G.R. No. L-32049 June 25, 1984
MATAAS NA LUPA TENANTS ASSOCIATION, INC., NICOLAS AGLABAY, et al., petitioners, vs. CARLOS DIMAYUGA and JULIANA DIEZ Vda. de GABRIEL, respondents.

FACTS

Petitioners, comprising 110 tenant families, filed a complaint to exercise preferential rights to purchase the land they had occupied for over ten years. The land, located in Manila, was formerly owned by respondent Juliana Diez Vda. de Gabriel, to whom petitioners paid rent. Without notice to petitioners, Gabriel sold the land to respondent Carlos Dimayuga on May 14, 1968. Petitioners alleged that under Republic Act No. 1162 , as amended, a parcel of land in Manila with at least fifty houses of tenants erected thereon and actually leased for at least ten years prior to June 20, 1959, could not be sold by the owner to any person other than such tenants unless they renounced their rights in a public instrument. Petitioners, not having renounced such rights, claimed the sale was void and sought to compel Gabriel to sell the land to them under the same terms.
Respondents moved to dismiss the complaint. Respondent Gabriel argued the land was not a “landed estate” and thus not expropriable under the invoked laws, and therefore no preferential rights existed. The Court of First Instance of Manila granted the motion to dismiss, ruling the complaint failed to state a cause of action. It held that since the land was not expropriable, the tenants could not claim preferential rights to purchase it upon a voluntary sale by the owner.

ISSUE

Whether the tenants have a valid cause of action to enforce their preferential right to purchase the land they occupy, notwithstanding that the land may not be classified as a “landed estate” subject to expropriation under the laws invoked in their complaint.

RULING

Yes. The Supreme Court reversed the lower court’s order of dismissal. The legal logic centers on the subsequent enactment of Presidential Decree No. 1517, the Urban Land Reform Law, which became applicable during the pendency of the case. This decree explicitly governs the rights of tenants in urban land reform zones. Section 6 of P.D. 1517 grants legitimate tenants who have resided on and built their homes on the land for ten years or more the right of first refusal to purchase the land. Furthermore, Proclamation No. 1967, issued pursuant to the decree, specifically declared the Metropolitan Manila Area, including the subject property “Mataas na Lupa,” as an Urban Land Reform Zone.
The Court found that petitioners’ case fell squarely within the ambit of P.D. 1517. The decree’s provisions are clear and created a direct cause of action for the tenants, vesting in them a statutory right of first refusal. This right exists independently of any prior classification of the land as a “landed estate” under older statutes. The lower court’s dismissal, based on the inapplicability of Republic Act No. 1162 , was therefore erroneous in light of this supervening law. The Supreme Court set aside the dismissal order and directed the Ministry of Human Settlements to facilitate the implementation of the petitioners’ rights under P.D. 1517.