G.R. No. L-36626 - De La Merced vs. De Guzman

Case Summary (G.R. No. L-36626)

Factual Background

The record showed that De Guzman owned the riceland and that De la Merced was the agricultural lessee of the three-hectare portion. On June 22, 1970, De Guzman sent De la Merced a letter offering to sell the portion being cultivated and granting him ninety days to exercise the option. De la Merced received the letter on July 3, 1970. De la Merced informed the defendant that he intended to buy and/or pre-empt the land at a reasonable and just price, with assistance from the Land Authority and the Land Bank. At De la Merced’s request, the Office of the Agrarian Counsel convened a conference on August 12, 1970 to attempt to secure agreement on the purchase price and payment arrangement. The parties failed to reach an agreement.

On September 17, 1970, De la Merced filed a complaint for pre-emption in the Court of Agrarian Relations at Baliuag, Bulacan. The Land Authority and the Land Bank were joined as co-plaintiffs.

Trial Court Proceedings

On November 12, 1970, De Guzman moved to dismiss for lack of a cause of action. By order dated March 31, 1971, the trial court dismissed the complaint on two grounds: first, that the complaint failed to allege that De la Merced had tendered and consigned in court the reasonable price of the landholding within the ninety-day period fixed by Section 11 of Republic Act No. 3844; and second, that the ninety-day period was not interrupted by the mere filing of the complaint.

De la Merced, together with the Land Authority and the Land Bank, moved for reconsideration but the trial court denied the motions. They then elevated the case to the Court of Appeals. The Court of Appeals referred the matter to the Supreme Court because the assigned errors involved only legal issues.

The Court’s Interlocutory Direction on Mootness and Possession

During the Supreme Court proceedings, the Court issued a resolution on September 28, 1983 requiring the parties, within ten days from notice, to inform the Court whether Andres de la Merced was still in possession of the disputed land from 1971 to date, or whether the case had become moot and academic. Copies of the resolution were sent to multiple counsel. The record noted service defects for certain counsel due to death or nonholding of office at the given addresses, and the absence of proof of service as to the other parties.

Legal Issues

The Supreme Court confronted the legal sufficiency of the complaint in light of Section 11 of Republic Act No. 3844. The principal issues were whether the complaint stated a cause of action by alleging the required timely tender or consignation of the reasonable purchase price within the ninety-day period from written notice, and whether the filing of the complaint could interrupt or suspend that statutory period.

The Parties’ Contentions

The plaintiffs-appellants’ theory, as reflected in the allegations of the complaint, did not assert that De la Merced had tendered or consigned the reasonable price within the statutory period. Instead, it alleged that the Land Authority and the Land Bank were ready, able, and willing to extend De la Merced legal and financial assistance and to deposit an amount that the court might deem reasonable for the pre-emption. De Guzman, in turn, invoked the absence of these allegations as a defect fatal to the complaint for lack of a cause of action, and argued that the statutory time limit remained unaltered by the filing of the complaint.

Legal Basis and Reasoning

The Supreme Court focused on the statutory command in Section 11 of Republic Act No. 3844, which provides, in substance, that when the agricultural lessor decides to sell, the agricultural lessee has a preferential right to buy, and that the right may be exercised within ninety days from notice in writing served by the owner on all lessees affected. The Court held that the complaint failed to allege the necessary fact that the agricultural lessee tendered to the landowner or deposited in court the purchase price within that ninety-day period.

The Court explained that, for the court to render a valid judgment in accordance with the prayer, the complaint must state a cause of action. It therefore required allegations establishing a timely exercise of the pre-emption right in conformity with Section 11. The Court ruled that, in the case at bar, the complaint was fatally defective because it did not allege that the owner’s offer to sell was responded to within the prescribed period, and because it did not allege tender or consignation of the reasonable price within that period. In support, the Court cited Falcasantos vs. How Suy Ching, 91 Phil. 456, holding that failure to allege facts necessary to show the existence of a cause of action warrants dismissal.

The Court further rejected the notion that the ninety-day period could be suspended or interrupted. It emphasized that pre-emption and/or redemption is not a matter of intent; it depends on the payment or tender of the price within the time specified by law. It cited Basbas vs. Entena, 28 SCRA 665, to underscore that timeliness of payment or tender is what matters and that “how the pre-emptioner will raise the money” is immaterial. The Court also relied on the same case to clarify the practical function of tender: unless tender or consignation is made, litigation must be filed to ascertain the reasonable price, whereas prior tender can avoid controversy because the landowner may accept a genuinely reasonable offer, thereby sparing attorney’s fees and litigation expenses.

