LEONILA LAUREL ALMEDA AND VENANCIO ALMEDA, PETITIONERS, VS. THE HONORABLE COURT OF APPEALS AND EULOGIO GONZALES, RESPONDENTS.

This is an agrarian case.  Three
questions of consequential effects are raised: 
first, is there a tenant’s right of redemption in sugar and
coconut lands; second, is prior tender or judicial consignation of the
redemption price a condition precedent for the valid exercise of the right of
redemption; and third, does the Court of Agrarian Relations have
jurisdiction over complaints for redemption of sugar and coconut lands.

Respondent Eulogio Gonzales is an
agricultural share tenant of Glicerio, Sinfroso, Susana, Maria, Sebastian, Rufina,
Bienvenido, Besmark and
Cesar, all surnamed Angeles, on their 46,529-square land situated in Tanauan, Batangas, and devoted to
sugar cane and coconuts.  On September 30, 1968, the landowners
sold the property to petitioners-spouses Leonila
Laurel Almeda and Venancio Almeda without notifying respondent-tenant in writing of
the sale.  The document of sale was
registered with the Register of Deeds of Tanauan, Batangas on March
27, 1969.  Respondent-tenant
thus seeks the redemption of the land in a complaint filed on March 27, 1971, pursuant to the
provisions of Sections 11 and 12 of the Code of Agrarian Reforms, with the
Court of Agrarian Relations at Lipa
City.

Answering the complaint, petitioners-spouses state, among other
things, that long before the execution of the deed of sale, Glicerio
Angeles and his nephew Cesar Angeles first offered the sale of the land to
respondent Gonzales, but the latter said that he had no money; that
respondent-tenant, instead, went personally to the house of petitioners-spouses
and implored them to buy the land for fear that if someone else would buy the
land, he may not be taken in as tenant; that respondent-tenant is a mere dummy
of someone deeply interested in buying the land; that respondent-tenant made no
tender of payment or any valid consignation in court at the time he filed the
complaint for redemption.

At the hearing of May
29, 1973, the parties waived their right to present evidence and,
instead, agreed to file simultaneous memoranda upon which the decision of the
court would be based.

On October 10, 1973,
the Agrarian Court rendered
judgment authorizing the respondent-tenant, Eulogio
Gonzales, to redeem the tenanted land for P24,000.00, the said amount to be
deposited by him with the Clerk of Court within fifteen (15) days from receipt
of the decision.

Petitioners-spouses excepted to the ruling of the Agrarian
Court and appealed the case to the Court of
Appeals.  On January 30, 1976, the Appellate Court, however,
affirmed the decision of the Agrarian Court.  Denied of their motions for reconsideration,
petitioners-spouses instituted the present petition for review.

We find the appeal to be
impressed with merits.

1. Prior to the enactment of the Agricultural Land Reform Code (RA
3844), no right of preference in the sale of the land under cultivation was
enjoyed by the tenant-farmer.  The
absence of this right freely opened the way to the landlords to ease out their
tenants from the land by ostensible conveyance of said land to another tenant who, in turn, sues for the ejectment of the first tenant on ground of personal
cultivation.  While many of these sales
were simulated, the tenant is oftenly evicted from
the land because of the formal transfer of ownership in the land.^[1]
On August 8, 1963, the Agricultural Land Reform Code was passed, impressed with
the policy of the State, among other things, “(t)o establish owner-cultivatorship and the economic family-size farm as the
basis of Philippine agriculture; to achieve a dignified existence for the small
farmers free from pernicious institutional restraints and practices; to make
the small farmers more independent, self-reliant and responsible citizens, and
a source of genuine strength in our democratic society.”^[2]
More importantly, a new right was given to the tenants-farmers:  the right of pre-emption and redemption.  It bolsters their security of tenure and
further encourages them to become owner-cultivators.^[3]
Thus, Section 11 provides: “In case the agricultural lessor
decides to sell the landholding, the agricultural lessee shall have the
preferential right to buy the same under reasonable terms and conditions.  * * * *. 
The right of pre-emption under this Section may be exercised within one
hundred eighty days from notice in writing, which shall be served by the owner
on all lessees affected and the Department of Agrarian Reform.  If the agricultural lessee agrees with the
terms and conditions of the sale, he must give notice in writing to the
agricultural lessor of his intention to exercise his
right of pre-emption within the balance of one hundred eighty days’ period
still available to him, but in any case not less than thirty days.  He must either tender payment of, or
present a certificate from the land bank that it shall make payment pursuant to
section eighty of this Code on the price of the landholding to the agricultural
lessor.  If
the latter refuses to accept such tender or presentment, he may consign
it with the court.” As protection of this right, Section 12 was inserted:
“In case the landholding is sold to a third person without the knowledge
of the agricultural lessee, the latter shall have the right to redeem the same
at a reasonable price and consideration. 
* * * *.  The right of redemption under this section may be exercised within one
hundred eighty days from notice in writing which shall be served by the vendee
on all lessees affected and the Department of Agrarian Reform upon the
registration of the sale, and shall have priority over any other right of legal
redemption.  The redemption price shall
be the reasonable price of the land at the time of the sale.”^[4] In the precedential
case of Hidalgo v. Hidalgo,^[5] this right was held applicable to both leasehold
tenants and share tenants.

