Roble Arrastre, Inc. vs. Villaflor

The power of a municipal mayor to issue licenses and permits under Section 444(b)(3)(iv) of the Local Government Code of 1991 is discretionary, not ministerial, because it is an exercise of delegated police power rooted in the general welfare clause (Section 16). Consequently, a writ of mandamus cannot issue to compel the grant of a business permit even where the applicant has paid the required fees and submitted the necessary documents; the proper remedy to question an arbitrary refusal is certiorari.

Roble Arrastre, Inc. provided arrastre and stevedoring services at the Municipal Port of Hilongos, Leyte, under a permit and a hold‑over authority issued by the Philippine Ports Authority (PPA). For 1992 and 1993, the company obtained business permits from the municipal mayor. In January 1994, while a 90‑day hold‑over authority from the PPA was in effect, petitioner applied for renewal of its business permit and paid the license fees. The mayor denied the application, invoking Municipal Resolution No. 93‑27 of the Sangguniang Bayan of Hilongos, passed on 17 March 1993. That resolution objected to the grant of any arrastre permit to an entity that also operated shipping lines on the Cebu‑Hilongos route because petitioner was owned by Roble Shipping Lines, a competing carrier, and local shippers had complained of biased services. Despite the resolution, the PPA subsequently awarded petitioner a five‑year cargo handling contract effective 1 March 1994. Petitioner initiated a mandamus action to compel the mayor to issue the permit.

• Nature of the Action: Petitioner filed a Petition for Mandamus to compel respondent mayor to issue a business permit for arrastre services at the Municipal Port of Hilongos, Leyte, for the year 1994. Petitioner had paid the corresponding fees and secured a barangay clearance.

• PPA Authority: Petitioner operated under PPA Permit No. M92‑005 (7 September 1992 to 15 September 1993) and a 90‑day hold‑over authority issued on 14 December 1993. During the pendency of the mandamus action, the PPA granted petitioner a five‑year cargo handling contract effective 1 March 1994, indorsed by the District Manager for the Visayas.

• Application and Denial: On 27 January 1994, petitioner applied to respondent mayor for renewal of its Business Permit No. 276 for 1994 and paid P9,789.48 under Official Receipt No. 7534455‑C. The mayor denied the application, invoking Municipal Resolution No. 93‑27 of the Sangguniang Bayan of Hilongos.

• Resolution No. 93‑27: Enacted on 17 March 1993, the resolution objected to the approval of a five‑year management contract for Roble Arrastre, Inc. It recited that: (a) Roble Arrastre, Inc. and Roble Shipping Lines were owned and managed by the same family; (b) shippers had complained during a public hearing conducted by PPA Manila on 9 March 1993 about biased services favoring Gabisan Shipping Lines, a competitor; and (c) it was “logical and ethical not to grant a permit to any group or corporation to engage in arrastre and stevedoring services in the municipal port who also have a shipping line flying the route of Cebu to Hilongos … in order to protect the business interests of the shipping industry of our municipality.” The resolution was signed by the Vice Mayor as presiding officer and approved by the mayor, but was furnished to PPA with no follow‑up action taken.

• Administrative Precedents: The public hearing by PPA Manila’s representatives was held on 9 March 1993 at the municipal center; the mayor was present and shippers aired complaints. Despite the resolution, the PPA awarded petitioner the five‑year contract nearly a year later, on 1 March 1994. The RTC found that the mayor did not pursue any action regarding the resolution before the PPA and that no municipal ordinance had been passed concerning port operations.

• RTC Findings: The trial court ruled that PPA had sole authority over cargo handling in Philippine ports under Presidential Decree No. 857, and that the mayor’s refusal was not based on law or discretion. It observed that the resolution, being a mere expression of sentiment, could not override the PPA’s exclusive jurisdiction and that the mayor’s approval of the resolution was superfluous because it was not an ordinance.

• Stipulated Facts: The parties admitted that petitioner was issued Mayor’s Permit No. 276 in 1993, paid business and license permit fees for 1994, and had obtained a Barangay Clearance.

• Ministerial Nature of Licensing Power: Petitioner maintained that the mayor’s authority under Section 444(b)(3)(iv) of the Local Government Code is merely for revenue generation, not regulation; thus, the duty to issue a permit becomes ministerial once the applicant pays the required fees and complies with documentary requirements. Reliance was placed on Symaco v. Aquino for the proposition that the mayor cannot refuse the permit absent any ordinance conferring discretion.

