G.R. No. L-15695; October 31, 1960
Matilde Gaerlan, et al., petitioners-appellees, vs. The City Council of Baguio and Hon. Alfonso Tabora, as Mayor of the City of Baguio, respondents-appellants, Magdalena Caluza, et al., intervenors-appellants.

FACTS

Petitioners Matilde Gaerlan and 15 others, considered by the Market Committee of Baguio City as the only persons to participate in a drawing of lots for 16 stalls in the city’s new market building, sought the nullification of City Council Resolution No. 323 dated November 29, 1956. The resolution awarded Stalls Nos. 16, 20, and 24 to intervenors Magdalena Caluza, Manuela Petilla, and Magdalena Caccam, respectively, before and without a drawing of lots. Petitioners claimed this violated Republic Act No. 37 and Department of Finance Order No. 32. The Court of First Instance of Baguio declared Resolution No. 323 null and void, finding it violated Section 10 of Department Order No. 32, which mandates a drawing of lots before adjudication. The City Council and the intervenors appealed.
The uncontroverted facts show that from 1947 to 1954, the intervenors were cloth-vendors occupying makeshift stalls in the old buildings on the site where the new market was constructed. They vacated upon the city’s requirement, with an assurance from city authorities dated May 14, 1954, that they would be given preferential rights to stalls in the new building. On November 8, 1956, intervenors reminded the city of this assurance. Upon the new building’s completion, but before any drawing of lots, the City Council passed Resolution No. 323, allocating the three specific stalls to the intervenors based on the prior commitment, as they were the former stall holders in the same area.

ISSUE

Whether City Council Resolution No. 323, awarding specific market stalls to the intervenors without a drawing of lots, is null and void for violating the procedure prescribed by Department of Finance Order No. 32.

RULING

No. The Supreme Court reversed the lower court’s decision and upheld the validity of Resolution No. 323.
The Court held that the procedure in Department Order No. 32, specifically the mandatory drawing of lots under Section 10, applies only to the “adjudication of vacant or newly created stalls or booths.” The stalls in question (Nos. 16, 20, and 24) were neither newly created nor vacant. They were not newly created because they merely replaced the old makeshift stalls on the same site due to the new construction. They were not vacant because the intervenors had occupied the same location for years and were displaced solely to facilitate the city’s construction project, with a prior assurance of preferential rights. The resolution did not constitute a new award but merely allowed the intervenors to continue enjoying a privilege that was temporarily interrupted. This action was a valid exercise of the City Council’s authority to regulate city markets under Section 2552(v) of the Revised Administrative Code and was not repugnant to any law.
The Court also noted that the petitioners subsequently participated in and obtained stalls from the drawing of lots for the remaining new stalls on March 11, 1957, and had occupied them since, meaning they suffered no prejudice from the resolution.