Presently, We are faced with an intricate question:  is this right of redemption available to
tenants in sugar and coconut lands?  We answer yes.  Among those exempted from the automatic
conversion to agricultural leasehold upon the effectivity
of the Agricultural Land Reform Code in 1963 or even after its amendments (Code
of Agrarian Reforms) are sugar lands. 
Section 4 thereof states: “Agricultural share tenancy
throughout the country, as herein defined, is hereby declared contrary to
public policy and shall be automatically converted to agricultural leasehold
upon the effectivity of this section.  * * * *. 
Provided, That in order not to jeopardize international
commitments, lands devoted to crops covered by marketing allotments
shall be made the subject of a separate proclamation by the President upon
recommendation of the department head that adequate provisions, such as the
organization of cooperatives marketing agreement, or similar other workable arrangements, have been made to insure
efficient management on all matters requiring synchronization of the
agricultural with the processing phases of such crops * * * *.” Sugar is, of course, one crop covered by
marketing allotments.  In other words,
this section recognizes share tenancy in sugar lands until after
a special proclamation is made, which proclamation shall have the same effect
of an executive proclamation of the operation of the Department of Agrarian
Reform in any region or locality:  the
share tenants in the lands affected will become agricultural lessees at the
beginning of the agricultural year next
succeeding the year in which the proclamation is made.^[6] But, there is nothing readable or
even discernible in the law denying to tenants in sugar lands the right
of pre-emption and redemption under the Code. 
The exemption is purely limited to the tenancy system; it does
not exclude the other rights conferred by the Code, such as the right of
pre-emption and redemption.  In the same
manner, coconut lands are exempted from the Code only with respect to
the consideration and tenancy system prevailing, implying that in other matters
– the right of pre-emption and redemption which does not refer to the
consideration of the tenancy – the provisions of the Code apply.  Thus, Section 35 states:
“Notwithstanding the provisions of the preceding Sections, in the case of
fishponds, saltbeds and lands principally planted to
citrus, coconuts, cacao, coffee, durian, and other similar permanent
trees at the time of the approval of this Code, the consideration, as
well as the tenancy system prevailing, shall be governed by the
provisions of Republic Act Numbered Eleven Hundred and Ninety-Nine, as
amended.”

It is to be noted that under the new Constitution, property
ownership is impressed with social function. 
Property use must not only be for the benefit of the owner but of
society as well.  The State, in the
promotion of social justice, may “regulate the acquisition, ownership,
use, enjoyment and disposition of private property, and equitably
diffuse property . . . . . . ownership and profits.”^[7]
One governmental policy of recent date projects the emancipation of tenants
from the bondage of the soil and the transfer to them of the ownership of the
land they till.  This is Presidential
Decree No. 27 of October 21, 1972, ordaining that all tenant farmers “of
private agricultural lands devoted to rice and corn under a system of share­crop
or lease-tenancy, whether classified as landed estates or not” shall be deemed “owner
of a portion constituting a family-size farm of five (5) hectares if not
irrigated and three (3) hectares if irrigated.”^[8]

