GERONIMO AVECILLA, AS ADMINISTRATOR OF THE ESTATE OF DECEASED PLACIDO ALFONSO, PETITIONER, VS. HON. NICASIO YATCO, ET AL., RESPONDENTS.

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 annulment of certain extra judicial 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 so as to include as
party defendant Susana Realty, Inc. to which the property was subsequently sold.

On August 1, 1956, Agueda Santos and Santiago Cruz filed their respective
answers but Susana Realty, Inc. filed a motion to dismiss alleging (1) lack of
cause of action; (2) the cause of action, if any, had prescribed; and (3)
plaintiffs do not have legal capacity to sue. On September 1, 1956, by leave of
court, plaintiffs were substituted by Geronimo Avecilla who was appointed
judicial administrator of the estate of the deceased Placido Alfonso on June 8,
1956. On September 14, 1956, the court granted the motion to dismiss and
dismissed the complaint in so far as Susana Realty, Inc. is concerned. It found
that plaintiff has no cause of action against the company, and that if he has
any, the action has. already prescribed. Plaintiff’s motion for reconsideration
having been denied, he interposed the present petition for certiorari.

It is alleged in the amended complaint that the spouses Placido Alfonso and
Agueda Santos owned a parcel of land covered by Transfer Certificate of Title
No. 21913 which was conjugal in nature; that Placido died in 1947 without any
issue; that Agueda, alleging fraudulently that she was the sole heir of her
deceased husband, executed an extrajudicial deed of settlement and secured
Transfer Certificate of Title No. 3585 in her name; that thereafter she sold the
laxid to Santiago Cruz who fraudulently secured Transfer Certificate of Title
No. 3586; that Santiago in turn conveyed the property to Susana Realty, Inc.
which secured Transfer Certificate of Title No. 31543 in its name; that
plaintiffs discovered the fraudulent sale between Agueda and Santiago only in
January, 1956, and that between Santiago and Susana Realty, Inc. in June, 1956,
Plaintiffs prayed for the annulment of the extrajudicial settlement and the,
deeds of sale in favor of Santiago Cruz and Susana Realty, Inc. and for the
reconveyance of the property to them.

The first ground on which the lower court dismissed the complaint is that it
does not allege a cause of action against Susana Realty, Inc. for the reason
that while it alleges that Agueda Santos and Santiago Cruz acted fraudulently in
effecting the sale of the land by the former to the latter, there is, however,
nothing alleged therein that in the transfer of the land by Cruz to Susana
Realty, Inc., the latter acted with knowledge of the fraud or of the defect
vitiating the title of Santiago Cruz. It is further inferred from the complaint
that the land is covered by a Torrens title on the back of which no encumbrance
appears. It is for this reason that the trial court found Susana Realty, Inc. to
have acted in good faith in purchasing the land and held that the action cannot
prosper against it under Section 55 of Act 496 which provides: “That in all
cases of registration procured by fraud, the owner may pursue all his legal and
equitable remedies against the parties to such fraud, without prejudice,
however, to the rights of any innocent holder for value of a certificate of
title.”

We have examined the pertinent allegations contained in the amended complaint
and have found the above findings of the trial court correct. Indeed, there is.
nothing alleged therein which may implicate Susana Realty, Inc. in the
commission of the alleged fraud in the transfer made by Agueda Santos of the
land to Santiago Cruz although the allegation therein is clear that both Santos
and Cruz have acted fraudulently. Being an innocent purchaser for value of the
land, its right is protected by law and the remedy of the persons prejudiced is
to bring an action for damages against the persons responsible therefor.

“In fact, in view of the issuance of certificates of title, another line of
approach conclusive against plaintiffs’ side suggests itself; There being no
allegation of had faith against Santos, his purchase of the duly registered
title of Afable may not be revoked even if Afable, as alleged in the complaint,
obtained it thru fraud. Consequently plaintiffs’ action for annulment of the
deed of sale will necessarily fail. Plaintiffs’ remedy, if any, is an action for
damages against Afable by reason of fraud and that remedy may only be demanded
judicially within four years after discovery of the deception. (Sec. 43 Act No.
190.)” Raymundo, et al. vs. Afable, et al., 96 Phil., 655.)

