Patriarca vs. Orate

A court cannot order a lessee to deliver land possessed with the owner's consent to another in an action to redeem alleged improvements where the land belongs to a third party not party to the contract or proceedings; the action is in personam and cannot bind the owner or non-party successor. An alleged security contract over improvements on leased land is unenforceable where it is neither mortgage, antichresis, nor purchase with right of redemption under the Civil Code and the local custom on which it depends is not proven by competent evidence.

Ladislao Patriarca and Juana Orate, widow of Inocencio Olimpo, disputed rights over improvements on a parcel within the hacienda of San Francisco de Malabon in Cavite. The parcel lay within a hacienda formerly held by the friars and later by the Augustinian Friars; Vicente Aviles was identified as its former owner. Tenancy and leasehold rights over hacienda land, and ownership of improvements placed thereon, were distinct from ownership of the land itself. The old Civil Code governed security contracts over real property, and Article 1976 repealed prior laws, usages, and customs on matters covered by that Code.

Ladislao Patriarca alleged that he was the lessee of a tract of land requiring three cavanes of seed to plant, with boundaries described in the complaint, situated in the barrio of San Juan of the Town of San Francisco de Malabon, Province of Cavite. He further alleged that the improvements upon the land had been mortgaged by him to Inocencio Olimpo and his wife Juana Orate, Inocencio having since died, to secure a loan of 323 pesos. According to Patriarca, when he attempted to redeem the land prior to Olimpo's death, Olimpo refused to consent, making various pretexts for the refusal.

Juana Orate answered by admitting the first paragraph of the complaint but alleging that since 1860 the lease of the land described had been taken from the tenant, Ladislao Patriarca, and given to Inocencio Olimpo and his wife, Juana Orate, by the administrator of the hacienda. She denied the alleged mortgage on the ground that the improvements upon land held under lease could not be mortgaged. She also denied the redemption allegations, citing Inocencio Olimpo's deposition of June 22, 1900, in which he asserted that he had purchased the improvements on the land, paying Patriarca 323 pesos in consideration, and denied the existence of the alleged mortgage.

The lower court found that both parties admitted the land in controversy was within the boundaries of the hacienda of San Francisco de Malabon, which formerly belonged to the friars, and that Patriarca, while a tenant, mortgaged to Orate and her deceased husband, to secure a loan of 323 pesos, Philippine currency, the land and the improvements thereon, such as the buildings and crops thereon. The first part of this finding was admitted by both parties, but the latter part was not. Orate contended that her husband had been in possession of the land since 1860 under a lease made by the administrator of the hacienda and that he acquired the improvements by purchase from Patriarca for 323 pesos.

The record did not establish what the improvements consisted of. Melecio Valbuena, a witness for Patriarca, was asked what the improvements consisted of and answered: "In the extension, in the crops, according to my best knowledge and understanding." The judgment below described the improvements as buildings and crops standing upon the land, but no evidence was introduced to show their nature or the rights that might arise from them.

Orate presented the testimony of Pedro Portugal, Manuel Columna, and Ignacio Astaño, which was uncontradicted, that Olimpo had been in possession of the land since 1859 or 1860; that the owner of the land was Vicente Aviles, the former owner of the hacienda now belonging to the Augustinian Friars; and that Olimpo was the lessee of the land. Quiterio Olimpo, a man 43 years of age, testified that he was the son of Inocencio Olimpo and Juana Orate, that his father had been in possession of the land since the witness had reached the age of discretion, and that the land had been sold by Patriarca to his father. The evidence thus showed that the property sought to be recovered was not the land but the improvements alleged to have been transferred to Olimpo; that the land formed part of a hacienda belonging to a third party and was not the property of either Patriarca or Orate; and that Olimpo had occupied the land for about forty years under a lease obtained directly from the owner of the hacienda, not by a sublease from Patriarca. What the improvements were and how the right to them arose were not shown.

