LAURA ALVAREZ, FLORA ALVAREZ AND RAYMUNDO ALVAREZ, PETITIONERS, VS. THE HONORABLE INTERMEDIATE APPELLATE COURT AND JESUS YANES, ESTELITA YANES, ANTONIO YANES, ROSARIO YANES, AND…

Alvarez versus Intermediate Appellate Court

The Case

This is a petition for review on certiorari brought by Laura, Flora and Raymundo Alvarez, the legitimate children and heirs of the late Rosendo Alvarez, against the Intermediate Appellate Court and the Yanes family. The Yaneses had earlier won a final judgment ordering Rosendo Alvarez to reconvey two parcels of land in Murcia, Negros Occidental. Because Alvarez had already sold those lots to a good-faith buyer before the judgment could be executed, the Yaneses sued for damages, and the courts below held the Alvarez heirs liable. The case matters because it joins two great themes of remedial law and succession: the finality of judgments, and the transmissibility of a deceased person's obligations to his heirs.

Procedural History

The Yaneses first sued for recovery of the lots in the Court of First Instance of Negros Occidental, and that court rendered judgment ordering Rosendo Alvarez to reconvey the properties to them. No appeal was taken, and that judgment became final and executory. When execution failed because the lots were already in the name of Dr. Rodolfo Siason, the Yaneses filed a new action for recovery of real property with damages. The trial court dismissed the case against Siason and the Register of Deeds, but ordered the Alvarez heirs to pay the Yaneses the actual value of the lots, plus actual damages, moral damages and attorney's fees. The Alvarez heirs appealed to the Intermediate Appellate Court, which affirmed the award of the actual value of the lots but reversed the awards of damages and attorney's fees. The appellate court denied their motion for reconsideration, so the Alvarezes came to the Supreme Court by petition for review on certiorari.

Facts

Lot 773 of the cadastral survey of Murcia, Negros Occidental, was registered in the name of the heirs of Aniceto Yanes. Aniceto was survived by his children Rufino, Felipe and Teodora, and the private respondents are their descendants. Fortunato Santiago later obtained transfer certificates of title over the subdivisions of the lot, known as Lot 773-A and Lot 773-B. Santiago sold both lots to Monico Fuentebella, Junior, who in turn sold them, through his estate, to Rosendo Alvarez.

In May 1960, Teodora Yanes and the children of Rufino sued Santiago, the Fuentebellas and Alvarez for the return of ownership and possession of the lots. While that case was pending, and without any notice of lis pendens annotated on the titles, Alvarez sold the lots to Dr. Rodolfo Siason, who bought in good faith and for value. In October 1963, the trial court rendered judgment ordering Alvarez to reconvey the lots to the Yaneses. That judgment became final, but execution failed because the lots were already in Siason's name, and Siason was not a party to that case.

The Yaneses then filed the present action for recovery of real property with damages. The trial court found Siason to be a purchaser in good faith and sustained his title, but ordered the Alvarez heirs to pay the actual value of the lots, since the sale to Siason had been made without court approval. The appellate court affirmed that award but deleted the damages and attorney's fees.

Issues

• Whether or not the decision in the earlier reconveyance case, having become final and executory, is conclusive upon the parties and their privies and can no longer be reopened.
• Whether or not the Yaneses' cause of action is barred by prescription and estoppel.
• Whether or not the liability arising from the sale of the lots by Rosendo Alvarez to Dr. Siason is transmitted to his heirs.
• Whether or not the heirs' liability is limited to the value of the property they received from the decedent.

Applicable Provisions

Article 774 of the Civil Code provides:

Article 774. Succession is a mode of acquisition by virtue of which the property, rights and obligations to the extent of the value of the inheritance, of a person are transmitted through his death to another or others either by his will or by operation of law.

This fixes the extent of what passes to the heirs, which is the inheritance measured by its value.

Article 776 of the Civil Code provides:

Article 776. The inheritance includes all the property, rights and obligations of a person which are not extinguished by his death.

This tells us that obligations not extinguished by death form part of the estate.

Article 1311 of the Civil Code provides:

Article 1311. Contracts take effect only between the parties, their assigns and heirs, except in case where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law. The heir is not liable beyond the value of the property received from the decedent.

This is the core provision: contractual obligations bind the heirs, but only up to the value of what they inherited.

Ruling

On the first issue, the Court held that the decision in the earlier reconveyance case had long become final and executory and is the law of the case between the parties. When a right or fact has been judicially tried and determined by a court of competent jurisdiction, so long as it remains unreversed, it is conclusive upon the parties and those in privity with them. Every litigation must come to an end, and the prevailing party should not be harassed by subsequent suits.

On the second issue, the Court held that the right to the properties had already been finally adjudicated in favor of the Yaneses, and that adjudication cannot be reopened on the pretext that prescription and estoppel were not properly considered. The petitioners could have appealed in the former case but did not, and so foreclosed their rights.

On the third issue, the Court held that the liability arising from the sale is transmitted to the heirs. The Court quoted Article 1311 and explained, through the doctrine of the Estate of Hemady versus Luzon Surety Company, that a party's contractual rights and obligations are generally transmissible to his successors. The petitioners cannot escape the legal consequences of their father's transaction. That they did not inherit the lots themselves is of no moment, because by legal fiction the monetary equivalent devolved into the hereditary estate, and hereditary assets are always liable in their totality for the debts of the estate.

On the fourth issue, the Court clarified that the petitioners are liable only to the extent of the value of their inheritance. Since they admitted that other properties left by the deceased are sufficient to cover the amount adjudged, the Court saw no reason to disturb the findings of the appellate court.

Doctrine

A final and executory judgment is conclusive upon the parties and their privies and can no longer be reopened, whether directly or indirectly, in a subsequent suit. The remedy of a landowner whose property has been wrongfully registered in another's name is an ordinary action for reconveyance or, if the property has passed to an innocent purchaser for value, for damages. Under Article 1311 of the Civil Code, contractual obligations are transmissible to the heirs, who are bound by the contracts of the decedent, but the heir is not liable beyond the value of the property received from the decedent. The hereditary estate, in its totality, answers for the debts of the deceased.

Disposition

The Supreme Court affirmed the decision of the appellate court, with the clarification that the Alvarez heirs are liable only to the extent of the value of their inheritance, and imposed costs against the petitioners.

Remember This

Memorize this line: the heir is not liable beyond the value of the property received from the decedent, and a final judgment binds the parties and their privies forever. Examiners use this case to test the transmissibility of contractual obligations to heirs and the conclusiveness of a final and executory judgment against collateral attack.