(The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.)
Q: What is a Certificate of Title?
A Certificate of Title (or a Torrens Title), is the best form of evidence of land ownership, being a result of the Torrens System of land registration. Being the best form of evidence, it prevails over other evidence of ownership such as tax declarations, real property tax receipts, deeds of sale, among others. Thus, if one person claiming ownership over a property shows his tax declarations and receipts as evidence, and another one claiming ownership shows a Certificate of Title, the certificate of title shall be given more weight.
Q: What are the different kinds of Certificates of Title?
There are two kinds of Certificates of Title: (1) Original Certificate of Title, and (2) Transfer Certificate of Title.
Q: To whom an Original Certificate of Title may be issued?
If a piece of land is still unregistered, the following are entitled to apply for registration and issuance of an Original Certificate of Title:
(1) Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation of alienable and disposable lands of public domain under a bona fide claim of ownership since June 12, 1945, or earlier.
(2) Those who have acquired ownership of private lands by prescription under the provisions of existing laws.
(3) Those who have acquired ownership of private lands or abandoned riverbeds by right of accession or accretion under the existing laws.
(4) Those who have acquired ownership of land through any other manner provided for by law.
In case of co-ownership, the application shall be filed by all co-owners.
Please take note, however, that only agricultural lands classified as alienable and disposable may be disposed of, and be subject of land registration for private citizens.
Q: To whom a Transfer Certificate of Title may be issued?
If a piece of land is already registered, such registration may be transferred in the name of the new owner, and a Transfer Certificate of Title may be issued to the latter, through registration with the Registry of Deeds of documents evidencing transfer of ownership of the property to the new owner. Examples of such documents are deeds of sale and deeds of donation, among others.
Q: Who can acquire land in the Philippines?
Generally, only Filipino citizens, or corporations with at least 60% Filipino ownership may acquire land and have it registered in their names.
Foreigners are allowed to acquire and own land or real property in the Philippines only in the following instances:
(1) When the property is acquired before the 1935 Constitution;
(2) If the property is acquired by the foreigner by hereditary succession or proven to be the legal heir;
(3) Purchase by foreigners of not more than 40% of the units or interests in a condominium project; and
(4) Purchase by former natural-born Filipino citizens.
Q: I am a former natural-born Filipino. Does that mean I can acquire any land of any size in the Philippines?
No. Even though former natural-born Filipinos may acquire land in the Philippines, it is subject to the following limitations (See B.P. Blg. 185 and R.A. No. 8179).
(1) The maximum areas that may be owned, for residence purposes, are limited to 1,000 square meters for urban land, and 10,000 square meters (or 1 hectare) in rural areas.
(2) The maximum areas that may be owned for business or commercial purposes, including agricultural or agri-business purposes, are 5,000 square meters of urban land, and three (3) hectares in rural areas.
(3) For married couples who are both former natural-born Filipinos, either or both of them may avail of the privilege acquiring land ownership, provided that the total area acquired should not exceed the maximum allowed.
(4) Those who have already acquired such properties may acquire additional urban or rural lands but the aggregate areas must not exceed the authorized maximum areas.
Q: What is a deed?
A deed refers to a written document executed in accordance with law, wherein a person grants or conveys to another a certain piece of land. It is also considered as an evidence of ownership, but its registration before the Registry of Deeds where the land is located is necessary before the land is registered in favor of the new owner, and a Transfer Certificate of Title is issued in his name. The most common examples of these are deeds of sale and deeds of donation.
Q: I purchased a real property, and a deed of sale was executed. How do I register the deed of sale with the Registry of Deeds?
The deed must be duly notarized before a Notary Public. The notarized deed must then be presented within 30 days from its notarization or within five (5) days after the close of the month from the date the deed was notarized to the Bureau of Internal Revenue (BIR), or authorized agent bank, to pay the capital gains tax and other required taxes. After payment of taxes, file and submit to the BIR the documents relative to the transfer of property, such as the notarized deed of sale, which are needed for the issuance of a tax clearance and a Certificate Authorizing Registration (CAR). You may now also proceed to the City Treasurer’s Office to pay the transfer tax.
