PHILIPPINE NATIONAL BANK, PETITIONER, VS. TEOFILO RAMIREZ, ET AL., RESPONDENTS.

Appeal taken by the Philippine National Bank from the decision of the Court
of Agrarian Relations in its Case No. 558-P-58.

The facts leading to the filing of the action in the Court below were found
by said Court to be as follows:

“That since 1953 Agustin Pecio had been cultivating the two hectares of land
in question located at Bo. Capulaan, Balungao, Pangasinan, belonging to Jose
Castillo y Refuerzo; that when the Philippine National Bank became the
administrator of the estate of the late Jose Castillo y Refuerzo, its Trust
Officer, through his representative, Atty. Jose Manalansan, executed contracts
of tenancy with the tenants of the hacienda; that for his purpose, Atty.
Manalansan went in 1955 to Balungao, Rosales, and Umingan, Pangasinan, to
contact the tenants and he stayed there for two months; that Atty. Marialansan
met the tenants in the municipal building of Balungao and there executed the
tenancy contracts; that Atty. Manalansan did not know any of the tenants then
and so what he did was to rely on the information given to him by the tenants;
that one morning, while Atty. Manalansan was in front of the municipal building
under the acacia tree, Teofilo Ramirez approached him and told him that he was
the tenant in two parcels of land located in Bos. Esmeralda and Capulaan,
Balungao; that Teodorico Dirije then filled in the blank in the contract forms
by typing the information dictated by Teofilo Ramirez; that the finished
contract of tenancy (Exhibit “A”) was registered in the municipal treasurer’s
office of Balungao on the same date of execution. June 25, 1955; that according
to the contract, Ramirez was to cultivate four hectares of land situated at Bos.
Esmeralda and Capulaan, Balungbo, Pangasinan; that a few days thereafter Agustin
Pecio appeared arid reported to Atty. Manalansan that he was the actual tenant
in the landholding in Capulaan included in the contract of tenancy executed by
the Philippine National Bank and Teofilo Ramirez; that Atty. Manalansan then
referred the matter to the Chief of Police to bring them to the municipal mayor
for conciliation; that as a result a ‘katulagan’ or agreemnt was entered into by
and between Ramirez and Pecio; that by virtue of the ‘katulagan’ Ramirez
cultivated one-hectare portion of the same in the agricultural year 1955-1956;
that Ramirez harvested 40 cavanes in said year, with the seeds, threshing and
harvesting expenses already deducted, while Pecio harvested 35 cavanes; and that
after the agricultural year 1955-1966 th,e entire two-hectare landholding an
Capulaan was, by virtue of the ‘katulagan’ or agreement, delivered to Agustin
Pecio who cultivated the same since then up to the present
time.”

Later, Teofilo Ramirez filed the aforestated case against the Philippine
National Bank in the Agrarian Court, alleging that he had been illegally ousted
from one-half of the land in question during the agricultural year 1956-1957,
and from the whole of it thereafter, and asking for reinstatement and for the
payment of the value of his unrealized shares of the harvest of the land during
the period of his dispossession, plus moral damages and attorney’s fees. The
bank answered, denying liability under the complaint, and, with the authority of
the court, brought in Agustin Pecio as third-party defendant, who likewise
denied any liability. The case was then tried, and on September 29, 1958, the
Agrarian Court rendered judgment, holding, on the basis of the above-quoted
findings of fact, that although the tenancy contract between the bank and
Ramirez was executed through fraud and misrepresentation on the part of the
latter, the “katulagan” or agreement Exhibit “1” between Ramirez ‘and Agustiri
Pecio was an express ratification by the latter of said tenancy contract and had
the effect of a surrender by Pecio of his right as tenant over one-half of the
land in question and of constituting Ramirez as the tenant over such portion, so
that thereafter, he was entitled to security of tenure under section 49 of
Republic Act No. 1199; whereupon, the bank was ordered to reinstate Ramirez to
one-half of the land in question, and to pay him damages of 12 cavanes of palay
yearly from the agricultural year 1956-1957 until his reinstatement. From this
judgment, the bank, as already stated in the first part of this decision,
appealed.

The appeal should be sustained.

First of all, we ‘agree with the petitioner bank that the lower court having
found that third-party defendant Agustin Pecio was the true tenant of the land
in question and not respondent Ramirez, Pecio is entitled to security of tenure
under section 7, Republic Act No. 1199, and may not be dispossessed of his
landholding except for any of the causes enumerated in Section 19 of the same
Act, and without the cause having been proved before and the dispossession
authorized by the Agrarian Court, in accordance with section 49, same law.
Consequently, the tenancy contract Exhibit “A” signed between the petitioner
bank and appellee Ramirez is illegal and void since it deprives Pecio of his
tenure over the land in question; and being a nullity, said contract did not
create any tenancy relation between the bank and Ramirez, nor could the latter
acquire any rights thereunder.

What is more, the Agrarian Court conclusively found that respondent Ramirez
was guilty of fraud and misrepresentation in the signing of the tenancy contract
Exhibit “A”, having falsely identified himself to the representative of the bank
as the tenant of the land in question, and it was only on that basis that the
bank signed and gave its consent to said tenancy contract. This contract is,
consequently, not only void ab iMtio for being contrary to the law giving Pecio,
the true tenant, security of tenure, but also annullable or voidable on the part
of the bank whose consent thereto was given through fraud and mistake. Thus, the
bank was justified in refusing to recog-. nize said contract after it learned of
Ramirez’ deceitful act, and in giving the land to Pecio, the lawful and true
tenant. The Court below, in ordering the reinstatement of Ramirez, was, in
effect, legalizing his imposture. Such a decree is against morals and public
policy and can not be allowed to stand.

As for the “katulagan” or agreement (Exhibit “1”) entered into by Pecio and
Ramirez merely to settle their dispute over the tenantry of the land in question
that arose from the latter’s fraud, the only effect that could be given this
agreement was, as stipulated therein by the parties, for Ramirez to share the
cultivation of the land in question equally with Pecio during the agricultural
year 1955-1956. Obviously, said agreement could not have created between Ramirez
and the petitioner bank the relationship of landlord and tenant so as to entitle
the latter to the security of tenure guaranteed by Republic Act No. 1199.
Besides, the tenancy law, conceived as it was to redeem the tenant from the
onerous terms of his tenancy and uplift his social and financial status (Pineda
vs. Pingul & C.I.R., 92 Phil., 89; 48 Off. Gaz. [9] 3901), can not
be invoked to protect one who is not a true and lawful tenant but who became so
only through deceitful and, insidious acts.

Wherefore, the decision appealed from is reversed, and the complaint
dismissed, with costs against respondent Teofilo Ramirez.

Paras, C.J., Bengzon, Padilla, Bautista Angelo, Labrador, Barrera,
Gutierrez David, and Paredes, JJ., concur.

Decision reversed.