A Torrens title issued without prior presentation and cancellation of the existing owner's duplicate title is a mere scrap of paper

Under Article 1456 of the Civil Code, "[i]f property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes." The law thus creates the obligation of the trustee to reconvey the property and its title in favor of the true owner. An action for reconveyance of property based on an implied constructive trust prescribes in ten (10) years, in accordance with Article 1144(2) of the Civil Code, which states that that an action involving an obligation created by law must be brought within ten (10) years from the time the right of action accrues.

However, in cases where fraud is specifically alleged to have been attendant in the trustee's registration of the subject property in his/her own name, the prescriptive period is ten (10) years counted from the true owner's discovery of the fraud.

When is the fraud deemed discovered in the context of registered property? Adille v. Court of Appeals (Adille) lends guidance:

It is true that registration under the Torrens system is constructive notice of title, but it has likewise been our holding that the Torrens title does not furnish a shield for fraud.

x x x x

x x x Accordingly, we hold that the right of the private respondents commenced from the time they actually discovered the petitioner's act of defraudation. x x x

The Court's ruling in Adille, reiterated in Samonte v. Court of Appeals and Government Service Insurance System v. Santiago, is in congruence with Section 53 of PD 1529, which states 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 and that registration procured by the presentation of a forged deed or other instrument shall be null and void.

Among the allegations hypothetically admitted by MLI are those concerning DAA Realty's failure to present Spouses Garcia's owner's duplicate copy of TCT No. T-77703 upon issuance of TCT No. T-97059 in its name, as required by Section 53 of PD 1529.

In Levin v. Bass (Levin) the Court en banc unanimously held that failure to comply with the registration requirements of the Torrens system averts the registration process, and prevents the underlying transaction from affecting the land subject of the registration, hence:

x x x Under the Torrens system the act of registration is the operative act to convey and affect the land. [Does] the entry in the day book of a deed of sale which was presented and filed together with the owner's duplicate certificate of title with the office of the Registrar of Deeds and full payment of registration fees constitute a complete act of registration which operates to convey and affect the land? In voluntary registration, such as a sale, mortgage, lease and the like, if the owner's duplicate certificate be not surrendered and presented or if no payment of registration fees be made within [fifteen (15)] days, entry in the day book of the deed of sale does not operate to convey and affect the land sold. x x x⁷⁰ (Emphasis and underscoring supplied)

Levin thus teaches that a Torrens title issued without prior presentation and cancellation of the existing owner's duplicate title does not bind the property to which it pertains. The title so issued does not produce the effects of a Torrens title contemplated under PD 1529, including the effects of constructive notice. It is literally a scrap of paper.

On this basis, coupled with the fact that they were always in possession of the owner's duplicate copy of TCT No. T-77703, Petitioners cannot be deemed to have been constructively notified of the issuance of DAA Realty's TCT No. T-97059. The ten (10)-year prescriptive period thus referred to in Article 1144(2) of the Civil Code must be reckoned not from the issuance of DAA Realty's Torrens title, but rather, from Petitioners' actual discovery of the fraud in 2010. The Complaint, having been filed barely four (4) years after, or on December 10, 2014, was therefore timely filed.

(Gatmaytan, et. al. vs. Misibis Island, Inc. G.R. No. 222166, June 10, 2020)

Declaratory Relief as a Remedy to Question a Law's Constitutionality

"Declaratory relief is defined as an action by any person interested in a deed, will, contract or other written instrument, executive order or resolution, to determine any question of construction or validity arising from the instrument, executive order or regulation, or statute, and for a declaration of his rights and duties thereunder. The only issue that may be raised in such a petition is the question of construction or validity of the provisions in an instrument or statute." (Ferrer, et. al. v. Mayor Sulpicio Roco, et. al., G.R. No. 174129 [2010])

"Case law states that the following are the requisites for an action for declaratory relief:

first, the subject matter of the controversy must be a deed, will, contract or other written instrument, statute, executive order or regulation, or ordinance; second, the terms of said documents and the validity thereof are doubtful and require judicial construction; third, there must have been no breach of the documents in question; fourth, there must be an actual justiciable controversy or the "ripening seeds" of one between persons whose interests are adverse; fifth, the issue must be ripe for judicial determination; and sixth, adequate relief is not available through other means or other forms of action or proceeding.

