RICARDO PARDO Y PUJOL, PLAINTIFF AND APPELLANT, VS. THE MUNICIPALITY OF GUINOBATAN, DEFENDANT AND APPELLEE.

This is an appeal taken by the plaintiff, Ricardo Pardo y Pujol, from the
judgment of the Court of First Instance of Albay, the dispositive part of which
reads as follows:

“Upon the forgoing considerations, the complaint is hereby dismissed, afld it
is held that the plaintiff is not entitled to such income as may be derived from
the market of Guinobatan for a period of six years, seven months, and sixteen
days, beginning on July 30, 1928; and the preliminary injunction issued is
hereby dissolved. The defendant’s counterclaim is also dismissed, without
special pronouncement as to costs.”

In support of his appeal, the appellant assigns the following alleged errors
as committed by the court below in the judgment appealed from, to wit:

“1. In finding that the plaintiff’s claim was decided on December 18, 1920,
in civil case No. 2603 of Albay.

“2. In finding that the plaintiff attempted to sell to the defendant
corporation the remainder of the term of his franchise for the sum of
P1,500.

“3. In finding that one of the principal causes why the plaintiff, delayed
the reconstruction of the public market was his lack of funds for that
purpose.

“4. In finding that the defendant municipality had no power to authorize the
plaintiff to complete the full term of his franchise; and that its contract so
to do, was null and void.

“5. In finding that the plaintiff had no right to complete the enjoyment of
the full term of 40 years’ franchise interrupted from 1912 to 1918.

“6. In failing to find that the plaintiff is entitled to continue the
enjoyment of his right of exclusive public market for 6 years, 7 months, and 16
days.

“7. In failing to grant the final injunction as prayed for by the
plaintiff.”

The present case originated in a complaint filed by the plaintiff, Ricardo
Pardo y Pujol, against the municipality of Guinobatan, praying, for the reasons
given: (a) That a preliminary injunction be issued against the defendant
municipality, its president, vice-president, councillors, secretary, treasurer,
constables, and other employees and officials, restraining them from depriving
the plaintiff of his right to the income derived from the public market of
Guinobatan ; (6) that after due hearing the injunction be declared final for a
period of six years, seven months, and nine days; and (c) that the plaintiff be
granted any other adequate remedy, with costs against the defendant.

The
defendant filed an amended answer on October 14, 1929, denying generally and
specifically each and every allegation in the complaint, and setting up five
special defenses, and one counterclaim. The defendant prays that the complaint
be dismissed, dissolving the preliminary injunction issued, and that the
plaintiff be ordered to make the necessary repairs on the rebuilt old market of
Guinobatan so as to make it sanitary, or, in default thereof, to pay the
defendant the amount necessary to have such repairs made, that is, P1,500; to
return possession of said building to the defendant and to reimburse to it the
amount collected as rent from August 1, 1928 to the middle of November, 1928,
that is, P1,500, with costs.

For the determination of the questions raised in this appeal the following
facts, established by a preponderance of the evidence, must be stated:

On August 4, 1888, Ricardo Pardo y Cabanas, father of the plaintiff and
appellant, Ricardo Pardo y Pujol, obtained from the former Spanish Government an
administrative franchise (Exhibit A) to build and control a public market on his
land, situated in the municipality of Guinobatan, Province of Albay, with the
privilege of enjoying the rent thereof for a period of forty years, after which
both the market building and the lot, as well as the subsequent rent, would
become the exclusive property of said municipality.

On July 30, 1888, the building was completed; it was thrown open to the
public with the due approval of the government, and the period of forty years
began to run. (Exhibit C.)

On January 2, 1912, the building was totally destroyed by fire.

On January 31 of the same year, the municipal council of Guinobatan, through
resolution No. 17, series of 1912, granted to one Francisco Olaguera, as the
highest bidder, the privilege of establishing and controlling a public market
for a period of four years at an annual rental of P1,500.

On March 30, 1912, the said municipal council of Guinobatan, by means of
resolution No. 51, series of 1912, authorized its president to offer the
plaintiff, Ricardo Pardo y Pujol, the amount of P1,500 to waive his exclusive
right to establish the market.

On April 16, 1912, the plaintiff, Ricardo Pardo y Pujol, signified his
willingness to accept the offer, but payment had to be deferred on account of
the difficulty in raising the necessary amount. (Exhibit B; resolutions Nos. 57
and 58, series of 1912.)

On April 30, 1912, one Vergo D. Tufexis, a judgment creditor of the
plaintiff, notified the municipal council of Guinobatan that he had acquired, at
a judicial sale made by the sheriff on September 30, 1911, the right of the
plaintiff to operate a market granted in said franchise, so that the council had
to suspend the effects of the aforementioned resdlution No. 51. (Exhibit B;
resolution No. 61, series of 1912.)