The second ground on which the order dismissing the complaint is predicated
is that, even if plaintiff has a cause of action against defendant Susana
Realty, Inc., the same has already prescribed. The court said: “It is very clear
that said prescriptive period commences to run from the discovery of the fraud,
which, in the instant case, is from April 11, 1947, the date of registration of
the alleged fraudulent document, the affidavit of extra-judicial settlement by
the defendant Agueda Santos. It is a well-settled rule in land registration that
registration of a document in the registry office operates, not only to the
parties to the same, but also against the whole world. It is obvious that the
four-year period has long expired from aforesaid date of registration.”

Again, we find correct the above finding of the trial court. Under Section 51
of Act 496, every conveyance affecting registered lands if recorded, filed or
entered in the office of the register of deeds, shall “be notice to all persons
from the time of such registration, filing, or entering.” And it has been held
that the period of prescription in relation to an action to annul a sale of land
bought by third persons should be counted from the date of registration of the
same, which is notice to the whole world (De Guinoo vs. The Court of Appeals, 97
Phil., 235).

But petitioner maintains that this cause of action has not yet prescribed
because when Agueda Santos, through fraudulent misrepresentation, secured a
certificate of title in her name, a constructive trust in favor of the defrauded
heirs of her late husband was created which grants to said heirs the right to
vindicate the property regardless of the lapse of time. But the right of action
in this constructive trust should be exercised against the trustee, who caused
the fraud, and not against an innocent purchaser for value, as the Susana
Realty, Inc. This right may also be exercised against Santiago Cruz who also
obtained title to the land with knowledge of the fraud, but not with regard to
Susana Realty, Inc. which, as already stated, has bought the property in good
faith. The remedy in this case of the defrauded heirs is to bring an action for
damages against those who caused the fraud or were instrumental in depriving
them of the property. Their action cannot reach an innocent purchaser for value
who is protected by law (Raymundo, et al. vs. Afable, et al., supra).

After plaintiffs have filed their amended complaint in the lower court and
defendant Susana Realty, Inc. filed its motion to dismiss alleging that the same
alleges no cause of action against it because it appears therein that it has
acted without knowledge of the fraud with which the title of its
predecessor-in-interest was vitiated, counsel for plaintiffs moved for leave to
file their amended complaint in order that he may supply the deficiency in so
far as said defendant is concerned. Of course, defendant Susana Realty, Inc.
opposed the move and the court denied the motion. Counsel now contends that the
lower court erred in denying the motion.

While under the rules a party may, upon motion, ask the court for leave to
alter or amend any pleading, action thereon is addressed to the discretion of
the court. The court may grant leave to amend upon such terms as may be just or
where in its opinion the circumstances so warrant (section 2, Rule 17). The rule
is not mandatory. The rule is further subject to the limitation that, if the
amendment is allowed, the cause of action should not be substantially changed,
or the theory of the case altered to the prejudice of the other party. Thus, it
was held: “The granting of leave to file amended pleadings is a matter
peculiarly within the sound discretion of the trial court. This discretion will
not be disturbed on appeal, except in case of an evident abuse thereof. But the
rule allowing amendments to pleadings is subject to the general but not
inflexible limitation that the cause of action or defense shall not be
substantially changed, or that the theory of the case shall not be altered”
(Torres Vda. de Neir vs. Tomacruz, 49 Phil, 913). In the circumstances, we find
nothing to show that the lower court has abused its discretion on this matter.

We find one procedural error committed by petitioner in this case. Petitioner
seeks redress from an order of the trial court dismissing his complaint against
the Susana Realty, Inc. but in doing so he filed a petition for certiorari. This
is erroneous for his remedy is appeal, the order in question being final in
character. This alone is enough ground for the dismissal of the present petition
for certiorari.

Petition is dismissed, with costs against petitioner.

Paras, C.J., Bengzon, Montemayor, Reyes, A., Labrador, Concepcion, Reyes,
J.B.L., Endencia, and Felix, JJ., concur.