ENRIQUE BERNARDO, ET AL., PETITIONERS, VS. CRISOSTOMO S. BERNARDO AND THE COURT OF APPEALS, RESPONDENTS.

Enrique Bernardo, his wife and children, petition this Court for a
review of the decision of the Court of Appeals (in its case No.
6677-R), declaring the respondent Crisostomo R. Bernardo entitled to
preference under Commonwealth Acts Nos. 20 and 539, in the acquisition
of lot No. 462-A of the “Capellania de Concepcion”, also known as lot
No. 4, block No. 26, of the Tambobong Estate plan, located in Malabon,
Rizal, and having an area of 208 square meters.

It is uncontested fact that on December 31, 1947, the Republic of
the Philippines purchased from the Roman Catholic Church the estate
known as the “Capellania de Tambobong” in Malabon, Rizal, under the
provisions of section 1, of Commonwealth Act No. 539. Said Act
authorizes the expropriation or purchase of private lands and that
lands acquired thereunder should be subdivided into lots, for resale at
reasonable prices to “their bona fide tenants or occupants.”
Crisostomo R. Bernardo, respondent herein, applied to the Rural
Progress Administration for the purchase of the lot in question.
Petitioners Enrique Bernardo, et al., contested the application and
claimed preferential right to such purchase, and on January 12, 1948,
the Rural Progress Administration resolved to recognize the petitioners
as entitled to preference. The respondents then appealed to the Court
of First Instance of Rizal, and the latter upheld their claim, and the
decision was affirmed by the Court of Appeals.

The decision of the Court of Appeals expressly finds that:

“* * * It has been incontestably proven that the
disputed lot had been held under lease by appellee’s deceased parents
and later by him (appellee) continuously from 1912 to 1947. The
appellee’s predecessors paid the rentals due on the said lot from the
commencement of their leasehold rights up to 1936, when Teodora Santos
died. The appellee continued paying the rents on the same lot from 1936
to December 31, 1947, when the Government acquired the entire
Capellania de Concepcion estate. Since 1912, the values of the
leasehold right of appellee amounts to about P4,000.00.

The
alleged preferential right of the appellants to the purchase of the
disputed lot, which was also the main basis of the decision of the
Rural Progress Administration, is their claim of actual occupation, of
the lot for many years before the acquisition of the Concepcion estate
by the Government. The appellants’ occupation of the premises is not
denied by the appellee. Appellee’s witness, Otli Santos, however, said
that the late Romulo Bernardo had allowed his uncle, appellant Enrique
Bernardo, to stay in the premises since the year 1918. (Petitioner’s
Brief, pp. 72-73).

The Court of Appeals also found that the house standing on the lot
had been since July 13, 1944, sold by petitioner Enrique Bernardo to
the respondent, who thereby became its owner; that because of family
relationship, the petitioners “were able to remain in the premises due
to the tolerance of, and out of charity from, the appellee (respondent
Crisostomo Bernardo) and his deceased parents who were the rightful
lessees of the lot in question.”

The Court of Appeals likewise found and declared in its decision
that since February 1, 1945, the respondent Crisostomo Bernardo
required the petitioner to vacate the premises. Finally, we understand
that in Case No. 6734-R, the Court of Appeals declared valid the sale
of the house on the lot in question made in 1944 by petitioner Enrique
Bernardo in favor of respondent Crisostomo R. Bernardo, and that the
aforesaid judgment is now final.

There are thus before us, disputing” the right of preference to the
acquisition of the lot, the respondent who is the owner of the house
standing on said lot since 1944, and has held the land in lawful
tenancy since 1912, paying rents and taxes thereon; and the petitioner,
who was allowed by respondent, out of deference and charity, to
gratuitously occupy the lot and live therein since 1918. Upon the facts
on record, we are of the opinion that petitioner does not come under
the description “bona fide tenant or occupant” employed in the statute (C.A. 539).

