G.R. No. 128509 - Roble Arrastre, Inc. vs. Villaflor

Case Summary (G.R. No. 128509)

Factual Background

Roble Arrastre, Inc. operated cargo handling services and held a PPA permit and municipal business permits for the early 1990s. While its PPA renewal was pending, the PPA granted a ninety-day hold-over authority and thereafter awarded petitioner a five-year contract to provide arrastre services at the Port of Hilongos effective March 1, 1994. The Sangguniang Bayan of Hilongos adopted Resolution No. 93-27 objecting to approval of a five-year management contract by Roble Arrastre, Inc., on the ground that petitioner was associated with Roble Shipping Lines and that such connection could bias services and harm local shipping interests; the resolution was approved by the mayor. Petitioner paid the requisite municipal business fees and procured barangay clearance but, on application for renewal on January 27, 1994, the municipal mayor refused to approve the business permit for 1994.

Trial Court Proceedings

Petitioner filed a Petition for mandamus with preliminary mandatory injunction before the RTC to compel approval of the 1994 business permit and to annul the mayor's refusal, alleging that the mayor's power to issue business licenses under Section 444(b)(3)(iv) of the Local Government Code was ministerial once documentary requirements and fees had been complied with. The mayor answered that issuance of the permit involved discretion, invoked Resolution No. 93-27, and counterclaimed for moral and exemplary damages and attorney's fees. The RTC admitted a supplemental petition by petitioner attaching the five-year PPA contract and, after pre-trial and stipulations regarding payment and clearances, ruled that the PPA had exclusive authority to authorize cargo handling operations under the PPA charter and that the mayor's refusal was not grounded in law or proper exercise of discretion. The RTC granted the writ of mandamus, ordered the mayor to approve the 1994 application, dismissed the counterclaim, and denied the mayor's motion for reconsideration.

Proceedings in the Court of Appeals

The Court of Appeals reversed the RTC in a decision dated October 7, 1996 and entered judgment dismissing Special Civil Action No. H-237. The appellate court held that the mayor's duty to issue licenses under Section 444(b)(3)(iv) involved the exercise of police power and official discretion and was therefore not ministerial, citing Mateo v. Court of Appeals and Pedro v. Provincial Board of Rizal. The Court of Appeals further declared petitioner's main prayer moot and academic because the 1994 license could no longer be meaningfully compelled given the passage of time and the need for new applications for subsequent years. The Court of Appeals denied reconsideration on February 13, 1997.

Issues Presented

Petitioner presented four principal issues: whether the Court of Appeals validly relied on Mateo v. Court of Appeals and Pedro v. Provincial Board of Rizal to conclude that the mayor had full discretion in issuing or renewing the business permit even after petitioner complied with documentary requirements and paid fees; whether the Court of Appeals correctly interpreted Section 444(b)(3)(iv) as a grant of police power and discretion to refuse issuance despite compliance; whether the Court of Appeals erred by failing to apply Symaco v. Aquino, which petitioner argued supports a ministerial character to permit issuance absent an ordinance conferring discretion; and whether the Court of Appeals properly dismissed the petition on grounds of mootness.

Ruling of the Supreme Court

The Supreme Court affirmed the Court of Appeals' judgment and denied the petition. The Court concurred with the appellate court that the petition had become moot and academic insofar as the specific relief sought for the year 1994 could no longer be granted. Nevertheless, the Court exercised its institutional function to address the legal question because the controversy presented issues capable of repetition yet evading review. On the merits, the Court held that the exercise of power to issue licenses under Section 444(b)(3)(iv) is an exercise of delegated police power under Section 16 and necessarily entails official discretion; therefore, mandamus does not lie to compel the performance of that discretionary duty. The Court affirmed that certiorari is the proper remedy to challenge alleged grave abuse of discretion. Costs were taxed against petitioner.