 2. Nevertheless, while the Code secures to the tenant-farmer this
right of redemption, in particular, the exercise thereof must be in accordance
with law in order to be valid. “The timely exercise of the right of legal
redemption,” said the Court in Basbas
v. Entena,^[9]
“requires either tender of the price or valid consignation thereof.”
The statutory periods within which the right must be exercised “would be
rendered meaningless and of easy evasion unless the redemptioner
is required to make an actual tender in good faith of what he believed to be
reasonable price of the land sought to be redeemed.” “The existence
of the right of redemption operates to depress the market value of the land
until the period expires, and to render that period indefinite by permitting
the tenant to file a suit for redemption, with either party unable to foresee
when final judgment will terminate the action, would render nugatory the period
of two years (180 days under the new law) fixed by the statute for making the
redemption and virtually paralyze any efforts of the landowner to realize the
value of his land.  No buyer can be
expected to acquire it without any certainty as to the amount for which it may
be redeemed, so that he can recover at least his investment in case of
redemption.  In the meantime, the
landowner’s needs and obligations cannot be met.  It is doubtful if any such result was
intended by the statute, absent clear wording to that effect.”^[10]
Bona-fide redemption necessarily imports a seasonable and valid tender
of the entire repurchase price.  The
right of a redemptioner to pay a “reasonable
price” does not excuse him from the duty to make proper tender of
the price that can be honestly deemed reasonable under the circumstances,
without prejudice to final arbitration by the courts. “It is not difficult
to discern why the redemption price should either be fully offered in legal
tender or else validly consigned in court. 
Only by such means can the buyer become certain that the offer to redeem
is one made seriously and in good faith. 
A buyer cannot be expected to entertain an offer of redemption without
attendant evidence that the redemptioner can, and is
willing to accomplish the repurchase
immediately.  A different rule would
leave the buyer open to harassment by speculators or crackpots, as well as to
unnecessary prolongation of the redemption period, contrary to the policy of
the law.  While consignation of the
tendered price is not always necessary because legal redemption is not made to
discharge a pre-existing debt (Asturias Sugar Central v. Cane Molasses Co., 60
Phil. 253), a valid tender is indispensable, for the reasons already
stated.  Of course, consignation of the
price would remove all controversy as to the redemptioner’s
ability to pay at the proper time.”^[11]

In the case before Us, neither prior tender nor judicial
consignation of the redemption price accompanied the filing of the redemption
suit.  In fact, the Agrarian Court had
yet to order, when it rendered its decision on October 10, 1973 (complaint was
filed on March 27, 1971), respondent-tenant to deposit the amount of P24,000.00
as redemption price with the Clerk of Court within fifteen (15) days from
receipt of the decision.  The absence of
such tender or consignation leaves Us, therefore, with no alternative but to
declare that respondent-tenant had failed to exercise his right of redemption
in accordance with law.

