Public markets are indispensable institutions in Philippine economic and social life. They serve as the primary distribution points for affordable basic goods, particularly food, and provide livelihood to millions of small vendors and their families. The rental of stalls or spaces in public markets and barangay-level markets is therefore not treated as ordinary private commercial leasing but as a highly regulated privilege involving property of public dominion, local revenue generation, social equity objectives, and police power.

The entire system is anchored on the principle that public market spaces belong to the State (or the local government unit as its trustee) and are property of public dominion under Article 420 of the Civil Code. They are therefore inalienable, imprescriptible, and not subject to private ownership or acquisitive prescription. The award of a stall is always a revocable privilege, never a vested right.

Primary Governing Law: Republic Act No. 7160 (Local Government Code of 1991)

The Local Government Code is the single most important law on the subject.

Sections 16 and 17 expressly mandate cities and municipalities to establish, operate, maintain, and regulate public markets as part of basic services and facilities.
Section 129 grants LGUs corporate powers, including the power to lease public property.
Sections 130–132 lay down the fundamental principles for imposition of local fees and charges, including market stall rentals.
Section 17(b)(2)(ii) for municipalities and Section 17(c)(2)(ii) for cities explicitly include public markets in the devolved functions.
Sections 447(a)(3)(iii), 458(a)(3)(iii), and 468(a)(3)(iii) empower the Sangguniang Bayan, Sangguniang Panlungsod, and Sangguniang Panlalawigan to enact ordinances regulating the use of public markets and fixing stall rentals and fees.
Section 3(d) (operative principles of decentralization) and Section 5(a) (rules of interpretation favoring local autonomy) are repeatedly invoked by courts to uphold local market ordinances as long as they are not arbitrary or confiscatory.

Provinces may also operate public markets (terminal markets, economic enterprise markets) under Section 17(d) and Section 468.

Nature of the Stallholder’s Right: Privilege, Not Property Right

The Supreme Court has consistently ruled (as early as 1980s cases such as Talisay-Silay Milling Co. v. Teodoro, G.R. No. L-45635, and more recently in City of Ozamiz v. Court of Appeals, G.R. No. 170737, July 10, 2013, and numerous subsequent cases) that:

A market stall award creates only a personal, revocable privilege to occupy and use the space for vending purposes.
It is not a lease in the strict Civil Code sense that creates real rights.
The stallholder acquires no ownership or possessory right that can be asserted against the LGU’s superior right to repossess for public use or better revenue generation.
The relationship is governed primarily by the market ordinance and the award contract, with Civil Code provisions on lease applying only suppletorily.

Award of Market Stalls: Public Bidding as the General Rule

Commission on Audit regulations and consistent Supreme Court jurisprudence (e.g., Province of Zamboanga del Norte v. City of Zamboanga, G.R. No. 244306, June 28, 2020, and earlier COA decisions) require public bidding for the award of market stalls because:

The stalls constitute valuable public property.
Public bidding ensures transparency, competitiveness, and maximum revenue for the LGU.

Exceptions or alternative modes recognized in practice and by DILG opinions:

Renewal to existing bona fide stallholders who have no arrears and no violations (most common practice and upheld by courts as reasonable classification).
Direct award to members of duly registered vendors’ cooperatives or associations under certain ordinances.
Award through negotiation when bidding fails twice (allowed under COA Circular 85-55-A and subsequent circulars).
Temporary or seasonal awards for night markets, tiangge, or special events.

DILG Opinion No. 50, s. 2012 and Opinion No. 21, s. 2016 both affirm that LGUs may grant preference or priority rights to long-time occupants provided this is expressly stated in the ordinance and does not violate equal protection.

Rental Rates and Fees

Fixed exclusively by ordinance of the Sanggunian concerned (LGC Sec. 447/458).
Rates must be reasonable and uniform for the same class of stalls.
Increases require new ordinance; automatic escalation clauses in old contracts are void if not ratified by new ordinance.
During the COVID-19 pandemic, RA 11469 (Bayanihan 1) and RA 11494 (Bayanihan 2) mandated grace periods and prohibited increases. These have long expired, but many LGUs still observe voluntary moratoriums or phased increases.
Stall rentals are not subject to the Rent Control Act (RA 9653 as amended) because they are not private residential or commercial leases but use of public dominion property.

