Municipality of Cavite vs. Rojas

A municipal corporation cannot validly lease a portion of a public plaza for private use, because property for public use is outside the commerce of man and cannot be the object of a contract; any such lease is null and void ab initio.

The Municipality of Cavite, duly organized under Act No. 82, exercised control and administration over streets, plazas, and public places within its jurisdiction. By section 3 of Act No. 1039 of the Philippine Commission, enacted January 12, 1904, the municipality was granted all land included in the tract called Plaza Soledad, a public promenade. In a prior case, Nicolas vs. Jose, the Supreme Court had already ruled that Plaza Soledad belonged to the municipality but was not transferable property inscriptible in the municipality's name, because the intention of Act No. 1039 was that the plaza be kept open for public transit.

The Municipality of Cavite, acting through the provincial fiscal, filed a complaint on December 5, 1911, as amended on March 14, 1912, alleging that it had exclusive right, control, and administration over the streets, lanes, plazas, and public places of the municipality, as successor to the rights held under the late Spanish government and by virtue of Act No. 1039. The complaint stated that defendants Hilaria Rojas and her husband Tiung Siuko occupied a parcel of land approximately 93 square meters in area forming part of the public plaza known as Soledad, pursuant to a lease secured from the municipality. Under the lease, the defendants paid a rental of ₱5.58 per quarter in advance and were obligated to vacate the land within sixty days after demand. The municipality had demanded that the defendants vacate, but more than sixty days had elapsed without compliance. The municipality contended that the lease was ultra vires and therefore null and void, because the land was an integral portion of a public plaza of public domain and use, and the municipal council had never had authority to withdraw it from public use and lease it to a private party.

In their answer of April 10, 1912, the defendants admitted some allegations but denied that the parcel formed an integral part of Plaza Soledad or that the lease was null and void. They asserted that they had acquired the right of possession. As a special defense, they alleged that under the lease they could only be ordered to vacate when the municipality needed the land for decoration or other public use, which they claimed did not apply. In a cross-complaint, they alleged that they had erected a house of strong materials on the land, assessed at ₱3,000, constructed under a license secured from the municipality, and that if ordered to vacate they would suffer damages in that amount. They prayed for absolution from the complaint or, in the alternative, indemnification of ₱3,000 as damages plus costs.

The evidence established that upon application by Hilaria Rojas, the municipal council of Cavite, by Resolution No. 10 dated July 3, 1907, leased to her some 70 or 80 square meters of Plaza Soledad, on condition that she pay rent quarterly in advance pursuant to Ordinance No. 43 and vacate within sixty days after notification. Rojas had paid the land tax on the house erected on the lot. A plan prepared by a naval engineer, submitted as evidence by the plaintiff, showed that the defendant's house stood on ground forming part of the promenade called Plaza Soledad, which was corroborated by the testimony of the plaintiff's witnesses. The trial court nonetheless dismissed the complaint, declaring that the municipality had no right to require the defendants to vacate.

• Ultra Vires Lease: The Municipality argued that the lease was ultra vires and therefore ipso facto null and void, because the land was an integral portion of a public plaza of public domain and use, and the municipal council never had power or authority to withdraw it from public use and lease it to a private party for private benefit.
• Ejectment Right: The Municipality contended that because the lease was void, the defendants never had any right to occupy or retain the land, and their occupation was illegal, entitling the municipality to recover possession.

• Valid Leasehold: The defendants denied that the parcel formed part of Plaza Soledad and denied that the lease was null and void, asserting they had acquired the right of possession.
• Condition for Ejectment: The defendants argued that under the lease, they could only be ordered to vacate when the municipality needed the land for decoration or other public use, a condition they claimed did not apply.
• Damages for Improvements: The defendants cross-claimed that they had erected a house of strong materials valued at ₱3,000 under a license from the municipality, and sought indemnification of ₱3,000 if ordered to vacate, plus costs.

• Validity of Lease: Whether the lease executed by the Municipality of Cavite over a portion of Plaza Soledad to a private party is valid.
• Ejectment: Whether the defendants may be ordered to vacate the land and restore possession to the municipality.
• Damages: Whether the defendants are entitled to indemnification for the house they constructed on the leased land.

• Validity of Lease: No. The lease is null and void because the land is an integral portion of a public plaza, which is property for public use and outside the commerce of man, and thus cannot be the object of a contract under Article 1271 of the Civil Code.
• Ejectment: Yes. Because the lease is void ab initio, the defendants must restore and deliver possession of the land to the municipality, which in turn must return all rentals collected.
• Damages: No. Because the contract is null and void in its origin, it can produce no effect, and the defendants are not entitled to claim indemnity for damages arising from removal of their house.