Based on a judicious review of the records, the Court observes that while the first, second, and third requirements appear to exist in this case, the fourth, fifth, and sixth requirements, however, remain wanting.

As to the fourth requisite, there is serious doubt that an actual justiciable controversy or the "ripening seeds" of one exists in this case.

Pertinently, a justiciable controversy refers to an existing case or controversy that is appropriate or ripe for judicial determination, not one that is conjectural or merely anticipatory. Corollary thereto, by "ripening seeds" it is meant, not that sufficient accrued facts may be dispensed with, but that a dispute may be tried at its inception before it has accumulated the asperity, distemper, animosity, passion, and violence of a full blown battle that looms ahead. The concept describes a state of facts indicating imminent and inevitable litigation provided that the issue is not settled and stabilized by tranquilizing declaration.

A perusal of private respondents’ petition for declaratory relief would show that they have failed to demonstrate how they are left to sustain or are in immediate danger to sustain some direct injury as a result of the enforcement of the assailed provisions of RA 9372. Not far removed from the factual milieu in the Southern Hemisphere cases, private respondents only assert general interests as citizens, and taxpayers and infractions which the government could prospectively commit if the enforcement of the said law would remain untrammeled. As their petition would disclose, private respondents’ fear of prosecution was solely based on remarks of certain government officials which were addressed to the general public. They, however, failed to show how these remarks tended towards any prosecutorial or governmental action geared towards the implementation of RA 9372 against them. In other words, there was no particular, real or imminent threat to any of them. As held in Southern Hemisphere:

Without any justiciable controversy, the petitions have become pleas for declaratory relief, over which the Court has no original jurisdiction. Then again, declaratory actions characterized by "double contingency," where both the activity the petitioners intend to undertake and the anticipated reaction to it of a public official are merely theorized, lie beyond judicial review for lack of ripeness.

The possibility of abuse in the implementation of RA 9372does not avail to take the present petitions out of the realm of the surreal and merely imagined. Such possibility is not peculiar to RA 9372 since the exercise of any power granted by law may be abused. Allegations of abuse must be anchored on real events before courts may step in to settle actual controversies involving rights which are legally demandable and enforceable.

Thus, in the same light that the Court dismissed the SC petitions in the Southern Hemisphere cases on the basis of, among others, lack of actual justiciable controversy (or the ripening seeds of one), the RTC should have dismissed private respondents’ petition for declaratory relief all the same.

It is well to note that private respondents also lack the required locus standi to mount their constitutional challenge against the implementation of the above-stated provisions of RA 9372 since they have not shown any direct and personal interest in the case. While it has been previously held that transcendental public importance dispenses with the requirement that the petitioner has experienced or is in actual danger of suffering direct and personal injury, it must be stressed that cases involving the constitutionality of penal legislation belong to an altogether different genus of constitutional litigation. Towards this end, compelling State and societal interests in the proscription of harmful conduct necessitate a closer judicial scrutiny of locus standi, as in this case. To rule otherwise, would be to corrupt the settled doctrine of locus standi, as every worthy cause is an interest shared by the general public.

As to the fifth requisite for an action for declaratory relief, neither can it be inferred that the controversy at hand is ripe for adjudication since the possibility of abuse, based on the above-discussed allegations in private respondents’ petition, remain highly-speculative and merely theorized. It is well-settled that a question is ripe for adjudication when the act being challenged has had a direct adverse effect on the individual challenging it. This private respondents failed to demonstrate in the case at bar.