Duration of Award

Most ordinances provide for short-term awards (1–5 years) precisely to preserve LGU control. Long-term leases (10–25 years) executed in the 1970s–1990s under old municipal charters have been declared void ab initio by the Supreme Court in multiple cases (e.g., Heirs of Moreno v. Mactan-Cebu International Airport Authority applied by analogy, and direct market cases) when they impair the LGU’s police power or revenue generation.

Renewal is not automatic; it is subject to evaluation of good standing and payment of renewal fees.

Prohibited Acts by Stallholders

Common prohibitions in virtually all market ordinances:

Subleasing or transfer of rights without prior Sanggunian approval (usually prohibited outright or allowed only to spouse/children upon death).
Use of stall for purposes other than those awarded.
Construction of permanent structures without permit.
Selling outside designated stall (“sidewalk vending”).
Hoarding or price manipulation.

Violation constitutes ground for cancellation of award after due notice and hearing.

Eviction and Cancellation of Award

The LGU may cancel the award and eject the stallholder only for cause and after due process. Valid causes typically include:

Non-payment of rentals for a certain period (usually 3–6 months).
Repeated violations of market rules.
Abandonment.
Public necessity (redevelopment, renovation, or conversion to other public use).

In cases of redevelopment, the Supreme Court has ruled (City Government of Quezon City v. Ericta Bayle, G.R. No. 199979, February 12, 2018, and subsequent cases) that:

Stallholders are entitled to reasonable notice (usually 30–90 days).
Priority in re-awarding the new stalls if they are qualified.
Relocation assistance when feasible.
Payment of disturbance compensation is not constitutionally required but is often granted as a matter of policy or ordinance.

Ejectment suits are filed in the Municipal Trial Court under summary procedure (Rule 70, Rules of Court) if the stallholder refuses to vacate after cancellation.

Barangay-Level Market Spaces (Talipapa, Bagsakan, Weekend Markets)

Barangays have limited authority:

Under Section 17(i) of the LGC, barangays exercise police power over minor market-related matters.
Section 391(a)(7) authorizes barangays to provide for the establishment of community markets or talipapa.
Barangays may collect reasonable market fees and rentals, but major public markets remain under municipal/city control.
Rental of barangay market spaces is governed by barangay ordinance approved by the Sangguniang Bayan (required under Sec. 57 LGC for revenue ordinances).
In practice, many barangays simply allocate spaces by resolution to residents on a first-come, first-served or lottery basis with nominal fees (₱100–₱500 per day for weekend markets).

Application of the Government Procurement Reform Act (RA 9184)

While RA 9184 primarily governs procurement of goods and infrastructure, the 2016 Revised IRR explicitly includes “lease of venue” and, by analogy, lease of public market stalls when done through competitive bidding. COA has consistently applied RA 9184 standards (posting, bidding documents, bid evaluation) to market stall awards when public bidding is required.

Remedies Available to Aggrieved Stallholders

Motion for reconsideration with the Mayor or Market Committee.
Appeal to the Sangguniang Panlungsod/Bayan (if provided in the ordinance).
Petition for prohibition/injunction with prayer for TRO in the Regional Trial Court (most common and usually successful if no due process was observed).
Administrative complaint against local officials before the Ombudsman for grave abuse of discretion.
Damages suit if bad faith is proven (rarely successful).

Current Best Practices Adopted by Model LGUs (as of 2025)

Computerized bidding and online payment systems (Quezon City, Davao City, Makati).
One-stall-per-vendor policy to prevent monopolies.
Priority re-awarding to original stallholders after renovation (now almost universal after Supreme Court rulings).
Creation of Market Development and Administration Offices with dedicated legal teams.
Partnership with vendors’ cooperatives for collective leasing of entire sections (allowed under DILG MC 2019-121).

In summary, the rental of public and barangay market spaces in the Philippines is a tightly regulated privilege designed to balance livelihood protection, revenue generation, and public interest. While the Local Government Code provides the broad framework, the actual terms and conditions are almost entirely determined by local ordinances. Stallholders therefore enjoy significant day-to-day security of tenure as long as they comply with the rules, but they can never claim absolute or perpetual rights over spaces that ultimately belong to the public.