Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-11075 June 30, 1960

COMMISSIONER OF CUSTOMS, petitioner and appellant,

vs.
CARIDAD CAPISTRANO, respondent and appellee.

Office of the Solicitor General Ambrosio Padilla and Solicitor Felicisimo R. Rosete for petitioner.
Capistrano & Capistrano for respondent.

PARAS, C.J.:

On March 31, 1955, Caridad Capistrano was booked as an outgoing passenger of a plane bound for Hongkong.
When she was subjected to the customary search by a woman agent of the Bureau of Customs immediately before
the plane she was to board took off, there were found in her person one hundred and fifty six (156) pieces of
Philippine 50-peso bills, seventeen (17) pieces of U.S. 20-dollar bills and one (1) piece of U.S. 10-dollar bill,
although her license from the Central Bank allowed her to carry only $200, broken down into $50.00 in cash and
$150.00 in traveler's check. Consequently, the bills were seized for alleged violation of Central Bank Circulars Nos.
42 and 55, in relation to Section 1363 (f) of the Revised Administrative Code.

In the seizure and forfeiture proceedings correspondingly instituted, the Collector of Customs rendered on May 5,
1955, a decision ordering the forfeiture in favor of the Government of the bills in question. This decision was
affirmed by the Commissioner of Customs on July 29, 1955. Dissatisfied, Caridad Capistrano brought the matter to
the Court of Tax Appeals (CTA Case No. 174).

In its decision of June 4, 1956, the Court of Tax Appeals ruled that while Circulars Nos. 37, 20, 42 and 55 were
promulgated by the Monetary Board pursuant to the provisions of Republic Act No. 265, said circulars did not,
however, authorize the seizure and forfeiture of the Philippine peso bills carried by herein petitioner in excess of that
allowed by the Central Bank regulations. The Tax Court further said that neither could Section 1363 (f) of the
Revised Administrative Code be invoked because said section referred merely to "merchandise or prohibited
importation or exportation."

Taking judicial notice of the fact that the United States dollar has already ceased to be legal tender in the Philippines
and that it could be bought and sold in the country, the Tax Court held that the U. S. dollar falls within the term
"merchandise". However, the same thing was not said of the Philippine peso. Hence, the decision of the
Commissioner of Customs, insofar as the one hundred and fifty six (156) pieces of Philippine 50-peso bills were
concerned, was reversed, and said bills were ordered to be returned to petitioner Caridad Capistrano. From that
portion of the decision, the Commissioner of Customs has appealed to this Court.

Confining ourselves to the determination of the question as to whether the Court of Tax Appeals erred in revoking
the order of forfeiture of the Philippine peso bills and ordering their release to the appellee, we believe, after careful
reflection, that the ruling of the Tax Court has to be reversed.

Section 1363 (f) of the Revised Administrative Code relied upon by the appellant reads as follows:

Any merchandise of prohibited importation or exportation, the importation or exportation of which is effected
or attempted contrary to law, and all other merchandise which, in the opinion of the collector, have been
used, are or were intended to be used as instrument in the importation or exportation of the former.

There can scarcely be any doubt that Philippine money may be exported or brought out of the country. Indeed, the
Court of Tax Appeals recognized this fact in the decision appealed from. That such exportation ultimately affects the
stability of the peso cannot be denied. As clearly explained by the Tax Court, it was in the light of compelling
economic reasons and necessities that Central Bank Circulars Nos. 37 and 42, prohibiting the exportation of
Philippine bills and coins, subject to certain exceptions, were conceived and promulgated.

We believe that Philippine peso bills come within the concept of "merchandise," as this term is understood in
Section 1363(f) of the Revised Administrative Code. As defined by the same Code, merchandise, when used with
reference to importations or exportations, includes goods, wares, and in general anything that may be the subject of
importation or exportation. (Sec. 1419.) It cannot be gainsaid that money may be a commodity — an object of trade.

Money in the country where it is current, is both a measure of value and a medium of exchange, while in
other countries it is a commodity bought and sold in the market, and its value fluctuates in the market like
that of other commodities. (58 C. J. S. 845, citing Richard vs. American Union Bank, 170 N. E. 532, 535, 69
A. L. R. 667.)
In the same manner that in the Philippines the United States dollar bills which have ceased to be legal tender, are
considered merchandise, the Philippine peso bills when attempted to be exported, as in the present case, may be
deemed to have been taken out of domestic circulation as legal tender and treated as commodity. Hence, they may
be forfeited pursuant to Central Bank Circular No. 37 in relation to Section 1363 (f) of the Revised Administrative
Code.

Wherefore, the decision appealed from is reversed. So ordered.

Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., Barrera, and Gutierrez
David, JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 161107 March 12, 2013

HON. MA. LOURDES C. FERNANDO, in her capacity as City Mayor of Marikina City, JOSEPHINE C.
EVANGELIST A, in her capacity as Chief, Permit Division, Office of the City Engineer, and ALFONSO ESPIRITU, in
his capacity as City Engineer of Marikina City, Petitioners,
vs.
ST. SCHOLASTICA'S COLLEGE and ST. SCHOLASTICA'S ACADEMY-MARIKINA, INC., Respondents.

DECISION

MENDOZA, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court, which seeks to set aside
the December 1, 2003 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 75691.

The Facts

Respondents St. Scholastica’s College (SSC) and St. Scholastica’s Academy-Marikina, Inc. (SSA-Marikina) are
educational institutions organized under the laws of the Republic of the Philippines, with principal offices and
business addresses at Leon Guinto Street, Malate, Manila, and at West Drive, Marikina Heights, Marikina City,
respectively.2

Respondent SSC is the owner of four (4) parcels of land measuring a total of 56,306.80 square meters, located in
Marikina Heights and covered by Transfer Certificate Title (TCT) No. 91537. Located within the property are SSA-
Marikina, the residence of the sisters of the Benedictine Order, the formation house of the novices, and the
retirement house for the elderly sisters. The property is enclosed by a tall concrete perimeter fence built some thirty
(30) years ago. Abutting the fence along the West Drive are buildings, facilities, and other improvements.3

The petitioners are the officials of the City Government of Marikina. On September 30, 1994, the Sangguniang
Panlungsod of Marikina City enacted Ordinance No. 192,4 entitled "Regulating the Construction of Fences and Walls
in the Municipality of Marikina." In 1995 and 1998, Ordinance Nos. 2175 and 2006 were enacted to amend Sections
7 and 5, respectively. Ordinance No. 192, as amended, is reproduced hereunder, as follows:

ORDINANCE No. 192

Series of 1994

ORDINANCE REGULATING THE CONSTRUCTION OF FENCES AND WALLS IN THE MUNICIPALITY OF

MARIKINA

WHEREAS, under Section 447.2 of Republic Act No. 7160 otherwise known as the Local Government Code of 1991
empowers the Sangguniang Bayan as the local legislative body of the municipality to "x x x Prescribe reasonable
limits and restraints on the use of property within the jurisdiction of the municipality, x x x";

WHEREAS the effort of the municipality to accelerate its economic and physical development, coupled with
urbanization and modernization, makes imperative the adoption of an ordinance which shall embody up-to-date and
modern technical design in the construction of fences of residential, commercial and industrial buildings;

