ALVAREZ v.

IAC
G.R. No. L-68053 May 7, 1990
FACTS:
The real properties involved are two parcels of land identified as Lot 773-A and Lot 773-B which were
originally known as Lot 773 with an area of 156,549 square meters, was registered in the name of the
heirs of Aniceto Yanes (Aniceto) under Original Certificate of Title No. RO-4858 (8804).

Aniceto Yanes was survived by his children, Rufino (Children: Estelita, Iluminado and Jesus), Felipe
(Children: Antonio and Rosario) and Teodora (Child: Jovita - not a party).

Aniceto left his children Lots 773 and 823. Teodora cultivated only three hectares of Lot 823. Rufino and
his children left the province to settle in other places as a result of the outbreak of World War II. After
liberation, when her brother went there to get their share of the sugar produced therein, he was
informed that Fortunato Santiago, Fuentebella (Puentevella) and Alvarez were in possession of Lot 773.

On May 19, 1938, Fortunato D. Santiago was issued Transfer Certificate of Title No. RF 2694 (29797)
covering Lot 773-A with an area of 37,818 square meters. TCT No. RF 2694 describes Lot 773-A as a
portion of Lot 773 of the cadastral survey of Murcia and as originally registered under OCT No. 8804. On
September 6, 1938, the bigger portion of Lot 773 with an area of 118,831 square meters was also
registered in the name of Fortunato D. Santiago TCT No. RT-2695 (28192).

On May 30, 1955, Santiago sold Lots 773-A and 773-B to Monico B. Fuentebella, Jr. in consideration of
the sum of P7,000.00. After Fuentebella's death and during the settlement of his estate, the
administratrix (wife) filed in Special Proceedings No. 4373 in the Court of First Instance of Negros
Occidental, a motion requesting authority to sell Lots 773-A and 773-B. By virtue of a court order
granting said motion, 8 on March 24, 1958, sold said lots for P6,000.00 to Rosendo Alvarez.

On May 26, 1960, Teodora Yanes and the children of her brother Rufino, namely, Estelita, Iluminado and
Jesus, filed in the Court of First Instance of Negros Occidental a complaint against Fortunato Santiago,
Arsenia Vda. de Fuentebella, Alvarez and the Register of Deeds of Negros Occidental among others, for
the "return" of the ownership and possession of Lots 773 and 823.

During the pendency in court of said case, Alvarez sold Lots 773-A, 773-B and another lot for P25,000.00
to Dr. Rodolfo Siason.
On October 11, 1963, a decision was rendered by the Court of First Instance ordering the defendant
Rosendo Alvarez to reconvey to the plaintiffs lots Nos. 773 and 823. However, execution of said decision
proved unsuccessful with respect to Lot 773. hence, private respondents (the Yaneses) filed a petition
for the issuance of a new certificate of title and for a declaration of nullity of TCT Nos. T-23165 and T-
23166 issued to Rosendo Alvarez.

Siason filed a manifestation stating that he purchased Lots 773-A, 773-B and 658, not Lots 773 and 823,
"in good faith and for a valuable consideration without any knowledge of any lien or encumbrances
against said properties"; that the decision in the cadastral proceeding 19 could not be enforced against
him as he was not a party thereto.

the lower court, ruled that at the judgment therein could not be enforced against Siason as he was not a
party in the case. The Yaneses prayed for the cancellation of TCT Nos. T-19291 and 19292 issued to
Siason. Siason alleged that the validity of his titles to Lots 773-A and 773-B, having been passed upon by
the court in its order of September 4, 1965, had become res judicata and the Yaneses were estopped
from questioning said order. 26 On their part, the Alvarez stated in their answer that the Yaneses' cause
of action had been "barred by res judicata, statute of limitation and estoppel."

lower court found that Siason, who purchased the properties in question thru an agent as he was then
in Mexico pursuing further medical studies, was a buyer in good faith for a valuable consideration.
Although the Yaneses were negligent in their failure to place a notice of lis pendens" before the Register
of Deeds of Negros Occidental in order to protect their rights over the property in question", equity
demanded that they recover the actual value of the land because the sale thereof executed between
Alvarez and Siason was without court approval.

Alvarez appealed, but the court affirmed the lower court.

ISSUE:
Whether or not the obligation of the Alvarez(deceased) could be legally transmitted to his legitimate
heirs?

HELD:
YES. The doctrine obtaining in this jurisdiction on the general transmissibility of the rights and
obligations of the deceased to his legitimate children and heirs. Thus, the pertinent provisions of the
Civil Code state:
Art. 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.
Art. 776. The inheritance includes all the property, rights and obligations of a person which are not
extinguished by his death.
Art. 1311. Contract stake 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.

Petitioners being the heirs of the late Rosendo Alvarez, they cannot escape the legal consequences of
their father's transaction, which gave rise to the present claim for damages. That petitioners did not
inherit the property involved herein is of no moment because by legal fiction, the monetary equivalent
thereof devolved into the mass of their father's hereditary estate, and we have ruled that the hereditary
assets are always liable in their totality for the payment of the debts of the estate. It must, however, be
made clear that petitioners are liable only to the extent of the value of their inheritance.