On August 31, 1912, the municipal council of Guinobatan resolved to construct
a modern market, indemnifying the plaintiff, Ricardo Pardo y Pujol, for the
rescission of his franchise. (Exhibit B; resolution No. 134, series of
1912.)

On July 31, 1913, the municipal councilpaid Francisco Olaguera the sum of
P1,000 for the rescission of his contract of lease of the market, which was to
expire on February 1, 1916 (Exhibit B; resolutions Nos. 114, 119, 122, and 130,
series of 1913), pursuant to a satisfactory settlement of his claim against the
municipality of Guinobatan in civil case No. 1801. (Exhibit D.)

On November 26, 1914, the modern market of the municipality of Guinobatan was
thrown open to the public (Exhibit B; resolution No. 180, series of 1914) in a
different place, and it remained as a public market belonging exclusively to the
municipality of Guinobatan.

On December 24, 1915, this court rendered the judgment in G. R. No. 9865,
civil case No. 1804 of the Court of First Instance of Albay, entitled Tufexis
vs. Olaguera and Municipal Council of Guinobatan, affirming the order
of the lower court sustaining the demurrer set up by the municipality of
Guinobatan on the ground that the plaintiff had not set up in his complaint
facts sufficient to constitute a cause of action.^[1]

On or about May 10, 1917, the herein plaintiff and appellant, Ricardo Pardo y
Pujol, went to the house of building contractor Constantino Stamatalakis to
propose the construction of a market building at the place where the old market
destroyed by fire was located. As the contractor learned that the plaintiff did
not have sufficient funds to pay for the work (Exhibit E, pp. 24 and 25) he
requested the latter to look for other persons who were solvent, and who would
answer directly to said contractor for the cost of the construction of the
building; and to that end the contract Exhibit 7 was executed on May 17, 1917
between Ciriaco Chunaco, Vicente Olmos and Irene Jaucian de del Rosario, on the
one hand, and Constantino Stamatalakis, on the other, whereby the former
undertook severally to pay him the sum of P2,500 for the construction of the
market building.

On July 23, 1917, upon learning that the plaintiff was constructing his
market building, the municipal council of Guinobatan prohibited such
construction and ordered the municipal president to have all the construction
material removed from the premises. (Exhibit B; resolution No. 101, series of
1917.)

On August 11, 1917, the said municipal council of Guinobatan by resolution
No. 113, series of 1917, ordered the plaintiff to remove all construction
material on the site of the old market destroyed by fire within three days, with
the warning that, upon failure to do so, the municipal police would carry out
the order.

On August 16, 1917, the plaintiff filed a petition in the Court of First
Instance of Albay, civil case No. 2603, for a writ of injunction and damages,
praying that the municipal council of Guinobatan be ordered to desist from its
opposition to the plaintiff’s construction of the new market building upon the
site of the old one that was destroyed by fire. (Exhibit E.)

On August 18, 1917, the Court of First Instance of Albay issued a writ of
preliminary injunction, restraining the defendant municipal council from
obstructing the plaintiff’s aforesaid construction. (Exhibit E, page 16.)

On October 31, 1918, the plaintiff Ricardo Pardo y Pujol filed .in the same
court a supplementary complaint for the immediate closure of the modern market
constructed by the municipality of Guinobatan, on the ground that it was
prejudicial to the public market belonging to him, which had been opened to the
public, being a source of ruinous competition. (Exhibit E, page 41.)

On November 23, 1918, the Court of First Instance of Albay ordered the
immediate closure of the aforementioned modern market, and the transfer of all
the stands and stalls therein to the plaintiff’s market. (Exhibit E, pp. 51 et
seq.)

On December 15, 1918, the parties to said civil case No. 2603 entered into an
agreement, approved by the court, whereby the parties waived damages, and the
defendant municipal council undertook to recognize and respect all the rights
and privileges acquired by the plaintiff through administrative franchise
Exhibit A, and accepted all the obligations imposed upon it by said
administrative franchise, and bound itself to obey everything ordered in the
preliminary and final injunctions issued against it by the court. (Exhibit E, p.
84.)

About December 18, 1920, the plaintiff herein again entered ypon the
enjoyment of the privileges and benefits to which he was entitled by virtue of
the aforesaid administrative franchise Exhibit A.

At the plaintiff’s petition, on October 18, 1925, the municipal council of
Guinobatan, through resolution No. 112, series of 1925, granted the plaintiff an
extension of his franchise, which expired on July 30, 1928, of six years, ten
months, and sixteen days, authorizing the municipal president to draw up the
proper document. (Exhibit C, pp. 12, 13.)

On October 14, 1925, the plaintiff and the defendant executed a document
(Exhibit C), approved by the provincial board (Exhibit 2), which included the
aforesaid resolution No. 112, series of 1925.