Finally, as regards the sixth requisite, the Court finds it irrelevant to proceed with a discussion on the availability of adequate reliefs since no impending threat or injury to the private respondents exists in the first place.

All told, in view of the absence of the fourth and fifth requisites for an action for declaratory relief, as well as the irrelevance of the sixth requisite, private respondents’ petition for declaratory relief should have been dismissed. Thus, by giving due course to the same, it cannot be gainsaid that the RTC gravely abused its discretion.” (Republic of the Philippines v. Herminio Harry Roque, et. al., G.R. No. 204603 [2013])

  

Less painful means of saving on labor costs

It is the employer’s prerogative to save on labor costs, especially during uncertain or turbulent times, such as this Covid-19 pandemic. It may resort to retrenchment or closure or cessation of business. However, depending on certain crucial factors, an employer may still opt for less drastic measures.

Reduction of working hours is the least painful and more palatable to employees. Before its implementation, the employer must take into consideration the following: the arrangement was temporary, it was a more humane solution instead of retrenchment of personnel, there was notice and consultations with the workers and supervisors, a consensus were reached on how to deal with deteriorating economic conditions and it was sufficiently proven that the company was suffering from losses.

On the other hand, “lay-off” is an act of the employer of dismissing employees because of losses in the operation, lack of work, and considerable reduction on the volume of its business. However, a lay-off must only be temporary. It should not last longer than six (6) months. After the period of six (6) months, the employees should either then be recalled to work or permanently retrenched following the requirements of the law.

The employer must also act in good faith, that is, one which is intended for the advancement of the employer's interest and not for the purpose of defeating or circumventing the rights of the employees under the law or under valid agreements.

In both cases, failure to comply with any of said requirements would be tantamount to dismissing the employees, making the employer responsible for such dismissal.

Retrenchment as an authorized cause for termination

In the midst of the Covid-19 pandemic, businesses are understandably looking for ways to protect their bottom-line. Retrenchment of employees is among the first things that would come to their minds. But not so fast. 

According to the Supreme Court, retrenchment is an act of the employer of reducing the work force because of losses in the operation of the enterprise, lack of work, or considerable reduction on the volume of business. It is, in many ways, a measure of last resort when other less drastic means have been tried and found to be inadequate. 

The Labor Code recognizes retrenchment as an authorized cause for terminating employment. It is an option validly available to an employer to address losses in the operation of the enterprise, lack of work, or considerable reduction on the volume of business. Retrenchment is normally resorted to by management during periods of business reverses and economic difficulties occasioned by such events as recession, industrial depression, or seasonal fluctuations.

While a legitimate business option, retrenchment may only be exercised in compliance with substantive and procedural requisites.

As to the substantive requisites, an employer must show: 

First, that the retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer;

Second, that it exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent the employees' right to security of tenure; and

Third, that it used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees, such as status (i.e., whether they are temporary, casual, regular or managerial employees), efficiency, seniority, physical fitness, age, and financial hardship for certain workers.

Procedurally, an employer must:

Serve a written notice both to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment; and

Pay the retrenched employees separation pay equivalent to one month pay or at least 1/2 month pay for every year of service, whichever is higher. (G. R. No. 214744)

Without complying with these requirements, such retrenchment may be considered invalid and tantamount to illegal dismissal, placing the employer into further and much prohibitive financial risks.

May an unlicensed foreign corporation "doing business" in the Philippines be allowed from accessing our courts?

As a general rule, no foreign corporation transacting business in the Philippines without a license shall be permitted to maintain or intervene in any action, suit or proceeding in any court or administrative agency of the Philippines.

In a number of cases, however, the Supreme Court has held that an unlicensed foreign corporation doing business in the Philippines may bring suit in Philippine courts against a Philippine citizen or entity who had contracted with and benefited from said corporation. Such a suit is premised on the doctrine of estoppel. A party is estopped from challenging the personality of a corporation after having acknowledged the same by entering into a contract with it. The application of this principle prevents a person contracting with a foreign corporation from later taking advantage of its noncompliance with the statutes chiefly in cases where such person has received the benefits of the contract.

