Lucero vs. City Government of Pasig

A lease of a stall in a public market is not a right but a purely statutory privilege, and the operation of a market stall by virtue of a license is always subject to the police power of the city government. The enactment of a new ordinance regulating the possession and use of public market facilities, even one that repeals the ordinance under which existing leases were granted, is a valid exercise of police power and does not violate the non-impairment clause, which is subject to and limited by the paramount police power.

Petitioners were lessees of specific market stalls in the Pasig Public Market, granted under Municipal Ordinance No. 25, series of 1983. The municipality of Pasig was later converted into a highly urbanized city known as the City of Pasig by virtue of RA 7829, enacted on December 8, 1994. The municipal government renovated the market facilities and constructed annex buildings, prompting the enactment of a new ordinance to regulate the occupation and use of the market stalls.

Petitioners Ruperto Lucero, Jr., Pablo Lucero, and Antonio Tenorio were granted lease contracts to occupy and operate stalls in the public market of Pasig by virtue of Municipal Ordinance No. 25, series of 1983. Specifically, Ruperto Lucero, Jr. leased Market Stall No. 29, Commercial Section; Pablo Lucero leased Market Stall Nos. 456 and 457, Grocery Section; and Antonio Tenorio leased Market Stall No. 28, Commercial Section.

Sometime in 1993, the municipal government of Pasig renovated the market facilities and constructed annex buildings to the old public market. The Sangguniang Bayan of Pasig then enacted Municipal Ordinance No. 56, series of 1993, entitled "An Ordinance Prescribing the Rules and Regulations in Occupying and Using Market Stalls and Providing Penalties for Violations Thereof." The ordinance took effect 30 days after its enactment on October 20, 1993. Pursuant to the new ordinance, municipal officials urged all stall occupants to fill up and submit the necessary application forms, which contained the terms and conditions for the occupation and operation of the stalls. If approved, the application would serve as the lease contract. Petitioners, however, refused to apply for a new lease on their market stalls and were adamant despite being given a deadline to comply.

On November 14, 1995, the city government of Pasig filed a complaint for ejectment against petitioners in the Metropolitan Trial Court (MTC), Branch 68, Pasig City, docketed as Civil Case No. 5043. The city government alleged that petitioners failed to pay the required ₱10,000 performance bond and their rental fees since January 1994 as required by the municipal ordinance. In their answer, petitioners claimed that they had faithfully complied with their obligations as set forth in their 1983 lease contracts. They alleged that it was the city government which refused to accept their rental payments from January 1994 onwards because of their failure to submit new applications to lease their market stalls. They did not pay the performance bond because, as previous stall occupants, they were not required to do so. With due notice to the city treasurer, petitioners deposited their payments in a bank when their offer to pay was not acted upon.

The MTC found the ejectment suit to be without merit and dismissed the complaint. The city government appealed to the Regional Trial Court (RTC), Branch 162, Pasig City, which reversed the MTC decision and decided in favor of the city government, ordering petitioners to vacate the stalls, pay rental arrearages, and pay attorney's fees. Petitioners appealed to the Court of Appeals (CA), which dismissed the appeal for lack of merit; their motion for reconsideration was similarly denied, prompting the petition to the Supreme Court.

• Vested Right to Market Stalls: Petitioners claimed to have a vested right to the possession, use and enjoyment of the market stalls based on their 1983 lease contracts, which could not be impaired by the enactment of Municipal Ordinance No. 56 in 1993.
• Non-Impairment of Contracts: Petitioners assailed the non-renewal of their lease contracts on stalls in the public market when they did not comply with the requirements of Municipal Ordinance No. 56, series of 1993, arguing that the new ordinance impaired their existing contractual rights.

N/A — The decision does not recount the specific arguments raised by the respondent city government beyond its allegations in the ejectment complaint that petitioners failed to pay the required performance bond and rental fees as required by the municipal ordinance.

• Vested Right: Whether petitioners can claim a vested right to the market stalls they were occupying by virtue of their lease contracts under Municipal Ordinance No. 25, series of 1983.

• Vested Right: No. Petitioners did not have any vested right to the stalls, as the lease and occupation of a stall in a public market is not a right but a purely statutory privilege governed by laws and ordinances, and the operation of a market stall by virtue of a license is always subject to the police power of the city government.

