G.R. No. 106615 - Mallari vs. Arcega

Case Summary (G.R. No. 106615)

Nature of the Dispute

The consolidated petitions involved the tenants-cultivators’ insistence that they validly and timely exercised their right of redemption over Lot No. 3664 after it was foreclosed and sold to PNB. The Mallari spouses opposed redemption and, after separate agrarian and execution-related incidents, pursued claims for back rentals and other reliefs premised on the tenants’ alleged failure to redeem. Central to every issue was whether the tenants satisfied the jurisdictional requirements under Section 12 of R.A. No. 3844, as amended, particularly the need for notice, tender of payment or consignation, and the 180-day redemption period.

Factual Background: Foreclosure, PNB’s Sale, and the Tenants’ Attempted Redemption

On March 16, 1962, the Wijangcos mortgaged Lot No. 3664 and other lots to PNB. After the mortgage indebtedness was not paid, PNB foreclosed, and in the subsequent auction, the lots were awarded to PNB as the highest bidder. A Certificate of Sale was issued on March 17, 1978. The Wijangcos failed to redeem within the reglementary period, so ownership was consolidated in PNB. Transfer certificates of title were subsequently issued to PNB, including TCT No. 154516-R covering Lot No. 3664.

On July 10, 1980, PNB executed in favor of the spouses Eligio and Marcelina Mallari a Deed of Promise to Sell involving two parcels, one of which was Lot No. 3664. The Mallari spouses paid P473,000.00, constituting 20% of the purchase price, as a down payment. The balance of P1,892,000.00 was to be paid in three (3) equal yearly installments from 1981 to 1983. The contract further provided that PNB would retain ownership and title to the lots until the Mallari spouses completed payment of the last installment.

Before the Mallari spouses could pay the first amortization, the tenants attempted to redeem at P5,000.00 per hectare. The spouses declined the offer. The tenants then sought assistance from the (then) Ministry (later the Department) of Agrarian Reform and asked that the LBP be called to finance the redemption.

Agrarian Case No. 1908 and the Early Procedural Events

On July 22, 1981, 27 tenants instituted Agrarian Case No. 1908 before the CAR, Branch I at San Fernando, Pampanga. The action sought to compel the Wijangcos, PNB, and the Mallari spouses to allow redemption of the landholdings in Lot No. 3664 under R.A. No. 3844, as amended by R.A. No. 6389. During the initial RTC stage, 10 tenants entered into a compromise with the Mallari spouses. Later, three (3) more tenants withdrew, leaving 14 tenants as petitioners. Among the remaining tenants were Ignacio Arcega, Alfredo de Guzman, Ben Garcia, Marieta Jacinto, Celestino Magat, Juanito Vital, Percasio Catacutan, Torobia Serrano, Celestina Torno, Vicente Mallari, Rafael Manalo, Lorenzo Manarang, Emilio de Mesa, and Juan Pangilinan.

On November 18, 1981, the 14 tenants filed a Motion to Direct the Land Bank of the Philippines to Issue a Certificate of Availability of Funds to finance the redemption. The RTC denied the motion on December 24, 1981. The RTC required the tenants to show cause why the case should not be dismissed for failure to tender payment and/or consign. The tenants sought reconsideration and presented a certification dated January 15, 1982, signed by LBP’s President Basilio Estanislao, confirming that LBP would finance acquisition of the landholding subject of the redemption case if found consonant with Section 12 of R.A. No. 3844 and LBP’s policies, and that funds would be set aside upon receipt of the court’s directive.

First RTC Dismissal and Court of Appeals’ Reversal

Despite the LBP certification, the RTC, on January 27, 1982, denied reconsideration and dismissed the redemption petition. It held that the certification was merely conditional and did not amount to a valid consignation of the redemption price. It also held that the petition was filed beyond the 180-day reglementary period.

