LEONIDA CRUZ, FORTUNATO CRUZ, LORENZA CRUZ, ANA CRUZ, FELIX POLICARPIO, EUGENIO CRUZ, NARCISO CRUZ, JR., MARIA GUTIERREZ, AND THE CHAIRMAN OF THE LAND TENURE ADMINISTRATION, PET…

The decision of the Court of Appeals before on review contains
the decisive facts as well as the crucial question involved.  Thus: 
“It is not disputed that the lot in question (Lot No. 34-A) is a
part of a bigger parcel originally known as Lot No. 1060 (now Lot No. 34, Block
No. 5, Tambobong Estate) which was leased to Vicente
Gonzalez by the Roman Catholic Archbishop
of Manila, the former owner of the Tambobong Estate;
that upon the death of Vicente Gonzales, he was succeeded by his only living
heir, Diego Gonzales, who continued with the lease contract; that sometime
thereafter, Diego Gonzales sold his leasehold rights over Lot No. 1060
as well as the improvements thereon to the plaintiff, Ricardo T. Franco,
[respondent in this Court] who thereupon took possession of the portion thereof
designated as Lot No. 34-B; and that Narciso Cruz,
the [petitioner’s] predecessor in interest, had been occupying the lot
in question (Lot No. 34-A) since
1926 as sublessee of Diego Gonzales, the plaintiff’s
predecessor in interest.  The question now is:  ”Who between Narciso Cruz [predecessor in interest
of petitioners] and the plaintiff [respondent in this Court] should be given
preference in the purchase of the lot in question from the Government?”^[1] In the decision now under review reversing a judgment of the lower court, the
answer given by the Court of Appeals failed to accord deference to the
authoritative principle, the latest formulation of which was in Gongon v. Court of Appeals,^[2] where the right of a sublessee
as an occupant was accorded due recognition. 
Thus the appealed decision cannot stand.

1.  From the undisputed
facts, respondent Ricardo T. Franco would rely on the rights of Diego Gonzales,
from whom he acquired the leasehold rights. 
On the other hand, the petitioners would base their claim as the
successor of one Narciso Cruz, who was a sublessee of the aforesaid Diego Gonzales.  As was pointed out in Gongon v. Court of Appeals, the opinion being penned by
Justice Makalintal: 
“The first issue involves a conflict of claims between a lessee and
a [sublessee] insofar as the right to purchase the property is concerned. 
Several decisions of this Court have been cited and discussed by the
parties.  Parenthetically, it may be noted
that in those cases the concept of possession by a sublessee
under the Civil Code, which accord­ing to the Court of Appeals in its decision
under review was in effect possession by the lessee sublessor,
was not considered by this Court applicable at all in construing the term
‘occupant’ under Commonwealth Act No. 539.”^[3]

Reference was then made to the first section of Commonwealth Act
No. 539 authorizing the President of the Philippines
to acquire private lands or any interest therein for the purpose of subdividing
the same into home lots or small farms for resale to bona fide tenants or occupants.^[4] It was noted in the Gongon opinion that in the first
case interpreting the above provision, Grande v. Santos,^[5] this Court gave the right of preference to
the registered lessee, taking into consideration a number of circumstances
namely, that the lot was a small one of only 144 square meters and that to
subdivide the same into three portions would, owing to such extremely limited
size of each land, lead to frictions, conflicts, misunderstandings and possibly
disturbances of the peace.

Barely two weeks later that same year, Marukot v. Jacinto^[6]
was decided, setting forth the now-prevailing doctrine.  As was noted in the opinion of the then Chief
Justice Paras: 
“As a matter of fact, there is no dispute that appellant Jacinto
was the lessee of the entire lot No. 35, who had paid rentals thereon prior to
the acquisition by the Government of the Tambobong
Estate; that since 1931, he has lived in his house built on his lot located in Caloocan, Rizal; that the three appellees Gabriel Marukot, Felipe
Balsa and Lorenzo Baltazar have respectively occupied
lots 35-B, 35-D and 35-E, the first since 1940, the second since 1946, and the
third since 1944, and all the three have their own houses thereon and have been
paying rentals as sublessees of appellant
Jacinto.”^[7]
After which, came this portion:  “In
our opinion, the trial court did not err in giving judgment in favor of the appellees.  It is not
necessary to decide herein whether a ‘tenant’ should enjoy priority over an
‘occupant’ who is a sublessee, because the effect of
the appealed decision is to accommodate both; and this certainly cannot be said
to be violative of the intents and purposes of
Commonwealth Act No. 539. It is striking to note that appellant Jacinto even
gets about 300 square meters, or 100 square meters in excess of the total area
of the three lots awarded by the trial court to the three appellees.”^[8]
Then came this affirmation as to who are bona fide occupants
entitled to preference under the Act: 
“The appellees are unquestionably bona
fide occupants within the meaning of Commonwealth Act No. 539 because
they have their respective houses on the lots sublet to them by the tenant Amado Jacinto; and there is absolutely no showing that they
were ordered to vacate either before or after the acquisition by the Government
of the Tambobong Estate.”^[9]