• Exclusive PPA Jurisdiction: Petitioner argued that the PPA has the exclusive discretion to determine who may render arrastre services at a port; the municipal mayor’s denial encroached on this exclusive jurisdiction.

• No Valid Ordinance or Law: Petitioner contended that no ordinance or law authorized the mayor to deny the permit. Resolution No. 93‑27 was a mere resolution, not an ordinance, and could not form the basis for refusal. Moreover, the Local Government Code requires that suspension or revocation of permits be based on a violation of conditions set in a law or ordinance, which was lacking.

• Erroneous Reliance by the Court of Appeals: Petitioner asserted that the appellate court improperly relied on Mateo v. Court of Appeals and Pedro v. Provincial Board of Rizal, because those precedents involved different factual contexts where discretion was explicitly granted, and the CA failed to apply Symaco v. Aquino.

• Discretionary Power: Respondent mayor countered that the issuance of a business permit is not a ministerial function but one requiring the exercise of sound judgment and discretion, particularly because the power is an incident of police power delegated to local government units under the general welfare clause. Mandamus therefore does not lie.

• Validity of Denial under Resolution No. 93‑27: Respondent invoked the resolution to justify the denial, asserting that petitioner was owned by Roble Shipping Lines, thus disqualified from operating an arrastre service that could harm competing shippers and the local shipping industry.

• Counterclaim: Respondent sought moral and exemplary damages, attorney’s fees, and litigation expenses.

• Discretionary Character of Licensing Power: Whether the Court of Appeals correctly interpreted Section 444(b)(3)(iv) of the Local Government Code as conferring a discretionary, rather than a ministerial, duty on the municipal mayor to issue business permits, thereby rendering mandamus improper.

• Mootness: Whether the petition for mandamus had become moot and academic due to the expiration of the 1994 permit year, and if so, whether the Court should nonetheless resolve the substantive issue.

• Discretionary Character of Licensing Power: The power of a municipal mayor to issue licenses and permits under Section 444(b)(3)(iv) is discretionary, not ministerial. That provision takes its cue from Section 16 (the general welfare clause), which encapsulates the delegated police power of the State to local government units. Because the issuance of a license involves an evaluation of conditions to promote the general welfare of the municipality’s inhabitants, the duty requires the exercise of official judgment. Mandamus lies only to compel performance of a ministerial act; it cannot control or review the exercise of discretion. The proper remedy to question an abuse of that discretion is a petition for certiorari. The fact that Resolution No. 93‑27 was a mere resolution and not an ordinance did not convert the discretionary power into a ministerial one; the existence of discretion flows directly from the statute. The trial court therefore erred in issuing the writ of mandamus.

• Mootness: The petition had indeed become moot and academic because the business permit sought was for the year 1994, which had long expired, and no practical relief could be granted. Courts will not adjudicate moot cases. Nevertheless, the Supreme Court resolved the merits under the symbolic function of educating the bench and bar and under the “capable of repetition yet evading review” exception. The dismissal of Special Civil Action No. H‑237 was affirmed.

• Ministerial vs. Discretionary Duty — A purely ministerial act is one which an officer performs in a given state of facts, in a prescribed manner, in obedience to the mandate of a legal authority, without regard to or the exercise of his own judgment upon the propriety or impropriety of the act done. A duty is discretionary when the law imposes a duty upon a public officer and gives him the right to decide how or when it shall be performed. Mandamus lies only to compel a ministerial duty, not a discretionary one. The mayor’s power under Section 444(b)(3)(iv) was held to be discretionary because it is an exercise of police power rooted in the general welfare clause.

• Licensing as Delegated Police Power — Section 16 of the Local Government Code (the general welfare clause) is the statutory delegation of the police power to local government units. Section 444(b)(3)(iv) is a specific manifestation of that delegated police power; the issuance of licenses and permits is therefore regulatory in nature and not merely a revenue‑raising measure. The exercise of police power necessarily entails official discretion to determine the measures that best serve the general welfare.

