CEFERINO ESTEBAN, GERONIMO CASTRO, ANDREA G. GALINDEZ, MARIA B. RONQUILLO, ISABEL ALEJO, ANACLETO MARANAN, FELIPE GARCIA, ELEONOR P. VELAYO, HERMOGENES G. DOMINGO, ALICIA GUZMAN…

In the pleading with which this case was initiated, entitled “Petition
for declaratory judgment, injunction, etc.,” the nineteen (19)
plaintiffs who are holders of stalls or “plats” in the market site of
the City of Cabanatuan, claiming to act on their behalf and that of
other stallholders belonging to their class, prayed the Court of First
Instance of Nueva Ecija to “enjoin the City of Cabanatuan and all its
high officials from enforcing, or acting on, * * * Ordinance No. 12,
series of 1956, pending this law suit”; to allow “the plaintiffs to
continue paying the defendant their rentals at the old or usual rates”;
to “declare said ordinance null and void for being ultra vires and
unconstitutional”; to “apply all their payments made in April and May
or June to the several months they may equitably apply at the old
rates”; and to grant “such other reliefs the Court may deem fair and
reasonable as a court of equity.”

Soon after the filing of
said petition, the lower court issued the writ of preliminary
injunction therein prayed for, upon the filing of a P1,000.00 bond.

Subsequently, four (4) other holders of stalls or “lots,” in said
public market, namely, Juanita Rabosa, Eustaquia de la Cruz, Eugenia
Aguirre and Gloria Garcia, were allowed to intervene and join the
original petitioners. In due course, judgment was rendered, thereafter,
dismissing plaintiffs’ complaint, as well as the complaint in
intervention, with costs, and dissolving said writ of preliminary
injunction. Plaintiffs appealed to the Court of Appeals, which,
however, certified the case to Us, inasmuch as the validity of a city
ordinance is in issue therein.

The main facts are set forth in the decision appealed from, from which we quote:

“The
City of Cabanatuan is the owner of a block located in the heart of the
City used as a market site. It is bounded by Paco Roman, Melencio, and
Sanciangco Streets and Burgos Avenue. This is leased to stallholders by
the City. A sketch plan, Exhibit A, indicates the division of the
market site. Plaintiffs are stallholders on Melencio and Sanciangco
streets and their names are indicated in the sketch, Exhibit A. Stalls
without names indicate that the holders thereof are not questioning the
validity of reasonableness of Ordinance No. 12.

“For
several years prior to the approval of Ordinance No. 12 by the
Municipal Board of the City of Cabanatuan on March 21, 1956, plaintiffs
had been occupying”, as lessees, stalls on Melencio and Sanciangco
streets as indicated in the plan, Exhibit A. It does not clearly appear
whether they have written contracts of lease with the City of
Cabanatuan. Be that as it may, it has not been shown that if they have
such contracts, the period had not expired. Since the rental under
Ordinance No. 48, series of 1945 and Ordinance No. 22, series of 1949
was paid by the month, it must be deemed that the lease contract was
from month to month. Under Ordinance 48, series of 1945, the plaintiffs
paid P.20 per square meter per month on the lots occupied by them. This
was raised to P.30 a month by Ordinance No. 22, series of 1949; On
March 21, 1956, the Municipal Board of Cabanatuan City passed and
approved Ordinance No. 12, series of 1956, raising the rentals on
Burgos Avenue and Paco Roman Street from P.035 and P.034, respectively,
per square meter to P.05 per square meter a day, and lots on Melencio
and Sanciangco Streets to P.03 and P.04 per square meter beginning June
1, 1956 to July 31, 1956 and after July 31, 1956 to P.05 per square
meter per day. The validity of this ordinance is challenged by the
plaintiffs as unreasonable and confiscatory and, therefore, null and
void.”

At the outset, we note that
plaintiffs contest the legality of the ordinance in question upon the
ground that the rates therein fixed are unreasonable. This claim is, in
turn, predicated upon the theory that a municipal ordinance, to be
valid, “must relate to a subject within the scope of the corporation;
it must be in harmony with the constitution, the laws and treaties of
the state, the municipal charter and the general principles of common
law and equity, * * * it must be reasonable in its terms; and it must
be enacted in good faith, in the public interest alone.” (Appellants’
brief, p. 10.) The foregoing statement must be qualified. It is, more
or less, an expression of the rule governing the validity of municipal
ordinance enacted in the exercise of the police power, under which
most, but not all, ordinances as well as laws, fall. Hence, the
amount of license fees, whether imposed by the national government or
by local governments must be reasonable.