• Validity of Lease: Article 344 of the Civil Code defines property for public use in provinces and towns as including provincial and town roads, squares, streets, fountains, public waters, promenades, and public works of general service. Plaza Soledad is a promenade for public use. The municipal council of Cavite could not in 1907 withdraw or exclude a portion thereof from public use in order to lease it for the sole benefit of a private party. In leasing a portion of the plaza, the municipality exceeded its authority by contracting over a thing of which it could not dispose. Article 1271 of the Civil Code provides that everything outside the commerce of man may not be the object of a contract, and plazas and streets are outside this commerce, as held by the Supreme Court of Spain in its decision of February 12, 1895. The prior ruling in Nicolas vs. Jose further established that Plaza Soledad was intended by Act No. 1039 to be kept open for public transit and was not transferable property of the municipality. Therefore, the lease contract (Exhibit C) is null and void for being contrary to law and for involving a thing that cannot be the object of a contract.
• Ejectment: Under Article 1303 of the Civil Code, when a contract is null and void, the parties must restore to each other the things which have been the subject matter of the contract. Accordingly, the defendant must restore and deliver possession of the land to the municipality, and the municipality must return all sums received as rentals once the land is restored.
• Damages: Because the lease is null and void in its origin, it can produce no effect. The defendants' claim for indemnity for the house they constructed on the land fails, as there is no valid contractual basis for such a claim arising from a void lease. The defendants built their house under a license from the municipality, but this does not cure the fundamental nullity of the lease over public property devoted to public use.

• Property for Public Use Outside Commerce — Property for public use, such as plazas, streets, promenades, fountains, and public waters, is by its very nature outside the commerce of man and cannot be the object of a contract. A municipal corporation has no authority to withdraw such property from public use and lease it to a private party for private benefit. Any lease so executed is ultra vires and null and void ab initio. The Court applied this doctrine by holding that the Municipality of Cavite's lease of a portion of Plaza Soledad to Hilaria Rojas was void, the plaza being a promenade for public use under Article 344 of the Civil Code and Act No. 1039.
• Restitution Upon Nullity of Contract — When a contract is declared null and void, the parties must restore to each other the things that have been the subject matter of the contract, pursuant to Article 1303 of the Civil Code. The Court applied this by ordering the defendant to return possession of the land and the municipality to return all rentals collected.

• "Communal things that cannot be sold because they are by their very nature outside of commerce are those for public use, such as the plazas, streets, common lands, rivers, fountains, etc." — This quotation, drawn from the decision of the Supreme Court of Spain of February 12, 1895, articulates the canonical formulation of the principle that property for public use is outside the commerce of man and cannot be alienated or leased.
• "In leasing a portion of said plaza or public place to the defendant for private use the plaintiff municipality exceeded its authority in the exercise of its powers by executing a contract over a thing of which it could not dispose, nor is it empowered so to do." — This passage states the ratio decidendi: a municipal corporation acts ultra vires when it leases public plaza land for private use, because it contracts over property it cannot dispose of.

• Nicolas vs. Jose, 6 Phil. Rep. 589 — Controlling precedent. The Court had previously held that Plaza Soledad belonged to the Municipality of Cavite but was not transferable property inscriptible in the municipality's name, because Act No. 1039 intended the plaza to be kept open for public transit. This ruling was relied upon to confirm that the defendants had no right to occupy the leased land, as it was an integral portion of a public plaza reserved for public use.
• Decision of the Supreme Court of Spain, February 12, 1895 — Persuasive authority cited for the proposition that communal things for public use, such as plazas and streets, are by their nature outside the commerce of man and cannot be sold.

• Article 344, Civil Code (Spain) — Defines property for public use in provinces and towns as comprising roads, squares, streets, fountains, public waters, promenades, and public works of general service. Applied to classify Plaza Soledad as a promenade for public use.
• Article 1271, Civil Code (Spain) — Provides that everything outside the commerce of man may not be the object of a contract. Applied to hold that the lease of a public plaza was void, as plazas are outside the commerce of man.
• Article 1303, Civil Code (Spain) — Provides that upon nullity of a contract, the parties must restore to each other the things that have been the subject matter of the contract. Applied to order mutual restitution: the defendant to vacate the land and the municipality to return rentals.
• Section 3, Act No. 1039, Philippine Commission — Granted to the Municipality of Cavite all land included in the tract called Plaza Soledad, with the intention that the plaza be kept open for public transit. Applied to establish that the plaza was reserved for public use and not transferable property.

Arellano, C.J., Johnson, J., and Araullo, J., concurred. Moreland, J., concurred in the result.