WHEREAS, Presidential Decree No. 1096, otherwise known as the National Building Code of the Philippines, does
not adequately provide technical guidelines for the construction of fences, in terms of design, construction, and
criteria;

WHEREAS, the adoption of such technical standards shall provide more efficient and effective enforcement of laws
on public safety and security;

WHEREAS, it has occurred in not just a few occasions that high fences or walls did not actually discourage but, in
fact, even protected burglars, robbers, and other lawless elements from the view of outsiders once they have gained
ingress into these walls, hence, fences not necessarily providing security, but becomes itself a "security problem";

WHEREAS, to discourage, suppress or prevent the concealment of prohibited or unlawful acts earlier enumerated,
and as guardian of the people of Marikina, the municipal government seeks to enact and implement rules and
ordinances to protect and promote the health, safety and morals of its constituents;
WHEREAS, consistent too, with the "Clean and Green Program" of the government, lowering of fences and walls
shall encourage people to plant more trees and ornamental plants in their yards, and when visible, such trees and
ornamental plants are expected to create an aura of a clean, green and beautiful environment for Marikeños;

WHEREAS, high fences are unsightly that, in the past, people planted on sidewalks to "beautify" the façade of their
residences but, however, become hazards and obstructions to pedestrians;

WHEREAS, high and solid walls as fences are considered "un-neighborly" preventing community members to easily
communicate and socialize and deemed to create "boxed-in" mentality among the populace;

WHEREAS, to gather as wide-range of opinions and comments on this proposal, and as a requirement of the Local
Government Code of 1991 (R.A. 7160), the Sangguniang Bayan of Marikina invited presidents or officers of
homeowners associations, and commercial and industrial establishments in Marikina to two public hearings held on
July 28, 1994 and August 25, 1994;

WHEREAS, the rationale and mechanics of the proposed ordinance were fully presented to the attendees and no
vehement objection was presented to the municipal government;

NOW, THEREFORE, BE IT ORDAINED BY THE SANGGUINANG BAYAN OF MARIKINA IN SESSION DULY

ASSEMBLED:

Section 1. Coverage: This Ordinance regulates the construction of all fences, walls and gates on lots classified or
used for residential, commercial, industrial, or special purposes.

Section 2. Definition of Terms:

a. Front Yard – refers to the area of the lot fronting a street, alley or public thoroughfare.

b. Back Yard – the part of the lot at the rear of the structure constructed therein.

c. Open fence – type of fence which allows a view of "thru-see" of the inner yard and the
improvements therein. (Examples: wrought iron, wooden lattice, cyclone wire)

d. Front gate – refers to the gate which serves as a passage of persons or vehicles fronting a street,
alley, or public thoroughfare.

Section 3. The standard height of fences or walls allowed under this ordinance are as follows:

(1) Fences on the front yard – shall be no more than one (1) meter in height. Fences in excess of
one (1) meter shall be of an open fence type, at least eighty percent (80%) see-thru; and

(2) Fences on the side and back yard – shall be in accordance with the provisions of P.D. 1096
otherwise known as the National Building Code.

Section 4. No fence of any kind shall be allowed in areas specifically reserved or classified as parks.

Section 5. In no case shall walls and fences be built within the five (5) meter parking area allowance located
between the front monument line and the building line of commercial and industrial establishments and educational
and religious institutions.7

Section 6. Exemption.

(1) The Ordinance does not cover perimeter walls of residential subdivisions.

(2) When public safety or public welfare requires, the Sangguniang Bayan may allow the
construction and/or maintenance of walls higher than as prescribed herein and shall issue a special
permit or exemption.

Section 7. Transitory Provision. Real property owners whose existing fences and walls do not conform to the
specifications herein are allowed adequate period of time from the passage of this Ordinance within which to
conform, as follows:

(1) Residential houses – eight (8) years

(2) Commercial establishments – five (5) years

(3) Industrial establishments – three (3) years

 (4) Educational institutions – five (5) years8 (public and privately owned)

Section 8. Penalty. Walls found not conforming to the provisions of this Ordinance shall be demolished by the
municipal government at the expense of the owner of the lot or structure.

Section 9. The Municipal Engineering Office is tasked to strictly implement this ordinance, including the issuance of
the necessary implementing guidelines, issuance of building and fencing permits, and demolition of non-conforming
walls at the lapse of the grace period herein provided.

Section 10. Repealing Clause. All existing Ordinances and Resolutions, Rules and Regulations inconsistent with the
foregoing provisions are hereby repealed, amended or modified.

Section 11. Separability Clause. If for any reason or reasons, local executive orders, rules and regulations or parts
thereof in conflict with this Ordinance are hereby repealed and/or modified accordingly.

Section 12. Effectivity. This ordinance takes effect after publication.

APPROVED: September 30, 1994

(Emphases supplied)

On April 2, 2000, the City Government of Marikina sent a letter to the respondents ordering them to demolish and
replace the fence of their Marikina property to make it 80% see-thru, and, at the same time, to move it back about
six (6) meters to provide parking space for vehicles to park.9 On April 26, 2000, the respondents requested for an
extension of time to comply with the directive.10 In response, the petitioners, through then City Mayor Bayani F.
Fernando, insisted on the enforcement of the subject ordinance.

Not in conformity, the respondents filed a petition for prohibition with an application for a writ of preliminary injunction
and temporary restraining order before the Regional Trial Court, Marikina, Branch 273 (RTC), docketed as SCA
Case No. 2000-381-MK.11

The respondents argued that the petitioners were acting in excess of jurisdiction in enforcing Ordinance No. 192,
asserting that such contravenes Section 1, Article III of the 1987 Constitution. That demolishing their fence and
constructing it six (6) meters back would result in the loss of at least 1,808.34 square meters, worth about
₱9,041,700.00, along West Drive, and at least 1,954.02 square meters, worth roughly ₱9,770,100.00, along East
Drive. It would also result in the destruction of the garbage house, covered walk, electric house, storage house,
comfort rooms, guards’ room, guards’ post, waiting area for visitors, waiting area for students, Blessed Virgin Shrine,
P.E. area, and the multi-purpose hall, resulting in the permanent loss of their beneficial use. The respondents, thus,
asserted that the implementation of the ordinance on their property would be tantamount to an appropriation of
property without due process of law; and that the petitioners could only appropriate a portion of their property
through eminent domain. They also pointed out that the goal of the provisions to deter lawless elements and
criminality did not exist as the solid concrete walls of the school had served as sufficient protection for many years.12

The petitioners, on the other hand, countered that the ordinance was a valid exercise of police power, by virtue of
which, they could restrain property rights for the protection of public safety, health, morals, or the promotion of public
convenience and general prosperity.13

On June 30, 2000, the RTC issued a writ of preliminary injunction, enjoining the petitioners from implementing the
demolition of the fence at SSC’s Marikina property.14

Ruling of the RTC

On the merits, the RTC rendered a Decision,15 dated October 2, 2002, granting the petition and ordering the
issuance of a writ of prohibition commanding the petitioners to permanently desist from enforcing or implementing
Ordinance No. 192 on the respondents’ property.

