TIRSO OPORTO AND LYDIA OPORTO, AND HON. FAUSTO H. IMBING, JUDGE, REGIONAL TRIAL COURT, PAGADIAN CITY, PETITIONERS, VS. HON. COURT OF APPEALS, LEOPOLDO CLARITO AND FILOMENA CLARI…

Whether or not the Spouses Leopoldo Clarito and Filomena Clarito
are agricultural tenants of the Spouses Tirso Oporto and Lydia Oporto is the
chief issue in the appellate proceeding at bar.

The Oportos are the owners in fee simple of a piece of land with
an area of 114,392 square meters. They
acquired the land by purchase sometime in 1965, at the time already registered
under the Torrens Act, covered by Original Certificate of Title No. P-17585.

In 1975 the Oportos decided to convert the land into a
fishpond. They shopped around for an
expert in the aquaculture business to whom they could entrust the conversion
and development of their property. It
happened that at that time, Tirso Oporto’s father, Isidro Oporto, was managing
a fishpond belonging to a relative, Quintin Oporto, which fishpond was adjacent
to the land owned by Tirso and Lydia Oporto. That fishpond of Quintin Oporto had been developed by Leopoldo Clarito,
who was reputed to be an expert in fishpond development and management, having
had a hand in the initiation and growth of several successful fishpond
operations in the area. This is why, on
learning of Tirso’s inquiries, Isidro introduced Leopoldo Clarito to his son.

After conferring with Clarito, Tirso Oporto decided to have the
conversion and development of his land into a fishpond handled by Clarito,
together with two others, Primitivo Benosa and Abelardo Denosta. A contract entitled “Agreement for a
Joint Venture” was accordingly executed on December 31, 1975 by Tirso Oporto
and Leopoldo Clarito, married to Filomena Clarito.^[1] For
some reason, Primitivo Benosa and Abelardo Denosta were not made parties in
this written contract, but it seems that the understanding among them was that
they would later sign a separate agreement with Leopoldo Clarito as partners in
the enterprise. Benosa and Denosta
nevertheless signed the “Agreement for a Joint Venture,” as
witnesses.

The agreement contained the following provisions, viz.:

“1. That **
(Leopoldo Clarito) will contribute in the development of the premises by
employing the best of his talents, energies and skill in completing the dike
construction to enclose the whole of said Lot No. 1 on Plan Psu-145968, and
will manage, maintain and raise fish and other products therein in return for
the compensation he will receive in the amount hereinbelow fixed and
determined;

2. That ** (Oporto)
shall advance upon the request by ** (Clarito), the necessary sum as maybe
needed in order to complete the construction of dikes along the West and
Southern borders of Lot No. 1 **;

3. That the
undertaking of ** (Oporto) to advance the sum needed for the construction of
the dikes ** shall cease as soon as the same shall have been fully enclosed by
adequate dikes, and thereafter all expenses for the construction of the nursery
and rearing pond within the premises as well as all expenses for further
development and improvement of the area including its dependencies shall be
taken from the proceeds of the sale of fish or other fishpond products raised,
produced and harvested within the premises;

4. That as soon as
the income derived from the proceeds of the sales of fishpond and other
products shall permit, ** (Oporto) shall be reimbursed of all sums which he may
have advanced for the initial development of the fishpond, specifically with
respect to the expenses mentioned in condition no. 2 hereof;

5. That after all
expenses for the initial
development of the premises are fully paid up and reimbursed, the net products
or proceeds thereof which are periodically harvested from the fishpond shall be
divided in equal proportion between ** (Oporto) and ** (Clarito) for the
duration of the life span of this contract;

6. That the term of
this contract shall be for a period of TEN (10) years to be reckoned from and
as of the date of the execution of this instrument, renewable upon the
expiration of the original term hereof by mutual agreement of the parties under
the same terms and conditions herein expressed or with such additional terms
and conditions as the parties hereto may stipulate; and

7. That upon
termination of the joint venture by expiration of the term fixed, dissolution
or other causes not imputable to the fault of either party, the parties hereto agreed as they hereby mutually agree
to renounce and waive all claims and counterclaims which they may ordinarily
have against each other, either for sums advanced or labor performed, save only
as to the value of any residential house which ** (Clarito) may construct
within the premises to which he shall be entitled to at least one-half (1/2) of
the value thereof to be paid to ** (Clarito) by ** (Oporto), and the fishpond
premises shall peacefully revert to ** (Oporto) in full and exclusive
possession, ownership and dominion.”

