VOLUNTARY DEALINGS WITH REGISTERED LANDS

Q: Who may convey, mortgage, lease, charge or otherwise deal with the land?

A: an owner of registered land may convey, mortgage, lease, charge or otherwise deal with the
land.

Q: What is the formal requirement of contracts involving real property?

A: Contracts are obligatory in whatever form they may have been entered into provided all
essential requirements for their validity are present.

Q: What are the essential requirements of in order for a contracts involving real property
obligatory?

A: The requisites are (a) consent of the contracting parties; (b) object certain which is the subject
matter of the contract; (c) cause of the obligation which is established.

Q: What is the importance of the form?

A: As a general rule, form is not important for the validity of a contract provided that there is
consent, subject matter and cause. But the general rule applies only to consensual contracts.
When the law requires that the contract be in some form in order that it may be valid or
enforceable or that a contract be proved in a certain way, that requirement is absolute and
indispensable. For example donation of real property which must be in a public instrument to
be valid.

Q: Does the conveyance of land made in private document valid?

A: Yes, a conveyance of land made in a private document does not affect its validity.

Q: What is the importance of putting the contract in a public instrument?

A: Article 1358 of the Civil code which requires the embodiment of certain contracts in a public
instrument is only for convenience; and registration of the instrument only adversely affects
third parties; and non-compliance therewith does not adversely affect the validity of the
contract or the contractual rights and obligations of the parties.

Q: What perfects a contract of sale?

A: A contract is perfected by mere consent of parties. The moment there is a meeting of minds
between parties upon which are the object of the contract and upon the price.
Q: How are prices agreed upon in case of sale of real property?

A: Parties may choose between unit price contact or lump sum contract. Unit price contract is
determined by way of reference to a stated rate per unit while lump sum contract is determined
by stating a full purchase price for an immovable the area of which may be declared based on
the estimate or where both the area and boundaries are stated.

Q. What is the rule in case of conjugal property?

A: Sale of a conjugal property requires the consent of both husband and wife. The absence of the
consent of one renders the entire sale null and void.

Q: What is the importance of registration?

A: The act of registration operates to convey and affect the registered land so that bona fide
purchaser of such land acquires good title as against a prior transferee, if such prior transfer was
unrecorded.

Q: Is registration essential for the validity of sale?

A: as between parties to a sale, registration is not necessary to make the sale valid and effective.

Q; What is subsequent registration?

A: It is where incidental matters after original registration may be brought before the land
registration court by way of motion or petition filed by the registered owner or a party in
interest.

Q: What are the rules as to the necessity and effects of subsequent registration?

A: General Rule: The mere execution of deeds of sale, mortgages, leases or other voluntary
documents serves only 2 purposes:

1. as a contract between the parties thereto

2. as evidence of authority to the RD to register such documents (Sec. 51, PD 1529)

Exception: Wills that purport to convey or affect a registered land.

Note: It is only the act of registering the instrument in the RD of the province or the city where
the land lies which is the operative act that conveys ownership or affects the land insofar as
third persons are concerned (Sec. 51, PD 1529).

The act of registration creates a constructive notice to the whole world of such voluntary or
involuntary instrument or court writ or process.

Q: What is the effect of registration of instruments dealing with registered land?

A: A deed or other voluntary instrument involving registered land shall not take effect as a
conveyance or bind the land but shall operate on as a contract between the parties and as
 evidence of authority of the Register of Deeds to make registration. The act of registration shall
be the operative act to convey or affect the land insofar as third persons are concerned.

Q. What is the purpose of the registration?

A: The purpose of the registration is merely to notify the interests of strangers to a given
transaction, who may be ignorant thereof, and the non-registration of the deed of evidencing
said transaction does not relieve the parties thereto of their obligations thereunder. Where no
right of innocent third persons is involved, the conveyance between the vendee and his
vendors, although not registered, is valid and binding upon the latter as well as upon his heirs.

Q: Is registration a requirement for the validity of a contract?

A: No. The principal purpose of the registration is merely to notify other persons not parties to a
contract that a transaction involving the property had been entered into. Where a party has
knowledge of a prior existing interest which is unregistered at the time he acquired a right to the
same land, his knowledge of that prior unregistered interest has the effect of registration as to
him.

Q: Is registration necessary to bind the parties to a contract?

A: Registration is not necessary to make it valid and effective, for actual notice is equivalent to
registration. The registration is intended to protect the buyer against claims of third person
arising from subsequent alienations by the vendor, and is not necessary to give effect to the
deed of sale.

Q: Is it required of a purchaser to go beyond the four corners of the title before purchasing the
property?