The term “bona fide occupant” (admittedly petitioner is not a
tenant) has been defined as “one who supposes he has a good title and
knows of no adverse claim” (Philips vs. Stroup, 17 Atl. 220,
221) ; “one who not only honestly supposes himself to be vested with
true title but is ignorant that the title is contested by any other
person claiming a superior right to it” (Grosham VH. Ware, 79 Ala. 192,
199) ; definitions that correspond closely to that of a possessor in
good faith in our Civil Law (Civil Code of 1889, art. 433; new Civil
Code, art. 526). The essence of the bona fides or good faith,
therefore, lies in honest belief in the validity of one’s right,
ignorance of a superior claim, and absence of intention to overreach
another. The petitioner Enrique Bernardo falls short of this standard:
for the precarious nature of his occupancy, as mere licensee of
respondents, duty bound to protect and restore that possession to its
real and legitimate holders upon demand, could never be hidden from
him. Moreover, at the time the Government acquired the Tambobong
Estate, petitioner had already parted with the house that was his
remaining link with the occupancy of the lot; and since 1945, even
before the Government’s purchase, he had been required to vacate. Thus
bereft of all stable interest in the land, petitioner nevertheless
seeks to turn respondent’s past deferential regard to his own
advantage, and to exploit his gratuitous stay at respondent’s expense
for the purpose of ousting his benefactors Ind wiping out the
investment that the latter, and their predecessors in interest, had
established and preserved by faithful payment for thirty years of the
rental charged for the lot in question. That the law, in preferring
“bona fide occupants,’ intended to protect or sanction such utter
disregard of fair dealing may well be doubted.

The petitioner seeks to justify his stand by claiming that the
policy of the government, ever since the start of the American
sovereignty, had been to acquire the landed estates for the benefit of
their “actual occupants,” as allegedly exemplified in Acts 1170 and
1933 (Friar Lands’ Acts), and Commonwealth Acts Nos. 20, 260, 378, and
539 (Homesite Acts); that the words “bona fide occupants” employed in
the Commonwealth Acts are equivalent to “actual” occupants. Two
powerful reasons nullify this contention. The first is that section 7
of Act 1170 of the old Philippine Legislature, employs the terms
“actual bona fide settlers and occupants”, plainly indicating that
“actual” and “bona fide” are not synonymous, while the Commonwealth
acts deleted the term “actual” and solely used the words “bona fide
occupants”, thereby emphasizing the requirement that the prospective
beneficiaries of the acts should be endowed with legitimate tenure. The
second reason is that in carrying out its social readjustment policies,
the government could not simply lay aside moral standards, and aim to
favor usurpers, squatters, and intruders, unmindful of the lawful or
unlawful origin and character of their occupancy. Such a policy would
perpetuate conflicts instead of attaining their just solution. It is
safe to say that the term “bona fide occupants” was not designed to
cloak and protect violence, strategy, double dealing, or breach of
trust.

That the underlying motive behind the Homesite Acts is the desire
that “the heads of the families concerned be given opportunity to
become the owners of their homes and residential lots in which they and
their forbears have been raised and born” (Messages of the President,
Vol. 4, pp. 288-290), favors the respondents rather than the
petitioner, for it is an inalterable fact on record that the rentals
and taxes on the lot in question were always paid by the parents of
respondent Crisostomo Bernardo and continued by the latter upon his
parents’ death, to the exclusion of herein respondent. As pointed out
by the decision under review, had not the respondents taken and
maintained sincere and affirmative steps to own their lands through a
continuous and faithful payment of their obligations, the chances are
that the petitioner would have been long ago speedily ejected from the
premises of the former landowners. To which may be added that at
present, not being the lessee of the lot, nor the owner of the house
standing thereon, the petitioner’s interest in this particular lot
appears to be a purely speculative one.

We therefore rule that a person who, at the time of the acquisition
of the Tambobong Estate by the Government, has been gratuitously
occupying a lot therein by mere tolerance of its lessee, and who does
not own the house erected on such lot, is not a “bona fide occupant”
entitled to its acquisition, as the term is used in Commonwealth Act
No. 539. Whether or not the situation would be different if the
occupant were a sublessee of the lot, need not be decided in this case,
the issue not being involved.

Wherefore, the decision appealed from, is affirmed, with costs against the petitioner.

Bengzon, Padilla, Montemayor, Reyes, A., and Jugo, JJ., concur.

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CONCURRING

BAUTISTA ANGELO, J.:

I concur with the majority solely because of the peculiar facts of this case; but I am of the opinion that, between a bona fide
occupant and a tenant or lessee, the spirit of the law is to prefer the
former especially if the latter has already a piece of land of his own.