After going through the above-mentioned process of payments and submission of documents, you may now apply before the Registry of Deeds for the issuance of a Transfer Certificate of Title in your name, and with the Assessor’s Office for the issuance of new Tax Declarations over the property.
Q: What are the taxes and other fees that must be paid, in connection with transfer of real property in the name of another?
The seller pays for the following:
- Capital gains tax equivalent to 6% of the selling price on the deed of sale or the zonal value, whichever is higher;
- Withholding tax if the seller is a corporation;
- Unpaid real estate taxes due, if any;
- Agent / Broker’s commission.
The buyer pays for the following:
- Cost of Registration:
- Documentary Stamp Tax, at 1.5% of the selling price or zonal value or fair market value, whichever is higher.
- Transfer Tax, at a rate of 0.5% of the selling price, or zonal value or fair market value, which ever is higher.
- Registration fee, which is 0.25% of the selling price, or zonal value or fair market value, which ever is higher.
- Incidental and miscellaneous expenses incurred during the registration process.
Please take note that nothing prevents the parties to the sale from agreeing upon who shall pay what.
Q: Aside from the deed of sale, are there other deeds that should be registered with the Registry of Deeds?
If the purpose is to transfer title of the property in the name of another, it is necessary that the deed evidencing such transfer of ownership, such as deeds of sale, deeds of donation, deeds of extrajudicial settlement, among others, should be registered with the Registry of Deeds.
However, if there is no transfer of ownership involved, the deed or instrument showing the involvement of the real property in any transaction, or any charge or claim affecting the real property, may be registered in order to bind third persons. Under the law, every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed or entered in the Registry of Deeds, shall be constructive notice to all persons from the time of such registration, filing or entering.
Q: If there is no transfer of ownership, how are the dealings registered with the Registry of Deeds?
Such dealings may be registered with the Registry of Deeds by filing the instrument that creates, transfers, or claims such interests, and by a brief memorandum thereof made by the Register of Deeds upon the Certificate of Title. A similar memorandum shall also be made on the owner’s duplicate.
The cancellation or extinguishment of such interests shall be registered in the same manner.
Q: What is an annotation of liens/encumbrances on the title?
Annotation of liens or encumbrances is an indication at the back of the Certificate of Title that the property covered is subject to claims or charges appearing therein, and shall constitute a notice upon anyone dealing with the property covered by the Certificate of Title. In such case, if a lien, such as mortgage, is annotated at the back of the title, then anyone dealing with the property shall be deemed notified of such mortgage, and he shall have an inferior right over the property as against the mortgagee.
Under the Torrens System, the purchaser of the property is not required to explore further than what the title indicates, and may rely in good faith on what appears on the face of the title. However, if he has notice of the defect of the vendors title, or any claim that the property may be subjected to (such as when the defect on the title, or the claim over the property is annotated in the title), the buyer cannot claim good faith.
Q: I lost my certificate of title. What can I do to have it replaced?
In case of loss or destruction of an owner’s duplicate certificate of title, due notice under oath shall be sent to the Register of Deeds of the province or city where the land lies as soon as such loss or destruction is discovered. If a duplicate certificate is lost or destroyed, or cannot be produced by any person applying for the entry of a new certificate in his name, or for the registration of any instrument, a sworn statement of the fact of such loss or destruction may be filed by the registered owner or other person in interest.
Upon the petition of the registered owner or other person in interest, the court may, after notice and due hearing, direct the issuance of a new duplicate certificate, which shall contain a memorandum of the fact that it is issued in place of the lost duplicate certificate, but shall in all respects be entitled to the same faith and credit as the original duplicate, and shall thereafter be regarded as such for all purposes.