The tenants appealed to the Intermediate Appellate Court (later the Court of Appeals) docketed as CA-G.R. No. SP-13807-CAR. The Court of Appeals ruled that a tender or consignation was not necessary because the LBP certification would suffice. It also found that redemption was exercised within the 180-day period. The Court of Appeals set aside the RTC order and remanded the case to the RTC for further proceedings.

Supreme Court Decision in G.R. No. L-61093 and the Remand for Further Proceedings

The Mallari spouses then challenged the Court of Appeals ruling before the Supreme Court through a petition for review on certiorari, docketed as G.R. No. L-61093. They argued that the redemption period had prescribed and that the tenants made no valid tender or consignation.

In a Decision dated May 25, 1988, the Supreme Court, through former Chief Justice Pedro L. Yap, denied the Mallari spouses’ petition. The Supreme Court held that the tenants’ redemption right had not prescribed because no written notice of the sale was given by the vendee to the tenants as agricultural lessees, as required by law. It further held that it was not necessary for the lessees to make a tender of payment and/or consignation because the LBP certification to finance redemption was sufficient compliance with Section 12 of R.A. No. 3844, as amended. The Supreme Court remanded Agrarian Case No. 1908 to the RTC for further proceedings.

Post-Redemption Litigation: Back Rentals, DARAB Proceedings, and Continued Agrarian Incidents

While the agrarian case proceeded, the Mallari spouses filed separate complaints before the Provincial Adjudication Board of the Department of Agrarian Reform, DARAB Case Nos. 144-P’89 to 160-P’89, seeking dissolution of the tenancy relationship and payment of annual rentals corresponding to crop years from 1983-1984 to 1988-1989. On June 18, 1990, the RTC issued an order requiring the tenants to pay back rentals totaling P1,745,777.70. On November 8, 1990, the RTC rendered a decision dismissing the tenants’ redemption petition for the second time, “in utter disregard” of the Supreme Court’s earlier decision in G.R. No. L-61093. The RTC repeated essentially the same grounds it previously relied upon: lack of valid tender or consignation because of the alleged conditional nature of LBP’s certification, absence of evidence fixing a reasonable redemption price, and prescription due to filing beyond the 180-day period.

The tenants appealed again to the Court of Appeals, docketed as CA-G.R. SP CAR 25209. On June 9, 1992, the Court of Appeals reversed. It stressed that questions on the tenants’ compliance with Section 12’s jurisdictional requirements had already been resolved by the Supreme Court in the 1988 decision and that the RTC should have focused on determining the reasonable redemption price. The Court of Appeals also ruled that the tenants could not be held liable for back rentals for the period covered by the crop years from 1982-1983 up to 1989-1990, because the tenants had validly and promptly exercised redemption according to law. It held that the Mallari spouses’ rental claims must fail and that compulsory rental payments could not be exacted for landholdings deemed cultivated by the tenants as cultivators-owners from the time the LBP certification was presented, which was treated as equivalent to consignation or tender. The Court of Appeals set aside the RTC decision and remanded the case solely for the purpose of determining the redemption price and consideration, with instructions to implead the LBP as party defendant.

Supreme Court Consolidation: The Issues Raised in G.R. Nos. 106615 and 108591-139379

After the Court of Appeals remand, the Mallari spouses filed G.R. No. 106615 challenging the Court of Appeals decision reversing the RTC’s November 8, 1990 dismissal. They again framed the core issues as whether the LBP certification was sufficient compliance with Section 12, and whether the redemption period had expired.

In parallel, the tenants filed G.R. No. 108591, directly attacking several RTC orders recognizing the Mallari spouses’ demand for payment of back rentals for crop year 1991-1992. This grouping depended on the premise that the tenants had not exercised their right of redemption.

The litigation also involved DARAB proceedings. On June 2, 1993, the Mallari spouses filed additional petitions challenging Court of Appeals actions that affirmed the DARAB’s holding proceedings in abeyance until resolution of the redemption issue by the Supreme Court.