---

DISSENTING

PARAS, C. J.:

On December 12, 1947, the herein respondent Crisostomo S. Bernardo
filed an application with the Rural Progress Administration for the
purchase of lot No. 462-A of the “Capellania de Concepcion”, now lot
No. 4, block No, 26, of the Tambobong Estate plan, situated in
Concepcion, Malabon, Rizal, and containing an area of 208 square
meters. The herein petitioners, Enrique Bernardo, his wife and
children, also applied for the purchase of the same lot. The basis of
both applications is Commonwealth Act No. 20, as amended by
Commonwealth Act No. 539. In its decision dated January 12, 1948, the
Rural Progress Administration awarded the lot to the petitioners, and
on July 9, 1948 the corresponding deed was executed in their favor.

On July 26, 1948, respondent Bernardo filed an action in the Court
of First Instance of Rizal against the petitioners and the Rural
Progress Administration, praying that the decision of the Rural
Progress Administration, as well as the corresponding sale in favor of
the petitioners, be declared null and void; that respondent Bernardo be
declared entitled to purchase the lot in question; that the petitioners
be ordered to vacate the lot and surrender the possession thereof; and
that the petitioners be sentenced to pay respondent Bernardo, by way of
damages, the sum of P20.00 per month from February 1, 1945 until its
surrender to said respondent. After hearing, the Court of First
Instance of Rizal rendered on February 15, 1950 a decision in favor of
respondent Bernardo, the dispositive part of which reads as follows:

“In view of the foregoing:, the Court renders
judgment in favor of the plaintiff and against the defendants,
declaring the decision of the Rural Progress Administration dated
January 12, 1948, as well as the sale of the lot in question by said
Rural Progress Administration to defendants Bernardo null and void and
of ,no effect; ordering said defendant Rural Progress Administration to
sell the lot in question to the plaintiff who is the bona fide tenant
of the lot in dispute and the owner of the house standing thereon;
ordering the defendants Bernardo to vacate the lot in question and to
pay to the plaintiff damages in the sum of P20.00 per month,
representing the reasonable rental value for their illegal use and
occupation of said lot, from February 1, 1945 until the said lot is
vacated by defendant Bernardo; and sentencing all defendants to pay the
costs of the suit.”

From this decision the petitioners appealed to the Court of Appeals
which, on April 17, 1952, affirmed the decision of the court of origin in toto, with costs against the petitioners. The latter have elevated the case before us on certiorari.

The facts relied upon by the Court of First Instance of Rizal and
the Court of Appeals are to the effect that the deceased parents of the
respondent Bernardo and later said respondent himself had been the
lessee of the lot from 1912 to 1947; that respondent’s predecessors
paid its rental up to 1936 when his mother Teodora Santos died; that
from 1936 respondent Bernardo in turn paid the rentals up to December
31, 1947, when the Government acquired the entire “Capellania de
Concepcion” estate; that he owns the house standing on the lot; that
while the petitioners actually occupied said lot since 1918, their
occupancy was by mere tolerance of and out of charity from respondent
Bernardo and his deceased parents; that the petitioners were required
by respondent Bernardo to vacate the premises on February 1, 1945, or
two years before the acquisition of the “Capellania de Conception”
estate by the Government.

Upon the other hand, the petitioners’ preferential right to acquire the lot is premised on their actual occupancy since 1918.

Commonwealth Act No. 20, enacted on July 11, 1936, in section 1,
provided that “the President of the Philippines is hereby authorized to
order the institution of expropriation proceeding or to enter into
negotiations for the purpose of acquiring portions of large landed
estates which are now used as home sites and reselling them at costs to
their bona fide occupants.” It will be noted that, under this provision, portions of large landed estates used as homesites would be expropriated or acquired by the Government for resale to their bona fide occupants.
Commonwealth Act No. 539, enacted on May 26, 1940, and amending
Commonwealth Act No. 20, provides that “the President of the
Philippines is authorized to acquire private lands or any interest
therein, through purchase or expropriation, and to subdivide the same
into home lots or small farms for resale at reasonable prices and under
such conditions as he may fix to their bona fide tenants or
occupants or to private individuals who will work the lands themselves
and who are qualified to acquire and own lands in the Philippines.”
This latter provision differs from Commonwealth Act No. 20 in the sense
that private lands are to be acquired or expropriated for subdivision
into lots or small farms for resale to their bona fide
tenants or occupants or to private individuals who are qualified to
acquire and own lands in the Philippines, the important change being,
for the purposes of this opinion, that resale now be made to “bona fide tenants or occupants.”

