G.R. No. 98258 May 8, 1992
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 CLARITO, respondents.

FACTS

Petitioners Spouses Tirso and Lydia Oporto are the registered owners of a parcel of land. In 1975, they decided to convert it into a fishpond. Tirso Oporto’s father introduced respondent Leopoldo Clarito, who was reputed to be an expert in fishpond development and management. The parties executed an “Agreement for a Joint Venture” on December 31, 1975. Under the contract, Clarito would contribute his talents, energy, and skill to develop the land by constructing dikes and managing the fishpond. Oporto would advance the necessary funds for the initial dike construction. After the dikes were completed, all further development expenses would be taken from the proceeds of the fish harvests. Oporto was to be reimbursed for his advances from the income. Thereafter, the net proceeds would be divided equally between the parties. The contract was for a period of ten years, renewable by mutual agreement. Upon termination, Clarito would be entitled to one-half the value of any residential house he constructed, and the fishpond would revert to the Oportos.
By 1978, Clarito completed the development and produced two harvests. He also constructed a concrete house, installed an artesian well, and provided electric lighting. He claimed to have spent P287,000.00 for development and P90,000.00 for the house. On December 8, 1985, before the contract’s expiration, the Oportos sent a letter to the Claritos advising them that the agreement would not be renewed. The Claritos refused to vacate, contending they were agricultural tenants entitled to security of tenure and that they had not been refunded for their expenditures. The Oportos filed an unlawful detainer case in the Municipal Trial Court, which dismissed the suit. The Regional Trial Court reversed this on appeal. The Court of Appeals, in turn, reversed the RTC, ruling that a tenancy relationship existed between the parties, thus the MTC had no jurisdiction.

ISSUE

The chief issue is whether or not the Spouses Leopoldo Clarito and Filomena Clarito are agricultural tenants of the Spouses Tirso Oporto and Lydia Oporto.

RULING

The Supreme Court REVERSED the decision of the Court of Appeals and REINSTATED the Decision of the Regional Trial Court. The Court ruled that no tenancy relationship existed. The essential elements of agricultural tenancy are: (1) the parties are the landowner and the tenant; (2) the subject is agricultural land; (3) there is consent; (4) the purpose is agricultural production; (5) there is personal cultivation by the tenant; and (6) there is sharing of the harvests. While the land is agricultural (a fishpond) and there was sharing of harvests, the element of personal cultivation was absent. The evidence showed Leopoldo Clarito was not a simple farmer but a businessman engaged in the fishpond industry. He owned several fishponds, including one larger than the Oportos’, and was a partner in other aquaculture ventures. He did not personally work on the fishpond but hired laborers to do so. The agreement was a joint venture where Clarito contributed his management expertise and capital (through borrowed funds), not merely his labor. The contract stipulated a fixed term and provided for reimbursement of advances and division of net proceeds, characteristics inconsistent with a tenancy arrangement. Therefore, the Claritos were not agricultural tenants but joint venturers whose contract had expired. They were ordered to vacate the property and pay rentals, unremitted shares, and litigation expenses. The Oportos were ordered to reimburse the Claritos for one-half the value of the house constructed.