This paper presents an efficient tree-based hybrid spectral amplitude coding optical code division multiple access (SAC-OCDMA) system that is able to provide high capacity transmission along with fault detection and restoration throughout the passive optical network (PON). Enhanced multidiagonal (EMD) code is adapted to elevate system’s performance, which negates multiple access interference and associated phase induced intensity noise through efficient two-matrix structure. Moreover, system connection availability is enhanced through an efficient protection architecture with tree and star-ring topology at the feeder and distribution level, respectively. The proposed hybrid architecture aims to provide seamless transmission of information at minimum cost. Mathematical model based on Gaussian approximation is developed to analyze performance of the proposed setup, followed by simulation analysis for validation. It is observed that the proposed system supports 64 subscribers, operating at the data rates of 2.5 Gbps and above. Moreover, survivability and cost analysis in comparison with existing schemes show that the proposed tree-based hybrid SAC-OCDMA system provides the required redundancy at minimum cost of infrastructure and operation.