Acebedo Optical Company, Inc. v. Court of Appeals
REITERATIONFacts
1. The Antecedents: Acebedo Optical Company, Inc. (Acebedo) applied for a business permit in Iligan City. The City Mayor granted the permit but imposed several conditions restricting Acebedo's operations, including limitations on establishing clinics, examining patients, prescribing glasses, and advertising. The Samahan ng Optometrist sa Pilipinas (SOPI), Iligan Chapter, filed a complaint alleging Acebedo violated these conditions. An investigation by the City Legal Officer found Acebedo guilty and recommended the cancellation of its business permit. The City Mayor subsequently issued a notice of resolution and cancellation of the permit, giving Acebedo three months to wind up its affairs. 2. Procedural History: Acebedo filed a petition for certiorari, prohibition, and mandamus with the Regional Trial Court (RTC) of Iligan City, challenging the cancellation of its business permit and the imposition of the conditions, alleging denial of due process and equal protection, and lack of authority of the City Mayor and City Legal Officer. The RTC dismissed the petition for failure to exhaust administrative remedies. Acebedo then filed a petition for certiorari, prohibition, and mandamus with the Court of Appeals (CA), seeking to set aside the RTC's dismissal order, arguing grave abuse of discretion. The CA dismissed this petition for lack of merit. Acebedo's motion for reconsideration was also denied. 3. The Petition: Acebedo filed the present petition for review under Rule 45 of the Rules of Court, seeking to nullify the CA's dismissal of its case. Acebedo argues that the CA erred in holding that the special conditions imposed by the City Mayor, though ultra vires, became binding as a private agreement upon acceptance, and that the CA erred in holding that the business permit was entered into by the City in the performance of its proprietary functions. Acebedo contends that the conditions were void ultra vires and that the issuance of business permits is an exercise of police power, not proprietary function.
Issue(s)
Whether the special conditions imposed by the City Mayor on petitioner's business permit, which were found to be ultra vires, became binding on petitioner as a private agreement or contract upon its acceptance. Whether the business permit issued by the City Mayor was in the nature of a contract entered into in the performance of proprietary functions of Iligan City, and the extent of the City Mayor's authority to impose conditions on business permits, particularly concerning the regulation of optometry, considering the lack of appeal by the respondents.
Ruling
The petition is GRANTED. The Decision of the Court of Appeals is REVERSED, and the respondent City Mayor is ordered to reissue petitioner's business permit in accordance with law and this disposition.
Ratio Decidendi
On the issue of whether the special conditions became binding as a private agreement: The Supreme Court held that a license or permit is not a contract but a special privilege. Therefore, the principle of estoppel cannot apply to ultra vires acts. The fact that petitioner acquiesced to the special conditions does not preclude it from challenging their imposition, as ultra vires acts are null and void and cannot be given effect. The Court emphasized that the doctrine of estoppel cannot operate to give effect to an act that is otherwise null and void or ultra vires. On the issue of whether the business permit was issued in the performance of proprietary functions, the authority of the City Mayor, the regulation of optometry, and the effect of non-appeal by respondents: The Supreme Court ruled that the issuance of business licenses and permits by a municipality or city is essentially regulatory and an exercise of police power, not proprietary functions. While the power to issue business permits includes the corollary power to impose reasonable terms and conditions, these conditions must be within the bounds of law and reason. The imposed conditions were found to be ultra vires, meaning they were beyond the scope of the City Mayor's authority as they attempted to regulate the practice of optometry, a function exclusively vested in the Professional Regulation Commission and the Board of Optometry. The Court cited jurisprudence, including its own ruling in Samahan ng Optometrists sa Pilipinas vs. Acebedo International Corporation, G.R. No. 117097, which held that corporations hiring licensed optometrists do not engage in the practice of optometry themselves. Since the public and private respondents did not appeal the Court of Appeals' ruling that the City Mayor's imposition of special conditions was ultra vires, they could not question this finding.
Main Doctrine
The imposition of special conditions on a business permit, which are not based on law or ordinance and effectively regulate the practice of a profession, is ultra vires and cannot be sustained. A business permit is regulatory and not a means to control professional practice, which falls under the exclusive domain of professional regulatory bodies.