Alvarez v.

Intermediate Appellate Court

Facts:
Aniceto was survived by his children Rufino, Felipe, and Teodora. The private respondents are the
children of Rufino, Felipe, and Teodora. Aniceto left his children lots 773 and 823. Rufino and his
children left the during World War II. After the liberation of the country from Japanese occupation,
they found out that lot 773 was in the possession of Santiago, Fuentebella, and Alvarez, with the
records showing that TCTs covering lot 773-A;B were already issued to Santiago. Santiago sold
the lots to Fuentebella; and when Fuentebella died, his wife sold the lots to Rosendo Alvarez.

Expectedly, the private respondents filed a complaint against Santiago, Fuentebella, Alvarez, and
the Register of Deeds of Negros asking for the return of the ownership and possession of lots 773
and 823. During the pendency of the case, Alvarez sold the lots to Dr. Rodolfo Siason. Meanwhile,
in 1962, Jesus executed a quitclaim in favor of the defendant. However, in 1963, the CFI rendered
a decision in favor of the private respondents and ordering the reconveyance of the lots to them.

Despite the decision being decided in their favor, the decision could not be executed as the lots in
question were already registered in the name of Rodolfo Siason. The private respondents filed a
new case to force Siason to reconvey the lands with the cadastral court initially orderering Siason
to produce his TCTs. However, the same court nullified its previous order because Siason was able
to prove that he was without knowledge of any lien or encumbrances upon the properties which
he bought in good faith and for valuable consideration.

Unable to settle with the decision, the private respondents filed an ex-parte motion for the issuance
of an alias writ of execution which Siason opposed. On this matter, the court ruled that the
judgment cannot be enforced because Siason was not a party in the case. Another action was filed
for the recovery of the land plus damages and fruits. The petitioners raised res judicata, prescription
and estoppel in their answer, but yet again the lower court ruled in favor of the private respondents.
The lower court found that Rodolfo Siason, who purchased the properties in question through an
agent, as he was then in Mexico pursuing further medical studies, was a buyer in good faith for a
valuable consideration.

In this decision, 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" in Civil Case No. 5022, equity demanded that they recover the actual value of the land
because the sale thereof executed between Alvarez and Siason was without court approval. The
petitioners did not appeal, and as such, Civil Case No. 5022 became final and executory.

Issue:
Can the obligation of the deceased Alvarez to pay the private respondents be legally transmitted
and passed down to his legitimate children and heirs?

Held:
Yes. Petitioners contended that the liability arising from the sale of Lots No. 773-A and 773-B
made by Rosendo Alvarez to Dr. Rodolfo Siason should be the sole liability of the late Rosendo
Alvarez or of his estate, after his death. This cannot be accepted; the binding effect of contracts
upon the heirs of the deceased party is not altered by the provision of Rule 89 of the Rules of Court
that states that money-debts of a deceased must be liquidated and paid from his estate before the
residue is distributed among said heirs. The reason is that whatever payment is made from the
estate is ultimately a payment by the heirs or distributees since the amount of the paid claim in fact
diminishes or reduces the shares that the heirs would have been entitled to received.

The petitioners, being the heirs of the late Rosendo Alvarez, 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 the court has
consistently 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.