G.R. Nos. 106615, 108591, 109452, 109978 & 139379; January 15, 2004
SPOUSES ELIGIO P. MALLARI and MARCELINA I. MALLARI, petitioners, vs. IGNACIO ARCEGA, et al., respondents.

FACTS

The case involves a parcel of agricultural land (Lot 3364) originally owned by the Wijangco spouses and mortgaged to the Philippine National Bank (PNB). Upon foreclosure, PNB acquired the lot and later sold it to spouses Eligio and Marcelina Mallari in 1980. The respondents, Ignacio Arcega et al., are agricultural lessees on the land. Alleging they were not notified of the sale, they filed a petition for redemption under Section 12 of Republic Act No. 3844 (Agricultural Land Reform Code), as amended. To exercise this right, they presented a “Certification To Finance Redemption” dated January 15, 1982, issued by the then-president of the Land Bank of the Philippines (LBP), purporting to commit the bank to finance the redemption.
The Regional Trial Court, acting as an agrarian court, initially dismissed the petition for redemption. However, the Supreme Court, in a prior Decision dated March 20, 2002, reversed this and upheld the validity of the LBP certification, recognizing the lessees’ right to redeem. The Mallari spouses filed the instant motion for reconsideration of that 2002 Decision.

ISSUE

The core issue is whether the “Certification To Finance Redemption” issued by the Land Bank president constitutes a valid tender or consignation of the redemption price, which is an indispensable requirement for the proper exercise of the right of redemption under R.A. No. 3844 .

RULING

The Supreme Court GRANTED the motion for reconsideration, SET ASIDE its 2002 Decision, and REINSTATED the trial court’s dismissal of the petition for redemption. The Court held that the LBP certification was void and did not satisfy the requirement of tender or consignation. The legal logic is anchored on a strict interpretation of statutory procedure. Section 12 of R.A. No. 3844 , as amended, explicitly states that “The Department of Agrarian Reform shall initiate, while the Land Bank shall finance, said redemption.” This provision establishes a specific process where the DAR must first initiate the redemption before the LBP’s financing role is triggered. The certification, issued solely by the LBP president without prior DAR initiation, circumvented this mandated sequence. Furthermore, the certification violated LBP Circular Letter No. 3, which required such certifications to be issued by the LBP Manager for Operations upon DAR request. Since the certification was void for non-compliance with the law and internal rules, it could not be deemed a valid substitute for the actual tender or consignation of the redemption price. Without such valid tender or consignation, the agricultural lessees’ right of redemption was not properly exercised. While agrarian reform policy favors owner-cultivatorship, it cannot be implemented in a manner that disregards clear legal requirements or unduly prejudices the rights of innocent purchasers for value.