Doctrine: A public plaza is beyond the commerce of man and so cannot be the subject of lease or any other contractual undertaking. This is elementary. Any contract covering such properties are null and void.

Facts: The conflict started when the municipal council of San Fernando adopted Resolution No. 218 authorizing some 24 members of the Fernandino United Merchants and Traders Association to construct permanent stalls and sell in the above-mentioned place. The action was protested on November 10, 1961, in Civil Case No. 2040, where the Court of First Instance of Pampanga, Branch 2, issued a writ of preliminary injunction that prevented the defendants from constructing the said stalls until final resolution of the controversy thereby impliedly revoking Resolution No. 218, series of 1961. Four years later, on November 2, 1968, Judge Andres C. Aguilar decided the aforesaid case and held that the land occupied by the petitioners, being public in nature, was beyond the commerce of man and therefore could not be the subject of private occupancy.

Petitioner’s Claim: The basic contention of the petitioners is that the disputed area is under lease to them by virtue of contracts they had entered into with the municipal government, first in 1961 insofar as the original occupants were concerned, and later with them and the other petitioners by virtue of the space allocations made in their favor in 1971 for which they saw they are paying daily fees. 

Respondent’s Claim: That the land in question cannot be the subject of a contract of lease since it forms part of the plaza and is outside the commerce of men. That since the fees were collected daily, the leases, assuming their validity, could be terminated at will, or any day, as the claimed rentals indicated that the period of the leases was from day to day.

Issue: Whether or not petitioners’ claim of right over the subject land is valid?

Held: The court ruled on the negative. A public plaza is beyond the commerce of man and so cannot be the subject of lease or any other contractual undertaking. Everything which is not outside the commerce of man may be the object of a contract, and plazas and streets are outside of this commerce. Petitioners had no right in the first place to occupy the disputed premises and cannot insist in remaining there now on the strength of their alleged lease contracts. As officer-in-charge of the office of the mayor, he had the duty to clear the area and restore it to its intended use as a parking place and public plaza of the municipality of San Fernando, conformably to the aforementioned orders from the court and the council. It is, therefore, not correct to say that he had acted without authority or taken the law into his hands in issuing his order. Even assuming a valid lease of the property in dispute, the resolution could have effectively terminated the agreement for it is settled that the police power cannot be surrendered or bargained away through the medium of a contract. In fact, every contract affecting the public interest suffers a congenital infirmity in that it contains an implied reservation of the police power as a postulate of the existing legal order.

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