The RTC agreed with the respondents that the order of the petitioners to demolish the fence at the SSC property in
Marikina and to move it back six (6) meters would amount to an appropriation of property which could only be done
through the exercise of eminent domain. It held that the petitioners could not take the respondents’ property under
the guise of police power to evade the payment of just compensation.

It did not give weight to the petitioners’ contention that the parking space was for the benefit of the students and
patrons of SSA-Marikina, considering that the respondents were already providing for sufficient parking in
compliance with the standards under Rule XIX of the National Building Code.

It further found that the 80% see-thru fence requirement could run counter to the respondents’ right to privacy,
considering that the property also served as a residence of the Benedictine sisters, who were entitled to some sense
of privacy in their affairs. It also found that the respondents were able to prove that the danger to security had no
basis in their case. Moreover, it held that the purpose of beautification could not be used to justify the exercise of
police power.

It also observed that Section 7 of Ordinance No. 192, as amended, provided for retroactive application. It held,
however, that such retroactive effect should not impair the respondents’ vested substantive rights over the perimeter
walls, the six-meter strips of land along the walls, and the building, structures, facilities, and improvements, which
would be destroyed by the demolition of the walls and the seizure of the strips of land.

The RTC also found untenable the petitioners’ argument that Ordinance No. 192 was a remedial or curative statute
intended to correct the defects of buildings and structures, which were brought about by the absence or insufficiency
of laws. It ruled that the assailed ordinance was neither remedial nor curative in nature, considering that at the time
the respondents’ perimeter wall was built, the same was valid and legal, and the ordinance did not refer to any
previous legislation that it sought to correct.

The RTC noted that the petitioners could still take action to expropriate the subject property through eminent
domain.

The RTC, thus, disposed:

WHEREFORE, the petition is GRANTED. The writ of prohibition is hereby issued commanding the respondents to
permanently desist from enforcing or implementing Ordinance No. 192, Series of 1994, as amended, on petitioners’
property in question located at Marikina Heights, Marikina, Metro Manila.

No pronouncement as to costs.

SO ORDERED.16

Ruling of the CA

In its December 1, 2003 Decision, the CA dismissed the petitioners’ appeal and affirmed the RTC decision.

The CA reasoned out that the objectives stated in Ordinance No. 192 did not justify the exercise of police power, as
it did not only seek to regulate, but also involved the taking of the respondents’ property without due process of law.
The respondents were bound to lose an unquantifiable sense of security, the beneficial use of their structures, and a
total of 3,762.36 square meters of property. It, thus, ruled that the assailed ordinance could not be upheld as valid
as it clearly invaded the personal and property rights of the respondents and "[f]or being unreasonable, and undue
restraint of trade."17

It noted that although the petitioners complied with procedural due process in enacting Ordinance No. 192, they
failed to comply with substantive due process. Hence, the failure of the respondents to attend the public hearings in
order to raise objections did not amount to a waiver of their right to question the validity of the ordinance.

The CA also shot down the argument that the five-meter setback provision for parking was a legal easement, the
use and ownership of which would remain with, and inure to, the benefit of the respondents for whom the easement
was primarily intended. It found that the real intent of the setback provision was to make the parking space free for
use by the public, considering that such would cease to be for the exclusive use of the school and its students as it
would be situated outside school premises and beyond the school administration’s control.

In affirming the RTC ruling that the ordinance was not a curative statute, the CA found that the petitioner failed to
point out any irregularity or invalidity in the provisions of the National Building Code that required correction or cure.
It noted that any correction in the Code should be properly undertaken by the Congress and not by the City Council
of Marikina through an ordinance.

The CA, thus, disposed:

WHEREFORE, all foregoing premises considered, the instant appeal is DENIED.1âwphi1 The October 2, 2002
Decision and the January 13, 2003 Order of the Regional Trial Court (RTC) of Marikina City, Branch 273, granting
petitioners-appellees’ petition for Prohibition in SCA Case No. 2000-381-MK are hereby AFFIRMED.

SO ORDERED.18

Aggrieved by the decision of the CA, the petitioners are now before this Court presenting the following

ASSIGNMENT OF ERRORS

1. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN DECLARING THAT CITY
ORDINANCE NO. 192, SERIES OF 1994 IS NOT A VALID EXERCISE OF POLICE POWER;
 2. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE
AFOREMENTIONED ORDINANCE IS AN EXERCISE OF THE CITY OF THE POWER OF EMINENT
DOMAIN;

3. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN DECLARING THAT THE
CITY VIOLATED THE DUE PROCESS CLAUSE IN IMPLEMENTING ORDINANCE NO. 192, SERIES OF
1994; AND

4. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE ABOVE-
MENTIONED ORDINANCE CANNOT BE GIVEN RETROACTIVE APPLICATION.19

In this case, the petitioners admit that Section 5 of the assailed ordinance, pertaining to the five-meter setback
requirement is, as held by the lower courts, invalid.20 Nonetheless, the petitioners argue that such invalidity was
subsequently cured by Zoning Ordinance No. 303, series of 2000. They also contend that Section 3, relating to the
80% see-thru fence requirement, must be complied with, as it remains to be valid.

Ruling of the Court

The ultimate question before the Court is whether Sections 3.1 and 5 of Ordinance No. 192 are valid exercises of
police power by the City Government of Marikina.

"Police power is the plenary power vested in the legislature to make statutes and ordinances to promote the health,
morals, peace, education, good order or safety and general welfare of the people."21 The State, through the
legislature, has delegated the exercise of police power to local government units, as agencies of the State. This
delegation of police power is embodied in Section 1622 of the Local Government Code of 1991 (R.A. No. 7160),
known as the General Welfare Clause,23 which has two branches. "The first, known as the general legislative power,
authorizes the municipal council to enact ordinances and make regulations not repugnant to law, as may be
necessary to carry into effect and discharge the powers and duties conferred upon the municipal council by law. The
second, known as the police power proper, authorizes the municipality to enact ordinances as may be necessary
and proper for the health and safety, prosperity, morals, peace, good order, comfort, and convenience of the
municipality and its inhabitants, and for the protection of their property."24

White Light Corporation v. City of Manila,25 discusses the test of a valid ordinance:

The test of a valid ordinance is well established. A long line of decisions including City of Manila has held that for an
ordinance to be valid, it must not only be within the corporate powers of the local government unit to enact and pass
according to the procedure prescribed by law, it must also conform to the following substantive requirements: (1)
must not contravene the

Constitution or any statute; (2) must not be unfair or oppressive; (3) must not be partial or discriminatory; (4) must
not prohibit but may regulate trade; (5) must be general and consistent with public policy; and (6) must not be
unreasonable.26

Ordinance No. 192 was passed by the City Council of Marikina in the apparent exercise of its police power. To
successfully invoke the exercise of police power as the rationale for the enactment of an ordinance and to free it
from the imputation of constitutional infirmity, two tests have been used by the Court – the rational relationship test
and the strict scrutiny test:

We ourselves have often applied the rational basis test mainly in analysis of equal protection challenges. Using the
rational basis examination, laws or ordinances are upheld if they rationally further a legitimate governmental interest.
Under intermediate review, governmental interest is extensively examined and the availability of less restrictive
measures is considered. Applying strict scrutiny, the focus is on the presence of compelling, rather than substantial,
governmental interest and on the absence of less restrictive means for achieving that interest.27

Even without going to a discussion of the strict scrutiny test, Ordinance No. 192, series of 1994 must be struck down
for not being reasonably necessary to accomplish the City’s purpose. More importantly, it is oppressive of private
rights.

