Basics of land titles, transactions, and real property registration

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Published — December 2, 2017

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.

Related Topic: Frequently Asked Questions on Land Titles and Dealings with Real Property

One of the safest businesses out there is investing in real estate. It is so because real property appreciates in value, and may serve as shield against inflation. However, in order to engage in real estate business, one must have an understanding of land titles, and on how dealings with real property work.

Generally, only Filipino citizens, or corporations with at least 60% Filipino ownership may acquire land and have it registered in their names [See: Art. XII, Sec. 7, Constitution].

Certificate of title

The Register of Deeds issues certificates of title. There are two kinds, namely:

1. Original Certificate of Title (OCT), which is issued for newly titled land; and
2. Transfer Certificate of Title (TCT), which is issued in case of mere transfer of previously titled land.

Considering that majority of the lands being dealt at present are already titled properties, real property transactions nowadays are likely to involve Transfer Certificate of Title.

Best form of evidence of land ownership

The certificate of title is the best form of evidence of land ownership under our system of land registration (the Philippines follows the Torrens System). 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 a person claiming ownership over a property shows his tax declarations and receipts as evidence, and another one claiming ownership produces a certificate of title, the certificate of title shall be given more weight [See: G.R. No. 163551].

Transfer certificate of title

If a piece of land is already previously registered, such registration may be transferred in the name of a new owner who may have acquired it. In such case, a Transfer Certificate of Title may be issued to the one who acquired the subject land, through registration with the Registry of Deeds of the documents evidencing such transfer of ownership of the property to the new owner. Examples of such transfer documents are deeds of sale and deeds of donation, among others.

Registration of the deed of transfer

The following are the basic steps in the process of registration.

1. The deed effecting the transfer of property must be duly notarized before a Notary Public.
2. 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.
3. 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).
4. 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, the transferee may now do the following:

1. Apply before the Registry of Deeds for the issuance of a TCT in his name, and
2. Apply with the Assessor’s Office for the issuance of new Tax Declarations over the property.

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 an existing mortgage, is annotated at the back of the title, then anyone dealing with the property shall be deemed notified of such mortgage, and shall have an inferior right over the property as against the mortgagee.

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 [See: G.R. No. 122425]. However, if he has notice of the defect of the transferor’s title, or any claim that the property may be subjected to (such as when the claim over the property is annotated in the title), the transferee cannot claim that he acquired the property in good faith.

Armed with such basic knowledge of the various documents and processes in land and real property registration, one can start enjoying the benefits of investing in real estate. After all, persons who engage in real estate business may find such endeavor advantageous not only from an entrepreneurial standpoint, but also from the personal perspective of accumulating assets. Given the scarcity of land, it would be better to start investing the earliest possible opportunity. It could already be more difficult to do it much later when real estate values appreciate through the years, and everything else is devalued by the certainty of inflation.

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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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