3. Reliance cannot be placed upon the case of Hidalgo v.
Hidalgo^[12]
as excuse for the failure to make the requisite tender or consignation in
court, because the Court did not rule therein that prior tender
or judicial consignation of the redemption price is not required for the valid
exercise of the right of redemption.  In
that case, the spouses Igmidio Hidalgo
and Martina Rosales were the share
tenants of Policarpio Hidalgo
on his 22,876-square meter agricultural land in Lumil,
San Jose, Batangas,
while the spouses Hilario Aguila
and Adela Hidalgo were his tenants on a 7,638-square
meter land.  Policarpio
Hidalgo sold these lands without
notifying his tenants; and so, the tenants filed petitions before the Court of Agrarian Relations seeking the redemption of
the lands under Section 12 of the Code. 
The Agrarian Court dismissed the petitions for the reason that
the right of redemption is available to leasehold tenants only but not
to share tenants.  On review, the Court
ruled that while the Agrarian Court “correctly focused on the sole
issue of law” – whether the right of redemption granted by
Section 12 of Republic Act No. 3844 is applicable to share tenants – it
(Agrarian Court) “arrived at its erroneous conclusion that the
right of redemption granted by Section 12 of the Land Reform Code is available
to leasehold tenants only but not to share tenants.” The Court said that
“(t)he Code intended * * * to afford the farmers who transitionally continued
to be share tenants after its enactment but who inexorably would be
agricultural lessees by virtue of the Code’s proclaimed abolition of tenancy,
the same priority and preferential right as those other share tenants,
who upon the enactment of the Code or soon thereafter were earlier converted
by fortuitous circumstance into agricultural lessees, to acquire the lands
under their cultivation in the event of their voluntary sale by the owner or of
their acquisition, by expropriation or otherwise, by the Land Authority.” But,
the Court did not rule that tender of payment or consignation of the
redemption price in court is not a requisite in the valid exercise of the right
of redemption.  In fact, it said that
“(i)n the absence of any provision in the Code
as to the manner of and amounts payable on redemption, the pertinent
provisions of the Civil Code apply in a suppletory
character” which, of course, imposes tender of payment or judicial consignation
of the repurchase price as condition for valid redemption.  Besides, it is noteworthy that in that case
petitioners-tenants’ possession of funds and compliance with the
requirements of redemption were not questioned, the case having been
submitted and decided on the sole legal issue of the right of redemption
being available to them as share tenants.

4. As a consequence, the Court of Agrarian Relations has
jurisdiction over suits for redemption, like the present case, of sugar and
coconut lands.  Section 154 of the Agricultural
Land Reform Code, as amended, states: “The Court of Agrarian Relations
shall have original and exclusive jurisdiction over (1) all cases or actions
involving matters, controversies, disputes, or money
claims arising from agrarian relations * * * *.” Since this case
involves a matter, controversy or dispute “arising from agrarian
relations” – whether respondent-tenant on sugar and coconut lands has the
right of redemption – it is definite that the Agrarian
Court has jurisdiction to hear and decide the
same.^[13]
The Court of Agrarian Relations came into being for the enforcement of all laws
and regulations governing the relations between capital and labor on all
agricultural lands under any system of cultivation with original and exclusive
jurisdiction over the entire Philippines, to consider, investigate, decide and
settle all questions, matters, controversies, or disputes involving or arising
from such relationship.^[14]

ACCORDINGLY, the appealed decision of the Court of Appeals
is hereby reversed and set aside. 
Respondent Eulogio Gonzales is hereby held not
to have validly exercised his right of redemption over his tenanted
agricultural land.  No costs.

SO ORDERED.

Teehankee, (Chairman), Muñoz Palma, Fernandez, and
Guerrero, JJ., concur.

Makasiar, J., reserves his vote.

^[1]
Montemayor, Labor, Agrarian and Social Legis­lation,
Vol. 3, 1967 ed., at 246.

^[2]
Sec. 2, Agricultural Land Reform Code, as amended.

^[3]
Op. Cit.

^[4]
Agricultural Land Reform Code, as amended, now known as “Code of Agrarian
Reforms.”

^[5]
L-25327-28, May 29, 1970,
33 SCRA 105.

^[6]
See Montemayor, Labor, Agrarian and Social
Legislation, Vol. 3, 1967 ed., at 230.

^[7]
Art. II, Sec. 6, 1973 Constitution; Alfanta v.
Noe, L-32362, September
19, 1973, 53 SCRA 84.

^[8]
Villanueva v. Court of Appeals, L-37653, June 28, 1974, 57 SCRA 724.

^[9]
L-26255, June 30, 1969, 28
SCRA 669-672.

^[10]
Idem.

^[11]
Conejero v. Court of Appeals, L-21812, April 29, 1966, 16 SCRA 775.

^[12]
L-25327-28, May 29, 1970,
33 SCRA 105.

^[13]
Lacson v. Pineda, L-28523, July 16, 1971, 40 SCRA 30; Ferrer v. Villamor,
L-33293, Sept. 30, 1974, 60
SCRA 106.

^[14]
Salandanan v. Tizon,
L-30290, February 24, 1975,
62 SCRA 388.