Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&amp;view=article&amp;id=84312:60348&amp;catid=1594&amp;Itemid=566
Timestamp: 2019-04-19 14:33:11+00:00

Document:
G.R. No. 201248, March 11, 2015 - LETICIA NAGUIT AQUINO, MELVIN NAGUIT, ROMMEL NAGUIT, ELMA NAGUIT TAYAG, YSSEL L. NAGUIT, ROSALINA NAGUIT AUMENTADO, RIZEL NAGUIT CUNANAN, CARIDAD NAGUIT PARAJAS, MILLIE NAGUIT FLORENDO, MARNEL NAGUIT, EDUARDO NAGUIT, JOSE NAGUIT, ZOILO NAGUIT, AND AMELIA NAGUIT DIZON, REPRESENTED BY YSSEL L. NAGUIT, Petitioners, v. CESAR B. QUIAZON, AMANDA QUIAZON, JOSE B. QUIAZON AND REYNALDO B. QUIAZON, REPRESENTED BY JAIME B. QUIAZON, Respondent.
LETICIA NAGUIT AQUINO, MELVIN NAGUIT, ROMMEL NAGUIT, ELMA NAGUIT TAYAG, YSSEL L. NAGUIT, ROSALINA NAGUIT AUMENTADO, RIZEL NAGUIT CUNANAN, CARIDAD NAGUIT PARAJAS, MILLIE NAGUIT FLORENDO, MARNEL NAGUIT, EDUARDO NAGUIT, JOSE NAGUIT, ZOILO NAGUIT, AND AMELIA NAGUIT DIZON, REPRESENTED BY YSSEL L. NAGUIT, Petitioners, v. CESAR B. QUIAZON, AMANDA QUIAZON, JOSE B. QUIAZON AND REYNALDO B. QUIAZON, REPRESENTED BY JAIME B. QUIAZON, Respondent.
On December 16, 2005, a complaint3 for Annulment and Quieting of Title was filed before the RTC-Branch 59 by the petitioners, namely, Leticia Naguit Aquino, Melvin Naguit, Rommel Naguit, Elma Naguit Tayag, Yssel L. Naguit, Rosalina Naguit Aumentado, Rizel Naguit Cunanan, Caridad Naguit Parajas, Millie Naguit Florendo, Marnel Naguit, Eduardo Naguit, Jose Naguit, Zoilo Naguit, and Amelia Naguit Dizon, represented by Yssel L. Naguit (petitioners). They alleged that they were the heirs of the late Epifanio Makam and Severina Bautista, who acquired a house and lot situated in Magalang, Pampanga, consisting of 557 square meters, by virtue of a Deed of Sale, dated April 20, 1894; that since then, they and their predecessors-in-interest had been in open, continuous, adverse, and notorious possession for more than a hundred years, constructing houses and paying real estate taxes on the property; that sometime in June 2005, they received various demand letters from the respondents, namely, Cesar B. Quiazon, Amanda Quiazon, Jose B. Quiazon, and Reynaldo B. Quiazon, represented by Jaime B. Quiazon (respondents), claiming ownership over the subject property and demanding that they vacate the same; that upon inquiry with the Register of Deeds of San Fernando, Pampanga, they confirmed that the property had been titled in the name of respondents under Transfer Certificate of Title (TCT) No. 213777-R; that the said title was invalid, ineffective, voidable or unenforceable; and that they were the true owners of the property.
Hence, they prayed that the title be cancelled and a new title be issued in their favor.
In their Answer,4 respondents asserted that they were the absolute owners of the subject land as per TCT No. 213777-R; that they had inherited the same from their predecessor-in-interest, Fausta Baluyut, one of the registered owners under Original Certificate of Title (OCT) No. RO-1138 (11376), as per the Project of Partition and Deed of Agreement, dated January 2, 1974; 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"5 against them, because their deed of sale was spurious and could not prevail over Land Registration Decree No. 122511 issued on June 28, 1919 in Land Registration Case No. 5, LRC Records No. 128, by the Court of First Instance of Pampanga, in favor of their predecessor-in-interest. The predecessors-in-interest of petitioners were among the oppositors in the land registration proceeding but, nevertheless, after the trial, the subject lot was awarded, decreed and titled in favor of respondents' predecessor-in-interest, as per OCT No. RO-1138 (11376) of the Registry of Deeds of Pampanga. Second, the action was barred by prescription and that petitioners were guilty of laches in asserting their interest over the subject lot, considering that Land Registration Decree No. 122511 was issued on June 28, 1919 and OCT No. RO-1138 (11376) was issued on May 12, 1922. Hence, it was much too late for petitioners to institute the action after more than 80 years. They also raised the settled rule that a title registered under the Torrens system could not be defeated by adverse, open and notorious possession, or by prescription. 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, docketed as Civil Case No. 5487, which the RTC-Br. 56 dismissed.
