THE CITY OF BACOLOD v. PHUTURE VISIONS CO., INC.

mandatory order and/or preliminary mandatory injunction to remove the

padlock installed at respondent's place of business at SM Bacolod and
January 17, 2018 | Velasco, Jr., J allow it to conduct unhampered bingo operations
FACTS:  The Petitioners (City of Bacolod) alleged that:
o Phuture applied for the renewal of its mayor's permit with
 Phuture was incorporated in 2004. In May 2005, its Articles of "professional services, band/ entertainment services" as its
Incorporation (AOI) was amended to, among others, include the declared line of business, with address of the business at "RH
operation of lotto betting stations and/or other gaming outlets as one of Building, 26 Lacson Street, Barangay 5" instead of SM Bacolod
its secondary purposes. o Petitioners found discrepancies in Phuture's submitted
 Phuture applied with the Philippine Amusement and Gaming requirements, wherein the application form was notarized earlier
Corporation (P AGCOR) for an authority to operate bingo games at the than the amendment of its AOI to reflect the company's primary
SM City Bacolod Mall (SM Bacolod), as well as with SM Prime purpose for bingo operations.
Holdings (SM Prime) for the lease of a space in the said building. o Respondent failed to pay the necessary permit fee/assessment
 Phuture was issued a provisional Grant of Authority (GOA) by fee under the applicable tax ordinances of the City of Bacolod
PAGCOR, subject to compliance with certain requirements, and received o Without waiting for the release of the mayor's permit, respondent
an Award Notice from SM Prime. started the operation of its bingo outlet at SM Bacolod. This
 Phuture processed, completed and submitted to the Permits and prompted the former City Legal Officer, Atty. Allan Zamora, to
Licensing Division of the City Mayor of Bacolod City its Application for issue a Closure Order pursuant to City Tax Ordinance No. 93-
Permit to Engage in Business, Trade or Occupation to operate bingo 001, Series of 1993,
games at SM Bacolod and paid the fees therefor. It was then issued a  The RTC denied the prayer for the issuance of a temporary mandatory
claim slip for its permit on February 19, 2007, which was to be claimed order and dismissed the case for lack of merit.
on March 16, 2007.  Upon appeal, the Court of Appeals partially granted the appeal by
 Phuture commenced bingo operations at SM Bacolod on March 2, 2007, affirming the trial court's denial of the application for a temporary
prior to the issuance of the actual hard copy of the mayor's permit. mandatory order but reversing the dismissal of the suit for damages and
However, at around 6:10 a.m. of March 3, 2007, respondent learned that ordering the case to be reinstated and remanded to the court of origin for
its bingo outlet was padlocked by agents of the Office of the City Legal further proceedings.
Officer and that a copy of a Closure Order dated March 2, 2007 was o While it ruled that the Mayor's power to issue licenses and
posted at the entrance of the bingo outlet. permits is discretionary, and thus, cannot be compelled by
 Phuture thus filed a Petition for Mandamus and Damages against the mandamus, it found that respondent was not given due notice
City of Bacolod, et.al. and alleged that the closure of its bingo outlet at and hearing as to the closure of its business establishment at SM
SM Bacolod is tainted with malice and bad faith and that petitioners did Bacolod. It concluded that respondent was denied its proprietary
not have the legal authority to shut down said bingo operations, right without due process of law.
especially since P AGCOR itself had already issued a provisional GOA
in its favor.
 The RTC conducted a summary hearing to determine the sufficiency of
the form and substance of the application for the issuance of a temporary
Arguments of the Petitioner: Whether or not petitioners can be made liable to pay damages - NO

