CASE DIGEST: Villanueva et al. v. Castañeda et al. (G.R. No. L-61311)

G.R. No. L-61311 September 2l, 1987

HON. MARIANO CASTAÑEDA, JR., Presiding Judge of the Court of First Instance of Pampanga, Branch III, VICENTE A. MACALINO, Officer-in-Charge, Office of the Mayor, San Fernando, Pampanga, Respondents.

Facts: In 1961, the municipal council of San Fernando adopted a resolution authorizing members of Fernandino United Merchants and Traders Association to construct permanent stags and sell along Mercado Street. Petitioned by the Municipality, the Court of First Instance of Pampanga issued a writ of preliminary injunction that prevented defendants from constructing the said stalls until the final resolution. While the case was pending, the municipal council adopted a resolution that the subject area be returned to its original purposes as a parking place and a public plaza, thereby implicitly revoking the resolution authorizing the stags in the area. After an investigation, a resolution for the demolition of the stalls was issued. Petitioners filed a petition for prohibition with the Court of First Instance of Pampanga, which was denied even after motion to reconsider.

In the SC, the petitioners contended that they entered into a contract of lease with the municipal government, first in 1961 insofar as the original occupants were concerned, and later paying daily fees by virtue of space allocation in favor of them. The municipal government denied making such agreements. They argue that even assuming the validity of the collected fees daily, it could be terminated at any day as the claimed rentals indicated that the period of the leases was from day to day.

Issue: Is the contract of lease valid, considering that the object is a public plaza owned by a municipal government?

Held: No, the contract of lease is not valid because the object is a public plaza which is outside the commerce of men.

In contracts, one of the elements is a licit object. It must be capable of appropriation by men. Those outside the commerce of men, such as a public plaza, cannot be the object of a contract.

Here, the stalls being in a public plaza, even an allegation of the existence of a lease contract or daily payments is not enough. In fact, the act of the municipality of restoring the plaza to its original purpose is in line with law and with the exercise of police power for the general welfare. Hence, the contract is void.