Petitioners filed their Comment to Defendant's Affirmative Defenses.6 Anent the alleged lack of cause of action due to the spurious deed of sale, petitioners argued that this contention was a matter of evidence which might only be resolved in a full-blown trial. They insisted that the deed of sale was genuine and authentic and was issued and certified by the Deputy Clerk of Court of the RTC. They added that the settled rule was that to determine the sufficiency of the cause of action, only the facts alleged in the complaint should be considered, and that the allegations in their complaint sufficiently stated a cause of action.
As regards the allegation of prescription, the petitioners countered that an action to quiet title did not prescribe if the plaintiffs were in possession of the property in question. They argued that they were neither guilty of laches nor were they in possession of the property by mere tolerance, their possession being in the concept of owner for more than a hundred years.
Lastly, regarding the argument on res judicata, petitioners explained that they were not the same plaintiffs in Civil Case No. 5487 and that the case was dismissed without prejudice.
The RTC set a preliminary hearing on the affirmative defenses.
Respondents presented Atty. Charlemagne Tiqui Calilung, RTC Clerk of Court of San Fernando, Pampanga, who presented the record of Cadastral Case No. 5, dated June 28, 1919, as well as Decree No. 122511. They also presented Luis Samuel Ragodon, the Registration Examiner of the Registry of Deeds of San Fernando, Pampanga, who presented the original copy of OCT No. 11376, reconstituted as RO-1138, and testified that the title was derived from Decree No. 122511. He further testified that the original title had been cancelled pursuant to a project of partition, which was registered on December 17, 1984, and in lieu thereof, TCT Nos. 213775, 213776, 213777, 213778, 213779, 213780, and 213781 were issued. He presented the original copy of TCT No. 213777-R issued in the names of respondents.
Henry Y. Bituin, the court interpreter who translated the June 28, 1919 decision of the Court of First Instance of Pampanga in Land Registration Case No. 5 from Spanish to English, also testified.
Petitioners manifested that they were opting to submit the incident for resolution without presenting evidence, relying on their position that only the facts alleged in the complaint should be considered.
In their formal offer of evidence,7 respondents offered the following documents: (1) the June 28, 1919 Decision and its English translation; (2) Transmittal Letter, dated May 6, 1922; (3) Decree No. 122511; (4) OCT No. RO-1138; (5) TCT No. 213777-R; (6) the petition, dated July 29, 1988, and its annexes in Civil Case No. 5487; (7) the September 7, 1990 Order dismissing Civil Case No. 5487, without prejudice; and (8) the July 29, 1916 Decision in Expediente No. 132, G.L.R.O. Record No. 11958 and its English translation.
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. 59 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.
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.
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.
Whether the CA erred in affirming the dismissal of petitioners' complaint on the ground of lack of cause of action or failure to state a cause of action.
Petitioners argue that the CA gravely erred in considering external factors beyond the allegations in the petition. They aver that it is a settled rule that to determine the sufficiency of a cause of action, only facts alleged in the complaint shall be considered, and it is error for the court to take cognizance of external facts or hold a preliminary hearing to determine their existence.
The Court notes that respondents raised the affirmative defense in their Answer that petitioners "have no valid, legal and sufficient cause of action," raising factual matters,14 which is effectively the ground of "lack of cause of action." Respondents' arguments made no assertion that the complaint failed to state a cause of action. The ground of "lack of cause of action" has been frequently confused with the ground of "failure to state a cause of action," and this is the situation prevailing in the present case. The terms were, in fact, used interchangeably by both the respondents and the lower courts.
Also confused, respondents, on their part, asserted that "it is within the discretion of the Court a quo to conduct a preliminary hearing on the affirmative defense of lack of cause of action or failure to state a cause of action,"17 the very basis of their argument being hinged on the application of Section 6. They also insisted on the applicability of the exceptions to the general rule that only averments in the complaint must be considered, which pertains to the ground of "failure to state a cause of action."
