G.R. No. 68053 - Alvarez vs. Intermediate Appellate Court

Case Summary (G.R. No. 68053)

Factual Background

The parcels originated as Lot 773 registered under Original Certificate of Title No. R0-4858 (8804) issued October 9, 1917 in the name of the heirs of Aniceto Yanes. Aniceto was survived by Rufino, Felipe and Teodora; the private respondents are descendants of Rufino and Felipe. In 1938 Transfer Certificates of Title were issued to Fortunato D. Santiago for portions of Lot 773 identified as Lots 773-A and 773-B. Santiago sold the parcels to Monico B. Fuentebella, Jr. in 1955, and TCTs issued to Fuentebella in 1956. After Fuentebella’s death the administratrix sold the parcels to Rosendo Alvarez in 1958, and TCTs issued to Alvarez. Alvarez conveyed the parcels to Dr. Rodolfo Siason in November 1961. The Yaneses maintained that they were the rightful owners and they filed Civil Case No. 5022 in 1960 for reconveyance of Lots 773 and 823; the trial court rendered judgment in favor of the Yaneses on October 11, 1963 ordering reconveyance by Rosendo Alvarez. Execution encountered a hindrance when Lot 773 had been subdivided and the lots were found to be registered in the name of Dr. Siason, who was not then a party to the execution.

Subsequent Proceedings and Parallel Actions

After the obstructed execution the Yaneses sought further relief. In Cadastre proceedings and related motions the court declined to compel Siason to surrender his titles in view of his claim of purchase in good faith and because he had not been a party to Civil Case No. 5022. Thereafter, on February 21, 1968 the Yaneses instituted Civil Case No. 8474 for recovery of real property with damages, naming Dr. Rodolfo Siason, Laura Alvarez, Flora Alvarez and Raymundo Alvarez, and the Register of Deeds as defendants. The complaint prayed for cancellation of the titles issued to Siason, issuance of a new title in the Yaneses’ favor, delivery of possession, accounting for fruits, and monetary damages including moral and exemplary damages and attorney’s fees.

Trial Court Ruling

In its decision of July 8, 1974 the Court of First Instance found that Dr. Siason purchased the properties in good faith for value and dismissed the action against him and the Register of Deeds. The court nevertheless concluded that equity required relief against the seller whose sale had been effected without court approval. The court ordered Laura, Flora and Raymundo Alvarez, as heirs of the deceased Rosendo Alvarez, to pay jointly and severally P20,000 representing the actual value of Lots 773-A and 773-B; the court also awarded P2,000 as actual damages, P5,000 as moral damages, and P2,000 as attorney’s fees, all with legal interest. The cross-claim by Siason against the Alvarezes was dismissed.

Intermediate Appellate Court Disposition

The Intermediate Appellate Court, in its decision of August 31, 1983, affirmed the trial court “insofar as it ordered defendants-appellants to pay jointly and severally the plaintiffs-appellees the sum of P20,000.00 representing the actual value of Lots Nos. 773-A and 773-B,” and reversed the awards of P2,000, P5,000 and P2,000 as actual damages, moral damages and attorney’s fees, respectively. The appellate court denied the Alvarezes’ motion for reconsideration on May 30, 1984. The petitioners brought the result before the Supreme Court by petition for review on certiorari.

Issues Raised by Petitioners

The petitioners urged four principal contentions: first, that the defenses of prescription and estoppel were timely and properly invoked and should bar the Yaneses’ cause of action; second, that the cause or causes of action asserted in Civil Case No. 8474 were barred by the statute of limitations and estoppel; third, that the late Rosendo Alvarez had become a privy to a waiver manifested by the Yaneses on November 6, 1962 (Exhibit “4”), such that the waiver precluded the Yaneses’ later relief; and fourth, that any liability arising from the sale by Rosendo Alvarez to Dr. Siason could not lawfully be transmitted to the petitioners as heirs without violating law and due process.

The Supreme Court’s Disposition

The Supreme Court found the petition devoid of merit and affirmed the decision of the Court of Appeals subject to a clarification. The Court held that the judgment in Civil Case No. 5022 had become final and executory and therefore constituted binding law between the parties and their privies, with the limited exception of Dr. Siason who had not been a party to that case. The Court sustained the appellate court’s affirmation of the award of P20,000 as the actual value of Lots 773-A and 773-B against the Alvarezes, but clarified that the heirs’ liability is limited to the value of their inheritance. Costs were assessed against petitioners.