Under the rational relationship test, an ordinance must pass the following requisites as discussed in Social Justice
Society (SJS) v. Atienza, Jr.:28

As with the State, local governments may be considered as having properly exercised their police power only if the
following requisites are met: (1) the interests of the public generally, as distinguished from those of a particular
class, require its exercise and (2) the means employed are reasonably necessary for the accomplishment of the
purpose and not unduly oppressive upon individuals. In short, there must be a concurrence of a lawful subject and
lawful method.29

Lacking a concurrence of these two requisites, the police power measure shall be struck down as an arbitrary
intrusion into private rights and a violation of the due process clause.30
Section 3.1 and 5 of the assailed ordinance are pertinent to the issue at hand, to wit:

Section 3. The standard height of fences of walls allowed under this ordinance are as follows:

(1) Fences on the front yard – shall be no more than one (1) meter in height. Fences in excess of one (1) meter shall
be an open fence type, at least eighty percent (80%) see-thru;

xxx xxx xxx

Section 5. In no case shall walls and fences be built within the five (5) meter parking area allowance located
between the front monument line and the building line of commercial and industrial establishments and educational
and religious institutions.

The respondents, thus, sought to prohibit the petitioners from requiring them to (1) demolish their existing concrete
wall, (2) build a fence (in excess of one meter) which must be 80% see-thru, and (3) build the said fence six meters
back in order to provide a parking area.

Setback Requirement

The Court first turns its attention to Section 5 which requires the five-meter setback of the fence to provide for a
parking area. The petitioners initially argued that the ownership of the parking area to be created would remain with
the respondents as it would primarily be for the use of its students and faculty, and that its use by the public on non-
school days would only be incidental. In their Reply, however, the petitioners admitted that Section 5 was, in fact,
invalid for being repugnant to the Constitution.31

The Court agrees with the latter position.

The Court joins the CA in finding that the real intent of the setback requirement was to make the parking space free
for use by the public, considering that it would no longer be for the exclusive use of the respondents as it would also
be available for use by the general public. Section 9 of Article III of the 1987 Constitution, a provision on eminent
domain, provides that private property shall not be taken for public use without just compensation.

The petitioners cannot justify the setback by arguing that the ownership of the property will continue to remain with
the respondents. It is a settled rule that neither the acquisition of title nor the total destruction of value is essential to
taking. In fact, it is usually in cases where the title remains with the private owner that inquiry should be made to
determine whether the impairment of a property is merely regulated or amounts to a compensable taking.32 The
Court is of the view that the implementation of the setback requirement would be tantamount to a taking of a total of
3,762.36 square meters of the respondents’ private property for public use without just compensation, in
contravention to the Constitution.

Anent the objectives of prevention of concealment of unlawful acts and "un-neighborliness," it is obvious that
providing for a parking area has no logical connection to, and is not reasonably necessary for, the accomplishment
of these goals.

Regarding the beautification purpose of the setback requirement, it has long been settled that the State may not,
under the guise of police power, permanently divest owners of the beneficial use of their property solely to preserve
or enhance the aesthetic appearance of the community.33 The Court, thus, finds Section 5 to be unreasonable and
oppressive as it will substantially divest the respondents of the beneficial use of their property solely for aesthetic
purposes. Accordingly, Section 5 of Ordinance No. 192 is invalid.

The petitioners, however, argue that the invalidity of Section 5 was properly cured by Zoning Ordinance No.
303,34Series of 2000, which classified the respondents’ property to be within an institutional zone, under which a
five-meter setback has been required.

The petitioners are mistaken. Ordinance No. 303, Series of 2000, has no bearing to the case at hand.

The Court notes with displeasure that this argument was only raised for the first time on appeal in this Court in the
petitioners’ Reply. Considering that Ordinance No. 303 was enacted on December 20, 2000, the petitioners could
very well have raised it in their defense before the RTC in 2002. The settled rule in this jurisdiction is that a party
cannot change the legal theory of this case under which the controversy was heard and decided in the trial court. It
should be the same theory under which the review on appeal is conducted. Points of law, theories, issues, and
arguments not adequately brought to the attention of the lower court will not be ordinarily considered by a reviewing
court, inasmuch as they cannot be raised for the first time on appeal. This will be offensive to the basic rules of fair
play, justice, and due process.35

Furthermore, the two ordinances have completely different purposes and subjects. Ordinance No. 192 aims to
regulate the construction of fences, while Ordinance No. 303 is a zoning ordinance which classifies the city into
specific land uses. In fact, the five-meter setback required by Ordinance No. 303 does not even appear to be for the
purpose of providing a parking area.
By no stretch of the imagination, therefore, can Ordinance No. 303, "cure" Section 5 of Ordinance No. 192.

In any case, the clear subject of the petition for prohibition filed by the respondents is Ordinance No. 192 and, as
such, the precise issue to be determined is whether the petitioners can be prohibited from enforcing the said
ordinance, and no other, against the respondents.

80% See-Thru Fence Requirement

The petitioners argue that while Section 5 of Ordinance No. 192 may be invalid, Section 3.1 limiting the height of
fences to one meter and requiring fences in excess of one meter to be at least 80% see-thru, should remain valid
and enforceable against the respondents.

The Court cannot accommodate the petitioner.

For Section 3.1 to pass the rational relationship test, the petitioners must show the reasonable relation between the
purpose of the police power measure and the means employed for its accomplishment, for even under the guise of
protecting the public interest, personal rights and those pertaining to private property will not be permitted to be
arbitrarily invaded.36

The principal purpose of Section 3.1 is "to discourage, suppress or prevent the concealment of prohibited or
unlawful acts." The ultimate goal of this objective is clearly the prevention of crime to ensure public safety and
security. The means employed by the petitioners, however, is not reasonably necessary for the accomplishment of
this purpose and is unduly oppressive to private rights. The petitioners have not adequately shown, and it does not
appear obvious to this Court, that an 80% see-thru fence would provide better protection and a higher level of
security, or serve as a more satisfactory criminal deterrent, than a tall solid concrete wall. It may even be argued
that such exposed premises could entice and tempt would-be criminals to the property, and that a see-thru fence
would be easier to bypass and breach. It also appears that the respondents’ concrete wall has served as more than
sufficient protection over the last 40 years. `

As to the beautification purpose of the assailed ordinance, as previously discussed, the State may not, under the
guise of police power, infringe on private rights solely for the sake of the aesthetic appearance of the community.
Similarly, the Court cannot perceive how a see-thru fence will foster "neighborliness" between members of a
community.

Compelling the respondents to construct their fence in accordance with the assailed ordinance is, thus, a clear
encroachment on their right to property, which necessarily includes their right to decide how best to protect their
property.

