In the Philippine jurisdiction, a business license—often referred to as a Mayor's Permit or Business Permit—is not an absolute right but a revocable privilege. Under the exercise of Police Power, the State, through Local Government Units (LGUs), may revoke this privilege if a business engages in practices that undermine public welfare, including Unfair Competition.

I. Defining Unfair Competition

Under Section 168 of Republic Act No. 8293 (The Intellectual Property Code of the Philippines), unfair competition is committed by any person who employs deception or any other means contrary to good faith by which they pass off the goods manufactured by them, or in which they deal, for those of a person who has established such goodwill.

Core Elements:

Confusing Similarity: Passing off one's goods or services as those of another.
Deception: Giving the goods the general appearance of the goods of another manufacturer.
Intent to Defraud: An inherent or apparent intent to deceive the public or defraud a competitor.

II. Statutory Basis for Revocation

The authority to revoke a business license due to unfair competition is derived from several legal layers:

The Local Government Code of 1991 (R.A. 7160): The City or Municipal Mayor has the specific power to grant, deny, or revoke business permits. If a business is found to be violating national laws (like the IP Code) or the conditions of its permit, the LGU has the administrative authority to shut it down.
Article 28 of the Civil Code: It stipulates that "unfair competition in agricultural, commercial or industrial enterprises or in labor through the use of force, intimidation, deceit, machination or any other unjust, oppressive or highhanded method shall give rise to a right of action by the person who thereby suffers damage."
DTI Administrative Orders: The Department of Trade and Industry (DTI) can issue cease and desist orders and recommend to the LGU the cancellation of business names and licenses for entities found guilty of deceptive trade practices.

III. Specific Acts Leading to Revocation

While "Unfair Competition" is a broad term, the following specific acts are the most common catalysts for administrative revocation:

Product Imitation: Selling "knock-offs" or "counterfeits" that mimic the packaging, logo, or trade dress of an established brand.
False Advertising: Making misleading claims about the quality, origin, or characteristics of a product to lure customers away from competitors.
Trade Libel: Making false and malicious statements about a competitor’s business to destroy their reputation.
Industrial Espionage: Theft of trade secrets or confidential business information.

IV. The Process of Revocation

Revocation is rarely instantaneous; it must adhere to Administrative Due Process:

Verified Complaint: A competitor or an aggrieved party usually files a complaint with the LGU’s Business Permits and Licensing Office (BPLO) or the DTI.
Notice and Hearing: The respondent business must be given a "Notice to Explain" or a "Show Cause Order." A summary hearing is conducted where both sides present evidence.
The "Prima Facie" Finding: If there is clear evidence of intellectual property violation or deceptive practices, the Mayor may issue a Closure Order.
Appeal: Decisions by the Mayor can typically be appealed to the Office of the President or through a Petition for Certiorari in the courts if there is a grave abuse of discretion.

V. Jurisprudential Doctrine

The Philippine Supreme Court has consistently held that the right to do business is secondary to the State's duty to protect the public from fraud. In cases such as In-N-Out Burger, Inc. v. Sehwani, Incorporated, the courts emphasized that the protection of goodwill and the prevention of public confusion are paramount.

Key Takeaway: A business license is conditioned upon "good behavior." Once a business employs "machinations" or "deceit" to profit at the expense of a competitor and the consuming public, it forfeits its right to operate within the locality.

VI. Penalties Beyond Revocation

Revocation of a business license is an administrative penalty. It does not preclude the offender from facing:

Civil Liability: Damages awarded to the competitor under the IP Code.
Criminal Liability: Imprisonment (typically 2 to 5 years) and fines (PHP 50,000 to PHP 200,000) for infringement and unfair competition.