G.R. No. L-37389 August 31, 1973
FELICIDAD MEJORADA, ET AL., petitioners-appellants, vs. THE MUNICIPAL COUNCIL OF DIPOLOG, ET AL., respondents-appellees.

FACTS

Petitioners, Felicidad Mejorada and others, were the holders and occupants of ordinary stalls Nos. 37 and 38 in the public market of Dipolog, Zamboanga del Norte, under a lease arrangement without a fixed term. The Municipal Council of Dipolog passed Resolution No. 73 on February 27, 1964, which converted these stalls into meat stalls and directed petitioners to vacate by March 31, 1964. The council’s stated purpose was public welfare and increased municipal revenue, citing the need to expand the market’s meat section due to the stalls’ proximity to it.
Petitioners filed a petition for declaratory relief in the Court of First Instance, assailing the resolution as unconstitutional for impairing the obligation of contracts and for being oppressive and discriminatory. They secured a preliminary injunction against the resolution’s enforcement. The parties subsequently submitted the case on a stipulation of facts. The lower court rendered a decision on August 12, 1964, upholding the resolution’s validity and dissolving the injunction. Petitioners appealed to the Court of Appeals, which certified the appeal to the Supreme Court as it involved purely legal questions on constitutionality.

ISSUE

Whether Municipal Resolution No. 73 is unconstitutional for impairing contractual obligations and for being oppressive and discriminatory.

RULING

The Supreme Court affirmed the lower court’s judgment, finding the resolution constitutional and valid. The Court held that petitioners’ leasehold rights were not absolute or perpetual. Since petitioners paid monthly rentals of P10.00 without a fixed period, their lease was deemed on a month-to-month basis pursuant to Article 1687 of the Civil Code. Consequently, the municipal council acted within its legislative and police power authority in terminating the lease arrangement upon proper notice to reallocate the stalls for a public purpose.
The Court reiterated the settled doctrine that courts will not lightly invalidate legislative actions, such as municipal resolutions, unless a clear invasion of personal or property rights under the guise of police regulation is demonstrated. Here, the resolution was enacted in the interest of public welfare—to rationally reorganize the market layout for efficiency and to generate higher revenue for the municipality. Petitioners failed to present evidence proving oppression or discrimination, especially since they were given the opportunity to participate in the public bidding for the newly converted meat stalls. The presumption of validity in favor of the council’s action, as the elected body familiar with local necessities, stands. A procedural side-issue raised by petitioners regarding pre-trial was dismissed as unmeritorious and barred by estoppel.