The principles regarding the right of a foreign corporation to bring suit in Philippine courts may be condensed in four statements:

(1)  if a foreign corporation does business in the Philippines without a license, it cannot sue before the Philippine courts;

(2)  if a foreign corporation is not doing business in the Philippines, it needs no license to sue before Philippine courts on an isolated transaction or on a cause of action entirely independent of any business transaction;

(3)  if a foreign corporation does business in the Philippines without a license, a Philippine citizen or entity which has contracted with said corporation may be estopped from challenging the foreign corporation’s corporate personality in a suit brought before Philippine courts; and

(4)  if a foreign corporation does business in the Philippines with the required license, it can sue before Philippine courts on any transaction.

On the other hand, the Foreign Investments Act of 1991 (the "FIA"; Republic Act No. 7042, as amended), defines "doing business" as follows:

Sec. 3, par. (d). The phrase "doing business" shall include soliciting orders, service contracts, opening offices, whether called "liaison" offices or branches; appointing representatives or distributors domiciled in the Philippines or who in any calendar year stay in the country for a period or periods totaling one hundred eighty (180) days or more; participating in the management, supervision or control of any domestic business, firm, entity, or corporation in the Philippines; and any other act or acts that imply a continuity of commercial dealings or arrangements, and contemplate to that extent the performance of acts or works, or the exercise of some of the functions normally incident to, and in the progressive prosecution of, commercial gain or of the purpose and object of the business organization.

Section 1 of the Implementing Rules and Regulations of the FIA (as amended by Republic Act No. 8179) provides that the following shall not be deemed "doing business":

(1) Mere investment as a shareholder by a foreign entity in domestic corporations duly registered to do business, and/or the exercise of rights as such investor;

(2) Having a nominee director or officer to represent its interest in such corporation;

(3) Appointing a representative or distributor domiciled in the Philippines which transacts business in the representatives or distributors own name and account;

(4) The publication of a general advertisement through any print or broadcast media;

(5) Maintaining a stock of goods in the Philippines solely for the purpose of having the same processed by another entity in the Philippines;

(6) Consignment by a foreign entity of equipment with a local company to be used in the processing of products for export;

(7) Collecting information in the Philippines; and

(8) Performing services auxiliary to an existing isolated contract of sale which are not on a continuing basis, such as installing in the Philippines machinery it has manufactured or exported to the Philippines, servicing the same, training domestic workers to operate it, and similar incidental services.

In essence, to constitute "doing business", the activity to be undertaken in the Philippines is one that is for profit-making. (See Steelcase, Inc. v. Design International Selections, Inc. [2012]; Agilent Technologies Singapore (Pte.), Ltd. v. Integrated Silicon Technology Philippines Corporation [2004])

Judicial application for Filipino citizenship (under Commonwealth Act No. 473, as amended): Qualifications and Procedure

I.           Qualifications

The qualifications of an applicant to become a citizen of the Philippines by naturalization are the following:

1.  Must be not less than twenty-one (21) years of age on the day of the hearing of the petition;

2.  Must have resided in the Philippines for a continuous period of not less than ten (10) years. (This is reduced to five (5) years, however, if married to a Filipina);

3.  Must be of good moral character and believes in the principles underlying the Philippine Constitution, and must have conducted himself in a proper and irreproachable manner during the entire period of his residence in the Philippines in his relation with the constituted government as well as with the community in which he is living;

4.  Must own real estate in the Philippines worth not less than five thousand pesos, Philippine currency, or must have some known lucrative trade, profession, or lawful occupation;

5.  Must be able to speak and write English or Spanish and any one of the principal Philippine languages;

6.  Must have enrolled his minor children of school age, in any of the public schools or private schools recognized by the Office of Private Education of the Philippines, where the Philippine history, government and civics are taught or prescribed as part of the school curriculum, during the entire period of the residence in the Philippines required of him prior to the hearing of his petition for naturalization as Philippine citizen.