On November 4, 1994, the RTC issued an order granting the Mallari spouses’ motion for alias writ of execution of the June 18, 1990 order requiring payment of P1,745,777.70 as rentals for 1982-1983 to 1989-1990. The tenants impugned this through certiorari before the Court of Appeals, which on July 9, 1999 ruled that the issue on payment of redemption price was still pending resolution in the Supreme Court. The Mallari spouses then filed G.R. No. 139379 challenging the Court of Appeals’ July 9, 1999 decision.

The Supreme Court emphasized that all these issues hinged on G.R. No. 106615, specifically whether the tenants could still exercise the right of redemption under Section 12 of R.A. No. 3844, as amended.

Supreme Court’s Core Reasoning in G.R. No. 106615

The Supreme Court recalled the earlier procedural history. The RTC first dismissed the redemption petition in January 27, 1982 for (1) the alleged insufficiency of the LBP certification as a valid consignation and (2) lateness beyond the 180-day period. The Court of Appeals reversed. The Supreme Court then affirmed the reversal in G.R. No. L-61093, resolving the same jurisdictional questions in favor of the tenants. The Supreme Court reiterated the text of Section 12 providing for redemption within 180 days from written notice served by the vendee upon all lessees affected and the Department of Agrarian Reform upon registration of the sale, and requiring that the Department initiate while the Land Bank finances redemption.

In G.R. N

Case Syllabus (G.R. No. 106615)

The cases involved a parcel of agricultural land and the tenants-cultivators’ asserted right of redemption under Republic Act No. 3844, as amended by Republic Act No. 6389.
The petitions were consolidated because they involved the same agricultural land and hinged on the resolution of the redemption issue in G.R. No. 106615.
Spouses Eligio and Marcelina Mallari were petitioners in G.R. Nos. 106615, 109452, 109978 and 139379, while Arcega, et al. were respondents in those cases.
Arcega, et al. were petitioners in G.R. No. 108591, assailing specified RTC orders that recognized the Mallari spouses’ demand for back rentals, in effect treating the tenants as having failed to redeem.
The Court wrote finis to the long-pending disputes that continued despite earlier rulings.

Parties and Procedural Posture

G.R. No. 106615 presented the Mallari spouses’ direct challenge to a Court of Appeals decision reversing an RTC dismissal of Arcega, et al.’s redemption petition.
G.R. No. 108591 was a separate certiorari by Arcega, et al. contesting RTC orders that supported the Mallari spouses’ claims for back rentals for the crop year 1991-1992.
G.R. No. 109452 involved the Mallari spouses’ challenge to a DARAB-related matter where proceedings in DARAB cases had been held in abeyance pending final resolution of the redemption issue before the Court.
G.R. No. 109978 addressed the Mallari spouses’ challenge to a CA decision that set aside RTC orders relating to accounting and delivery of shares in sugarcane production for crop year 1991-1992.
G.R. No. 139379 challenged a CA decision setting aside an RTC order requiring Arcega, et al. to pay back rentals for crop years 1982-1983 to 1989-1990.
The Court emphasized that the resolution of all raised issues depended on whether Arcega, et al. could exercise redemption under Section 12 of R.A. No. 3844, as amended.
The Court proceeded to consider G.R. No. 106615 first, as it was determinative.