It also appears that requiring the exposure of their property via a see-thru fence is violative of their right to privacy,
considering that the residence of the Benedictine nuns is also located within the property. The right to privacy has
long been considered a fundamental right guaranteed by the Constitution that must be protected from intrusion or
constraint. The right to privacy is essentially the right to be let alone,37 as governmental powers should stop short of
certain intrusions into the personal life of its citizens.38 It is inherent in the concept of liberty, enshrined in the Bill of
Rights (Article III) in Sections 1, 2, 3(1), 6, 8, and 17, Article III of the 1987 Constitution.39

The enforcement of Section 3.1 would, therefore, result in an undue interference with the respondents’ rights to
property and privacy. Section 3.1 of Ordinance No. 192 is, thus, also invalid and cannot be enforced against the
respondents.

No Retroactivity

Ordinance No. 217 amended Section 7 of Ordinance No. 192 by including the regulation of educational institutions
which was unintentionally omitted, and giving said educational institutions five (5) years from the passage of
Ordinance No. 192 (and not Ordinance No. 217) to conform to its provisions.40 The petitioners argued that the
amendment could be retroactively applied because the assailed ordinance is a curative statute which is retroactive
in nature.

Considering that Sections 3.1 and 5 of Ordinance No. 192 cannot be enforced against the respondents, it is no
longer necessary to rule on the issue of retroactivity. The Court shall, nevertheless, pass upon the issue for the sake
of clarity.

"Curative statutes are enacted to cure defects in a prior law or to validate legal proceedings which would otherwise
be void for want of conformity with certain legal requirements. They are intended to supply defects, abridge
superfluities and curb certain evils. They are intended to enable persons to carry into effect that which they have
designed or intended, but has failed of expected legal consequence by reason of some statutory disability or
irregularity in their own action. They make valid that which, before the enactment of the statute was invalid. Their
purpose is to give validity to acts done that would have been invalid under existing laws, as if existing laws have
been complied with. Curative statutes, therefore, by their very essence, are retroactive."41
The petitioners argue that Ordinance No. 192 is a curative statute as it aims to correct or cure a defect in the
National Building Code, namely, its failure to provide for adequate guidelines for the construction of fences. They
ultimately seek to remedy an insufficiency in the law. In aiming to cure this insufficiency, the petitioners attempt to
add lacking provisions to the National Building Code. This is not what is contemplated by curative statutes, which
intend to correct irregularities or invalidity in the law. The petitioners fail to point out any irregular or invalid provision.
As such, the assailed ordinance cannot qualify as curative and retroactive in nature.

At any rate, there appears to be no insufficiency in the National Building Code with respect to parking provisions in
relation to the issue of the respondents. Paragraph 1.16.1, Rule XIX of the Rules and Regulations of the said code
requires an educational institution to provide one parking slot for every ten classrooms. As found by the lower
courts, the respondents provide a total of 76 parking slots for their 80 classrooms and, thus, had more than
sufficiently complied with the law.

Ordinance No. 192, as amended, is, therefore, not a curative statute which may be applied retroactively.

Separability

Sections 3.1 and 5 of Ordinance No. 192, as amended, are, thus, invalid and cannot be enforced against the
respondents. Nonetheless, "the general rule is that where part of a statute is void as repugnant to the Constitution,
while another part is valid, the valid portion, if susceptible to being separated from the invalid, may stand and be
enforced."42 Thus, the other sections of the assailed ordinance remain valid and enforceable.

Conclusion

Considering the invalidity of Sections 3.1 and 5, it is clear that the petitioners were acting in excess of their
jurisdiction in enforcing Ordinance No. 192 against the respondents. The CA was correct in affirming the decision of
the RTC in issuing the writ of prohibition. The petitioners must permanently desist from enforcing Sections 3.1 and 5
of the assailed ordinance on the respondents' property in Marikina City.

WHEREFORE, the petition is DENIED. The October 2, 2002 Decision of the Regional Trial Court in SCA Case No.
2000-381-MK is AFFIRMED but MODIFIED to read as follows:

WHEREFORE, the petition is GRANTED. The writ of prohibition is hereby issued commanding the respondents to
permanently desist from enforcing or implementing Sections 3.1 and 5 of Ordinance No. 192, Series of 1994, as
amended, on the petitioners' property in question located in Marikina Heights, Marikina, Metro Manila.

No pronouncement as to costs.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT

SECOND DIVISION

G.R. No. 147266 September 30, 2005

LUDO & LUYM DEVELOPMENT CORPORATION AND/OR CPC DEVELOPMENT CORPORATION, Petitioners,
vs.

vs.
VICENTE C. BARRETO as substituted by his heirs, namely: MAXIMA L. BARRETO, PEREGRINA B. UY,
ROGELIO L. BARRETO, VIOLETA L. BARRETO, FLORENDA B. TEMPLANZA, EDUARDO L. BARRETO,
EVELYN B. BERSAMIN, CECILIA B. AQUINO and NELSON NILO L. BARRETO, Respondent.

DECISION

CHICO-NAZARIO, J.:

The Case

This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the reversal of the
Decision1 dated 24 November 2000, and the Resolution2 dated 26 January 2001, rendered by the Court of Appeals
in CA-G.R. SP No. 46025, which annulled and set aside the decision3 dated 14 May 1997, and resolution4 dated 12
August 1997, of the Department of Agrarian Reform Adjudication Board (DARAB) in DARAB Case No. 0776. In its
decision, the DARAB affirmed the ruling5 dated 03 April 1992 of the DARAB Regional Adjudication Office6 (Regional
Office) in favor of petitioners LUDO & LUYM Development Corporation (LUDO) and CPC Development Corporation
(CPC) in Reg. Case No. 12-39-000-52-91.

The Facts

The present petition stemmed from a complaint7 for "Opposition Against the Application for Renewal of the
Conversion Order/Claim for Payment of Disturbance Compensation Plus Damages" filed on 30 April 1991 by
Vicente C. Barreto against herein petitioners LUDO and CPC before the DARAB Regional Office in Iligan City,
Lanao del Norte.

The landholding subject of the case at bar involves a thirty-six-hectare land, six hectares of which were devoted for
the planting of coconuts, while the remaining thirty hectares had been planted with sugarcane. The land is covered
by Transfer Certificate of Title No. 18822-25.

The facts are beyond dispute.

In 1938, Vicente C. Barreto, as tenant of landowner Antonio Bartolome, worked on and cultivated two hectares of
land devoted to sugarcane plantation.

In 1956, Antonio Bartolome sold the entire estate to LUDO with the latter absorbing all the farmworkers of the
former. Vicente C. Barreto was designated as a co-overseer with Bartolome on the six-hectare coco land portion of
the estate, pending the development of the entire estate into a residential-commercial complex. It was agreed that
the new owner, herein petitioner LUDO, Antonio Bartolome and complainant Vicente C. Barreto will share in the
harvests.

In 1972, when sugarcane production became unprofitable, herein petitioner LUDO discontinued the planting of the
same and shifted to cassava production. Soil analysis revealed later, however, that the land was not suitable for
cassava production and so the same was also discontinued.

In 1975, City Ordinance No. 1313, otherwise known as the Zoning Regulation of Iligan City, was passed. Pursuant
thereto, the subject landholding fell within the Commercial-Residential Zone of the city.