A: No, he only has to rely on the title. Where there is nothing in the certificate of title to indicate
any cloud or vice in the ownership of the property, or any encumbrance thereon, the purchaser
is not required to explore farther than what the Torrens title upon its face indicates in quest for
any hidden defect or inchoate right that may subsequently defeat his right thereto.

Q: Can a purchaser who has knowledge of the defect of his vendor’s title claim good faith?

A: No. One who purchases a real estate with knowledge of the defect of his vendor cannot claim
that he has acquired title thereto in good faith as against the true owner of the land or of an
interest therein.

Q: Is there any circumstances which impel a purchaser to make inquiries before buying the
property?

A: A person dealing with a registered land has a right to rely upon the face of the Torrens
certificate of title and to dispense with the need of inquiring further, except when the party
concerned has actual knowledge of facts and circumstances that would impel a reasonably
cautious man to make inquiry. One who purchases real property which is in actual possession of
 others should, at least, make some, inquiry concerning the rights of those in possession. He can
scarcely, in the absence of such inquiry, be regarded as a bona fide purchaser as against such
possessors.

Q: What is a notice lis pendens?

A: A notice of lis pendens is an announcement to the whole world that a particular real property is
in litigation, serving as a warning that one who acquires interest over said property does so at
his own risk, or that he gambles on the result of the litigation over the said property.

Q: What is the relevance of the surrender of the owner’s duplicate certificate in the process of
registration of voluntary instruments?

A: To register a voluntary instrument by the Register of Deeds together with such instruments,
except in some cases given or upon the order of the court for cause shown. The owner’s
duplicate certificate is conclusive authority for the RD to enter registration.

Q: What must be presented to affect the land sold?

A: Presentation of the deed of sale and its entry in the day book must be done with the surrender
of the owner’s duplicate of the certificate of title for cancellation and a new certificate is issued
in accordance Sec. 53 of PD No. 1529. Without the presentation of the of the owner’s
duplicate, issuance of TCT is unwarranted and confers no right on the purchaser.

Q: What is the effect of the compliance of the production of the owner’s duplicate certificate of
title required by Section 53 of PD No. 1529 in the registration?

A: Registration takes effect retroactively as of the date when the deed, conveyance was noted in
the entry book of the RD.

Q: What is the remedy in case of refusal or failure to surrender owner’s duplicate certificate?

A: Where a voluntary instrument cannot be registered by reason of refusal or failure of the holder
to surrender the owner’s duplicate certificate of title, the party in interest may file a petition in
court to compel surrender of the same to the RD.

However, non-production of the owner’s duplicate of the certificate of title may not invalidate
a vendee’s claim of ownership where the subsequent vendees of the same lot cannot be
considered in the law to be unaware of the prior sale, on account of their relationship with the
1st vendee, since the validity of a title to a piece of property depends on the buyer’s
knowledge, actual or constructive, of a prior sale.

Q: When may an original owner of a registered land may seek an annulment of a transfer?

A: On the ground of Fraud, such a remedy is without prejudice to the rights of an innocent holder
for value of a certificate of title.
Q: What is the claim of an innocent purchaser for value in good faith under a forge or fraudulent
deed?

A: None. A forged or fraudulent deed is a nullity and conveys no title. The innocent purchaser for
value protected by law is one who purchases a title land by virtue of a deed executed by the
registered owner himself, not by a forged deed.

Q: When may a forged deed may be the basis of a good title in the hands of a bona fide
purchaser?

A: A fraudulent or forged document of sale may become the root of a valid title if the certificate of
title has already been transferred from the name of the true owner to the name of the forger or
the name indicated by the forger, and while it remained that way, the land was subsequently
sold to an innocent purchaser. For then, the vendee had the right to rely upon what appeared
in the certificate.

Q: Where two or more TCT are issued to different persons for the same lots, or subdivisions
thereof, due to the fact that the original title was not cancelled when the first TCT was issued to
replace the original title, which title prevails?

A: General rule is that in case of 2 certificates of title purporting to include the same land, the
earlier in date prevails, whether the land comprised in the latter certificate be wholly or only in
part, comprised in the earlier certificate.

In successive registrations, where more than 1 certificate is issued in respect of a particular estate
or interest in land, the person claiming under the prior certificate is entitled to the estate or
interest; and the person is deemed to hold under the prior certificate who is the holder of, or
whose claim is derived directly or indirectly from the person who was the holder of the earliest
certificate issued in respect thereof. The vendee of the earlier certificate would be the owner as
against the vendee of the owner of the latter certificate.

Q: What is the remedy of the aggrieved party?

A: “… The purchaser from the owner of the later certificate and his successors, should resort to his
vendor for redress, rather than molest the holder of the first certificate and his successors, who
should be permitted to rest secure in their title.” Gatioan v. Gaffud

Q: May the mortgagee has a right to rely in good faith?

