Aquino v.

Quiazon
G.R. No. 201248, March 11, 2015 MENDOZA, J.

DOCTRINE: The trial court may hold a preliminary hearing on affirmative defenses. However, such
hearing is not necessary when the affirmative defense is failure to state a cause of action. The reception
and the consideration of evidence on the said ground, has been held to be improper and impermissible.
The trial court, thus, erred in receiving and considering evidence in connection with this ground.

FACTS: A complaint for Annulment and Quieting of Title was filed by the petitioners alleging that
they were the heirs of Epifanio Makam and Severina Bautista, who acquired a house and lot by
virtue of a Deed of Sale and since then, they had been in open, continuous, adverse, and notorious
possession for more than a hundred years. Later, they received demand letters from the
respondents claiming ownership over the subject property and demanding that they vacate the
same. Upon inquiry with the RD, it confirmed that the property had been titled in the name of
respondents and they claim that the title was invalid, ineffective, voidable or unenforceable and
that they were the true owners of the property. The respondents asserted that they were the
absolute owners of the subject land and they had inherited the same from their predecessor-in
interest and that petitioners had been occupying the property by mere tolerance. They denied the
allegations in the complaint and proffered affirmative defenses with counterclaims. They argued
that: First, the petitioners "have no valid, legal and sufficient cause of action" against them, because
their deed of sale was spurious. Second, the action was barred by prescription and that petitioners
were guilty of laches in asserting their interest over the subject lot. Third, the action was also
barred by res judicata and violated the prohibition against forum shopping, considering that
petitioners had earlier filed a similar case for quieting of title against respondents. The RTC set a
preliminary hearing on the affirmative defenses.

Lower court ruling: On July 14, 2008, the RTC-Br. 59 issued the Order dismissing petitioners’
complaint. It found that based on the decision, dated June 28, 1919, in Cadastral Case No. 5,
the Baluyut siblings, respondents’ predecessors-in-interest, were declared the absolute owners
of the subject property, over the claim of Jose Makam, the predecessor-in-interest of petitioners,
who was one of the oppositors in the said case. From this decision, OCT No. RO-1138 (11376)
was derived, which later became the subject of a project of partition and deed of agreement
among the Baluyut siblings, dated January 2, 1972, which, in turn, was annotated on the OCT
as Entry No. 8132. TCT No. 213777-R, covering the subject lot, was later derived from the
partition. The RTC-Br. 59 also noted that it was stated in the said decision that in 1907, a
warehouse was constructed on the subject lot by virtue of an agreement between the Chairman
of Magalang and Enrique Baluyut, with no objection from the Makams. It was further noted that
the deed of sale being asserted by petitioners was not mentioned in the 1919 decision despite
the claim of their predecessors-in-interest.
The RTC-Br. 59, thus, ruled that the deed of sale had become invalid by virtue of the
June 28, 1919 decision. It held that although the deed of sale dated, April 20, 1894, was
never challenged, it was nevertheless unenforceable by virtue of the June 28, 1919
decision. It found that petitioners had lost whatever right they had on the property from
the moment the said decision was rendered and an OCT was issued. Finding that
petitioners were not holders of any legal title over the property and were bereft of any
equitable claim thereon, the RTC-Branch 59 stated that the first requisite of an action to
quiet title was miserably wanting. It also found the second requisite to be wanting
because respondents had proved that the TCT registered in their names was valid.
Anent petitioners’ argument that only the complaint may be considered in determining
the sufficiency of the cause of action, the RTC Br. ruled that under Section 2 in relation
to Section 6, Rule 16 of the Rules of Court, a preliminary hearing on the affirmative
defense in the answer might be had at the discretion of the court, during which the
parties could present their arguments and their evidence.
On December 22, 2008, the RTC-Br. denied petitioners’ motion for reconsideration. It
stated that the court may consider evidence presented in hearings related to the case,
which was an exception to the general rule that only the complaint should be taken into
consideration. It stated that petitioners were without legal or equitable title to the subject
property, thus, lacking the legal personality to file an action for quieting of title and,
therefore, "the complaint was properly dismissed for failing to state a cause of action."