Sometime in 1978, having decided to convert the entire estate into a residential-commercial complex, herein
petitioner LUDO instructed Antonio Bartolome, who, in turn, instructed complainant Vicente C. Barreto, to submit a
list of its legitimate farmworkers so that they may be given some sort of disturbance compensation. Accordingly,
such list was submitted. Some farmworkers accepted "disturbance" compensation, while the others who refused to
accept the same instituted Court of Agrarian Reform (CAR) Cases No. 488 and No. 59.9 In the latter case, Vicente
C. Barreto was impleaded as a party defendant in his capacity as a co-overseer of the entire estate. Ultimately, said
cases were settled by compromise agreements.

On 30 March 1978, the Department of Agrarian Reform (DAR) issued a conversion permit10 to herein petitioner
LUDO authorizing the conversion of the entire estate into a residential/commercial lot.
Ten years later, or on 24 November 1988, herein co-petitioner CPC, the developer of the subject property, wrote the
Secretary of the DAR to ask for the renewal of the conversion permit earlier issued to the owner, herein petitioner
LUDO, as required by the Housing and Land Use Regulatory Board, in relation to the revised subdivision plan of
herein co-petitioner developer CPC for the subject property. Vicente C. Barreto fervently opposed the above move
by filing on 30 April 1991 a letter-complaint before the DARAB Regional Office in Iligan City, Lanao del Norte, on the
ground that such act was one of the prohibited acts enjoined by Section 73 of Republic Act No. 6657.11

SEC. 73. Prohibited Acts and Omissions. - The following are prohibited:

(a) The ownership or possession, for the purpose of circumventing the provisions of this Act, of agricultural lands in
excess of the total retention limits or award ceilings by any person, natural or juridical, except those under collective
ownership by farmer-beneficiaries.

(b) The forcible entry or illegal detainer by persons who are not qualified beneficiaries under this Act to avail
themselves of the rights and benefits of the Agrarian Reform Program.

(c) The conversion by any landowner of his agricultural land into any non-agricultural use with intent to avoid the
application of this Act to his landholdings and to dispossess his tenant farmers of the land tilled by them.

(d) The willful prevention or obstruction by any person, association or entity of the implementation of the CARP.

(e) The sale, transfer, conveyance or change of the nature of lands outside of urban centers and city limits either in
whole or in part after the effectivity of this Act. The date of the registration of the deed of conveyance in the Register
of Deeds with respect to titled lands and the date of the issuance of the tax declaration to the transferee of the
property with respect to unregistered lands, as the case may be, shall be conclusive for the purpose of this Act.

(f) The sale, transfer or conveyance by a beneficiary of the right to use or any other usufructuary right over the land
he acquired by virtue of being a beneficiary, in order to circumvent the provisions of this Act. [Emphasis supplied.]

In a letter12 dated 29 July 1991, CPC formally informed Vicente C. Barreto of the termination of his employment as a
co-overseer of the subject landholding due to the fact that the management has "already commenced selling our
subdivision lots and therefore, we have to start cutting coconut trees and other plants, especially within the
subdivision area…."

After hearing the parties, the DARAB Regional Office (Region XII) in Iligan City, Lanao del Norte, rendered a
decision, dated 03 April 1992, in favor of respondents, herein petitioners, LUDO and CPC. The fallo of the said
decision reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the respondents and against the
complainant. Complainant’s opposition against the application for renewal of the conversion order, his claims for
payment of disturbance compensation and damages are hereby DISMISSED for lack of merit. Complainant’s
relocation or payment of disturbance compensation is addressed to the humanitarian disposition of the respondents,
as the complainant has no legal right of possession much less ownership over the premises he is residing. NO
COSTS.13

In arriving at its decision, the DARAB Regional Office found that there was no tenancy relationship existing between
respondent LUDO and complainant Vicente C. Barreto, thus, no disturbance compensation was due the latter for
having been dispossessed of the six-hectare landholding he had been tilling. The DARAB Regional Office gave
ample credence to the affidavit of Antonio Bartolome, complainant’s co-overseer and former owner of the thirty-six-
hectare landholding. In said affidavit, Bartolome stated that "the complainant was one of his farmworkers who was
then cultivating a two-hectare portion of his land which was devoted to sugarcane production at the time of sale in
1956. Thereafter, they were jointly designated as overseers of the entire LUDODEV estate and subsequently on the
six-hectare portion of the estate which was planted with coconuts."

Likewise, it stated that even granting for the sake of argument that complainant Vicente C. Barreto was indeed a
tenant of the landholding, when he did not join as party plaintiff in either of the CAR cases aforementioned, and
instead opted to be designated as a co-overseer with Antonio Bartolome, he waived the alleged tenant status,
"[h]aving thus waived his tenancy in favor of overseeing, complainant is precluded by estoppel and laches to claim
only at this time for disturbance compensation. He simply cannot be allowed to enjoy the benefits flowing from both
worlds…"

Furthermore, the DARAB Regional Office also made the pronouncement that as early as 1975, the subject
landholding ceased to be agricultural in nature when Conrado F. Estrella, Secretary of the DAR, issued a conversion
permit14 allowing said conversion from agricultural to residential/commercial pursuant to the zoning regulation
passed by the legislative authority of Iligan City. The land having ceased to be agricultural in nature as far back as
1975, there was no current legitimate tenant to speak of.
With respect to the claim of complainant Vicente C. Barreto for payment of disturbance compensation, the DARAB
Regional Office declared that in view of the preceding paragraph, such had already prescribed by virtue of Section
38 of Rep. Act No. 3844:15

SEC. 38. Statute of Limitations. – An action to enforce any cause of action under this Code shall be barred if not
commenced within three years after such cause of action accrued.

It explained that the statute of limitation should commence to run from the time of notice to complainant of the
intended conversion by the landowner, specifically, sometime in 1974 when petitioner LUDO instructed Antonio
Bartolome and complainant Vicente C. Barreto to submit a list of its legitimate farmworkers entitled to disturbance
compensation. Thus, by 1978, complainant Vicente C. Barreto’s cause of action had already prescribed.

Aggrieved, complainant Vicente C. Barreto appealed the abovementioned decision to the DARAB.

During the pendency of the case, on 29 June 1992, complainant Vicente C. Barreto passed away. His wife and
children, herein respondents Maxima L. Barreto, Peregrina B. Uy, Rogelio L. Barreto, Violeta L. Barreto, Florenda B.
Templanza, Eduardo L. Barreto, Evelyn B. Bersamin, Cecilia B. Aquino and Nelson Nilo L. Barreto, were substituted
in his stead as complainants-appellants in the appeal.

On 14 May 1997, the DARAB promulgated a decision dismissing the appeal and affirming the assailed decision of
the Provincial Adjudicator of the DARAB Regional Office as follows:

WHEREFORE, finding no reversible error in the Decision of the Board a quo, the appeal is hereby DISMISSED for
lack of merit.16

Complainants-appellants heirs of Vicente C. Barreto then filed a motion for reconsideration. In a Resolution dated 12
August 1997, the Board, finding that no new matters had been adduced by the movant, denied the motion.

Undaunted, they subsequently filed a petition for review on certiorari before the Court of Appeals. The appellate
court ruled in favor of petitioners-appellants heirs of Vicente C. Barreto and annulled and set aside the DARAB’s
decision, stating thus:

WHEREFORE, the petition for review is granted. The assailed Decision promulgated on May 14, 1997 and
Resolution dated August 12, 1997 are hereby ANNULLED and SET ASIDE.