Q: What if the certificate of title that was lost or destroyed was the one in possession of the Register of Deeds, what can be done to have it restored?
Original copies of certificates of titles lost or destroyed in the offices of Register of Deeds as well as liens and encumbrances affecting the lands covered by such titles shall be reconstituted judicially, by filing a petition for that purpose before the Regional Trial Court of the place where the property is located.
Reconstitution of lost or destroyed certificates of title may also be done administratively, but it may be availed of only in case of substantial loss or destruction of land titles due to fire, flood or other force majeure as determined by the Administrator of the Land Registration Authority. As a condition, the number of certificates of titles lost or damaged should be at least 10% of the total number of titles in the possession of the Office of the Register of Deeds, and that in no case shall the number of lost or damaged certificates be less than 500. The application for administrative reconstitution shall be filed before the Office of the Registry of Deeds where the property is located.
Q: What is a real estate mortgage?
Mortgage is the charging of real property by a debtor to a creditor as security for a debt, on the condition that it shall be returned on payment of the debt within a certain period.
The mortgage extends to the natural accessions, to the improvements, growing fruits, and the rent or income not yet received when the obligation becomes due, and to the amount of the indemnity granted or owing to the proprietor from the insurers of the property mortgaged. In case of expropriation, the mortgage likewise extends with the declarations, amplifications and limitations established by law, whether the estate remains in the possession of the mortgagor, or it passes into the hands of a third person.
Q: What will happen if the debt for which a mortgage over a real property was constituted is not paid?
Where a debt is secured by a mortgage and there is a default in payment on the part of the mortgagor, the mortgagee has a choice of one of two remedies.
- To file an ordinary action to collect the unpaid debt; or
- To foreclose the property.
Failure on the part of the mortgagor to settle his obligation gives rise to the mortgagee’s right to foreclose the mortgages which is a remedy provided by law. Foreclosure is the process by which a mortgagee acquires an absolute title to the property of which he had previously been only the conditional owner, or upon which he had previously a mere lien or encumbrance. Section 63 of P.D. No. 1529 provides for the guidelines in foreclosure of mortgages as follows:
If the mortgage was foreclosed judicially:
- A certified copy of the final order of the court confirming the sale shall be registered with the Register of Deeds.
- If no right of redemption exists, the certificate of title of the mortgagor shall be cancelled, and a new certificate issued in the name of the purchaser.
- Where the right of redemption exists, the certificate of title of the mortgagor shall not be cancelled, but the certificate of sale and the order confirming the sale shall be registered by a brief memorandum made by the Register of Deeds upon the certificate of title.
- In the event the property is redeemed, the certificate or deed of redemption shall be filed with the Register of Deeds, and a brief memorandum shall be made by the Register of Deeds on the certificate of title of the mortgagor.
- If the property is not redeemed, the final deed of sale executed by the sheriff in favor of the purchaser at a foreclosure sale shall be registered with the Register of Deeds, the title of the mortgagor shall be cancelled, and a new certificate issued in the name of the purchaser.
If the mortgage was foreclosed extra-judicially:
- A certificate of sale executed by the officer who conducted the sale shall be filed with the Register of Deeds who shall make a brief memorandum on the certificate of title.
- In the event of redemption by the mortgagor, the same rule provided for in the second paragraph of this section shall apply. (The certificate or deed of redemption shall be filed with the Register of Deeds, and a brief memorandum shall be made by the Register of Deeds on the certificate of title of the mortgagor.)
- In case of non-redemption, the purchaser at foreclosure sale shall file with the Register of Deeds, either a final deed of sale executed by the person authorized by virtue of the power of attorney embodied in the deed of mortgage, or his/her sworn statement attesting to the fact of non-redemption (power of attorney is an instrument authorizing another to act as one’s agent).
- The Register of Deeds shall issue a new certificate in favor of the purchaser after the owner’s duplicate of the certificate has been previously delivered and cancelled.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding land titles and property registration, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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