G.R. No. 32243 - Torres vs. Cristina Gonzalez, Inc.

The land in issue originally belonged to Cristina Gonzalez, who held a Torrens title.
Cristina Gonzalez executed a mortgage on the land to the Agricultural Bank of the Philippine Islands.
The mortgage was foreclosed, leading to a sale of the property.
For want of redemption, the title subsequently vested in the Government.
During Cristina Gonzalez’s period of ownership, numerous tenants, including the plaintiffs, were working on the land.

The leasing process was governed by Section 35 of Act No. 3219, which prescribed:

The publication and posting of required notices for the lease auction.
The submission of sealed bids from interested parties.
Specific provisions on awarding the lease: if two or more bids are equal and higher than the others, and one of such bids belongs to the applicant, his bid is accepted; otherwise, the land must be submitted for public bidding.
The option for the applicant to raise his bid to match the highest bid.

The plaintiffs submitted the highest bid at P8,040.
Other bids included Ramon Pons (P6,500), Mercedes Tombo Lopez (P8,000), Bernardino Estrella (P7,200), Feliciano Nable (P5,520), and an informal bid which was rejected.
Cristina Gonzalez, Inc. submitted the lowest bid at P4,000.

The Director of Lands treated Cristina Gonzalez, Inc. as the applicant.
The Director inquired whether the applicant wanted to lease the land on the terms and conditions matching the plaintiffs’ higher bid.
Upon receiving a declaration of readiness, the Director awarded the lease to Cristina Gonzalez, Inc. despite their bid being the lowest.
The provisions of Section 35 clearly dictate that if the bid of the applicant is not one of the equal and highest bids, the land must be submitted for public bidding—a step which was bypassed.

Plaintiffs argued that since the bid of Cristina Gonzalez, Inc. was the lowest and not among the equal highest, the procedure should have led to public bidding.
The lower court had previously invalidated the lease awarded to Cristina Gonzalez, Inc. and had awarded the lease to the plaintiffs.
Defendants contended that the contractual lease, despite being null and void, should result in the lease being awarded to the plaintiffs.

Whether the land officials, particularly the Director of Lands, had the legal authority to execute the lease award directly to Cristina Gonzalez, Inc. without submitting the land for public bidding.

The primary legal question centered on the interpretation and mandatory nature of Section 35 of Act No. 3219.
Whether the bid of Cristina Gonzalez, Inc., not being among the equal and higher bids, justified bypassing the statutory requirement for public auction.

Whether the nullity of the lease automatically conferred entitlement on the plaintiffs.
How the breach of the mandatory statutory process affected the rights of all parties involved in the bidding process.