G.R. No. L-27651 October 30, 1970
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, petitioners, vs. RICARDO T. FRANCO, respondent.

FACTS

The lot in question (Lot No. 34-A) is part of a bigger parcel originally known as Lot No. 1060 in the Tambobong Estate, which was leased by the Roman Catholic Archbishop of Manila to Vicente Gonzales. Upon Vicente’s death, his heir Diego Gonzales succeeded to the lease. Diego Gonzales later sold his leasehold rights and improvements over Lot No. 1060 to respondent Ricardo T. Franco, who took possession of a portion designated as Lot No. 34-B. Narciso Cruz, petitioners’ predecessor-in-interest, had been occupying Lot No. 34-A since 1926 as a sublessee of Diego Gonzales. The government acquired the Tambobong Estate under Commonwealth Act No. 539. The predecessors-in-interest of petitioners acquired the disputed lot under a deed of sale executed by the Secretary of Agriculture and Natural Resources on August 11, 1951, which was subsequently registered, resulting in a transfer certificate of title in favor of Narciso Cruz. Respondent Franco filed a complaint praying for the deed of sale to be declared null and void and for the title to be cancelled, or for petitioners to reconvey the property to the Land Tenure Administration so it could execute a deed of sale in his favor.

ISSUE

Who between Narciso Cruz (predecessor-in-interest of petitioners) and Ricardo T. Franco (respondent) should be given preference in the purchase of the lot from the Government under Commonwealth Act No. 539?

RULING

The Supreme Court reversed the decision of the Court of Appeals and reinstated the judgment of the lower court dismissing respondent’s complaint. The Court held that petitioners, as successors of the sublessee-occupant, have the preferential right to purchase the lot over the respondent, who is the successor of the lessee. Applying the doctrine in Gongon v. Court of Appeals and Marukot v. Jacinto, the Court ruled that a sublessee in possession is considered a bona fide “occupant” under Commonwealth Act No. 539, entitled to preference in purchasing the land from the government. The Court found that justice and equity command that petitioners, who have their house built on the disputed lot, be given the preferential right to carry out the avowed policy of the law “to give land to the landless.” The Court noted that respondent, a medical practitioner, already possessed another lot (Lot No. 34-B and a portion of an adjacent lot totaling 390 square meters), whereas petitioners were the actual occupants. The deed of sale executed in favor of petitioners’ predecessor was therefore valid.