A: Yes, a mortgagee has a right to rely in good faith on the certificate of title of the mortgagor to
the property given as security and in the absence of any sign that might arouse suspicion, has no
obligation to undertake further investigation. Hence, even if the mortgagor is not the real
owner of, or doesn’t have a valid title to, the mortgaged property, the mortgagee in good faith
nevertheless is entitled to protection.

This doctrine is the exception to the rule on when mortgage should be done by the absolute
owner of the property mortgaged.
Q: What is a memorandum of encumbrances?

A: Memorandum of encumbrances is found at the back of the title. It contains all interests in the
registered land less than ownership which shall serve as a notice to third persons.

Q: How is memorandum of encumbrances entered?

A: A Memorandum of encumbrances shall be entered by the Registry of Deeds. A similar entry

shall be made on the owner’s duplicate certificate of title. The cancellation or extinguishment of
such interest or rights shall be recorded in the same manner.

Q: What are the contents of a voluntary instrument for registration to the Registry of deeds?

A: The voluntary instrument must contain the following:

a) Full name

b) Nationality

c) Status

d) Residence

e) Postal Address of the grantee or person acquiring interest under such instrument.

Q: What is the additional requirement for corporation or an association acquiring a land?

A: The instrument shall contain a statement whether or not it is legally qualified to acquire private
lands.

Q: Is there prohibition on private land acquisition by corporations and associations?

A: Private corporations or associations may not hold alienable lands of the public domain except
by lease. Alienable land refers to those lands of the public domain which have been the subject
of the present system of classification and declared as not needed for forest purposes.

Q: When is a voluntary transaction such as sale, mortgage and lease deemed completed?

A: Registration is complete and operates to convey or affect the land upon the:

a) Filing and registration in the day book of notarized deed or instrument;

b) Surrender of the owner’s duplicate of title; and

c) Payment in full of the proper registration fees within 15 days from date of entry.
Q: What is a power of attorney (POA)?

A: A power of attorney (POA) is a legal document giving one person (agent or attorney-in-fact)
the power to act for another person (principal).

Q: What are the different types of POA?

A: (1) General Power of Attorney; (2) Special Power of Attorney; (3) Healthcare Power of
Attorney; and (4) Durable Power of Attorney.

Q: Who can be an attorney-in-fact?

A: Anyone can be an attorney-in-fact, as long as the principal trusts him/her. There is no limitation
as to who can be appointed as an attorney-in-fact.

Q: What is a special power of attorney (SPA)?

A: A special power of attorney refers to a clear mandate, express or implied, specifically

authorizing the performance of an act.

It is a type of legal document that allows you to appoint and authorize a person or an
organization to handle your affairs when you are unavailable, unable to do so, or in your case,
while you are abroad. The person you will assign will be called attorney-in-fact or agent and he
or she will transact on your behalf.

Q: What are the limitations to a special power of attorney?

A: The limitations are: (1) A special power to sell excludes the power to mortgage; (2) A special
power to mortgage does not include the power to sell; and (3) A special power to compromise
does not authorize submission to arbitration.

Q: Can a power of attorney expire?

A: Yes. All powers of attorney, no matter what type, automatically expire when the agent is made
aware of the principal’s death.

Q: What is the difference of a general power or attorney and special power of attorney?

A: A general power of attorney grants the agent authority to make all personal and business
decisions on behalf of the principal. An individual who will be out of the country for a year
may give an agent extensive powers to carry out transactions.

On the other hand, a special power of attorney gives the agent the authority to act on the
principal's behalf, but only under certain, specified circumstances. Because this type of power of
attorney is limited to the act(s) designated in the document, it is especially important that the
principal is very clear about the powers she wishes to grant the agent. An individual whose
physical or mental health is compromised may opt for a special power of attorney, giving the
agent limited power to only buy, sell or manage real estate and other property on her behalf.
 The principal may create more than one special power of attorney, naming a different
individual in each one.

Q: When is a special power of attorney necessary?

A: SPAs are necessary in the following cases:

1. To make such payments as are not usually considered as acts of administration;

2. To effect novations which put an end to obligations already in existence at the tome the
agency was constituted;

3. To compromise, to submit questions to arbitration, to renounce the right to appeal from

a judgment, to waive objections to the venue of an action or to abandon a prescription
already acquired;

4. To waive any obligation gratuitously;

5. To enter into any contract by which the ownership of an immovable is transmitted or

acquired either gratuitously or for a valuable consideration;

6. To make gifts except customary ones for charity or those made to employees in the
business managed by the agent;

7. To loan or borrow money, unless the latter act be urgent and indispensible for the
preservation of the things which are under administration;

8. To lease any real property to another person for more than one year;

9. To bind the principal to render some service without compensation;

10. To bind the principal in a contact of partnership;

11. To obligate the principal as a guarantor or surety;

12. To create or convey real rights over immovable property;

13. To accept or repudiate an inheritance;

14. To ratify or recognize obligations contracted before the agency; and

15. Any other act of strict dominion.

Q: Does the SPA have to be notarized in order to be valid?

