You want to buy a piece of land. The owner told you that it is UNTITLED. He gave you a copy of his tax declaration. What should you do to make sure that you are safe, or that the person selling the land to you actually has title to it?
THE BIGGEST RISK when buying untitled property is that there is no ONE DOCUMENT that can guarantee that the person you are buying it from is its true owner. Why? Because the only document that is conclusive proof of ownership is a Torrens title.
What then is a tax declaration? A tax declaration is just that, i.e., a declaration for tax purposes. It shows how much taxes have to be paid and who is paying for it. AT BEST, a tax declaration proves POSSESSION and nothing more.
What gives title? Title is passed by a DEED that grants it. Among these are Deeds of Sale, Deeds of Donation, Extra-Judicial Partition, Last Will and Testament, and the like. Deeds are the true source of title. Even the Torrens title itself is not a source of title. It is merely PROOF of it. Without a valid deed, even Torrens titles can be nullified.
So, if you find yourself in a position of having to buy an untitled property, here is what you should do:
FIRST: Get a TRACER. Bring the tax declaration of your seller to the Assessor's Office and ask for a tracer. Go as far back as the records of the Assessor's Office will allow.
The tracer will give you a history of your seller's tax declaration. It will show all the tax declarations that were issued before it, in sequence. A tracer will show you who owned the property originally, who it was transferred to down the line until it reached the person whose tax declaration is in your possession.
SECOND: Get a copy of ALL the tax declarations mentioned in the tracer. The actual copy of the tax declaration will reveal annotations that could be useful to you. For instance, if the property has been mortgaged, it will show in the tax declaration. Sometimes, even cases affecting the property will be reflected on the tax declaration.
THIRD: Get a copy of ALL DEEDS that became the basis of the issuance of EACH tax declaration in your tracer. NOTE that a tax declaration CANNOT BE ISSUED without a deed transferring the property from one person to another. If any of the tax declarations in your tracer was issued without a deed, be wary. It likely means you lost your connection to the original owner of the property.
FOURTH: Go to the Register of Deeds. The Register of Deeds has what is called a Day Book. The Day Book records all transactions made over untitled lands. Give the ROD your lot number and ask for all recorded deeds affecting that particular piece of land.
FIFTH: Go to the Community Environment and Natural Reaources Office (CENRO) and ask for LAND STATUS and LOT STATUS. This will show if someone else has applied for a title over the land in question, or if a free patent title is already issued, or if the land may be titled at all. (Courtesy of Atty. Handel Lagunay and Exsofel Bads Sanchez.)
SIXTH: Go to the Regional Trial Court of the town or city where the land is located and ask for an RTC Clearance. The clearance will reveal if the land is invovled in a litigation, or if a case for judicial titling is pending or has been filed.
If the FIFTH and SIXTH steps above yield information of a titling case being filed by anyone over the property you wish to buy, you may want to reconsider. It means that someone else other than your seller is claiming title to the property.
SEVENTH: Bring all certificates, deeds, tax declarations, and tracer to a trusted lawyer. Ask the lawyer to evaluate if the deeds made valid transfers of the property's title from the first owner down to the person selling the property to you.
EIGHTH: Listen to your lawyer's opinion. Unless you picked a crooked lawyer, it will do you well to do as he advises.
Good luck.