Applying these principles, the Court held that the readiness and willingness of the Land Authority or the Land Bank to finance the acquisition did not satisfy the statutory requirement. The Court reasoned that Section 11 made no special exception for the Land Authority or the Land Bank as pre-emptioners acting on behalf of the agricultural lessee. It adopted the view that, if a private individual could not demand an extensio

Case Syllabus (G.R. No. L-36626)

The case involved a complaint for pre-emption filed by the agricultural lessee against the landowner, with Land Authority and Land Bank joined as co-plaintiffs.
The dispute reached the Supreme Court after the Court of Appeals referred the case for review on the basis that the assigned errors raised purely legal questions.
The Supreme Court affirmed the trial court’s order dismissing the complaint, and imposed costs against appellant Andres De la Merced.

Parties and Procedural Posture

Appellant Andres de la Merced acted as the agricultural lessee of a three-hectare riceland.
Appellant Land Authority and appellant Land Bank were co-plaintiffs in the pre-emption complaint.
Appellee Teodoro de Guzman was the landowner of the riceland.
The trial court dismissed the complaint by order dated March 31, 1971.
The appellants filed motions for reconsideration, which the trial court denied.
The appellants elevated the case to the Court of Appeals, and the Court of Appeals referred it to the Supreme Court on purely legal questions.
The Court issued a September 28, 1983 resolution requiring the parties to inform it within ten days whether appellant Andres de la Merced was still in possession of the disputed land since 1971 or whether the case had become moot and academic.
The records showed no proof of service for the resolution on some counsel, and the Court noted counsel issues including a claim that Atty. Jose T. Nery died on October 23, 1975 and returned mail indicating Atty. Mateo J. Lorenzo was deceased.
The Court noted a Manifestation with Motion for Withdrawal of Appearance filed by Atty. Nicanor C. Sincioco, who stated he had never acted as counsel and was unable to provide the requested possession information.
The Supreme Court ultimately resolved the matter by addressing the legal sufficiency of the pre-emption complaint, rather than dismissing on mootness.

Key Factual Allegations

Appellant De la Merced was the agricultural lessee of a three-hectare riceland in Piel, Baliuag, Bulacan, owned by appellee De Guzman.
On June 22, 1970, appellee De Guzman offered to sell to De la Merced the portion he had been cultivating and granted 90 days to exercise the option.
De la Merced received the offer on July 3, 1970 and informed appellee that he would buy and/or pre-empt the land at a reasonable and just price with assistance of the Land Authority and Land Bank.
On August 12, 1970, the Office of the Agrarian Counsel called a conference to agree on purchase price and payment manner, but the parties could not agree.
On September 17, 1970, De la Merced filed a complaint for pre-emption in the Court of Agrarian Relations at Baliuag, Bulacan.
The complaint was joined by Land Authority and Land Bank as co-plaintiffs.
Appellants sought pre-emption without alleging the required tender or consignation of the reasonable purchase price within the statutory period.

Statutory Framework

Section 11 of Republic Act No. 3844 governed the lessee’s right of pre-emption, including both the preferential right and the period of exercise.
The statute required that the lessee’s right be exercised within 90 days from notice in writing served by the owner on all lessees affected.
The statutory right contemplated that the agricultural lessee’s pre-emption depended on the making of proper payment or tender within the specified period, rather than on mere expressions of willingness to finance.
The Court treated the 90-day limitation as a mandatory and equal requirement applicable to all qualified pre-emptioners.

Issues Presented

The central issue concerned whether the complaint stated a cause of action for pre-emption under Section 11, Republic Act No. 3844.
The case required the Court to determine whether the complaint’s allegations were fatally defective for failing to allege tender or consignation within the 90-day period.
The case also required clarification of whether filing the complaint or the lessee’s reliance on Land Authority or Land Bank assistance could interrupt, suspend, or relax the statutory 90-day period.
The case addressed whether pre-emption involved intent or instead depended on compliance with statutory payment or tender timing.

Contentions of the Parties

Appell