CA: In the assailed Decision, dated March 13, 2012, the CA dismissed petitioners’ appeal. It
explained that under Section 6, Rule 16 of the Rules of Court, a court is allowed to conduct a
preliminary hearing, motu proprio, on the defendant’s affirmative defenses, including the ground
of "lack of cause of action or failure to state a cause of action." It gave the reason that because
the rule spoke in general terms, its manifest intention was to apply it to all grounds for a motion
to dismiss under the rules which were pleaded as affirmative defenses in the responsive
pleading. Thus, it held that the trial court might consider other evidence aside from the
averments in the complaint in determining the sufficiency of the cause of action. The CA
explained:
But as shown in the foregoing rule, the holding of a preliminary hearing on any of the
grounds for a motion to dismiss which is pleaded as an affirmative defense is within the
full discretion of the trial court. The rule speaks of affirmative defenses that are grounds
for a motion to dismiss. Indubitably, lack of cause of action or failure to state a cause of
action, being one of the grounds for a motion to dismiss, is included thereby.
Since the rule allows the trial court to conduct a preliminary hearing on this kind of an
affirmative defense, it follows then that evidence could be submitted and received
during the proceedings which the court may consider in forming its decision. It would be
plain absurdity if the evidence already presented therein would not be allowed to be
considered in resolving whether the case should be dismissed or not. To rule otherwise
would render nugatory the provision of Section 6, Rule 16 and would make the holding
of a preliminary hearing a plain exercise in futility. No well-meaning judge would hold a
preliminary hearing and receive evidence only to disregard later the evidence gathered
in the course thereof. If the intention of the rule is for the trial court to confine itself to the
allegations in the complaint in determining the sufficiency of the cause of action, as the
plaintiffs-appellants would want to impress upon this Court, then it should have been so
expressly stated by barring the court from conducting a preliminary hearing based on
the said ground. The fact, however, that the said rule speaks in general terms, it is its
manifest intention to apply it in all grounds for a motion to dismiss under the rules which
are pleaded as an affirmative defense in the responsive pleading. Thus, we find that
that trial court did not err in considering the evidence already presented and in not
confining itself to the allegations in the plaintiffs-appeallants’ complaint.
The CA gave credence to the evidence presented by respondents and noted that,
except for petitioners’ bare allegation that respondents’ title was invalid, there was
nothing more to support the same. It further noted that the deed of sale was written in a
local dialect without the translation and with no ascertainable reference to the area of
the property being conveyed. The CA, therefore, found that petitioners did not have the
title required to avail of the remedy of quieting of title, while respondents had sufficiently
proven the validity of their Torrens title. Hence, the subject petition.

ISSUE: Whether or not it is within the trial court’s discretion to receive other evidence in resolving
an affirmative defense on the ground of failure to state cause of action.

RULING: The Court does not discount, however, that there are exceptions to the general rule that
allegations are hypothetically admitted as true and inquiry is confined to the face of the complaint.
First, there is no hypothetical admission of (a) the veracity of allegations if their falsity is subject to
judicial notice; (b) allegations that are legally impossible; (c) facts inadmissible in evidence; and (d)
facts which appear, by record or document included in the pleadings, to be unfounded. Second,
inquiry is not confined to the complaint if culled (a) from annexes and other pleadings submitted by
the parties; (b) from documentary evidence admitted by stipulation which disclose facts sufficient
to defeat the claim; or (c) from evidence admitted in the course of hearings related to the case.

Pointing to the exception that inquiry was not confined to the complaint if evidence had been
presented in the course of hearings related to the case, the CA ruled that it was within the trial
court's discretion to receive and consider other evidence aside from the allegations in the
complaint in resolving a party's affirmative defense. It held that this discretion was recognized
under Section 6 of Rule 16 of the Rules of Court, which allowed the court to conduct a preliminary
hearing, motu proprio, on the defendant's affirmative defense if no corresponding motion to dismiss
was filed.

The trial may indeed elect to hold a preliminary hearing on affirmative defenses as raised in the
answer under Section 6 of Rules 16 of the Rules of Court. It has been held, however, that such a
hearing is not necessary when the affirmative defense is failure to state a cause of action, and that it
is, in fact, error for the court to hold a preliminary hearing to determine the existence of external
facts outside the complaint. The reception and the consideration of evidence on the ground that the
complaint fails to state a cause of action, has been held to be improper and impermissible. Thus, in a
preliminary hearing on a motion to dismiss or on the affirmative defenses raised in an answer, the
parties are allowed to present evidence except when the motion is based on the ground of
insufficiency of the statement of the cause of action which must be determined on the basis only of
the facts alleged in the complaint and no other. Section 6, therefore, does not apply to the ground
that the complaint fails to state a cause of action. The trial court, thus, erred in receiving and
considering evidence in connection with this ground.