Subject Land and Transaction History

The land in controversy was an agricultural lot planted to sugarcane, described as Lot No. 3664 of the San Fernando Cadastre, located at Barrio Maimpis, San Fernando, Pampanga.
The land was formerly owned by spouses Roberto Wijangco and Asuncion Robles under T.C.T. No. 27507-R.
On March 16, 1962, the Wijangcos mortgaged Lot No. 3664 and other lots to the Philippine National Bank (PNB).
After the mortgagors defaulted, PNB foreclosed the mortgage and became the purchaser in the auction sale, with a Certificate of Sale issued on March 17, 1978.
Spouses Wijangco failed to redeem within the reglementary period, leading to ownership consolidation in PNB’s name and issuance of Transfer Certificates of Title, including TCT No. 154516-R covering Lot No. 3664.
On July 10, 1980, PNB executed a Deed of Promise to Sell with spouses Eligio and Marcelina Mallari, covering two parcels, including Lot No. 3664.
Under the promise to sell, the Mallari spouses paid P473,000.00 as down payment, and the remaining P1,892,000.00 was payable in three equal yearly installments from 1981 to 1983.
The contract provided that PNB retained ownership and title until the Mallari spouses paid the last installment.
Before the Mallari spouses could pay the first amortization, the tenants attempted redemption at P5,000.00 per hectare, but the offer was declined, prompting resort to agrarian authorities and the financing facility of the Land Bank of the Philippines (LBP).

Tenants’ Redemption Effort

On July 22, 1981, 27 tenants instituted Agrarian Case No. 1908 before the then Court of Agrarian Relations (CAR), Branch I, to compel redemption under R.A. No. 3844, as amended by R.A. No. 6389.
The action sought to compel the former owners (Wijangcos), PNB as mortgagee-transferee and vendor, and the Mallari spouses as vendees under the Deed of Promise to Sell to allow redemption.
During early RTC proceedings, ten tenants compromised with the Mallari spouses, and three withdrew, leaving 14 tenants as petitioners.
The remaining 14 tenants were identified by name, including Ignacio Arcega, Alfredo de Guzman, Ben Garcia, Celestino Magat, Juanito Vital, Percasio Catacutan, Torobia Manalo-Serrano, Celestina Torno, Marieta Jacinto, Vicente Mallari, Rafael Manalo, Lorenzo Manarang, Emilio de Mesa, and Juan Pangilinan.
On November 18, 1981, Arcega, et al. filed a Motion to Direct the Land Bank of the Philippines to Issue a Certificate of Availability of Funds for financing their redemption.
The RTC denied the motion in an order dated December 24, 1981, requiring Arcega, et al. to show cause why the case should not be dismissed for failure to tender payment and/or consignation.
During the reconsideration hearing, Arcega, et al. presented an LBP Certification dated January 15, 1982 stating that LBP would finance the redemption if found in consonance with Section 12 of R.A. No. 3844, as amended.

RTC Dismissal and CA Reversal

Despite the LBP Certification, the RTC in an order dated January 27, 1982 denied reconsideration and dismissed the redemption petition.
The RTC’s dismissal relied on two grounds tied to jurisdictional requirements: the LBP Certification was allegedly conditional and thus not a valid consignation, and the petition allegedly was filed beyond the statutory 180-day period.
Arcega, et al. appealed to the Intermediate Appellate Court (now CA) docketed as CA-G.R. No. SP-13807-CAR.
The CA ruled that tender of payment and/or consignation was not required when the LBP issued a financing certification, and it held that redemption was exercised within the 180-day period.
The CA set aside the RTC dismissal and remanded for further proceedings.
The Mallari spouses then challenged the CA decision before the Court via petition for review on certiorari docketed as G.R. No. L-61093.
In Mallari v. Court of Appeals, the Court denied the petition in a decision dated May 25, 1988, holding that redemption had not prescribed because no written notice of sale was given to the tenants upon registration as agricultural lessees, and that tender or consignation was unnecessary because the LBP certification sufficed under Section 12.

Supreme Court’s Prior Binding Ruling

The Court’s decision in G.R. No. L-61093 affirmed the CA’s resolution of the same jurisdictional questions later raised repeatedly by the parties.
The Court held that the tenants’ redemption right had not prescribed where the required written notice of sale was not served by the vendee on the lessees upon registration.
The Court further held that Section 12 of R.A. No. 3844 did not require tender of payment and/or consignation where the LBP issued a certification to finance redemption.
The Court reasoned that Sections on pre-emption and redemption should be read liberally as providing the same footing regard