• Certiorari as Proper Remedy for Discretionary Acts — Where the law grants discretion to a public officer, the correctness of the exercise of that discretion cannot be tested through mandamus. The proper remedy is certiorari, which determines whether the officer committed grave abuse of discretion.

• Mootness and the “Capable of Repetition Yet Evading Review” Exception — Courts will not decide moot questions where no practical relief can be granted. However, a case otherwise moot may be decided on the merits if it presents an issue capable of repetition yet evading review, or when the Court exercises its symbolic function of educating the bench and bar.

• “Discretion, when applied to public functionaries, means a power or right conferred upon them by law or acting officially, under certain circumstances, uncontrolled by the judgment or conscience of others. A purely ministerial act or duty in contradiction to a discretional act is one which an officer or tribunal performs in a given state of facts, in a prescribed manner, in obedience to the mandate of a legal authority, without regard to or the exercise of his own judgment upon the propriety or impropriety of the act done. If the law imposes a duty upon a public officer and gives him the right to decide how or when the duty shall be performed, such duty is discretionary and not ministerial. The duty is ministerial only when the discharge of the same requires neither the exercise of official discretion or judgment.” — This passage, quoting Regalado and cited cases, encapsulates the controlling distinction and was applied to hold that the mayor’s licensing power is discretionary.

• “Section 444(b)(3)(iv) of the Local Government Code of 1991, whereby the power of the respondent mayor to issue license and permits is circumscribed, is a manifestation of the delegated police power of a municipal corporation. Necessarily, the exercise thereof cannot be deemed ministerial. As to the question of whether the power is validly exercised, the matter is within the province of a writ of certiorari, but certainly, not of mandamus.” — The ratio decidendi linking the licensing provision to police power and foreclosure of mandamus.

• Mateo v. Court of Appeals, 196 SCRA 280 — Followed. Stands for the rule that a duty requiring the exercise of official discretion or judgment is never ministerial. The Court of Appeals relied on this principle, and the Supreme Court affirmed its applicability.

• Pedro v. Provincial Board of Rizal, 56 Phil. 126 — Followed. Cited for the doctrine that a municipal license is not a property right; it is revocable when public interest requires, reinforcing the regulatory and discretionary nature of licensing.

• Batangas CATV, Inc. v. Court of Appeals, G.R. No. 138810, 29 September 2004 — Followed. Elaborated on the general welfare clause as the statutory delegation of police power to local government units, supporting the characterization of Section 444(b)(3)(iv) as an exercise of police power.

• Symaco v. Aquino — Distinguished. Petitioner invoked this precedent to argue that the mayor had no discretion absent an ordinance; however, the Supreme Court ruled that discretion was inherent in Section 444(b)(3)(iv) by virtue of the general welfare clause, without need for a separate ordinance.

• Alunan III v. Mirasol, 342 Phil. 467 (1997) — Followed. Applied in support of the “capable of repetition yet evading review” exception to the mootness rule.

• Section 444(b)(3)(iv), Republic Act No. 7160 (Local Government Code of 1991) — Empowers the municipal mayor to “issue licenses and permits and suspend or revoke the same for any violation of the conditions upon which said licenses or permits had been issued, pursuant to law or ordinance.” Interpreted as a manifestation of delegated police power, rendering the duty discretionary.

• Section 16, Republic Act No. 7160 (Local Government Code of 1991) — The general welfare clause. It declares that every local government unit shall exercise the powers necessary, appropriate, or incidental for its efficient and effective governance and those essential to the promotion of the general welfare. Used as the foundational source of the police power that underlies the mayor’s licensing authority.

• Presidential Decree No. 857 (Revised Charter of the Philippine Ports Authority) — Vests the PPA with sole authority to authorize cargo handling operations in Philippine ports. The RTC had emphasized this exclusivity, but the Supreme Court’s ruling did not turn on the PPA’s jurisdiction because the issue was the nature of the mayor’s licensing power, not a conflict between the PPA and the local government.

• Section 3, Rule 65, Rules of Court — Defines the writ of mandamus as a remedy to compel the performance of a ministerial duty. The provision was central to the holding that mandamus does not lie when the duty is discretionary.

Chief Justice Artemio V. Panganiban (Chairperson), Associate Justice Consuelo Ynares-Santiago, Associate Justice Ma. Alicia Austria-Martinez, and Associate Justice Romeo J. Callejo, Sr. concurred.