G.R. No. L-24398 and G.R. No. L-27478. October 25, 1977.
CAYETANO DE BORJA, petitioner, vs. COURT OF AGRARIAN RELATIONS, Branch I, Malolos, Bulacan, FIDEL HERNANDEZ, SIXTO BALTAO, VIVENCIO GALVEZ, ROMAN BALTAO, TIRSO GALVEZ, LAUREANO ESQUIVEL and BUENAVENTURA SALVADOR, respondents. CAYETANO DE BORJA, petitioner, vs. HON. JOSE M. SANTOS, Presiding Judge of the Court of Agrarian Relations, Branch I, Fifth Regional District, FIDEL HERNANDEZ, SIXTO BALTAO, VIVENCIO GALVEZ, TIRSO GALVEZ, ROMAN BALTAO, LAUREANO ESQUIVEL and BUENAVENTURA SALVADOR, respondents.

FACTS

The respondents were share tenants of petitioner Cayetano de Borja on ricelands in Bulacan and Nueva Ecija. On March 29, 1964, they informed the petitioner of their desire to convert their tenancy relationship from share tenancy to leasehold, effective the 1964-1965 agricultural year. The petitioner opposed this conversion. The respondents subsequently filed an action in the Court of Agrarian Relations (CAR) seeking, among other reliefs, a declaration that the conversion was valid. The CAR rendered a partial decision on February 22, 1965, declaring the relationship converted to leasehold effective 1964-1965. The petitioner assailed this decision via a petition for review (G.R. No. L-24398), challenging the CAR’s interpretation of the share tenancy contracts and the constitutionality of Section 14 of Republic Act 1199.
In a related but separate proceeding, the respondents moved for the temporary liquidation of their harvests for the 1965-1966 agricultural year. The CAR, in an order dated February 16, 1966, directed that the costs of irrigation be deducted from the gross produce before liquidation. The petitioner filed a petition for certiorari (G.R. No. L-27478) to annul this order, arguing that irrigation costs should not be deductible under the leasehold system.

ISSUE

The consolidated cases present two main issues: (1) Whether the share tenancy contracts provided for a definite period, thereby precluding the tenants’ unilateral conversion to leasehold; and (2) Whether irrigation costs are deductible from the gross harvest for purposes of temporary liquidation under a leasehold arrangement.

RULING

The Supreme Court ruled against the petitioner on both counts. On the first issue, the Court upheld the CAR’s interpretation of the contractual provision stating the agreement was effective “as long as the tenant shall remain the Kasama.” Applying Section 6 of Act No. 4054 , the Court held that this stipulation was indefinite and did not constitute a fixed term. The law explicitly provides that in the absence of a stipulation on duration, a tenancy contract lasts only for one agricultural year. Since the provision failed to specify a definitive period (month, day, and year), it was legally indefinite. Consequently, the respondents, as tenants under contracts without a fixed term, had the right under Section 14 of R.A. 1199 to elect to change the tenancy system to leasehold, which they validly exercised.
On the second issue regarding the deduction of irrigation costs, the Court found the CAR’s order to be in accordance with law. The Court explained that the purpose of a temporary liquidation order is to prevent spoilage of harvests and provide for the immediate needs of the parties pending final judgment. The governing provision,