The theory of the trial court and the Court of Appeals is that, as
respondent Bernardo was admittedly the lessee of the lot in question,
he should enjoy priority. It was reasoned out that said respondent
having paid, by his predecessors and himself, the rentals for the land
from 1912 to 191.7, and owning the house now standing on the lot, is a
“tenant” within the purview of Commonwealth Act No. 539; that the
petitioners could not have stayed in the premises since 1918, without
being ejected by the original owners of the “Capellania de Concepcion”
estate, if respondent Bernardo and his predecessors had not paid, said
rentals.

We are of the opinion that the law in this case has been misapplied.
To determine the real purpose of Commonwealth Act No. 20 and
Commonwealth Act No. 539, we have only to recall that as early as April
26, 1904, Act No. 1120, otherwise known as the “Friar Lands Act,” was
approved, providing that the actual settlers and occupants of lands
acquired by the Government had preference over all others to lease,
purchase, or acquire their holdings. This was followed on July 11,
1936, by Commonwealth Act No. 20, authorizing the resale of homesites
to their bona fide occupants. This trend was adopted in
Commonwealth Act No. 260, approved on April 18,1938, and Commonwealth
Act No. 378, approved on August 23, 1938, which also expressly referred
to bona fide occupants. The purpose of Act No. 1120, known as the
“Friar Lands Act” had already been explained by this court in the case
of Jocson vs. Soriano, 45 Phil. 375; 378-379; as follows:

“Acts 1120 and 926 were patterned after the laws
granting homestead rights and special privileges under the laws of the
United States and the various states of the Union. The statutes of the
United States as well as of the various states of the Union contain
provisions for the granting and protection of homesteads. Their object
is to provide a home for each citizen of the Government, where his
family may shelter and live beyond the reach of financial misfortune,
and to inculcate in individuals those feelings of independence which
are essential to the maintenance of free institutions. Furthermore, the
state itself is concerned that the citizens shall ,not be divested of a
means of support, and reduced to pauperism. (Cook and Burgwall vs. McChristian, 4 Cal., 24; Franklin vs. Coffee, 70 Am. Dec, 192; Richardson us. Woodward, 104 Fed. Rep., 873; 21 Cyc, 459.)

“The
conservation of a family home is the purpose of homestead laws. The
policy of the state is to foster families as the factors of society,
and thus promote general welfare. The sentiment of patriotism and
independence, the spirit of free citizenship, the feeling of interest
in public affairs, are cultivated and fostered more readily when the
citizen lives permanently i.n his own home, with a sense of its
protection and durability. (Wapples on Homestead and Exceptions, p. 3.)”

This objective is readily embedded in Commonwealth Act No. 20 which
speaks of bona, fide occupants; and we cannot suppose that, presumably
aware of legislative antecedents, our lawmakers ever intended to depart
from such purpose in enacting Commonwealth Act No. 539. Indeed, the
Rural Progress Administration in its resolution No. 32, dated August 7,
1949, (according to the petitioners, should be 1939) resolved “that it
is the sense of this Board that the words “bona fide occupants,
as used in Commonwealth Act No. 20, as amended, applies to the person
actually occupying any given lot, irrespective, of any former lease
contract with the previous owners of the homesite.” It is significant
that this construction was given by the very agency called upon to
implement the law. But the Court of Appeals argued that said resolution
should be construed in connection with paragraph 3 of resolution No.
252, dated March 11, 1949, which reads in part as follows:

“Resolved, to adopt as tentative rules covering the disposition of lot in the Tambobong Estate, Malabon, Rizal, the following:

“(1)
To award to the lessees the lots under their possession if they have
houses therean and the area thereof does not exceed 1,000 square
meters. The RPA, however, reserves the right to take away from said
lessees any portion in excess of 1,000 square meters.