The trial court held a preliminary hearing resolving the ground of "lack of cause of action" pursuant to Section 6 of Rule 16, which allows the court to hold a preliminary hearing on grounds for dismissal provided in the same rule that have been raised as an affirmative defense in the answer.18 The ground of "lack of cause of action," as already explained, however, is not one of the grounds for a motion to dismiss under Rule 16, and hence, not proper for resolution during a preliminary hearing held pursuant to Section 6. On this point alone, the trial court clearly erred in receiving evidence on the ground of "lack of cause of action" during the preliminary hearing. The factual matters raised by respondents in their affirmative defense arguing the non-existence of a cause of action, should have been duly resolved during a trial on the merits of the case.
In any case, even if the Court were to treat respondents' argument as a "failure to state a cause of action," their defense would still fail.
"The rule is that a defendant moving to dismiss a complaint on the ground of lack of cause of action is regarded as having hypothetically admitted all the averments thereof. The test of the sufficiency of the facts found in a petition as constituting a cause of action is whether or not, admitting the facts alleged, the court can render a valid judgment upon the same in accordance with the prayer thereof (Consolidated Bank and Trust Corp. v. Court of Appeals, 197 SCRA 663 ).
Article 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action may be brought to remove such cloud or to quiet title.
Section 6. Pleading grounds as affirmative defenses. - If no motion to dismiss has been filed, any of the grounds for dismissal provided for in this Rule may be pleaded as an affirmative defense in the answer and, in the discretion of the court, a preliminary hearing may be had thereon as if a motion to dismiss had been filed.
A review of the first ground under paragraph 6 of the answer reveals that respondents alleged that "[p]laintiffs have no valid, legal and sufficient cause of action against the defendants." It is at this point that it must again be emphasized that it is not "lack or absence of cause of action" that is a ground for dismissal of the complaint under Rule 16, but rather, that "the complaint states no cause of action."33 The issue submitted to the court was, therefore, the determination of the sufficiency of the allegations in the complaint to constitute a cause of action and not whether those allegations of fact were true, as there was a hypothetical admission of facts alleged in the complaint.34 An affirmative defense, raising the ground that there is no cause of action as against the defendants poses a question of fact that should be resolved after the conduct of the trial on the merits.35 A reading of respondents' arguments in support of this ground readily reveals that the arguments relate not to the failure to state a cause of action, but to the existence of the cause of action, which goes into the very crux of the controversy and is a matter of evidence for resolution after a full-blown hearing.
The trial court 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,36 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.37 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.38 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.39 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.
The lower courts also relied on the exception that external evidence may be considered when received "in the course of hearings related to the case," which is rooted in the case of Tan v. Director of Forestry (Tan).40 In said case, a hearing was conducted on the prayer for preliminary injunction where evidence was submitted by the parties. In the meantime, a motion to dismiss was filed by the defendant, citing as one of the grounds that the petition did not state a cause of action. The trial court resolved the prayer for the issuance of a writ of preliminary injunction simultaneously with the motion to dismiss. It dismissed the petition for failure to state a cause of action on the basis of the evidence presented during the hearing for preliminary injuction. On appeal, this Court ruled that the trial court was correct in considering the evidence already presented and in not confining itself to the allegations in the petition.
Second, Tan noted that the plaintiff had readily availed of his opportunity to introduce evidence during the hearing and, as a result, was estopped from arguing that the court is limited to the allegations in the complaint.44 This is in contrast to the present case, where petitioners steadfastly argued from the beginning that the trial court was limited to the allegations in the complaint. Petitioners maintained their stance during the preliminary hearing on the affirmative defenses, opting not to file rebuttal evidence and opposing respondents' formal offer of evidence on the same ground. Having been consistent in their position from the start, petitioners cannot be estopped from arguing that the trial court was precluded from considering external evidence in resolving the motion to dismiss.
Third, it was noted in Tan that the documentary evidence given credence by the trial court had effectively been admitted by stipulation during the hearing,45 and another had been an annex to the complaint,46 both of which are exceptions to the general rule that external facts cannot be considered. Neither of the said exceptions is availing in the present case. The Court notes that only the OCT of respondents was attached as an annex to their answer. The June 28, 1919 Decision in the Cadastral case, which was given considerable weight by the trial court, was not attached and was only presented during the preliminary hearing.
Fourth, Tan ruled that the rigid application of the rules could not be countenanced considering the overriding public interest involved, namely, the welfare of the inhabitants of the province whose lives and properties would be directly and immediately imperilled by forest denudation.47 There appears to be no overriding public interest in the present case to justify a similar relaxation of the rules.
