8/12/2019 Ozaeta vs. Palanca 63 OG 36 p7675 p23

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G.R. No. L-17455 August 31, 1964

ROMAN OZAETA, plaintiff-appellee, vs. SEBASTIAN C. PALANCA and LIBERTYINS. CORP.,defendants; SEBASTIAN C. PALANCA,defendant-appellant.

FACTS: On June 24, 1956, Sebastian Palanca executed with, and in favor of hisco-heirs, a Deed of Assignment over his shares in the estate of his father and latesister Marciana Palanca de Santos under terms and conditions, in consideration of theadjudication and transfer of certain properties in Sorsogon. In Special Proceeding No.12126, said Deed of Assignment was approved on July 3, 1956 and Roman Ozaeta,the executor of the testate intestate of Carlos Palanca y Tanguinlay, was directed todeliver the properties to Sebastian. Pursuant to the court order, Ozaeta executed aDeed of Conveyance of the subject property in favor of Sebastian. Thereafter, Palancafiled a case against Ozaeta before the CFI of Manila. On June 29, 1959, the first andsecond counterclaim of such case was dismissed for failure to state a cause of action.Sebastian then appealed to the Court of Appeals, which certified the case to the

Supreme Court because it involves a question of law.

In summary, Palancas first counterclaim states that as a result of the Ozaetasfailure to transfer and convey certain properties, free from all liens and encumbrances(as such properties are in the name and actual possession of third parties), Palancawas deprived of ownership and possession. His second counterclaim states thatseveral properties, which were not conveyed and delivered to him, have been plantedwith coconuts, abaca and rice, consisting of a total area of approximately 150 hectares.Due to Ozaetas failure to convey and deliver the title and possession of such land, hewas unable to collect the yearly harvest estimated at Php75, 000.00 from and after July1956 and until Ozaeta shall have delivered said properties free from all liens and

encumbrances.

ISSUES: (1) Is there a cause of action against Ozaeta, in his capacity as anexecutor of Carlos Palancas estate?

(2) More importantly, is adverse possession by third parties consideredan encumbrance?

RULING:

(1) None. The court ruled that there is no cause of action against Roman

Ozaeta, in his capacity as executor in Special Proceeding No. 12126, since he was nota party to the Deed of Assignment. Ozaetas participation relative to the contract wasmerely to comply with the order of the probate court.

The remedy of Sebastian Palanca, if any, lies only against the persons withwhom he has contracted the Deed of Assignment.

(2) No. Adverse possession by another is not considered as an encumbrancein law, and does not go against the condition that the subject property be free fromencumbrance(Yuson, et al. v. Diaz, 42 Phil. 22). Adverse possession cannot also be regardedas a lien, which indicates security for a claim (Shanghai Banking Corp. v. Rafferty, 39 Phil. 145).

WHEREFORE, the order appealed from is affirmed. Costs against appellant,Sebastian C. Palanca.