II.        Procedure

Declaration to become a Filipino citizen

1.  One year prior to the filing of his petition for admission to Philippine citizenship, the applicant for Philippine citizenship shall file with the Office of the Solicitor General(OSG), a declaration under oath that it is his bona fide (or good faith) intention to become a citizen of the Philippines.

1.a His declaration shall include the following:

a.  name

b.  age

c.  occupation,

d.  personal description

e.  place of birth

f.   last foreign residence and allegiance

g.  the date of arrival

h.  the name of the vessel or aircraft, if any, in which he came to the Philippines, and

i.   the place of residence in the Philippines at the time of making the declaration

1.b No declaration shall be valid until lawful entry for permanent residence has been established and a certificate showing the date, place, and manner of his arrival has been issued.

1.c The declarant must also state that he has enrolled his minor children, if any, in any of the public schools or private schools recognized by the Office of Private Education of the Philippines, where Philippine history, government, and civics are taught or prescribed as part of the school curriculum, during the entire period of the residence in the Philippines required of him prior to the hearing of his petition for naturalization as Philippine citizen.

1.d He must furnish two photographs of himself.

Petition for citizenship

2.  One year after making and submitting such declaration, the applicant shall file with the competent court (i.e., in a regional trial in the place where he presently resides for at least a year), a petition in triplicate, with two photographs of the applicant.

2.a The petition must indicate the following:

a.  name and surname

b.  present and former places of residence

c.  occupation

d.  the place and date of his birth

e.  civil status, as single or married

f.   the name, age, birthplace and residence of the wife and of each of the children

g.  the approximate date of his arrival in the Philippines, the name of the port of debarkation, and, if he remembers it, the name of the aircraft on which he arrived

h.  a declaration that he has the qualifications required by law, specifying the same, and that he is not disqualified for naturalization under the provisions of the law

i.   that he has complied with the requirements under the law, and

j.   that he will reside continuously in the Philippines from the date of the filing of the petition up to the time of his admission to Philippine citizenship

2.b The petition must be signed by the applicant in his own handwriting and be supported by the affidavit of at least two credible persons, stating that they are citizens of the Philippines and personally know the applicant to be a resident of the Philippines for the period of time required by law and a person of good repute and morally irreproachable, and that said applicant has in their opinion all the qualifications necessary to become a citizen of the Philippines and is not in any way disqualified under the provisions of law.

2.c The petition shall also set forth the names and post-office addresses of such witnesses as the applicant may desire to introduce at the hearing of the case.

2.d The certificate of arrival, and the declaration of intention must be made part of the petition.

Notice and Publication

3.  Immediately upon the filing of a petition, the clerk of the court will publish the petition at applicant's expense, once a week for three consecutive weeks, (1) in the Official Gazette, and (2) in one of the newspapers of general circulation in the province where the petitioner resides, and (3) to have copies of said petition and a general notice of the hearing posted in a public and conspicuous place in his office or in the building where said office is located.

3.a The notice will contain the name, birthplace and residence of the applicant, the date and place of his arrival in the Philippines, the names of the witnesses whom he proposes to introduce in support of his petition, and the date of the hearing of the petition, which hearing shall not be held within ninety days from the date of the last publication of the notice.

Hearing of the petition

4.  The hearing shall be public, and the Solicitor-General, either by himself or through his delegate or the city prosecutor, shall appear on behalf of the government at all the proceedings and at the hearing.

Issuance and Registration of Naturalization Certificate

5.  If, after the hearing, the court believes, in view of the evidence taken, that the applicant has all the qualifications required by, and none of the disqualifications specified in the law and has complied with all requisites herein established, it shall render a decision granting the petition.

5.a Once the decision becomes final and executory, the court shall order the proper naturalization certificate to be issued and the registration of the said naturalization certificate in the proper civil registry.