In about two years, or by 1978, Leopoldo Clarito had completed
the development of the Oportos’ fishpond and succeeded in producing two
harvests, albeit unprofitably. In that
time, he also put up a concrete house on the property, installed an artesian
well and made provisions for electric lighting. These he did without the assistance of the two persons who had
originally agreed to be his partners, Primitivo Benosa and Abelardo
Denosta. It appears that Benosa and
Denosta abandoned the project in favor of Clarito who, alone, continued in the operation
and management of the Oportos’ fishpond. According to Clarito, he spent P287,000.00 for the development of the
fishpond, and an additional sum of P90,000.00 for the construction of the
concrete house; and that these funds had come if not from his own pocket, from
parties from whom he obtained financing at ten percent (10%) interest per
annum.

In the years that followed, Leopoldo Clarito paid several amounts
to the Oportos, derived from the fishpond’s harvests.

On December 8, 1985 — shortly before the expiration on December
31, 1985 of the ten-year term stipulated in the parties’ aforesaid
“Agreement for a Joint Venture” — the Oporto Spouses, thru Lydia
Oporto, sent a letter to Leopoldo Clarito and his wife advising them that their
agreement of joint venture would not be renewed or extended and that they (the
Oportos) had decided to manage the fishponds themselves. One of the factors which apparently
influenced the Oportos’ decision not to renew their contract with Clarito was
their discovery that the latter was the registered owner, among others, of a
fishpond even larger than theirs.

The Claritos refused to vacate the premises, contending that they
had not been “refunded ** the one’half share of the P287,000.00
expenditures in the construction of the subject fishpond ** in accordance with
the terms stipulated in the contract,” and they were, in any case,
agricultural tenants who were entitled to security of tenure and could not
consequently be evicted from their landholding.

The matter was referred to the Lupong Pambaranggay
concerned but since the controversy could not there be resolved, the Oportos
filed with the Municipal Trial Court of Aurora, Zamboanga del Sur an action
denominated by them as one of “Unlawful Detainer with Application for Preliminary
Injunction, Collection of Unpaid Rents and Damages,” against the Clarito
Spouses, Leopoldo and Lydia.

The Municipal Court dismissed the suit in a Decision rendered on
November 29, 1989.^[2]
That decision was later reversed on appeal by the Regional Trial Court of
Pagadian City in a Decision rendered on March 30, 1990.^[3]
However, the Regional Trial Court’s decision was, in turn, reversed by the
Court of Appeals by its own judgment, promulgated on February 8, 1991,^[4]
in an appeal taken by the Claritos.^[5]

The Court of Appeals opined that the Municipal Trial Court had
correctly dismissed the Oportos’ complaint against the Claritos on the ground
of lack of jurisdiction. Invoking COCOMA
v. Court of Appeals,^[6]
decided in 1988 by this Court, the Appellate Tribunal ruled that “under
the circumstances in the case at bar ** there exists a tenancy relationship
between the parties notwithstanding the label of ‘joint venture’ used in the
written agreement. It set out its reasons
as follows:

“The records of this case show sufficient evidence to support
such a conclusion. It is undisputed
that the land involved in this case is a fishpond which is considered under the
law as an agricultural land (Section 166 [1], R.A. 3844, as amended). *** Moreover, as to the fish and other
fishpond products raised, produced and harvested in the premises, the contract
states that these ‘shall be divided in equal proportion’ between the
contracting parties **. Furthermore,
having granted to the petitioners (Claritos) the use or cultivation of their
fishpond for a consideration in shares of the harvests thereof the petitioners
are considered in law as landholders (Section 5 [b] of R.A. 1199). Lastly, since petitioners by themselves and
with the aid of their immediate family household occupied the land of the
private respondents (Oportos), converted and developed the same into a
fishpond, cultivated the same by raising and maintaining fish and other
fishpond products therein all these with the owner’s consent, and the net
produce or harvest from said fishpond is, by agreement, shared equally between
the parties, the petitioners (Claritos) are undoubtedly de jure tenants
on the land subject of the dispute and therefore they are entitled to security
of tenure (Section 5 [a] of R.A. 1199).”