It is of note that although the trial court might not have erred in holding a preliminary hearing on the affirmative defenses of prescription and res judicata, it is readily apparent from the decisions of the lower courts that no disquisition whatsoever was made on these grounds. It cannot be denied that evidence in support of the ground of "lack of cause of action" was received and given great weight by the trial court. In fact, all the evidence given credence by the trial court were only in support of the ground of "lack of cause of action." This all the more highlights that the trial court erred in receiving evidence to determine whether the complaint failed to state a cause of action.
Although neither the RTC or the CA ruled on the affirmative defenses of prescription and res judicata, it appears that this case could not have been dismissed on these grounds. First, an action to quiet title is imprescriptible if the plaintiffs are in possession of the property,48 which is the situation prevailing in the present case. Second, there appears to be no res judicata nor a violation of the prohibition against forum shopping considering that Civil Case No. 5487 had been dismissed, without prejudice, years before petitioners initiated their complaint for quieting of title.
Regional Trial Court for trial on the merits of the case.
1Rollo, pp. 21-32; penned by Associate Justice Amelita G. Tolentino, with Associate Justice Ramon R. Garcia and Associate Justice Samuel H. Gaerlan, concurring.
2 Id. at 64-70 and 74-75.
15 379 Phil. 939, 944-945 (2000).
18 Section 6. Pleading grounds as affirmative defenses. - If no motion to dismiss has been filed, any of the grounds for dismissal provided for in this Rule may be pleaded as an affirmative defense in the answer and, in the discretion of the court, a preliminary hearing may be had thereon as if a motion to dismiss had been filed.
19 G.R. No. 183308, April 25, 2012, 671 SCRA 112.
20 G.R. No. 79760, June 28, 1993, 223 SCRA 720.
21Insular Investment and Trust Corporation v. Capital One Equities Corporation, supra note 19, at 142.
22Indiana Aerospace University v. Commissioner of Higher Education, 408 Phil. 483, 502 (2001).
23Evangelista v. Santiago, 497 Phil. 269, 290 (2005).
24Phil-Ville Development and Housing Corporation v. Bonifacio, G.R. No. 167391, June 8, 2011, 651 SCRA 327, 341.
26Evangelista v. Santiago, supra note 23, at 286.
28Dabuco v. Court of Appeals, 379 Phil. 939, 950-951 (2000).
29Philippine Army v. Pamittan, G.R. No. 187326, June 15, 2011, 652 SCRA 306, 312.
30Dabuco v. Court of Appeals, supra note 28; Tan v. Director of Forestry, 210 Phil. 244 (1983).
33San Lorenzo Village Association v. CA, 351 Phil. 353, 365 (1998).
34Far East Bank v. Court of Appeals, 395 Phil. 701, 709 (2000).
35Heirs of Paez v. Torres, 381 Phil. 393, 402 (2000).
36Municipality of Binan v. Court of Appeals, G.R. No. 94733, February 17, 1993, 219 SCRA 69, 76; Misamis Occidental II Cooperative, Inc. v. David, 505 Phil. 181, 188-189 (2005).
37D.C. Crystal, Inc. v. Laya, 252 Phil. 759, 768-769 (1989); Del Bros Hotel Corporation v. Court of Appeals, G.R. No. 87678, June 16, 1992 210 SCRA 33, 42-43; Rava Development Corporation v. Court of Appeals, G.R. No. 96825, July 3, 1992, 211 SCRA 144, 153.
38Merrill Lynch Futures, Inc. v. Court of Appeals, G.R. No. 97816, July 24, 1992, 211 SCRA 824, 835.
39 Oscar M. Herrera, Remedial Law, (Quezon City, Philippines: Rex Book Store, Inc., 2007), Volume I, p. 1042; citing 1 Moran, p. 620, 1995 ed., citing Asejo v. Lenoso, 78 Phil. 467 (1947).
40Tan v. Director of Forestry, supra note 30.
41Hongkong & Shanghai Banking Corp., Ltd v. Catalan, 483 Phil. 525, 538 (2004).
43Hongkong & Shanghai Banking Corp., Ltd. v. Catalan, supra note 41.
44Tan v. Director of Forestry, supra note 30, at 255.
48Almarza v. Arguelles, 240 Phil. 681, 685 (1987).

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