Legal Basis and Reasoning

The Court reiterated that the writ of mandamus compels performance of a ministerial duty and does not control discretionary acts. It analyzed Section 444(b)(3)(iv) in the light of Section 16 of the Local Government Code, observing that the general welfare clause is the statutory vehicle for delegated police power to local government units. The Court explained that the issuance, suspension, or revocation of licenses under the cited provision is an exercise of police power and that a law or ordinance may prescribe the conditions for the exercise of that power; where the statutory grant is one of regulatory concern, the duty is not purely ministerial. The Court observed that Resolution No. 93-27 was a legislative expression of sentiment rather than a

Case Syllabus (G.R. No. 128509)

Parties and Posture

Roble Arrastre, Inc. was the petitioner and a cargo handling service operator authorized by the Philippine Ports Authority (PPA) to render arrastre and stevedoring services at the Municipal Port of Hilongos, Leyte.
Hon. Altagracia Villaflor was the respondent in her capacity as Municipal Mayor of Hilongos, Leyte, who denied petitioner's application for renewal of a business permit.
The Court of Appeals was the other respondent by virtue of its decision reversing the Regional Trial Court.
The petition was a Petition for Review on Certiorari to the Supreme Court assailing the Court of Appeals' Decision dated 7 October 1996 and Resolution dated 13 February 1997.

Key Facts

Roble Arrastre, Inc. held PPA Permit No. M92-005 and received Municipal Business Permits No. 349 (1992) and No. 276 (1993).
On 14 December 1993 the PPA issued a 90-day hold-over authority to petitioner with a proviso that the authority would be revoked if an earlier permit or contract were granted or withdrawn under PPA Administrative Order No. 10-81.
Petitioner applied for renewal of its 1994 business permit with the municipal mayor on 27 January 1994, and respondent mayor denied the application.
The Sangguniang Bayan of Hilongos passed Municipal Resolution No. 93-27 on 17 March 1993 objecting to a five-year contract for arrastre services by Roble Arrastre, Inc., on grounds that petitioner was affiliated with a shipping line operating the Cebu–Hilongos route.
After filing the RTC action petitioner obtained from PPA a five-year contract effective 1 March 1994 to provide cargo handling services at the Port of Hilongos and tendered that contract to the RTC in a Supplemental Petition.
Petitioner paid the business and license fees for 1994 and produced a barangay clearance as stipulated in the RTC Pre-Trial Order.

Procedural History

Petitioner filed a Petition for mandamus with preliminary mandatory injunction in the Regional Trial Court, Special Civil Action No. H-237, seeking to compel issuance of the 1994 business permit.
The RTC, Branch XVIII, Hilongos, Leyte, rendered judgment in favor of petitioner ordering the mayor to approve the 1994 permit and dismissed the mayor's counterclaim.
Respondent mayor's Motion for Reconsideration before the RTC was denied.
The Court of Appeals reversed the RTC in a Decision dated 7 October 1996 and dismissed Special Civil Action No. H-237, and it denied petitioner's Motion for Reconsideration in a Resolution dated 13 February 1997.
Petitioner filed the present Petition for Review on Certiorari to the Supreme Court.

Issues

Whether the Court of Appeals correctly relied on Mateo v. Court of Appeals and Pedro v. Provincial Board of Rizal in concluding that the municipal mayor exercised full discretion under Section 444(b)(3)(iv) of the Local Government Code of 1991.
Whether Section 444(b)(3)(iv) confers a regulatory police-power discretion on the municipal mayor to refuse or deny a business permit despite an applicant's prior compliance and payment of fees.
Whether the Court of Appeals erred in declining to apply Symaco v. Aquino to compel issuance of a permit where an applicant satisfied requirements and paid fees.
Whether the case had become moot and academic and whether the Court of Appeals properly dismissed the petition on that ground.

Contentions of the Parties

Roble Arrastre, Inc. contended that the mayor's issuance of business licenses under Section 444(b)(3)(iv) was ministerial an