LocGov Digest by M.

Dizon
City; Role and Creation
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Lim v. CA
G.R. No. 111397 | August 12, 2002 | Carpio, J.

Parties:

PETITIONER RESPONDENT

Hon. Alfredo Lim and Rafaelito Garayblas CA, Hon. Wilfredo Reyes, and Bistro Pigalle, Inc.

Doctrine: The power of the mayor to suspend business licenses and work permits is expressly premised on
the violation of the terms and conditions thereof; and the power to inspect and investigate does not include
the power to order a police raid on the establishments.
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CASE SUMMARY
FACTS: Mayor Lim caused work stoppages and ordered police raids in Bistro’s establishment. The trial court
granted Bistro’s petition for a TRO and a prohibitory preliminary injunction against Lim. Despite this, Lim still
issued a closure order on Bistro’s operations, which was carried out by policemen. Lim continued to cause
the disruption of Bistro’s business operations through his agents and policemen on several different dates.
Lim then filed a petition for certiorari, prohibition and mandamus against Bistro with the CA, claiming that the
trial judge committed GAD in issuing the writ of prohibitory preliminary injunction, which the CA denied. He
then filed a petition for review on certiorari with the SC for the CA decision and resolution.

ISSUE: W/N the prohibitory preliminary injunction was valid—YES.

HELD: The power of the mayor to issue business license and permits necessarily includes the corollary power
to suspend, revoke, or refuse to issue the same. However, the power to suspend or revoke permits and
licenses is expressly premised on the violation of the conditions of the permits and licenses. Further,
while the mayor has the power to inspect and investigate private commercial establishments for any violation
of the conditions of their licenses and permits, the mayor has no power to order a police raid on these
establishments in the guise of inspecting or investigating them.

Lim also had no authority to close down Bistro’s business (or any business establishment in Manila) without
due process of law. ITC, Lim’s exercise of this power violated Bistro’s property rights.
● Lim did not charge Bistro with any specific violation of the conditions of its business license and permits.
● Lim refused to accept Bistro’s license application, in effect denying it without examining whether it
complies with legal prerequisites.
● While his zeal in his campaign against prostitution is commendable, there is no excusing Lim for arbitrarily
closing down, without due process of law, Bistro’s business operations.

FACTS
• Bistro filed a petition for mandamus and prohibition, with prayer for TRO or writ of preliminary
injunction, against Lim in his capacity as Mayor of Manila with the trial court.
o Under Lim’s instructions, policemen inspected and investigated Bistro’s license, work permits
and health certificates of its staff. This caused work stoppage in Bistro’s night club and
restaurant operations. Lim also refused to accept Bistro’s application for a business license,
as well as the work permit applications of its staff, for the year 1993.
o Bistro argued that Lim’s refusal to issue the business license and work permits violated the
doctrine laid by the Court in De la Cruz v. Paras, in which the Court stated that “municipal
corporations cannot prohibit the operation of nightclubs. They may be regulated, but not
prevented from carrying on their business.”
• TC – issued the first assailed TRO ordering Lim to refrain from interfering in the operation of Bistro’s
business, and granted the writ of prohibitory preliminary injunction.
o Despite the order, Lim still issued a closure order on Bistro’s operations and sent policemen
to carry out the order.

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LocGov Digest by M. Dizon
City; Role and Creation
• Bistro filed an Urgent Motion for Contempt against Lim and the policemen who stopped its operations.
At the hearing, Bistro withdrew its motion on condition that Lim respects the court’s decision.
o Lim did not and again disrupted Bistro’s business operations through his agents and
policemen on several different dates.
• Meanwhile, Lim had filed a motion to dissolve the injunctive order and to dismiss the case.
o He insisted that the power of a mayor to inspect and investigate commercial establishments
and their staff is implicit in the statutory power of the city mayor to issue, suspend or revoke
business permits and licenses.
o The TC denied Lim’s motion.
• Lim filed a petition for certiorari, prohibition and mandamus against respondents with the CA, claiming
that the trial judge committed GAD in issuing the writ of prohibitory preliminary injunction.
o CA – denied Lim’s petition and his MFR.
• Sometime later, Manila City Ordinance 7783 took effect. On the same day, Lim ordered the police to
permanently close down the operations of Bistro, which was implemented immediately.
• Lim filed a petition for review on certiorari of the CA decision and resolution with the SC.
o Lim’s arguments: Relied primarily on his power as city mayor to grant and refuse municipal
licenses and business permits as expressly provided for in the LGC and the Revised Charter
of the City of Manila. He argued that the powers granted by these laws implicitly include the
power to inspect, investigate and close down Bistro's operations for violation of the conditions
of its licenses and permits.
o Bistro’s arguments: The legal provisions relied upon by Lim do not apply to the instant case.
Bistro maintains that the LGC and the Revised Charter of the City of Manila do not expressly
or impliedly grant Lim any power to prohibit the operation of night clubs. Lim failed to specify
any violation by Bistro of the conditions of its licenses and permits. In refusing to accept
Bistro's business license application for the year 1993, Bistro claims that Lim denied Bistro
due process of law.
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ISSUES & HELD
1. W/N the prohibitory preliminary injunction was valid—YES.
● From the language of the LGC and the Revised Charter of the City of Manila, it is clear that the power of
the mayor to issue business license and permits necessarily includes the corollary power to suspend,
revoke, or refuse to issue the same. However, the power to suspend or revoke permits and licenses
is expressly premised on the violation of the conditions of the permits and licenses.
o The laws specifically refer to the "violation of the condition(s)" on which the licenses and permits
were issued. Similarly, the power to refuse to issue such licenses and permits is premised on non-
compliance with the prerequisites for its issuance. The mayor must observe due process in
exercising these powers, which means that the mayor must give the applicant/licensee notice and
opportunity to be heard.
● While the mayor has the power to inspect and investigate private commercial establishments for any
violation of the conditions of their licenses and permits, the mayor has no power to order a police raid
on these establishments in the guise of inspecting or investigating them.
o Lim acted beyond his authority when he directed policemen to raid Bistro’s establishments. Such
act also violated Ordinance 7716, which expressly prohibits police raids and inspections.
● Lim also had no authority to close down Bistro’s business (or any business establishment in Manila)
without due process of law.
o No provision in the LGC or the Revised Charter of the City of Manila expressly or impliedly grants
the mayor authority to close down private commercial establishments without notice and hearing,
and even if there is, such provision would be void.
● 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.
o ITC, Lim’s exercise of this power violated Bistro’s property rights.
▪ Lim did not charge Bistro with any specific violation of the conditions of its business license
and permits.
▪ Lim refused to accept Bistro’s license application, in effect denying it without examining
whether it complies with legal prerequisites.
▪ While his zeal in his campaign against prostitution is commendable, there is no excusing
Lim for arbitrarily closing down, without due process of law, Bistro’s business operations.
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LocGov Digest by M. Dizon
City; Role and Creation
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RULING
Petition DENIED for lack of merit. CA decision affirmed in toto.
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