From this judgment the Oportos have appealed to this Court on certiorari. They seek reversal of said judgment on the
theory that the Court of Appeals had committed serious error in interpreting
the contract for a joint venture in a manner “outside and foreign to what
had been clearly expressed,” and in finding that Leopoldo Clarito is an
“agricultural tenant ** entitled to security of tenure instead of ** a
businessman engaged in (the) fishpond business;” and they assert that the
latter “is not the small farmer envisioned by law to be entitled to the
protection of security of tenure;” he is a business entrepreneur engaged
in the fishpond industry.^[7]

For their part, the Claritos contend that the Oportos raise
“mere questions of fact ** conclusive and binding” on this Court, and
that, in any case, “the Court of Appeals did not commit reversible
errors” in its decision which, on the contrary, is “in accordance
with the true facts therein and ** with law.”^[8]

There is, of course, no question that ordinarily the factual conclusions
of the Court of Appeals are indeed binding on, and not reviewable by this
Court. The rule admits of exceptions,
however, one of which is when facts of substance were overlooked which, if
correctly considered, might have changed the outcome of the case.^[9]

Overlooked by the Court of Appeals is evidence on record,
including Clarito’s own admissions, persuasively establishing that Leopoldo
Clarito was at all times material to the inquiry at bar engaged in the
cultivation and management of several fishponds, including one with an area of
twenty-three (23) hectares, registered in his name and obviously much larger
than the Oportos’ fishpond, and that he was a partner in at least two
aquaculture ventures in addition to his own fishponds.

Among the proofs on record are authentic copies of original
certificates of title issued in the name of Leopoldo Clarito (Exhibits E, E-1,
E-2, F, F-1), and a certification from the Municipal Assessor of Aurora,
Zamboanga (Exhibit H), to the effect that Clarito has four (4) parcels of land
declared in his name for taxation purposes. There is, too, the statement of Clarito himself on the witness stand
that he was a partner in the fishpond business of a certain Atty. Paderanga,
and a brother of Tirso Oporto, Quintin Oporto.^[10]

There is evidence satisfactorily proving that the work on the
Oportos’ fishond had not been done by Clarito with the aid of his
“immediate farm household,” as is legally required of an agricultural
tenant,^[11]
but with the assistance of his partners, Denosta and Benosa, and other persons
who were paid wages. This was testified
to by Leopoldo Clarito’s partner, Abelardo Denosta;^[12]
and this was admitted by Leopoldo Clarito in his own testimony. He said that there “were many
cultivating the land because I paid hired laborers,” who were paid
“by cubic meter ** (or) by station;” that he and his partners,
Denosta and Primitivo Benosa, had also taken part in the construction of the
fishpond of Quintin Oporto and thereafter operated the same; and that he was
receiving income from the fishponds of Quintin Oporto and Isidro Oporto, as
well as from the fishponds of a certain Paderanga, aside from his own
fishponds.^[13]

What is thus depicted by the evidence is not the figure of
“a mere tenant of the land,” as the Court of Appeals characterizes
Leopoldo Clarito, but of an entepreneur or independent contractor, developing
and managing fishponds belonging to other persons, hiring and paying wages to
laborers for the purpose, and who is himself the owner of a fishpond larger than
that of the Oportos, his latest clients, and in the process receiving not
inconsiderable revenue, either as co-partner of the fishpond owners or in some
other manner. Leopoldo Clarito is not
in any sense a small farmer within the contemplation of the Agricultural Reform
Code, entitled to its beneficent provisions. His activities cannot in any sense be described as owner-cultivatorship
by a small farmer of a family-size farm for his economic upliftment, the establishment
and protection of which is among the objectives of the law. He is a businessman, pure and simple, who
has absolutely no claim to that security of tenure guaranteed by the law to
tenants or owners-cultivators of family-size farms. As this Court has had occasion to observe in a strikingly similar
case,^[14]
in ruling on the assertion “that the cultivation of another fishpond is
irrelevant as the law does not require or prohibit the total absence of other
sources of income” –

“* * * it is of much significance to look
into the spirit of the Agricultural Land Reform Code. First and foremost, the law is meant to assist and help the small
farmers as enunciated in its Declaration of Policy. In the case at bar, pettitioner de Jesus is not a small farmer
but a businessman. To consider him an
agricultural lessee despite the fact that he does not cultivate the fishpond
personally and/or with the help of his immediate farm household as defined by
law, would render nugatory the letter and intent of the Agricultural Reform
Code.”