• Scope of the Alleged Mortgage: Appellant Juana Orate maintained that the lower court erred in treating the land and improvements as mortgaged to secure the 323-peso loan; she asserted that since 1860 the lease had been taken from Ladislao Patriarca and given to Inocencio Olimpo and herself by the hacienda administrator, and that Olimpo had purchased the improvements for 323 pesos rather than taken them as security.
• Improvements Not Identified: Appellant argued that improvements on land held under lease could not be mortgaged and that the record did not show what the improvements consisted of, so no rights arising from them could be determined.
• Third-Party Land and Due Process: Appellant maintained that the land ordered returned belonged to a third-party hacienda owner, not to either party, and that directing the lessee to deliver it to another would deprive the owner of property without notice or hearing.
• Action In Personam and Non-Party Successor: Appellant contended that the delivery ordered as a consequence of the right to redeem arose from an action in personam based on stipulation and could not bind the owner or the immediate successor to the obligation, who were not parties to the proceedings.
• Unenforceable Contract and Local Custom: Appellant argued that the alleged contract over the improvements was neither mortgage, antichresis, nor purchase with right of redemption under the Civil Code, and that any local custom supporting it had not been established by competent evidence; Article 1976 repealed prior laws, usages, and customs.

• Subject Matter of the Mortgage: Whether the lower court erred in treating the land itself, and not merely the improvements, as the subject of the alleged mortgage and in ordering the land returned to the plaintiff.
• Identification of Improvements: Whether the improvements allegedly mortgaged or sold were sufficiently identified and proven to support the judgment.
• Third-Party Ownership and Due Process: Whether the lower court could order the defendant-lessee to deliver land belonging to a third-party hacienda owner who was not a party to the contract or proceedings.
• Nature of the Action: Whether the delivery ordered as a consequence of the right to redeem was an action in personam that could not bind the owner or the immediate successor to the obligation who were not parties.
• Enforceability of the Contract: Whether the alleged contract over the improvements could be enforced as a mortgage, antichresis, or purchase with right of redemption, or under a local custom, under the Civil Code and Article 1976.

• Subject Matter of the Mortgage: Yes, the lower court erred. The controversy concerned only the improvements, not the land, because the land belonged to a third-party hacienda and was not shown to be the plaintiff's property.
• Identification of Improvements: Yes, the lower court erred. The record did not establish what the improvements were or the rights arising from them, so the judgment lacked factual basis on that point.
• Third-Party Ownership and Due Process: Yes, the lower court erred. An order directing the lessee to deliver land possessed with the owner's consent would deprive the owner of property without notice or hearing.
• Nature of the Action: Yes, the lower court erred. The delivery ordered as a consequence of the right to redeem arose from an action in personam based on stipulation and could not bind the owner or the immediate successor who were not parties.
• Enforceability of the Contract: Yes, the lower court erred. The alleged contract was neither mortgage, antichresis, nor purchase with right of redemption, and any local custom was not proven; Article 1976 repealed prior laws, usages, and customs.

• Subject Matter of the Mortgage: The complaint itself and the evidence showed that the property sought to be recovered was not the land but the improvements alleged to have been transferred by Patriarca to Olimpo. The land formed part of the hacienda of San Francisco de Malabon and belonged to a third party, not to either litigant. Olimpo had occupied it for about forty years under a lease obtained directly from the owner of the hacienda, not by a sublease from Patriarca. The lower court therefore erred in including the land within the mortgage and in ordering its return; the second error assigned was sustained.
• Identification of Improvements: The record did not show what the improvements consisted of. The witness Melecio Valbuena could only say that they were in the extension and in the crops, according to his best knowledge and understanding, and the judgment below described them as buildings and crops without evidentiary support. No evidence established their nature or the rights that might arise from them, so the seventh error assigned was sustained.
• Third-Party Ownership and Due Process: To direct the lessee to deliver to another person land of which he had possession with the owner's consent was equivalent to depriving him of a civil right that could not be taken except by the person who conferred it. It would amount to disposing of property belonging to one person for another's use and enjoyment without the owner's knowledge or consent and without giving the owner an opportunity to be heard. The owner would thus be deprived of property by an order implying a right to dispose, which belongs exclusively to the owner who had given no cause for such interference. The third and sixth errors assigned were sustained.
• Nature of the Action: Delivery of property by judicial order can only result from an action in rem or an action for possession. The delivery ordered in the judgment appealed from, as a consequence of the right to redeem, could only result from an action in personam arising from a stipulation, the effects of which could affect only the legitimate owner of the property. That owner was not a party to the stipulation, the proceedings, or the judgment. If the action in personam existed and was still enforceable, it should have been directed against the immediate successor to the obligation, not against the mother as coparticipant in the use of the land; the successor was not a party and his rights would be jeopardized without an opportunity to be heard. The fifth assignment of error was sustained.
• Enforceability of the Contract: The improvements were considered transferred to Olimpo under a contract that might be characterized as a mortgage insofar as it secured an obligation and as an antichresis insofar as it provided for delivery of the fruits of the real property. Mortgage and antichresis, however, relate to real property presumed to belong to the debtor and sufficient to secure the debt; here the real property did not belong to Patriarca and the improvements could not be ascertained to determine whether they gave rise to an action in rem or merely an action in personam. The alleged contract, being different from the security contracts in the Civil Code, depended for its existence on a local custom, and a local custom as a source of right cannot be considered unless properly established by competent evidence, which was not done. The contract was neither a mortgage, an antichresis, nor a purchase on condition of redemption. Because these were the only contracts relating to real property in the nature of security known to the Civil Code, and Article 1976 repealed all laws, usages, and customs constituting the common civil law on matters covered by the Code, the contract could not be enforced.

