G.R. No. L-11578; May 14, 1958
GERONIMO AVECILLA, as administrator of the estate of deceased Placido Alfonso, petitioner, vs. HON. NICASIO YATCO, ET AL., respondents.

FACTS

On June 11, 1956, Victorino Alfonso, Ciriaca Alfonso, and Paciencia Alfonso filed an action in the Court of First Instance of Rizal against Agueda Santos and Santiago Cruz for the annulment of an extrajudicial settlement and deed of sale covering a parcel of land allegedly owned by Placido Alfonso, the deceased husband of Agueda Santos. The complaint was later amended to include Susana Realty, Inc. as a party defendant, as the property was subsequently sold to it. On September 1, 1956, by leave of court, the plaintiffs were substituted by Geronimo Avecilla, the judicial administrator of the estate of Placido Alfonso. Susana Realty, Inc. filed a motion to dismiss the amended complaint on grounds of lack of cause of action, prescription, and the plaintiffs’ lack of legal capacity to sue. On September 14, 1956, the trial court granted the motion and dismissed the complaint as against Susana Realty, Inc., finding that the plaintiff had no cause of action against the company and that any such action had prescribed. The plaintiff’s motion for reconsideration was denied, prompting the filing of the present petition for certiorari.
The amended complaint alleged that the spouses Placido Alfonso and Agueda Santos owned a conjugal parcel of land; that Placido died in 1947 without issue; that Agueda fraudulently executed an extrajudicial deed of settlement, securing title in her name; that she then sold the land to Santiago Cruz, who also fraudulently secured title; and that Cruz subsequently conveyed the property to Susana Realty, Inc., which secured title in its name. The plaintiffs claimed they discovered the fraudulent sale between Agueda and Cruz only in January 1956, and that between Cruz and Susana Realty, Inc. in June 1956. They prayed for annulment of the settlement and deeds of sale and for reconveyance of the property.

ISSUE

1. Whether the amended complaint states a cause of action against Susana Realty, Inc.
2. Whether the cause of action, if any, has prescribed.
3. Whether the trial court erred in denying the plaintiff’s motion for leave to file a second amended complaint.
4. Whether the remedy of certiorari is proper.

RULING

1. No cause of action against Susana Realty, Inc.: The Supreme Court affirmed the trial court’s finding that the amended complaint does not allege a cause of action against Susana Realty, Inc. While the complaint clearly alleges fraud on the part of Agueda Santos and Santiago Cruz, there is no allegation that Susana Realty, Inc. acted with knowledge of such fraud or any defect in Cruz’s title when it purchased the property. The land was covered by a Torrens title with no encumbrance appearing on its back. Therefore, Susana Realty, Inc. is an innocent purchaser for value, and its rights are protected under Section 55 of Act No. 496 (Land Registration Act). The remedy of the prejudiced parties is an action for damages against those responsible for the fraud, not against the innocent purchaser.
2. Prescription of the cause of action: The Supreme Court also affirmed the trial court’s finding that the action has prescribed. Under Section 51 of Act No. 496, registration of a conveyance operates as notice to all persons from the time of such registration. The prescriptive period for an action to annul a sale based on fraud is four years from the discovery of the fraud. Here, the fraudulent extrajudicial settlement was registered on April 11, 1947, which constituted constructive notice to the whole world. The four-year period had long expired by the time the action was filed in 1956. The petitioner’s argument that a constructive trust was created, allowing the heirs to vindicate the property regardless of lapse of time, is unavailing because such an action lies against the trustee (Agueda Santos) or a purchaser with knowledge of the fraud (Santiago Cruz), but not against an innocent purchaser for value like Susana Realty, Inc.
3. Denial of motion to amend complaint: The Supreme Court held that the trial court did not abuse its discretion in denying the plaintiff’s motion for leave to file a second amended complaint. While amendments to pleadings are generally allowed under the rules, the grant or denial of such leave is within the sound discretion of the court, provided the amendment does not substantially change the cause of action or alter the theory of the case to the prejudice of the other party. No abuse of discretion was shown.
4. Improper remedy: The Supreme Court noted a procedural error. The order dismissing the complaint against Susana Realty, Inc. was a final order. The proper remedy was an appeal, not a petition for certiorari. This alone is sufficient ground for dismissal of the petition.
DISPOSITIVE:
The petition for certiorari is dismissed, with costs against the petitioner.