In the Philippines, the operation of a business is a privilege regulated by both local and national laws. When enterprises bypass these regulations—either by operating without the necessary permits or by intentionally evading taxes—they undermine fair competition and deprive the government of revenue essential for public services. This article outlines the legal avenues and procedural steps for reporting such infractions.

I. Businesses Operating Without Permits

Under the Local Government Code of 1991 (Republic Act No. 7160), Local Government Units (LGUs) have the authority to regulate businesses within their jurisdiction. A business is considered illegal if it operates without a Mayor’s Permit (also known as a Business Permit).

Regulatory Requirements

Before an enterprise can legally operate, it must generally secure:

DTI Registration (for sole proprietorships) or SEC Registration (for corporations/partnerships).
Barangay Clearance.
Mayor’s/Business Permit from the city or municipality where the business is located.
Fire Safety Inspection Certificate.

Where to Report

The primary agency responsible for enforcing local business compliance is the Business Permits and Licensing Office (BPLO) of the concerned LGU.

Process of Reporting

Verification: Confirm if the business displays its original Mayor’s Permit and Annual Inspection Certificate in a conspicuous place, as required by law.
Formal Complaint: File a written complaint with the BPLO. While anonymous tips are sometimes acted upon, a formal affidavit carries more weight.
Inspection: The LGU will dispatch inspectors to verify the claim.
Sanctions: If found in violation, the LGU may issue a Notice of Violation, impose administrative fines, or execute a Closure Order (padlock) under the police power of the Mayor.

II. Tax Evasion and BIR Non-Compliance

Tax evasion is the intentional and fraudulent attempt to defeat or evade the payment of a tax imposed by law. In the Philippines, this is governed by the National Internal Revenue Code (NIRC) of 1997, as amended.

Common Forms of Tax Evasion

Non-Issuance of Receipts: Failing to provide an Official Receipt (OR) or Sales Invoice (SI) for every sale of goods or services.
Under-declaration: Reporting significantly lower income than what is actually earned.
Double Bookkeeping: Maintaining two sets of records—one for internal use and a fraudulent one for the Bureau of Internal Revenue (BIR).
Non-filing of Returns: Total failure to submit required tax documentation.

The "Oplan Kandado" Program

The BIR implements the Oplan Kandado program, which allows for the temporary suspension or closure of business establishments based on specific grounds:

Failure to issue receipts or invoices.
Failure to file a value-added tax (VAT) return.
Understatement of taxable sales by 30% or more.
Failure to register the business with the BIR.

How to Report to the BIR

Reports can be submitted through the Run After Tax Evaders (RATE) program or the eComplaint portal:

Letter of Complaint: Address a letter to the Revenue District Office (RDO) having jurisdiction over the business or to the BIR Commissioner.
Evidence: Attach proof such as photos of the establishment, copies of unofficial receipts (e.g., "order slips" or "acknowledgment receipts" used in lieu of official ones), or financial discrepancies.
Online Portals: Utilize the BIR’s official website "eComplaint" system or the 8888 Citizens’ Complaint Center.

III. The Informer’s Reward (Section 282, NIRC)

To encourage civic participation, Philippine law provides a financial incentive for whistleblowers in tax evasion cases under Section 282 of the Tax Code.

Criteria	Reward Details
Eligibility	Any person who provides definite and sworn information not yet in the possession of the BIR.
Applicability	Violations of the NIRC where the information leads to the discovery of fraud and recovery of revenues.
Amount	10% of the revenues, surcharges, or fees actually recovered, or ₱1,000,000, whichever is lower.
Exclusions	Government employees and their relatives within the 6th degree of consanguinity are ineligible.

IV. Summary of Reporting Channels

Violation	Primary Office	Secondary Agency
No Mayor's Permit	City/Municipal BPLO	Department of Interior and Local Government (DILG)
No BIR Registration	Revenue District Office (RDO)	BIR RATE Program
No Official Receipts	BIR eComplaint	DTI (if consumer rights are also violated)
General Fraud	National Bureau of Investigation (NBI)	8888 Citizens' Complaint Center

V. Legal Protections and Risks

While reporting is a civic duty, it is important to ensure that the information provided is truthful. Filing a false or malicious complaint can lead to legal repercussions for the complainant, including:

Perjury: If the report is made under oath and is intentionally false.
Libel/Slander: If the information is spread maliciously to damage the business's reputation without factual basis.

Under the Ease of Doing Business and Efficient Government Service Delivery Act (RA 11032), LGUs and the BIR are mandated to act on complaints promptly. Whistleblowers may request confidentiality to protect themselves from potential retaliation.