Legal Reasoning and Basis

The Court anchored its disposition on the principle of res judicata and the doctrine that a final judgment of a competent court is conclusive upon the parties and those in privity. Because Civil Case No. 5022 had adjudicated the Yaneses’ rights to the property and had become final, the Yaneses could not be denied relief by permitting relitigation of the same cause between the same parties or their privies. The Court accepted the trial court’s finding that Dr. Siason was a purchaser in good faith and that no lis pendens had been annotated to warn bona fide third parties; accordingly, the trial court did not annul Siason’s pur

Case Syllabus (G.R. No. 68053)

Parties and Procedural Posture

LAURA ALVAREZ, FLORA ALVAREZ AND RAYMUNDO ALVAREZ filed a petition for review on certiorari challenging the decision of the Intermediate Appellate Court and the dismissal of their motion for reconsideration.
THE HONORABLE INTERMEDIATE APPELLATE COURT had affirmed in part and reversed in part the July 8, 1974 decision of the Court of First Instance of Negros Occidental.
JESUS YANES, ESTELITA YANES, ANTONIO YANES, ROSARIO YANES, AND ILUMINADO YANES were the private respondents and original plaintiffs in related earlier actions seeking reconveyance and damages.
The petition sought reversal of the Court of Appeals decision insofar as it ordered petitioners to pay P20,000.00 and reversed awards of P2,000.00, P5,000.00 and P2,000.00 as actual, moral damages and attorney’s fees respectively.

Key Factual Allegations

The subject properties were originally Lot 773 of the Murcia cadastre, registered under OCT No. R0-4858 (8804) in the name of the heirs of Aniceto Yanes.
Lot 773 was subsequently subdivided into Lots 773-A and 773-B, and titles were successively issued to Fortunato D. Santiago, then to Monico B. Fuentebella, Jr., then to Rosendo Alvarez, and ultimately to Dr. Rodolfo Siason.
The Yanes family alleged they were illegally deprived of ownership and possession of Lots 773 and 823 and sought reconveyance and accounting of produce dating from 1944.
Execution of a 1963 judgment ordering reconveyance to the Yaneses was frustrated because the lots had been subdivided and sold to third parties not parties to that action and because no lis pendens was annotated on the titles.

Titles and Transactions

TCT No. RF 2694 and TCT No. RT-2695 were issued to Fortunato D. Santiago in 1938 covering portions of Lot 773.
Santiago sold Lots 773-A and 773-B to Monico B. Fuentebella, Jr. on May 30, 1955 for P7,000.00, and TCT Nos. T-19291 and T-19292 issued in 1956.
Following Fuentebella’s death, his administratrix obtained court authority to sell the lots, and Rosendo Alvarez purchased them on March 24, 1958 for P6,000.00 with issuance of TCT Nos. T-23165 and T-23166.
Alvarez sold the lots to Dr. Rodolfo Siason on November 13, 1961 for P25,000.00, whereupon TCT Nos. 30919 and 30920 issued to Siason and he was found to be a purchaser in good faith for value.

Prior Proceedings

In Civil Case No. 5022, the Court of First Instance on October 11, 1963 ordered Rosendo Alvarez to reconvey Lots 773 and 823 to the plaintiffs (the Yaneses).
Execution of the 1963 judgment failed as the lots had been subdivided and sold to parties not bound by that judgment, and the sheriff reported inability to deliver Lot 773 to the plaintiffs.
In 1965 the cadastre court required Siason to produce titles but later nullified that requirement after Siason manifested his status as a purchaser in good faith.
The Yaneses instituted Civil Case No. 8474 on February 21, 1968 for recovery of real property against Dr. Rodolfo Siason, LAURA ALVAREZ, FLORA ALVAREZ, RAYMUNDO ALVAREZ and the Register of Deeds, seeking cancellation of TCTs and P45,000.00 in money relief plus damages and attorney’s fees.

Issues Presented

Whether the defenses of prescription and estoppel were timely and properly raised by the petitioners.
Whether the Yaneses’ cause of action in Civil Case No. 8474 was barred by statute of limitations, prescription or estoppel.
Whether Rosendo Alvarez or his estate became a privy or was bound by the 1962 manifestation wherein the Yaneses purportedly renounced claims against Arsenia Vda. de Fuentebella.
Whether liabilities arising from Alvarez’s sale could be transmitted by operation of law to his heirs LAURA ALVAREZ, FLORA ALVAREZ AND RAYMUNDO ALVAREZ.

Trial Court Ruling

The Court of First Instance in its July 8, 1974 decision found Dr. Rodolfo Siason to be a buyer in good faith for