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. Villanueva v. Castaneda, 154 SCRA 142 (1987)
The case involved a strip of land near a public market on which stands a conglomeration of vendor stalls known as talipapa. Said vendors were authorized by Sanggunian resolution to operate. This was protested in a civil case causing an injunction. Pending case, municipal council adopted a new resolution which declared the subject area “the parking space and as the public plaza of the municipality”. The CFI made the injunction permanent. However, the decision apparently was not enforced because the occupants were never evicted. Stall owners were even made to enter a lease agreement with the municipal government. After some time, clamor was raised to restore the area into its public use. The office of the mayor attempted to demolish the stalls. The stall owners filed a petition for prohibition but was denied.
Whether or not the stall owners may validly invoke the non-impairment clause as against the action to restore the area for public use.
No. Petition must be denied because the non-impairment clause does not apply here.
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. Applying this well-settled doctrine, the Supreme Court ruled that the petitioners had no right in the first place to occupy the disputed premises and cannot insist on remaining there now on the strength of their alleged lease contracts. The problems caused by the usurpation of the place by the petitioners are covered by the police power as delegated to the municipality under the general welfare clause. 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. This power can be activated at any time to change the provisions of the contract, or even abrogate it entirely, for the promotion or protection of the general welfare. Such an act will not militate against the impairment clause, which is subject to and limited by the paramount police power.