A: No. SPA need not to be notarized in order to be valid. However, if it is executed abroad, it
must be both notarized and consularized.

Q: What is trust?

A: A trust is a fiduciary relationship with respect to property which involves the existence of
equitable duties imposed upon the holder of the title to the property to deal with it for the
benefit of another.
 A person who establishes a trust is called the trustor while the one whose confidence is reposed
is the trustee, and the person for whose benefits the trust has been created is referred to as the
beneficiary or cestui que trust.

Q: What are the kinds of trust?

A: There are two kinds of trust: (1) Express trust; and (2) Implied trust.

Q: What is an express trust?

A: Express trusts are those which the direct and positive acts of the parties create, by some writing
or deed, or will, or by words evincing an intention to create a trust. It is created by the
intention of the trustor or of the parties.

Q: What is an implied trust?

A: Implied trust is when a property is sols, and the legal estate I granted to one party but the price
is paid by another for the purpose of having the beneficial interest of the property. It comes
into being by operation of law. Implied trusts are either resulting or constructive trusts.

Q: What is the difference between resulting and constructive trusts?

A: Resulting trusts are based on the equitable doctrine that valuable consideration and not legal
title determines the equitable title or interest and are presumed always to have been
contemplated by the parties. They arise from the nature or circumstances of the consideration
involved in a transaction whereby one person becomes invested with legal title but is obliged in
equity to hold his legal title for the benefit of another.

On the other hand, constructive trusts are created by the construction of equity in order to
satisfy the demands of justice and prevent unjust enrichment. The duty to convey the property
arises because it was acquired through fraud, duress, undue influence or mistake, or through
breach of a fiduciary duty, or through the wrongful disposition of another’s property.

Q: What is a Co-ownership?

A: There is co-ownership whenever the ownership of an undivided thing or right belongs to

different persons. Co-ownership is a form or trust and every co-owner is a trustee for the other.

Q: Does implied resulting trusts prescribe?

A: No. As a rule, implied resulting trusts does not prescribe except when the trustee repudiates the
trust. The action to reconvey does not prescribe so long as the property stands in the name of
the trustee.

Q: Is there a particular form required in creating an express trust?

A: None. There is no particular form required. Under the law on Trusts, it is not necessary that a
document expressly states and provides for the express trust, for no particular words are
required for the creation of an express trust. It is sufficient that a trust is clearly intended.

Q: How can trusts be expressed and registered?

A: Section 65 requires that if a deed or other instrument is filed in order to transfer registered land
in trust, or upon any equitable condition or limitation expressed therein, the particulars of the
trust, condition, limitation or other equitable interest shall not be entered on the certificate; but
only a memorandum. The memorandum shall contain:

Words “in trust,” or “upon condition,” or other proper words; and

by a reference number to the instrument authorizing or creating the same.

On the other hand, Sec. 66 states that no instrument which transfers, mortgages or in any way
deals with registered land in trust be registered unless the enabling power thereto is expressly
conferred in the trust instrument. If the instrument creating or declaring a trust or other
equitable interest contains an express power to sell, mortgage or deal with the land in any
manner, such power shall be stated in the certificate of title by the words:

“with power to sell; or

“power to mortgage,”; or

by proper words of description in case of other powers.

Q: Who appoints trustees?

A: Regional Trial Court appoints trustees.

Q: What happens when a trustee declines, resigns, dies or is removed?

A: When a trustee under a written instrument declines, resigns, dies or is removed before the
objects of the trust are accomplished and no adequate provision is made in such instrument for
supplying the vacancy, the proper RTC may, after due notice to all persons interested, appoint a
new trustee to act alone or jointly with others, as the case may be.

Q: What happens when a new trustee has been appointed?

A: If the court appoints a new trustee, a new certificate may be issued to him upon presentation to
the Register or Deeds of a certified copy of the order or judicial appointment and the surrender
for cancellation of the duplicate certificate.

Q: How is implied trust established?

A: For the protection of a person claiming an interest in registered land by reason of any implied
or constructive trust, he should file with the Register of Deeds a sworn statement containing:
 a) Description of the land;

b) Name of the registered owner; and

c) Reference to the number of the certificate of title.

Q: Will the claim of such person affect the right of a purchaser for value and in good faith prior to
such registration?

A: No. Such claim will not affect the right of a purchaser for value and in good faith prior to such
registration.