• Action in personam and non-party effect — A delivery of property ordered as a consequence of a right to redeem arises from an action in personam based on stipulation and can bind only parties to that stipulation and the proceedings. In this case, the owner of the land and the immediate successor to the obligation were not parties, so the judgment could not affect them or require the lessee to deliver third-party land.
• Due process in judicial delivery of third-party property — A court cannot order a lessee who possesses land with the owner's consent to deliver that land to another where the land belongs to a third party not before the court. Such an order would deprive the owner of property without notice or hearing and would imply a power to dispose of property that belongs exclusively to the owner.
• Local custom as a source of right — A local custom can be considered as a source of right only if it is properly established by competent evidence like any other fact. The alleged contract over the improvements depended on local custom, but its nature, effects, and extent were not proved, so it could not be enforced.
• Security contracts over real property under the Civil Code — The Civil Code recognizes mortgage, antichresis, and purchase with a right of redemption as contracts relating to real property in the nature of security. A contract over improvements that is none of these and rests on an unproved local custom cannot be enforced; Article 1976 repealed prior laws, usages, and customs on matters covered by the Civil Code.
• Improvements on leased land must be identified — Where the subject of an alleged mortgage or sale is not the land but the improvements thereon, the nature and extent of those improvements and the rights arising from them must be established by evidence. Absent such proof, a judgment affecting them lacks factual basis.

• "To direct this lessee to deliver to another person the land of which he has been in possession with the consent of the owner, is equivalent to depriving him of the civil right which can not be taken from him except by the person who conferred it upon him." — This passage states the due process and third-party ownership rationale for reversing the order requiring the lessee to deliver land belonging to another.
• "The delivery of property by virtue of a judicial order can only be the result of an action in rem or an action for possession, while the delivery ordered in the judgment here appealed from as a consequence of the right to redeem can only be the result of an action in personam, the consequence of a stipulation, the effects of which can only affect the legitimate owner of the property who, as in this case, was not a party to such a stipulation, not a party to the proceedings, and was not affected by the judgment." — This is the Court's central distinction between in rem and in personam actions and its basis for holding that the judgment could not bind the non-party owner.
• "However it may be, that contract in regard to the so-called improvements on the land, different in its effects from those contracts of security mentioned in the present Civil Code, must depend for its existence upon some local custom, and a local custom as a source of right can not be considered by a court of justice unless such custom is properly established by competent evidence like any other fact, which has not been done in this case, where neither the nature, the effects, nor the extent of that singular contract was proved." — This passage establishes the evidentiary requirement for proving local custom as a source of rights.
• "These being the only contracts relating to real property in the nature of contracts of security, known to the Civil Code, and prior to the promulgation of the Civil Code there was some similar contract with the same effect mentioned in the judgment of the court below, different, however, from the contracts of mortgage and purchase and sale, such contracts could not be enforced at this time, as article 1976 of the Civil Code repealed all laws, usages and customs which constituted the common civil law in all matters which are the subject of this code." — This excerpt supplies the Court's holding on the non-enforceability of the alleged contract under Article 1976 of the Civil Code.

• Article 1976, Civil Code — The Court cited this provision to hold that all laws, usages, and customs constituting the common civil law on matters covered by the Civil Code were repealed. Because the alleged contract over the improvements was neither mortgage, antichresis, nor purchase with right of redemption and rested on an unproved local custom, it could not be enforced.

Torres, Mapa, Carson, Willard, and Tracey, JJ., concur.