Respondents are ordered to pay petitioners disturbance compensation under Sec. 36(1) of R.A. 3844.

Let the records of this case be remanded to the Department of Agrarian Reform Adjudication Board for the
computation of disturbance compensation in accordance to law.17

Respondents-appellees LUDO and CPC filed a motion for reconsideration but said motion was similarly denied for
lack of merit by the Court of Appeals in a resolution dated 02 April 2003.

Hence, this petition.

The Issue

Petitioners LUDO and CPC filed the present petition for review on certiorari under Rule 45 of the Rules of Court
praying for the reversal of the above Decision and Resolution of the Court of Appeals premised on an ostensibly
simple issue of whether or not there existed a tenancy relationship between petitioner LUDO and Vicente C.
Barreto. A reply in the affirmative would necessarily entail the grant of disturbance compensation to respondent
heirs of Barreto.

The Court’s Ruling

The petition is bereft of merit.

A priori, the question of whether a person is a tenant or not is basically a question of fact and the findings of the
Court of Appeals and the Boards a quo are, generally, entitled to respect and non-disturbance. However, this Court
finds that there is a compelling reason for it to apply the exception of non-conclusiveness of their factual findings on
the ground that the findings of facts of both courts contradict each other. An overwhelming evidence in favor of the
late Vicente C. Barreto was overlooked and disregarded. Hence, a perusal of the records and documents is in order.

The issue of whether or not there exists a tenancy relationship between parties is best answered by law, specifically,
The Agricultural Tenancy Act of the Philippines18 which defines "agricultural tenancy" as:

. . . [T]he physical possession by a person of land devoted to agriculture belonging to, or legally possessed by,
another for the purpose of production through the labor of the former and of the members of his immediate farm
household, in consideration of which the former agrees to share the harvest with the latter, or to pay a price certain,
either in produce or in money, or in both.19

From the foregoing definition, the essential requisites20 of tenancy relationship are:

1. the parties are the landholder and the tenant;

2. the subject is agricultural land;

3. there is consent;

4. the purpose is agricultural production; and

5. there is consideration.

All of the above requisites are indispensable in order to create or establish tenancy relationship between the parties.
Inexorably, the absence of at least one requisite does not make the alleged tenant a de facto one for the simple
reason that unless an individual has established one’s status as a de jure tenant, he is not entitled to security of
tenure guaranteed by agricultural tenancy laws. Conversely, one cannot be ejected from the agricultural landholding
on grounds not provided by law. This is unequivocally stated in Section 7 of Rep. Act No. 3844, which provides:

SEC. 7. Tenure of Agricultural Leasehold Relation. – The agricultural leasehold relation once established shall
confer upon the agricultural lessee the right to continue working on the landholding until such leasehold relation is
extinguished. The agricultural lessee shall be entitled to security of tenure on his landholding and cannot be ejected
therefrom unless authorized by the Court for causes herein provided.

Fundamentally, the Boards a quo found that the first essential element – is that the parties are the landowner and
tenant – is very much absent in the case at bar. In reversing the DARAB’s decision, however, the Court of Appeals
noted that the DARAB overly relied on the fact that deceased Vicente C. Barreto did not join as party plaintiff the
other tenants of petitioner LUDO in CAR Cases No. 48 and No. 59 and instead was impleaded as party defendant in
CAR Case No. 59 along with petitioner LUDO. It held that:

The fact that Barreto did not institute a case or did not join the other tenants in CAR Case Nos. 48 and 59 does not
imply that he was not a tenant. He precisely filed his opposition before the Board to protect his rights as tenant on
the subject six (6) hectare coconut land. His action or rather inaction in the past does not bar him of the petitioners
from seeking whatever relief they may be entitled to under the law.21

In their memorandum submitted to the Court, petitioners LUDO and CPC, while admitting that Vicente Barreto was a
former worker-cultivator/tenant of the subject parcel of land, insist that he was such only during the time when the
landholding was still owned by Antonio Bartolome. Thus, they basically deny now the existence of a landlord-tenant
relationship between the parties of the instant case. It had the same view as the Boards a quo, that the first
essential element indicating the existence of a landlord-tenant relationship, "that the parties are the landowner and
the tenant or agricultural lessee,"22 is essentially lacking. They adamantly maintain that after its sale to petitioner
corporation, however, Vicente Barreto opted to waive his right to claim disturbance compensation to become
an overseer of the said parcel of land, together with its former owner, Antonio Bartolome. There being no landlord-
tenant relationship between Vicente Barreto and petitioner corporation, it asserts that, consequently, respondent
legal heirs of Vicente C. Barreto are not entitled to disturbance compensation.

We disagree.

Even as we uphold time and again the existence and validity of implied agricultural tenancy agreements, the inverse
does not essentially follow. The intention of a tenant to surrender the landholding and concomitantly the statutory
rights emanating from the status of being a tenant, absent a positive act, cannot, and should not, be presumed,
much less determined by implication alone. Otherwise, the right of a tenant to security of tenure becomes an illusory
one. Tenancy relations cannot be bargained away except for the strong reasons provided by law23 which must be
convincingly shown by evidence.

In the case at bar, it bears emphasizing that no one has denied the existence of the tenancy status of deceased
Vicente C. Barreto over the subject thirty-six-hectare landholding with respect to its former owner, Antonio
Bartolome. There being no waiver executed by deceased tenant Barreto, no less than the law clarifies that the
existence of an agricultural tenancy relationship is not terminated by mere changes of ownership, in cases of sale or
transfer of legal possession as in lease.24 Section 10 of Rep. Act No. 3844 provides that:

SEC. 10. Agricultural Leasehold Relation Not Extinguished by Expiration of Period, etc. – The agricultural leasehold
relation under this Code shall not be extinguished … by the sale, … of the landholding. In case the agricultural
lessor sells, … the purchaser … shall be subrogated to the rights and substituted to the obligations of the
agricultural lessor.
For this reason, when petitioner LUDO became the owner of the subject landholding, it became subrogated to the
rights and obligations of its predecessor-in-interest, Antonio Bartolome, his obligation under the law to the deceased
tenant, Vicente C. Barreto, continues and subsists until terminated as provided for by law.

Apropos the matter of deceased respondent Vicente C. Barreto’s designation as an overseer, it was held by the
Boards a quo that the nature of an overseer goes against the character of a tenant. In contrast, the Court of
Appeals’ estimation is that:

. . . [R]espondent’s purpose in designating Barreto’s (sic) as overseer was to bring about the production of coconut.
His designation would prove inutile without him performing tasks necessary to take care, supervise and manage the
subject landholding. Logically, in the process of taking care, supervising and managing the six-hectare coco land he
cultivated the same.25

A tenant has been defined under Section 5(a) of Rep. Act No. 1199 as a person who, himself, and with the aid
available from within his immediate household, cultivates the land belonging to or possessed by another, with the
latter’s consent for purposes of production, sharing the produce with the landholder under the share tenancy
system, or paying to the landholder a price certain or ascertainable in produce or in money or both, under the
leasehold system. Applying the preceding to the case at bar, what became apparent from the records is that though
the late Vicente C. Barreto was designated as a co-overseer of the subject landholding, he was also tilling the land
and had a sharing arrangement with petitioner LUDO and Antonio Bartolome. What is glittering, therefore, is that the
deceased also took on the added duty of being the overseer of the petitioners. Nothing in law and in the facts of the
case at bar excludes one from the other.

