A.M. No. RTJ-04-1888 - Maquiran vs. Grageda

Petitions filed by Aurelia Gua-An and Sonia Gua-An Mamon (petitioners) against Gertrudes Quirino, represented by Elmer Quirino (respondent).
The case reached the Court of Appeals where the CA rendered a decision reversing the DARAB ruling, which was later brought for review under Rule 45 of the Rules of Court.

A 2.8800-hectare agricultural land located in Batangan, Valencia, Bukidnon known as Lot 0899.
Covered by Certificate of Land Transfer (CLT) No. 0-025227 issued in the name of Prisco Quirino, Sr. under Presidential Decree (P.D.) No. 27 on October 16, 1979.

On February 27, 1985, Prisco Quirino, Sr. executed a deed of conditional sale transferring the subject land to Ernesto Bayagna.
The deed contained a repayment condition in the amount of Forty Thousand Pesos (P40,000.00) to be paid after eight years, subject to an automatic extension of four years, after which Ernesto would enjoy possession until repurchase.

Ernesto Bayagna possessed and cultivated the land for over 10 years.
In 1996, Prisco offered to redeem the land, but his offer was refused by Ernesto who allowed petitioner Aurelia, through her daughter Sonia, to redeem the lot.

After Prisco’s death, on January 30, 1998, respondent Gertrudes Quirino (through her son Elmer) filed a complaint for specific performance, redemption, reinstatement and damages against Ernesto and the petitioners before the Office of the Agrarian Reform Regional Adjudicator (RARAD).
Petitioners contested the claim stating that Prisco’s right was merely inchoate and that the deed was null and void for contravening laws and public policy; further arguing that the failure to tender redemption money barred the redemption.
On May 6, 1998, the RARAD dismissed the complaint for lack of merit.

On December 29, 2004, the Department of Agrarian Reform Adjudication Board (DARAB) declared that Prisco Quirino, Sr. had violated agrarian laws by abandoning the land, having failed to cultivate it continuously for two consecutive calendar years.
DARAB canceled CLT No. 0-025227 in Prisco’s name and ordered reallocation of the subject landholding to a qualified beneficiary.

The CA reversed the DARAB decision, characterizing the pacto de retro sale as an equitable mortgage rather than an outright sale.
The CA held that as a qualified beneficiary Prisco (and his heirs) possessed security of tenure and thus were entitled to a preferential right of redemption over the subject landholding.

The Supreme Court found the petition meritorious.
It reinstated the DARAB decision, setting aside the CA decision, on the basis that the deed of conditional sale violated agrarian reform law requirements.

Whether the deed of conditional sale between Prisco and Ernesto, labeled as a pacto de retro sale, constituted an absolute transfer of title or merely functioned as an equitable mortgage intended to secure a debt.
Whether such a transaction circumvents the prohibitions under P.D. No. 27 and the Comprehensive Agrarian Reform Law (R.A. 6657).

Whether Prisco’s purported right to redeem the land, as well as the transfer of this right to the petitioners, is valid in light of the alleged failure to meet legal requirements.
Whether the failure of Ernesto to tender and consign the redemption money negates the respondent’s cause of action or affects the validity of the redemption.

Whether Prisco’s act of surrendering possession and cultivation of the land to Ernesto for a prolonged period (11 years) constitutes abandonment such that his rights under the conditional sale are nullified.
Whether such abandonment, in conjunction with the statutory prohibitions, precludes any valid exercise of the preferential right of redemption.