It is therefore the Court’s conclusion that the dispositions of
the Regional Trial Court in Civil Case No. 3040 involving the private
petitioners and private respondents are correct,^[15] and
there is sufficient evidence justifying the award of damages made by it.

WHEREFORE, the petition is GRANTED; the decision of the
Court of Appeals in CA-G.R. SP No. 20782 dated February 8, 1991 is REVERSED AND
SET ASIDE; and the Decision of the Regional Trial Court in Civil Case No. 3040
dated March 30, 1990 is REINSTATED AND AFFIRMED.

Conformably with said Regional Trial Court’s Decision, the
private respondents, Leopoldo Clarito and Filomena Clarito, are hereby ORDERED:

1) forthwith to vacate the areas in question and restore the
possession thereof to the petitioners, Tirso Oporto and Lydia Oporto;

2) to pay solidarily to the petitioners, rentals at the rate of
P200,000.00 per harvest at two harvests per year, from 1986 until the
petitioners have been fully restored in the possession of their property;

3) to pay solidarily to the petitioners the sum of P3,661.56,
representing the unremitted share of the petitioners in the harvest as of
February 10, 1985; and

4) to pay solidarily to petitioners the amount of P3,500.00 as
attorney’s fees, and P25,000.00 as expenses of litigation, aside from the costs
of suit.

The petitioners, the Oporto Spouses, on the other hand, are
hereby ORDERED, again conformably with the same judgment of the Trial Court, to
reimburse to the private respondents the sum of P45,000.00, representing
one-half (1/2) of the value of the house constructed on the former’s property
in accordance with Condition No. 7 of the Joint Venture Agreement.

SO ORDERED.

Cruz,
Grino-Aquino, Medialdea, and Bellosillo,
JJ., concur.

^[1]
Rollo, pp. 42-44

^[2]
Id., pp. 53 et seq.; the Decision was written by Acting Judge Antonio V.
Din in Civil Case No. 20

^[3]
Id., pp. 63 et seq.; the Decision was written by Judge Fausto H. Imbing,
Branch 18 in Civil Case No. 3040

^[4]
Id., pp. 30 et seq.; the Decision, was written by Mendoza, F., J., with
whom concurred Magsino and Garcia, JJ.

^[5]
Docketed in that Court as CA-G.R. SP No. 20782

^[6]
164 SCRA 568 (Aug. 19, 1988)

^[7]
Rollo, p. 21

^[8]
Id., p. 116

^[9]
SEE, e.g., Hernandez v. Court of Appeals, 160 SCRA 821, citing Clanor
Vda. de Portugal, et al. v. IAC and Portugal, 159 SCRA 178; People v.
Rosario, 159 SCRA 192; People v. Ibal, 143 SCRA 317; People v.
Bautista, 142 SCRA 649; People v. Olalia, Jr., 128 SCRA 139

^[10]
TSN, April 13, 1989, pp. 7, 40-41

^[11]
By “immediate farm household” is meant “the members of the family of the
tenant, and such other person or persons, whether related to the tenant or not
who are dependent upon him for support and who usually help him operate the
farm enterprise” (Sec. 5 [o], R.A. No. 1199 and Sec. 166 (8), R.A. No.
3844, as amended; SEE also Carag v. C.A., 151 SCRA 44 [1987], and de
Jesus v. IAC, 175 SCRA 559 [1989], citing a Minute Resolution of the
Second Division of this Court dated December 8, 1986 in G.R No. 28231 [Isidro v.
Santiago]).

^[12]
Testimony of Denosta: TSN, Oct. 20, 1988, p. 7

^[13]
TSN, April 13, 1989, pp. 40-41

^[14]
De Jesus v. IAC, 175 SCRA 559 (1989), supra

^[15]
SEE footnote 3 and related text, supra