• Vested Right: The Court defined a vested right as one where "the right to enjoyment has become the property of some particular person or persons as a present interest." It is unalterable, absolute, complete and unconditional, and expresses a "present fixed interest which in right reason and natural justice is protected against arbitrary state action." Contrary to petitioners' contention, their 1983 lease contracts did not grant them irrefutable rights to the market stalls; they were mere grantees of a privilege to occupy and operate such booths. What petitioners had was a license to occupy and operate particular stalls over a period of time, and their possession and use of these facilities could not be characterized as fixed and absolute. It was within the ambit of the Sanggunian's authority in the exercise of police power to regulate the enjoyment of the privilege to lease the market stalls. The enactment of Municipal Ordinance No. 56, series of 1993, repealing Municipal Ordinance No. 25, series of 1983, was a valid exercise of such governmental authority to regulate the possession and use of the public market and its facilities. The lease (and occupation) of a stall in a public market is not a right but a purely statutory privilege governed by laws and ordinances. The operation of a market stall by virtue of a license is always subject to the police power of the city government. An application for this privilege may be granted or refused for reasons of public policy and sound public administration. The city government, through its market administrator, is not duty-bound to grant lease privileges to any applicant, least of all those who refuse to obey the new ordinance prescribing the rules and regulations for the market stalls. Moreover, a public market is one dedicated to the service of the general public and operated under government control and supervision as a public utility; hence, its operation is imbued with public interest. Petitioners' 1983 lease contracts contained an implied reservation of the police power as a postulate of the existing legal order, which could be exercised any time to change the provisions of the contracts or even abrogate them entirely, for the protection of the general welfare. Such an act did not violate the non-impairment clause, which is anyway subject to and limited by the paramount police power.

• Vested Right — A right is vested when the right to enjoyment has become the property of some particular person or persons as a present interest; it is unalterable, absolute, complete and unconditional, and expresses a "present fixed interest which in right reason and natural justice is protected against arbitrary state action." The Court applied this doctrine to find that petitioners' 1983 lease contracts did not grant them irrefutable rights to the market stalls, as their possession and use of the facilities could not be characterized as fixed and absolute.
• Market Stall Lease as Privilege — The lease (and occupation) of a stall in a public market is not a right but a purely statutory privilege governed by laws and ordinances, and the operation of a market stall by virtue of a license is always subject to the police power of the city government. An application for this privilege may be granted or refused for reasons of public policy and sound public administration.
• Police Power and Non-Impairment of Contracts — The non-impairment clause is subject to and limited by the paramount police power. Petitioners' lease contracts contained an implied reservation of the police power as a postulate of the existing legal order, which could be exercised any time to change the provisions of the contracts or even abrogate them entirely, for the protection of the general welfare.

• "A right is vested when the right to enjoyment has become the property of some particular person or persons as a present interest." — This passage defines the concept of a vested right, which the Court used as the standard to determine whether petitioners could claim such a right to the market stalls.
• "The lease (and occupation) of a stall in a public market is not a right but a purely statutory privilege governed by laws and ordinances." — This is the core ratio decidendi of the case, establishing that market stall leases are mere privileges subject to regulation.
• "The operation of a market stall by virtue of a license is always subject to the police power of the city government." — This passage reinforces the controlling principle that the privilege of operating a market stall is always subject to the exercise of police power.
• "Such an act did not violate the non-impairment clause which is anyway subject to and limited by the paramount police power." — This passage resolves the petitioners' non-impairment argument by establishing the supremacy of police power over contractual rights.

• Ayog vs. Cusi, 204 Phil. 126 (1982) — Cited to define the concept of a vested right as a "present fixed interest which in right reason and natural justice is protected against arbitrary state action."
• Jovellanos vs. Court of Appeals, G.R. No. 100728, 18 June 1992, 210 SCRA 126 — Cited for the proposition that a vested right is unalterable, absolute, complete and unconditional, and is not dependent upon a contingency.
• Lahom vs. Sibulo, 453 Phil. 270 (2003) — Cited for the proposition that a vested right includes not only legal and equitable title to the enforcement of a demand but also exemptions from new obligations created after the right has become vested.
• Navarro vs. Lardizabal, 134 Phil. 331 (1968) — Cited for the rule that the lease of a stall in a public market is not a right but a purely statutory privilege governed by laws and ordinances.
• Aprueba vs. Ganzon, 124 Phil. 574 (1966) — Cited for the rule that the operation of a market stall by virtue of a license is always subject to the police power of the city government, and that an application for this privilege may be granted or refused for reasons of public policy and sound public administration.
• Javellana vs. Kintanar, 201 Phil. 205 (1982) — Cited for the proposition that a public market is dedicated to the service of the general public and operated under government control and supervision as a public utility.
• Villanueva vs. Castañeda, Jr., G.R. No. L-61311, 21 September 1987, 154 SCRA 142 — Cited for the proposition that lease contracts contain an implied reservation of the police power as a postulate of the existing legal order, which could be exercised any time to change the provisions of the contracts or even abrogate them entirely.

• Municipal Ordinance No. 25, series of 1983 — The ordinance under which petitioners were granted lease contracts to occupy and operate stalls in the public market of Pasig.
• Municipal Ordinance No. 56, series of 1993 — The new ordinance prescribing the rules and regulations in occupying and using market stalls, which required the submission of new application forms and payment of a performance bond, and which repealed the 1983 ordinance. The Court held that its enactment was a valid exercise of police power.
• RA 7829 — The law that converted the municipality of Pasig into a highly urbanized city known as the City of Pasig, enacted on December 8, 1994.
• Non-Impairment Clause (Constitution) — The Court held that the non-impairment clause is subject to and limited by the paramount police power, and thus was not violated by the enactment of the new ordinance.

Puno, J. (Chairperson), Sandoval-Gutierrez, J., Azcuna, J., and Garcia, J. concurred in the decision.

N/A — No dissenting opinions were noted in the provided text.