 Hearing the action for damages effectively violates the City's immunity Petitioners have not given their consent to be sued
from suit since respondent had not yet obtained the consent of the City
Government of Bacolod to be included in the claim for damages.  The principle of immunity from suit is embodied in Section 3, Article
 They also argue that the other petitioners, the City Mayor and other XVI of the 1987 Philippine Constitution which states that "[t]he State
officials impleaded, are similarly immune from suit since the acts they cannot be sued without its consent." The purpose behind this principle is
performed were within their lawful duty and functions. to prevent the loss of governmental efficiency as a result of the time and
energy it would require to defend itself against lawsuit
 Petitioners maintain that they were merely performing governmental or
sovereign acts and exercised their legal rights and duties to implement  Consent may be express or implied, such as when the government
the provisions of the City Ordinance exercises its proprietary functions, or where such is embodied in a
general or special law.
 They contend that the assailed Decision contained inconsistencies such
o In the present case, respondent sued petitioners for the latter's
that the CA declared mandamus to be an inappropriate remedy, yet
refusal to issue a mayor's permit for bingo operations and for
allowed the case for damages to prosper.
closing its business on account of the lack of such permit.
Arguments of the Respondent:  While the authority of city mayors to issue or grant licenses and business
permits is granted by the Local Government Code (LGC), which also
 The grounds raised by petitioners should not be considered since these vests local government units with corporate powers, one of which is the
were only invoked for the first time on appeal. power to sue and be sued, this Court has held that the power to issue or
 The case for damages should proceed since petitioners allegedly caused grant licenses and business permits is not an exercise of the
the illegal closure of its bingo outlet without proper notice and hearing government's proprietary function. Instead, it is in an exercise of the
and with obvious discrimination. police power of the State, ergo a governmental act.
 No consent to be sued and be liable for damages can thus be implied
Reply of Petitioners
from the mere conferment and exercise of the power to issue business
 The issues they raised in the instant petition cannot be considered as permits and licences. Waiver of immunity from suit, being in derogation
having been raised for the first time since they are intertwined and bear of sovereignty, will not be lightly inferred.
relevance and close relation to the issues resolved by the trial court.  The City of Bacolod as a government agency or instrumentality cannot
 They cannot be held liable for damages since they were merely be estopped by the omission, mistake or error of its officials or agents.
performing governmental or sovereign acts in the issuance of a mayor's Estoppel does not also lie against the government or any of its agencies
permit. arising from unauthorized or illegal acts of public officers.
 That whatever damages that respondent may have incurred belong to the  We cannot hold petitioners stopped from invoking their immunity from
concept of damnum absque injuria for which the law provides no remedy suit on account of having raised it only for the first time on appeal.
o T]he real reason why, from the procedural point of view, a suit
RULING: WHEREFORE, the petition is hereby GRANTED. The Decision dated against the state filed without its consent must be dismissed is
February 27, 2009 and the Resolution dated October 27, 2009 of the Court of because, necessarily, any such complaint cannot state a cause of
Appeals in CA-G.R. SP No. 03322 are hereby ANNULLED and SET ASIDE. The action, since, as the above decision confirms, "there can be no
Decision dated March 20, 2007 of the Regional Trial Court ofBacolod City, Branch
49 is hereby REINSTATED. SO ORDERED.
 legal right as against the authority that makes the law on which be a right that is clear and unmistakable. From this, the trial court
the right depends. concluded that the right being claimed by respondent to operate bingo
o The requirement that this defense should be raised at the trial is games at SM Bacolod was, at the very least, doubtful.
only to give the plaintiff a chance to cure the defect of his  It appears that respondent had no clear and unmistakable legal right to
complaint, but if, as in this case, the lack of consent of the state operate its bingo operations at the onset. Respondent failed to establish
cannot be cured because it is a matter of judicial notice that that it had duly applied for the proper permit for bingo operations with
there is no law allowing the present suit, (only Congress that the Office of the Mayor and, instead, merely relied on the questionable
can give such consent) the reason for the rule cannot obtain, claim stub to support its claim.
hence it is clear that such non-suability may be raised even on  Respondents claim that it had applied for a license for bingo operations is
appeal. After all, the record on appeal can be examined to find questionable since, as it had admitted in its Petition for Mandamus and
out if the consent of the state is alleged in the complaint. Damages, the primary purpose in its AOI was only amended to reflect
o The waiver cannot be made other than the Congress. as a matter bingo operations on February 14, 2007 or more than a month after it had
of public policy, the law must be understood as insulating the supposedly applied for a license for bingo operations with the Office of
state from such undesirable contingencies and leaving it free to the Mayor.
invoke its sovereign attributes at any time and at any stage of a  Petitioners, in ordering the closure of respondent's bingo operations,
judicial proceeding, under the principle that the mistakes and were exercising their duty to implement laws and ordinances which
omissions of its officers do not bind it. (Insurance Co. of North include the local government's authority to issue licenses and permits for
America v. Oakka Shosen Kaisha) business operations in the city. This authority is granted to them as a
delegated exercise of the police power of the State. It must be
Petitioners are not liable for damages
emphasized that the nature of bingo operations is a fonn of gambling;
 The argument of respondents that petitioners are guilty of surreptitiously thus, its operation is a mere privilege which could not only be regulated,
padlocking its SM bingo outlet in a "patently arbitrary, whimsical, but may also very well be revoked or closed down when public interests
capricious, oppressive, irregular, immoral and shamelessly politically so require.
motivated" manner and with clear discrimination since the majority  We adhere to the principle that injury alone does not give respondent the
owners of the company are the sons of petitioner Mayor Leonardia's right to recover damages, it must also have a right of action for the legal
political rival, then Congressman Monico Puentevella. Such contention is wrong inflicted by petitioners. In order that the law will give redress for
clearly but non sequitur, grounded as it is in pure conjecture. an act causing damage, there must be damnum et injuria that act must be
 The CA remanded the case to the RTC but the RTC already ruled that not only hurtful, but wrongful.
respondent Phuture had no right and/or authority to operate bingo games o In order that a plaintiff may maintain an action for the injuries of
at SM Bacolod because it did not have a Business Permit and has not which he complains, he must establish that such injuries resulted
paid assessment for bingo operation. Thus, it held that petitioners acted from a breach of duty which the defendant owed to the plaintiff -
lawfully in stopping respondent's bingo operation and closing its a concurrence of injury to the plaintiff and legal responsibility by
establishment for lack of any business permit. the person causing it. The underlying basis for the award of tort
 RTC had also found that respondent's reliance on the GOA issued by damages is the premise that an individual was injured in
PAGCOR, the SM Award Notice, and the "questionable" Claim Slip and contemplation of law.
Application paper tainted with alteration/falsification did not appear to