G.R. No. L-29819. April 14, 1972.
CHAMBER OF FILIPINO RETAILERS, INC., NATIONAL MARKET VENDORS ASSOCIATION, INC., AMBROSIO ILAO, and CRISPIN DE GUZMAN, petitioners-appellants, vs. HON. ANTONIO J. VILLEGAS, as Mayor of THE CITY OF MANILA, respondents-appellees.

FACTS

Petitioners, market vendors and their associations, sought to prohibit the enforcement of Manila City Ordinance No. 6767, which increased market stall fees. They argued that the City Charter ( Republic Act No. 409 ) only authorized the City to collect “fees” for the use of public markets, which should be limited to covering the costs of supervision, maintenance, and regulation. They contended that the ordinance, by imposing substantially higher rates, transformed these fees into a revenue-generating tax, which the City had no power to impose under its charter for that purpose.
The case was submitted for decision on the pleadings. The primary contention was that the City’s power to fix market fees under its charter was a governmental function, limiting charges to cost recovery. The petitioners further argued that as a public utility, the City could not fix rates for its public markets without the prior approval of the Public Service Commission.

ISSUE

The core issue was whether the City of Manila had the legal authority to impose market stall fees at rates designed to generate revenue, beyond mere cost recovery for supervision and maintenance.

RULING

The Supreme Court upheld the validity of Ordinance No. 6767 and affirmed the lower court’s decision. The Court rejected the petitioners’ arguments on two principal grounds. First, the Court clarified that the City’s authority was not confined by its original charter. The Local Autonomy Act ( Republic Act No. 2264 ) broadly granted chartered cities the power to impose municipal license taxes or fees upon persons engaged in any occupation or business. Since market vendors are engaged in business, the City could legally impose fees for revenue purposes under this subsequent law.
Second, the Court characterized the transaction between the City and a stallholder as a lease of patrimonial property, not merely a regulatory permit. The City Charter itself referred to collections from markets as “rents.” In exercising this proprietary function, the City, like any private property owner, is free to determine the lease rates. The stallholder’s payment secures the exclusive use of a specific space for a period, constituting a contractual lease agreement. The Court also held that public markets, while a public service, are not among the utilities under the jurisdiction of the Public Service Commission. Therefore, the City did not need the Commission’s approval to fix the stall fees. The ordinance was a valid exercise of the City’s proprietary and taxing powers.