G.R. No. 190289 – 823 Phil. 867 – Political Law – Constitutional Law – State Immunity From Suit – Government Functions vs Proprietary Functions – Estoppel
In 2007, Phuture Visions Co., Inc. applied for a business permit from the Office of the Mayor of Bacolod City for it to be allowed to hold bingo operations. The Office of the Mayor accepted the application and it issued a claim stub to Phuture for the business permit. But prior to receiving the actual business permit, Phuture commenced operations. As a result, the City Legal Officer caused the closure of the business operations of Phuture on the ground that it was operating without a business permit. Phuture then filed a petition for mandamus with damages against the city and its officials. The trial court dismissed the petition. The Court of Appeals remanded the issue on damages to the trial court. The City elevated the case to the Supreme Court raising and invoking for the first time the doctrine of the State’s immunity from suit. They argue that the city officials cannot be sued as they were merely performing their lawful duty and functions; that they were merely performing governmental or sovereign acts and exercised their legal rights and duties to implement the provisions of the City Ordinance.
ISSUE: Whether or not the city officials are immune from suit.
HELD: Yes. The issuance of business licenses and permits by a municipality or city is essentially regulatory in nature. The authority, which devolved upon local government units to issue or grant such licenses or permits, is essentially in the exercise of the police power of the State within the contemplation of the general welfare clause of the Local Government Code. This is not a proprietary function.
The State does not give its consent to be sued simply because it exercises its power to issue business permits and licenses. Waiver of immunity from suit, being in derogation of sovereignty, will not be lightly inferred.
Is the City (State) estopped from raising the defense of immunity from suit because it was raised belatedly?
No. Estoppel does not also lie against the government or any of its agencies arising from unauthorized or illegal acts of public officers. Hence, the State is not estopped from invoking their immunity from suit on account of having raised it only for the first time on appeal.