“(2) That lots with houses even though surrounded by fence be declared vacant.

“(3) That sublessees who have been occupying lots for at least five years be considered as bona fide occupants and as such with preferential right to purchase said lots if they possess no other in the same estate.”

The Court of Appeals was of the opinion that paragraph 3 of
resolution No. 252 requires bona. fide actual occupation on the part of
the sublessees for at least five years prior to the acquisition by the
Government of the lot to be resold; and as the petitioners were
required by respondent Bernardo to vacate the premises on February 1,
1945, they could not be considered as having occupied the lot bona fide
for at least five years prior to December 31, 1947 when the “Capellania
de Concepcion” estate was purchased by the Government. This
construction is untenable, since paragraph 3 of the resolution No. 252
does not say that the bona fide possession for five years
should be counted in relation or prior to the date of acquisition by
the Government Said resolution, it may fairly be supposed, contemplates
possession from the time the sublessee actually occupies. In the
present case it is admitted that the petitioners have held possession
since 1918.

In this connection it may not be amiss to make reference to Republic
Act No. 1162 which, in its section 5, provides, among other things,
that “from the approval of this Act, and until the expropriation herein
provided, no ejectment proceedings shall be instituted or prosecuted
against any tenant or occupant of any landed estates or haciendas
herein authorized to be appropriated if he pays his current rentals.”
Of course, said Act was approved in 1954, or after the purchase by the
Government of the “Capellania de Concepcion” estate, but it is obvious
therefrom that the policy of the Government is to protect the actual
occupants as much as possible, with the view to enabling them to
acquire homesites. By analogy, we may consider the efforts of
respondent Bernardo to oust the petitioners in 1945 as being of no
decisive consideration.

We are also inclined to the view that the term “tenant” was added by
Commonwealth Act No. 539, not for the purpose of giving such tenant any
preference over an occupant, but merely to expand the scope of the law
by allowing resale to persons other than a bona fide occupant; and this
is clear from the use of the alternative conjunction “or” between the
words “tenant” and “occupants” in Commonwealth Act No. 539. If the
intention were otherwise, the law would have expressly provided that
the tenant and the occupant shall enjoy preference in the order in
which they are enumerated. This was exactly done in Republic Act No.
1162 which provides, in its section 3, that “the landed estates or
haciendas expropriated by virtue of this Act shall be subdivided into
small lots, none of which shall exceed one hundred and fifty square
meters in area, to be sold at costs to the tenants, or occupants of
said lots, and to other individuals, in the order mentioned.”
In essence and effect, Commonwealth Act No. 539 may be said to vest a
certain degree of discretion in the agency authorized to carry out the
law, to determine who is better qualified and should be preferred to a
given lot. In the case before us, the Rural Progress Administration,
after proper investigation, awarded the lot to the petitioners and, in
our opinion, this exercise of discretion and judgment should not be
interfered with in the absence of gross abuse. We are not ready to
state that the Rural Progress Administration had abused its discretion,
because the petitioners have lived on the lot since 1918 and they are
conceded more indigent than respondent Bernardo, coupled with the fact
that the latter allegedly owns another property as his homesite. It is
immaterial whether the petitioners have occupied the lot in question by
mere tolerance and out of charity of respondent Bernardo, since this
would not detract from the bona fide character of
petitioners’ possession which is all that is required by the law. In
our opinion, the petitioners have occupied the land with as much good
faith as a sub-lessee actually paying rentals; so much so that the
former owners of the land never attempted to oust them; and they cannot
h charged with either ingratitude or unfair dealing and dishonesty
towards respondent Bernardo, for they accepted the benefit
intended to be conferred in Commonwealth Act No. 539. The petitioners
do not deny having been the subject of respondent’s benevolence; and as
to whether the latter is entitled to demand an accounting and to be
paid for such benevolence is another question which he may ventilate.