The Gongon opinion, in its review of
previous decisions, likewise referred to Santiago
v. Cruz,^[10]
decided later in the month of that same year, where this Court, taking into
consideration that the sublessees did execute a
document expressly agreeing to vacate the lots anytime the tenant would so
require it, recognized the right of preference of the registered tenant.  That the above decision did not in any wise
impair the holding of Marukot v. Jacinto was made
clear in the opinion in Gongon v. Court of
Appeals.  Thus:  “However, in the subsequent case of
Gutierrez vs. Santos, et al. (107 Phil. 419), the ruling in the Santiago
decision was clarified and given a restrictive application, as follows:  ‘Now, we say that the above order of
preference should be observed if the parties affected stand on an equal footing
or under equal circumstances, for only in that way can the provision of the law
be implemented with equity, justice and fairness to all and in keeping with the
spirit of giving land to the landless so that he may have a land of his
own.  But the order need not be rigidly
followed when a party, say a bona fide tenant, has already in his
name other lots more than what he needs for his family, for certainly to give
him the preference would work injustice to the occupants.'”^[11]

After such a view of the previous decisions, Justice Makalintal in the same Gongon
decision announced the holding reached by this Court and the reason of public
policy that lies behind it:  “In the
case at bar it is not disputed that respondent spouses have their house on
another lot (lot No. 34, block No. 7) in the Tambobong
Estate.  Furthermore, respondent Rufino Rivera is the registered bona fide
tenant of still another lot, also in Tambobong, with
an area of 2,761 square meters, which is considerably bigger than the lot in
question, where petitioner and his family constructed their residence and where
they have been living since 1934.  It
cannot be said, therefore, that the parties herein stand on an equal footing or
under equal circumstances.  Justice and
equity command that petitioner be given the preferential right to purchase in
order to carry out the avowed policy of the law to give land to the
landless.”^[12]
So it should be in this case.  As earlier
set forth, the decision of the Court of Appeals cannot be sustained.

2.  In fairness to the Court
of Appeals, it cannot be truly said that no effort was made to abide by the
controlling principle announced by us. 
As a matter of fact, its decision sought to distinguish the facts of
this case from that deemed controlling in Gutierrez v. Santos.  Thus: 
“The same thing cannot be said of the herein plaintiff who only has
Lot No. 34-B with an area of 338 square meters and a portion of 52 square
meters of the adjacent Lot No. 1059, or a total of 390 square meters.  Being a doctor by profession, he certainly
needs a more spacious lot to be able to keep up, if not to the demands of his
profession such as a clinic to accommodate his patients, at least to the needs
of his growing family.”^[13]

While not entirely without basis, this Court does not deem the
above reason persuasive.  If it were
otherwise, then it would lead to manifesting an undue regard for the needs of a
medical practitioner and the standing a member thereof should possess as
against the claim of the several petitioners who, as found by the Court of
Appeals, have their house built on the disputed lot.  The choice is not difficult, for justice and
equity, to follow the language of Justice Makalintal’s
opinion, “command that [petitioners] be given the preferential right to
purchase in order to carry out the avowed policy of the law to give land to the
landless.” As a matter of fact, as far back as August 11, 1951, the
predecessors in interest of petitioners did acquire the disputed lot under the
deed of sale executed by the then Secretary of Agriculture and Natural
Resources, the deed of sale having been subsequently registered, resulting in a
transfer certificate of title in favor of the aforesaid Narciso
Cruz.

3.  The decision of the
lower court, reversed by the Court of Appeals, dismissing the complaint of now
respondent Ricardo T. Franco, praying that the aforesaid deed of sale be
declared null and void, that the corresponding transfer certificate of title be
cancelled, or, in the alternative, for the petitioners to reconvey
such property to the then Land Tenure Administration, which could execute the
corresponding deed of sale in favor of the plaintiff, now respondent Ricardo T.
Franco, could thus stand the test of
the most exacting scrutiny.  Any other
decision would be to render nugatory the fundamental purpose of Commonwealth
Act No. 539 and to that extent would amount to an assumption by the judiciary
of the authority to declare public policy violative
of the principle of separation of powers which places in the hands of Congress
the sole and uncontrolled discretion as to what it shall be.

WHEREFORE, the decision of the Court of Appeals of March 27, 1967 is reversed.  With costs against
respondent Ricardo T. Franco.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, and Barredo, JJ., concur.

Ruiz Castro and Teehankee, JJ., in the result.

Villamor, J., took no part.

Makasiar, J., on official leave.

^[1]
Decision, Annex A, Brief for the Petitioners, pp. II-XII.

^[2]
L-24421, April 30, 1970, 32 SCRA 412.

^[3]
Ibid, p. 416.

^[4]
Section 1 of Commonwealth Act No. 539 (1940) reads as follows:  “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.”

^[5]
98 Phil. 62 (1955).

^[6]
98 Phil. 128.

^[7]
Ibid, p. 131.

^[8]
Ibid, pp. 131-132.

^[9]
Ibid, p. 132.

^[10]
98 Phil. 168.

^[11]
L-24421, April 30, 1970, 32 SCRA 412,
417.

^[12]
Ibid, pp. 417-418.

^[13]
Decision, Annex A, Brief for the Petitioners, p. XV.