On November 19, 1925, the municipal council of Guinobatan decided by a
majority of votes to reconsider the said resolution No. 112, series of 1925.
(Exhibit 2.)

On April 28, 1927, said resolution No. 112, series of 1925, was revoked at
the instance of the then Chief of the Executive Bureau, Vicente del Rosario.
(Exhibit 3.) October 21, 1928, at the suggestion of said Chief of the Executive
Bureau, the municipal council of Guinobatan resolved to take immediate
possession of the public market reconstructed by the plaintiff. (Exhibit 5.)

On November 7, 1928, the defendant municipality took possession of the
aforesaid market, ejecting the plaintiff-appellant, Ricardo Pardo y Pujol,
therefrom.

The first question to decide in this appeal is whether the delay in the
reconstruction of the market belonging to the plaintiff, which was destroyed by
fire, and which resulted in the suspension of the use of his franchise until
October 31, 1918, was due to acts of the defendant municipal corporation.

We have seen that the plaintiff could not begin the reconstruction of his
market building until May, 1917, when he found persons who were willing to
guarantee the cost of the work to the contractor. The fact that the defendant
offered to buy out the plaintiff’s rights to the remaining time under the
franchise, and that the sale fell through because the municipal treasury failed
to collect sufficient funds, was not a legal or necessary obstacle to the
plaintiff’s preparation for the reconstruction and completion of his market once
the negotiations for the sale of his rights to the municipality had fallen
through, and the municipality can in no way be held responsible for the
delay.

Furthermore,, the matter of damages sustained by the plaintiff from the
municipality’s interference with the reconstruction of his market has already
been passed upon in the civil case No. 2603 of the Court of First Instance of
Albay, instituted by the plaintiff herein against the defendant herein on August
16, 1917, the judgment being an approval of the agreement entered into by the
parties,in the second clause of which they, respectively waived their claims for
damages and costs. The damages claimed in that case included those sustained by
the plaintiff because of his inability to enjoy the franchise from the time the
fire destroyed the market until it was rebuilt and opened to the public. If this
is so, any liability the defendant might have incurred by depriving the
plaintiff of the use of his franchise during- the time he was unable to
reconstruct his market has already been adjudged in that case, in which he
waived his rights to said damages.

There is therefore no question as to whether the defendant municipality of
Guinobatan is liable for depriving the plaintiff of the use of his franchise
from 1912 to 1917, and even if there were, it would be res
judicata.

The second question to be determined is whether the extension of six years,
ten months, and sixteen days of the plaintiff’s franchise by the municipality of
Guinobatan, which expired on July 30,1928, is legal and valid.

We have seen that the delay in the construction of the plaintiff’s market
building was not attributable to any fault of the defendant municipal
corporation, and that all claims for damages which such corporation might have
caused the plaintiff by interfering with such construction have been definitely
settled in civil case No. 2603, cited supra, so that the period elapsed
from the destruction of the old market to the building of the new one must be
counted against the franchise which expired on July 30, 1928; consequently, the
privilege of six years, ten months, and sixteen days from July 30, 1928, which
the municipality of Guinobatan granted to the plaintiff, could not be regarded
as an extension of his former franchise, but rather as a new franchise. If the
plaintiff’s old franchise expired on July 30, 1928, as the plaintiff himself
impliedly recognized in applying for an additional period, the defendant became
ipso facto the owner of the building and the lot upon which it stands,
in accordance with article 4 of said franchise.

“Art. 4. Upon the expiration of said term, both the land and the building
constructed thereon “shall become the property of and delivered to the
government in good condition.”

If the municipality of Guinobatan already owned the market building
constructed by the plaintiff as well as the lot upon which it was built, said
municipal corporation could not let that market save in accordance with the
legal provisions in force upon the matter.

Section 2319 of the Administrative Code provides as follows:

“Sec. 2319. Letting of municipal ferry, market, or slaughterhouse to highest
bidder.—When any ferry, market, or slaughterhouse belonging to a municipality is
to be let to a private party, the same shall, unless otherwise directed by the
Department Head, be let to the highest and best bidder for the period of one
year or, upon the previous approval of the provincial board, for a longer period
not exceeding five years, under such conditions as shall be prescribed by the
Department Head.”

According to the legal provision just quoted, inasmuch as the market in
question became the property of the municipality of Guinobatan, the latter could
not let it to anyone except by public auction and with the approval of the
provincial board and the Executive Bureau, if the period is for more than one
year, but not to exceed five years. As these requirements of the law were not
complied with in granting the new franchise to the plaintiff, the municipal
ordinance granting the franchise is null and void.

Wherefore, finding no error in the judgment, appealed from, it is hereby
affirmed in toto, with costs against the appellant. So ordered.

Avanceña, C. J., Johnson, Street, Malcolm, Villamor, Ostrand,
Romualdez, and Imperial, JJ., concur.