We cannot sustain the pronouncements of the Boards a quo to the effect that as early as 1975, the subject
landholding ceased to be agricultural in nature when Conrado F. Estrella, Minister of Agrarian Reform issued a
conversion permit26 allowing said conversion from agricultural to residential/commercial pursuant to the zoning
regulation passed by the legislative authority of Iligan City. The land having ceased to be agricultural as far back as
1975, there can be no current legitimate tenant to speak of.

To begin with, the declaration by the Boards a quo to the effect that as early as 1975, the subject landholding
ceased to be agricultural in nature when the DAR issued a conversion permit is extremely misleading because the
conversion permit was not issued in 1975, but was actually signed by then Secretary Estrella only on 30 March
1978. What was in reality referred to by the Boards was only City Ordinance No. 1313, otherwise known as the
Zoning Regulation of Iligan City. Pursuant thereto, the subject landholding of the case was reclassified from
agricultural to residential/commercial as such fell within the Commercial-Residential Zone of the City of Iligan. In
1975, the subject landholding was just merely reclassified and not converted.

Reclassification is very much different from conversion. The latter is the act of changing the current use of a piece of
agricultural land into some other use as approved by the DAR.27 Reclassification, in contrast, is the act of specifying
how agricultural lands shall be utilized for non-agricultural uses such as residential, industrial or commercial, as
embodied in the land use plan, subject to the requirements and procedure for land use conversion.28 Accordingly, a
mere reclassification of agricultural land does not automatically allow a landowner to change its use and thus cause
the ejectment of the tenants. Parties can still continue with their tenurial relationship even after such reclassification.
He has to undergo the process of conversion before he is permitted to use the agricultural land for other purposes.29

Conspicuously, the Court of Appeals disparaged the aforecited finding when it declared that:

. . . While it is a fact that as early as 1975, the area where the subject landholding is located was declared by City
Ordinance 1313 (Zoning Regulation of Iligan City) to be within a commercial-residential zone…, it is indubitable that
the subject six-hectare land was actually devoted to agricultural activity.

Under R.A. No. 6657, land devoted to agricultural activity is agricultural land (Sec. 3 [b]). The same law defines
agricultural activity as "the cultivation of the soil, planting of crops, growing of fruit trees, raising of livestock, poultry
or fish, including the harvesting of such farm products, and other farm activities and practices performed by a farmer
in conjunction with such farming operations done by persons whether natural or juridical" (Sec. 3 [c]).

Not only does the six-hectare landholding go through the foregoing activities at one point in time or another;
respondents further admitted that the land was devoted and utilized for the production and harvest of coconut
products.

On the basis of the foregoing, it is indubitable that the subject landholding is agricultural land.30

While we agree in the conclusion, we do not fully subscribe to the aforequoted ratiocination. What we stated in the
case of Spouses Cayetano and Patricia Tiongson, et al. v. Court of Appeals and Teodoro S. Mascaya31 is especially
fitting in the case at bar:

. . . The fact that a caretaker plants rice or corn on a residential lot in the middle of a residential subdivision in the
heart of a metropolitan area cannot by any strained interpretation of law convert it into agricultural land and subject it
to the agrarian reform program.
To set the record straight, a conversion permit was indeed issued to the petitioners by the DAR on 30 March 1978
allowing petitioner LUDO and accordingly co-petitioner CPC, being the developer, to change the current use of the
landholding subject of the case at bar. Notwithstanding such, however, it is axiomatic, as plainly provided for by
Section 36 of Rep. Act No. 3844:

SEC. 36. Possession of Landholding; Exceptions. – Notwithstanding any agreement as to the period or future
surrender, of the land, an agricultural lessee shall continue in the enjoyment and possession of his landholding
except when his dispossession has been authorized by the Court in a judgment that is final and executory if after
due hearing it is shown that:

1. The landholding is declared by the department head upon recommendation of the National Planning Commission
to be suited for residential, commercial, industrial or some other urban purposes: Provided, That the agricultural
lessee shall be entitled to disturbance compensation equivalent to five times the average of the gross harvests on
his landholding during the last five preceding calendar years;

....

From the foregoing provision of law, it is clear that a tenant can be lawfully ejected only if there is a court
authorization in a judgment that is final and executory and after a hearing where the reclassification/conversion of
the landholding was duly determined. If the court authorizes the ejectment, the tenant who is dispossessed of his
tenancy is entitled to disturbance compensation. Put simply, court proceedings are indispensable where the
reclassification/conversion of a landholding is duly determined before ejectment can be effected, which, in turn,
paves the way for the payment of disturbance compensation.

In the case at bar, though there appears to be no court proceeding which took cognizance of the
reclassification/application for conversion of the subject landholding from agricultural to residential/commercial, the
permit issued by the DAR on 30 March 1978 was never assailed and thus, attained finality. In the case of Bunye v.
Aquino,32 the Court allowed the payment of disturbance compensation because there was an order of conversion
issued by the DAR of the landholding from agricultural to residential. The decree was never questioned and thus
became final. Consequently, the tenants were ejected from the land and were thus awarded disturbance
compensation. From the preceding discussion, it stands to reason that deceased Vicente C. Barreto, who used to
be a tenant of petitioner LUDO at the time of the conversion of the subject landholding, is entitled to disturbance
compensation for his dispossession.

Having declared that deceased Vicente C. Barreto, who had been fittingly substituted by his legal heirs, is entitled to
disturbance compensation under the law, the next appropriate concern to be addressed is if such entitlement has
already prescribed by virtue of Section 38 of Rep. Act No. 3844:

SEC. 38. Statute of Limitations. – An action to enforce any cause of action under this Code shall be barred if not
commenced within three years after such cause of action accrued.

The Boards a quo and the petitioners are of the view that prescription has already set in, thus, the respondent heirs
of Vicente C. Barreto cannot now claim for payment of disturbance compensation. According to the decision of the
DARAB, the deceased Vicente C. Barreto’s cause of action arose in 1974 when the latter received notice of the
intended conversion of the subject landholding by petitioner LUDO. When the deceased filed the instant complaint in
1991, thirteen years had already passed, hence, beyond the three-year prescriptive period enunciated above.

On this matter, the Court agrees with the Court of Appeals, in its ruling, as contained in its Resolution dated 26
January 2001, which denied the motion for reconsideration filed by petitioners LUDO and CPC anchored on the
issue of prescription. It held that:

. . . It would appear however from the records that the respondents, through its general manager terminated the
services of the late petitioner Vicente Barreto only on July 29, 1991. The instant complaint was filed also in the same
year before the Office of the Agrarian Adjudicator in Iligan City.33

In fine, the Court cannot, in law and conscience, condone the eviction of the deceased Vicente C. Barreto, absent
the payment of disturbance compensation due him under the law.

WHEREFORE, in view of the foregoing, the instant petition is DENIED. The assailed Decision dated 24 November
2000, and the Resolution dated 26 January 2001, rendered by the Court of Appeals in CA-G.R. SP No. 46025, are
hereby AFFIRMED in toto. No costs.

SO ORDERED.