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Republic of the Philippines DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT DILG-NAPOLCOM Contr, EDSA comer Quezon Avenue, West Tingle, Quezon Cty tp: IMwvewdllg.com.ph MR. FRANK THIEL 28 NOV 2018 General Manager San Buenaventura Power Ltd., Co. D % 62H, Dela Costa St., Brgy. Daungan, ILG OPINION NO. s. 208 Mauban, Quezon Dear Mr. Thiel: This has reference to your letter dated 04 June 2018 requesting for the Department's opinion on the issues relative to the regulatory power of a municipal Mayor. In your letter the following queries were submitted for this Department's legal opinion, we quote: 1. What are the requisites for a Municipal Mayor to issue a Cease and Desist Order (CDO) against a licensed entity operating within the territorial jurisdiction ofa Municipality? 2. May a Municipal Mayor issue a CDO against a licensed entity for the alleged non-payment of the monetary claims of the (i) sub- contractors of the said entity or (ii) suppliers of the main contractor of the entity? 3. May a Municipal Mayor impose conditions on the issuance or renewal of a Business Permit which are not provided under any national or local ordinance? Considering that the first and third queries are interrelated, we deem it apt to discuss query number one to be followed by the discussion on query number three. On the first query, we opine that both the substantive and procedural requirements of the law have to be complied with for the issuance of the cease-and-desist order against licensed entity operating within a municipality's territorial authority. This is under the premise that the issuance of the said cease-and-desist order is an enforcement of the regulatory power of a municipal mayor under Republic Act No. 7160 (RA 7160), otherwise known as the Local Government Code of 1991 Particularly on the substantive requirement, Section 444(b)(3)(iv) of RA 7160, finds application. It provides the ground by which such license or permit may be suspended or revoked. It states: Page 1of4 “Section 444. The Chief Executive: Powers, Duties, Functions and Compensation. — sexx (b) For efficient, effective and economical governance the purpose of which is the general wellare of the municipality and its inhabitants pursuant to Section 16 of this Gode, the municipal mayor shall: ax (iv) Issue licenses and permits and suspend or revoke the same for any licenses or issued, pursuant to law or ordinance;" Emphasis supplied). In the aforecited provision, it is clear that Municipal Mayor may suspend or revoke licenses and permits when the conditions upon which said licenses or permits had been issued, pursuant to law or ordinance, had been violated. These conditions are in place precisely because a license is rather in the nature of a special privilege, of a permission or authority to do what is within its terms, It is not in any way vested, permanent or absolute.' Further, in the case of Hon. Alfredo Lim (Mayor Lim) and Rafaelito Garayblas vs. ‘The Court of Appeals’, et.al, the Supreme Court has this to say: “it is clear that the power of the mayor to issue business licenses and permits necessarily includes the corollary power to suspend, revoke or even refuse to issue the same. However, the power to suspend or revoke these licenses and permits is expressly premised on the violation of the conditions of these permits and licenses, The laws specifically refer to the violation of the condition(s) on which the licenses and permits were issued.” (Emphasis supplied) As to the procedural requirement, basic under the principle of due process are the twin requirements of notice and hearing i.e. notice to the party being charged ofa violation of the laws, ordinances, and rules violated and opportunity to be heard on the part of the said party so he can lay down his defenses and be able to explain his or her side. ‘Also in the case of Mayor Lim, the Supreme Court held that: “The mayor must observe due process in exercising these powers, which means that the mayor must give the applicant or licensee notice and opportunity to be heard. * Gonzalo Sy Trading ve. Central Bank, 70SCRA 570, 2 GR. No. 111397, 12 August 2018 Page 2oF4 The regulatory powers granted to municipal corporations must always be exercised in accordance with law, with utmost observance of the rights of the people to due process and equal protection of the law. Such power cannot be exercised whimsically, arbitrarily or despotically. In the instant case, we find that Lims exercise of this power violated Bistros property rights that are protected under the due process clause of the Constitution. It has been held that Due process, as a constitutional precept, does not always and in all situations require a trial-type proceeding. Due process is satisfied when a person is notified of the charge against him and given an opportunity to explain or defend himse! In administrative proceedings, the filing of charges and giving reasonable opportunity for the person so charged to answer the accusations against him constitute the minimum requirements of due process, The essence of due process is simply to be heard, or as applied to administrative proceedings, an opportunity to explain one’s side, or an opportunity to seek a reconsideration of the action or ruling complained of! Hence, the presence of the violation of the conditions upon which said licenses and permits were issued does not ipso facto give the municipal mayor the right to suspend or revoke said licenses and permits. The procedural requirement aspect shall also be complied with. Accordingly, prior to issuance of cease-and-desist order, any licensed entity must be first notified of the violation and be given the opportunity to present its defenses. On the third query, may we emphasize, at this point, the last phrase of Section 444(b)(3)(iv) as follows: (iv) 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 co law or ordinance;” (Emphasis supplied). ‘Thus, the issuance of licenses or permits shall only be pursuant to law or ordinance and the municipal mayor is bereft of the authority to impose additional conditions on the issuance, renewal, or continued validity of a business permit other than what the law and/or ordinance provides. In the letter from Company, the additional condition being imposed for the continued validity of a business permit is for the Company to execute a Memorandum of Agreement with the municipality for the former's provision of financial assistance to the latter for its projects. This has no basis in law. Veritably, we are of strong opinion that this kind of agreement shall not be imposed as a condition because all contracts are voluntarily agreed upon by the contracting parties without any vitiation of consent otherwise such contract shall be voided. Article 1318 of Republic Act No. 386, otherwise known as the Civil Code of the Philippines, states: “An. 1318. There is no contract unless the following requisites concur: > ibid “ Ray Peter ©. Vivo vs. Philippine Amusement and Game Corporation (PAGCOR), G.R. No. 187854, November 12.2013. Page 30f4 (1) Consent of the contracting parties; (2) Object certain which is the subject matter of the contract; (3) Cause of the obligation which is established. "(Emphasis supplied). Lastly, on the second query, our view is in the negative. Non-payment of monetary claims ofa third party (sub-contractors and suppliers) cannot be one of the conditions upon which said licenses or permits had been issued because this is a civil matter between the parties (i.e. licensed entity and third parties) cognizable by a court of competent jurisdiction. It is not up to the municipal mayor nor within his regulatory power to intervene in purely civil matters and thereafter use his regulatory powers under the law to punish the alleged erring private party. The licensed party's contract with a third party is one thing and the obligations it acquired by virtue of the issuance of license is another thing, Item no. 5.1.3. of this Department's Memorandum Circular No, 2016-104 on Implementing Guidelines in the Issuance of Local Permits and Licenses Pursuant to the Directive of the President of the Philippines, states: "5.0. Policy Content and Guidelines 5.1. As directed by President Rodrigo Roa Duterte in his first State of the Nation Address, the following standards must be observed in issuing Jocal permits and licenses: 5.13. No other documents shall be required from the applicant aside from those already identified by the LGU;” Accordingly, it is apparent that it is not up to the municipal mayor but to the local government to identify other documents required from the applicant in the issuance of local permits und licenses. For guidance, we herein refer DILG-DTI-DICT Joint Memorandum Circular No. 01, Series of 2016 on the Revised Standards in Processing, Business Permits and Licenses in All Cities and Municipalities. ‘Thank you. Very truly yours, By the authority of the Secretary MARIYEL C. SACENDONCILLO, CESO III Assisthnt Secretary for Local Governmeny a y Po Page 40F4