Certain exactions,
imposable under an authority other than police power, are not subject,
however, to qualification as to the amount chargeable, unless the
Constitution or the pertinent laws provide otherwise. For instance, the
rates of taxes, whether national or municipal, need not be reasonable,
in the absence of such constitutional or statutory limitation.
Similarly, when a municipal corporation fixes the fees for the use of
its properties, such as public markets, it does not wield the police
power, or even the power of taxation. Neither does it assert
governmental authority. It exercises merely a proprietary function.
And, like any private owner, it is—in the absence of the aforementioned
limitation, which does not exist in the Charter of Cabanatuan City
(Republic Act No. 526)—free to charge such sums as it may deem best,
regardless of the reasonableness of the amount fixed, for the
prospective lessees are free to enter into the corresponding contract
of lease, if they are agreeable to the terms thereof, or, otherwise,
not enter into such contract.

Needless to say, the
authorities relied upon by the plaintiffs are not in point. The
Association of Customs Brokers, Inc. & G. Manlapit Inc. vs. Municipal Board of Manila, 93 Phil., 107; 49 Off. Gaz. (5) 1803 and Philippine Motors Association vs.
City Assessor of Manila, G. R. No. L-4442 (May 22, 1953), referred to
an ordinance taxing motor vehicles operating within the City of Manila,
which was declared unconstitutional because it was not a property tax
and it violated the Motor Vehicles Law, (Act No. 3992), apart from
being discriminatory. The case of Yick Wo vs. Hopkins (118 U.
S. 356) involved an ordinance, enacted in the exercise of the police
power, regulating the operation of laundries. In short, the
reasonableness of the amount charged for the use of patrimonial
property was not vital to the validity of the ordinances in issue in
said cases.

In any event, sections 1, 2 and 3 of the ordinance in question provide:

“Section 1. RENTALS OF MARKET LOTS.—Unless
otherwise changed by the Municipal Board, the City Treasurer shall
collect the following rents on the following market lots:

‘(a)
Lessees of lots fronting Burgos Avenue and Paco Roman Street who are
now paying P0.035 and P0.034 respectively per square meter a day shall
pay P0.05 per square meter a day;

‘(b) Lessees
of lots fronting Paco Roman, Melencio and Sanciangco Streets who are
now paying P0.01 per square meter a day shall pay P0.03 per square
meter a day. This rate of P0.03 shall be P0.04 beginning June 1, 1956
up to July 31, 1956 and P0.05 thereafter.’

“Section 2. RENTALS OF OTHER CITY LOTS.—Unless
otherwise changed by the Municipal Board, the City Treasurer shall
collect the following rentals on the following City Lots which are not
market lots:

‘(a) Lessees of lots fronting Burgos Avenue who are now paying P0.01 per square meter a day shall pay P0.03 per square meter a day;

‘(b)
Lessees of lots fronting Melencio Street who are now paying P0.01 per
square meter a day shall pay P0.03 per square meter a day; and

‘(c)
Lessees of lots fronting Rizal Street who are now paying P0.05 per
square meter a month shall pay P0.02 per square meter a day.’
(Ordinance No. 12, supra, Rec. on Appeal, pp. 7-8.)

“Section
3.—POLICY OF GOVERNMENT.—Henceforth, no person or persons shall be
permitted, directly or indirectly, to lease any lot or lots within the
public market with an area exceeding twenty-four (24) square meters,
that is, 4 m. x 6 m. All lessees of market lots or spaces now paying or
who will pay P0.05 per square meter a day under the provisions of
Section 1 hereof shall pay P0.10 a day beginning January 1, 1957 for
every square meter they are now occupying and may occupy in excess of
twenty-four (24) square meters. (Ordinance No. 12, supra, Rec. on Appeal, p. 8.)”

Referring to the question whether the rentals thus fixed are
unreasonable and discriminatory or not, the lower court lucidly stated:

“*
* * The main argument of plaintiffs is that the raising of fees from
P0.01 per square meter per day to P0.03 daily, and thereafter to P0.04
beginning June 1, 1956, and then P0.05 beginning July 1, 1956, is
unreasonable, abusive, prohibitive and unwarranted- At first blush, the
raise being sudden and abrupt, it would seem that plaintiffs’
contention is tenable. But a comparison with the rentals paid by other
stallholders in the same market site reveals that the City of
Cabanatuan is only charging stallholders on Melencio and Sanciangco
Streets the same rates which are charged to other stallholders in the
same market site, and which these stallholders had been paying prior to
the approval of Ordinance No. 12 on March 21, 1956. As early as 1945
stallholders on Paco Roman Street were paying P.035 per square meter
per day and those on Burgos Avenue were paying P0.034 per square meter.
This was the rate they were paying up to the approval of Ordinance No.
12. All the while, from 1945 to April 1, 1956, stallholders on
Sanciangco and Melencio Streets were enjoying a rare privilege in that
they were paying only 2/3 of a centavo per square meter per day from
1945 to 1949, and P.01 per square meter from 1949 up to the approval of
Ordinance Nos. 12 on March 21, 1956. And it is to be noted that
Melencio and Sanciangco Streets appear to be the busier section because
these streets are bus terminals. The reason for this rate privilege
enjoyed by the stallholders on Melencio and Sanciangco Streets was that
prior to the election of November, 1955, there were two members of the
Municipal Board of Cabanatuan City who were stallholders on Melencio
and Sanciangco Streets. While it does not appear from the evidence that
those two members of the board had obstructed the increase in rentals,
the records do show that notwithstanding the recommendation of the City
Treasurer to the Municipal Board in 1952, to raise the rentals on Paco
Roman and Sanciangco Streets to P.05 per square meter a day, the
recommendation remained unacted. After the election of 1955, those two
members of the Municipal Board ceased to be members of the Municipal
Board. Again, the City Treasurer recommended to the Municipal Board
that the rentals on the market site be raised, Exhibit 1. Acting upon
this recommendation of the City Treasure, Ordinance No. 12 series of
1956, raising the rentals, was approved by the Municipal Board.

“For
over about 10 years, the stallholders on Burgos Avenue and Paco Roman
street were paying P0.034 and P0.035 per square meter a day. This must
be conclusively presumed justified and reasonable for there had been no
protest and no question as to their reasonableness had been raised by
the stallholders on these streets. It stands to reason that the same
rate would be reasonable on Melencio and Sanchiangco Streets, more so,
because these two streets appear to be busier streets. With the passing
years it may be presumed that land values went up and population
increased. The increase of rentals from P.035 per square meter to P.05
cannot be said unreasonable nor oppressive. And the best evidence that
it is not so is that none of the stallholders on Burgos Avenue had
questioned the reasonableness of the ordinance, and of all the
stallholders of Paco Roman Street, only one raised the question. Inside
the market site, the lowest fee is P.05 per square meter a day, the
highest being P0.10. These rates, notwithstanding, it appears that
business continue to flourish inside the market and on Paco Roman
Street and Burgos Avenue. And notwithstanding the approval of Ordinance
No. 12, there are many applicants for the lease of stalls on Melencio
and Sanciangco Streets. If the fees charged by the City of Cabanatuan
were out of proportion to the flow of business, as to leave no
reasonable profits, operators of stalls inside the market site and on
Paco Roman Street and Burgos Avenue would have abandoned their business
and stalls long before the approval of Ordinance No. 12. The fact is
that all these stallholders on Paco Roman and Burgos Avenue and those
inside the market site have continued to pay the fees charged by the
City of Cabanatuan without any protest. Stallholders on Sanciangco and
Melencio Streets must have realized bigger profits considering the
privilege they enjoyed. It is the loss of a part of this profit that
led the plaintiffs to question the validity and reasonableness of the
ordinance. If anyone had a right to protest, it is those stallholders
inside the market and on Paco Roman Street and Burgos Avenue who had
been discriminated upon prior to the approval of Ordinance No. 12.
Ordinance No. 12 does nothing more than to equalize the fees imposed
upon stallholders and to correct an injustice which had been existing
for over ten years. The privilege they have been enjoying for over 10
years was merely taken away by the Municipal Board.”

Upon a review of the record, we find ourselves fully in agreement with the foregoing views of His Honor, the Trial Judge.

It is urged, however, that:

“The
lower court erred in barring the presentation of testimonial evidence
tending to show the keen competition being met by appellants’ business
from the business of stallholders inside the market and that of the
storekeepers or business establishments along the opposite side of the
streets, for which reason appellants’ business is slack and poor, a
condition that will ultimately drive them away from pursuing their only
means of livelihood if and when the provisions of the ordinance are
applied to them.”

There is no merit in this
pretense. The bigger number of stores and other business enterprises
being allegedly established and operated along the side of the streets
opposite to that in which appellants’ stalls, plats or lots are
situated, would merely indicate the growing importance of, and volume
of the traffic in said streets, and justify the increase in the rentals
complained of.

Wherefore, the decision appealed from is hereby affirmed, with costs against the plaintiffs-appellants. It is so ordered.

Paras, C. J., Bengzon, Montemayor, Bautista Angelo, Labrador, Barrera, and Gutierrez David, JJ., concur.

Reyes, J.B.L., and Endencia, JJ., took no part.