The relation of the parties herein which naturally gave way to
petitioners continued possession of the lot in question, and the manner
the petitioners acquired said possession, are contained in the
following passage from the brief for the defendant-appellant in CA-G.R. No. G734-R, Crisostomo Bernardo vs. Enrique Bernardo, in
which the ownership of the house standing on the lot was litigated and
decided in favor of respondent Bernardo:

“The plaintiff-appellee Crisostomo S. Bernardo and
the defendant-appellant Enrique Bernardo are blood relatives. It
appears that the grandmother of the plaintiff-appellee, one by the name
of either Aniceta or Severina Bernardo, is the sister of the
defendant-appellant Enrique Bernardo. At one time, (the exact time
could no longer be remembered) the parents of Aniceta or Severina
Bernardo and Enrique Bernardo, occupied the lot subject of the land
case. There was a time however, when their parents died, the grand
mother of the plaintiff-appellee, together with his parents
(plaintiff-appellee’s) left the premises, while the defendant-appellant
Enrique Bernardo was left behind on the said lot. As the years went on
the defendant-appellant erected a new house on the lot the one now in
question, and continued to live therein up to the present time with his
children, who are the other defendants-appellants in the Jand case.
(Please refer to defendants-appellants’ brief in the land case and the
documents or exhibits therein mentioned nao-es 3-5.” Supra, pp. 4-5.)

At any rate, from a technical point of view, the term “tenant” as
used in Commonwealth Act No. 539 may be considered as referring only to
a lessee who is in actual possession, thereby preventing one with
wealth from acquiring lots for business purposes. Suppose a lessee of
25 lots in a big hacienda sublets the same to 25 actual occupants. In
case the Government should expropriate the hacienda for resale in lots
to “tenants or occupants,” can it be seriously contended that the
lessee is to be preferred to the actual occupants? An affirmative
answer will be revolting to our sense of proportion; and yet that is
the effect of the majority decision.

“SEC. 27. Necessity of Entry by Lessee.—Upon
the execution of a lease, naming a present term, the lessee has a right
of entry and of possession, but it seems well settled that he is not a
tenant until he enters. To create the relation of landlord and tenant,
there must be an entry by the lessee under the lease, or a holding of
the possession of the premises by the lessee that will be referable to
the lease as his authority. There is also authority to the effect that
a lessee does not have an estate until he enters, and that under the
common law, no estate for years could be created by a lease or other
common-law conveyance, without an actual entry made by the person to
whom the land was granted. * * * (32 Am. Jur., p. 50.)

The fact that respondent Bernardo had allowed the petitioners to
occupy the lot since 1918 is positive evidence that said respondent has
no need thereof; and it cannot be gainsaid that Commonwealth Acts Nos.
20 and 539 are obviously intended, as heretofore already noted, to
provide the actual occupants with a piece of land which they may call
their own. Certainly the Government would have no reason to worry about
those who were or are already home and land owners, much less to
encourage “absentee” lessees. Commonwealth Act No. 539 was conceived to
solve a social problem, not merely as a direct or indirect means of
allowing accumulation of land holdings. Indeed, in Republic Act No.
267, which authorizes municipalities to expropriate lands for sale in
lots, preference being given to Filipino bona fide occupants
and to Filipino veterans, their widows, and their children, the policy
of the Government was more or less announced that “no such lot shall be
sold to any person who already owns a residential lot, and any sale
made to such person shall be void.”

The petitioners have called attention to the fact that respondent
Bernardo paid the rentals from July, 1940 to December 31, 1947, only on
April 8 1947, when steps were already being taken by the Government to
acquire the Tambobong Estate for resale to tenants or occupants. This
fact may not of course affect the status of respondent Bernardo as a
lessee, but it in a way justifies further the finding of the Rural
Progress Administration that the petitioners should be preferred in the
resale of the lot in question. Another circumstance that influenced the
Court of Appeals in affirming the decision of the Court of First
Instance of Rizal is that the house standing on the lot belongs to
respondent Bernardo. Apart from the fact that said house assessed at
P640, Philippine currency, was sold by the petitioners to respondent
Bernardo in 1944 for P1,050 in Japanese military notes (or less than
P100, Philippine currency) and the petitioners remained in possession,
we do not think that respondent’s ownership can affect the status of
the petitioners as bona fide occupants for purposes of Commonwealth Act
No. 539. The same considerations mentioned with respect to the
possession of the land are applicable.

Accordingly, we vote to reserve the appealed judgment and to affirm
the decision of the Rural Progress Administration dated January 21,
1948, and the sale of the land in question to the petitioners.

Pablo, J., concurs.