I. Dealings with Unregistered Lands

I. Dealings with Unregistered Lands (P.D. No. 1529, sec. 113)

> SEC. 113. Recording of instruments relating to unregistered lands.—No deed, conveyance, mortgage, lease, or other voluntary instrument affecting land not registered under the Torrens system shall be valid, except as between the parties thereto, unless such instrument shall have been recorded in the manner herein prescribed in the office of the Register of Deeds for the province or city where the land lies.

• The Register of Deeds for each province or city shall keep a Primary Entry Book and a Registration Book. The Primary Entry Book shall contain, among other particulars, the entry number, the names of the parties, the nature of the document, the date, hour and minute it was presented and received. The recording of the deed and other instruments relating to unregistered lands shall be effected by way of annotation on the space provided therefor in the Registration Book, after the same shall have been entered in the Primary Entry Book.
• If, on the face of the instrument, it appears that it is sufficient in law, the Register of Deeds shall forthwith record the instrument in the manner provided herein. In case the Register of Deeds refuses its admission to record, said official shall advise the party in interest in writing of the ground or grounds for his refusal, and the latter may appeal the matter to the Commissioner of Land Registration in accordance with the provisions of Section 117 of this Decree. It shall be understood that any recording made under this section shall be without prejudice to a third party with a better right.
• After recording on the Record Book, the Register of Deeds shall endorse, among other things, upon the original of the recorded instruments, the file number and the date as well as the hour and minute when the document was received for recording as shown in the Primary Entry Book, returning to the registrant or person in interest the duplicate of the instrument, with appropriate annotation, certifying that he has recorded the instrument after reserving one copy thereof to be furnished the provincial or city assessor as required by existing law.
• Tax sale, attachment and levy, notice of lis pendens, adverse claim and other instruments in the nature of involuntary dealings with respect to unregistered lands, if made in the form sufficient in law, shall likewise be admissible to record under this section.
• For the services to be rendered by the Register of Deeds under this section, he shall collect the same amount of fees prescribed for similar services for the registration of deeds or instruments concerning registered lands.

Procedure:

• Presentation of instrument dealing with unregistered land;
• If found in order, the instrument is registered;
• If found defective, the registration is refused. The reason for refusal will be written.

Under Act 3344, registration of instruments affecting unregistered lands is without prejudice to a third party with a better right (Radiowealth Finance Co. v. Palileo, G.R. No. 83432, May 20, 1991).

Registration of instruments affecting unregistered lands is “without prejudice to a third party with a better right.” The aforequoted phrase has been held by this Court to mean that the mere registration of a sale in one’s favor does not give him any right over the land if the vendor was not anymore the owner of the land having previously sold the same to somebody else even if the earlier sale was unrecorded. (Radiowealth Finance Company v. Palileo, G.R. No. 83432, May 20, 1991)

If a parcel of land covered by a Torrens Title is sold, but the sale is registered under Act 3344, and not under the Land Registration Act, the sale is not considered registered and the registration of the deed does not operate as constructive notice to the whole world. (Vda. de Melencion v. CA, G.R. No. 148846, Sept. 25, 2007; Mactan-Cebu International Airport Authority v. Spouses Edito, G.R. No. 171535, June 5, 2009).

In order to be registered under Act No. 3344, the instrument must refer only to unregistered land and its own improvements only, and not any other kind of real estate or properties. The words “own” and “only” used in the language of the law when referring to improvements, clearly mean improvements on unregistered lands alone. In fine, the deed cannot refer to improvements or buildings on lands registered under the Torrens system, or under the Spanish Mortgage Law. To hold otherwise, would result in the anomalous situation of two registrations, one under Act 496 with respect to unimproved land, and another, under Act 3344 for improvements subsequently introduced on the same land. (Salita v. Calleja, G.R. No. L-17314)

Effect of Registration

Registration of an instrument involving unregistered land in the Registry of Deeds creates constructive notice and binds a third person who may subsequently deal with the same property. (Heirs of Deleste v. Land Bank, G.R. No. 169913, June 8, 2011)

The reliance on an unnotarized and unregistered deed of absolute sale of real property executed in one’s favor is misplaced and unwarranted, for the non-registration of the deed meant that the sale could not bind third parties. The transaction affecting unregistered lands covered by an unrecorded contract, if legal, might be valid and binding on the parties themselves, but not on third parties. In the case of third parties, it was necessary for the contract to be registered. (Dadizon vs. Court of Appeals, G.R. No. 15911, Sept. 30, 2009)

Innocent purchasers of unregistered lands

An ordinary buyer may rely on the certificate of title issued in the name of the seller. He or she need not look beyond what appears on the face of the certificate of title. However, the defense of having purchased the property in good faith may be availed of only where registered land is involved and the buyer had relied in good faith on the clear title of the registered owner. It does not apply when the land is not yet registered with the Registry of Deeds. (Heirs of Gregorio Lopez v. DBP., G.R. No. 193551, Nov. 19, 2014)

Rules When Landowner Sells Land To a 3rd Person Who Is In Bad Faith:

Builder must go against the third person. When the third person has paid the landowner, the builder may still file a case against the third person.

The third person may file a 3rd party complaint against the landowner.

Builder, planter or sower on another's land: the rules at a glance

When the materials, plants or seeds belong to a third person

A lessee cannot be a builder in good faith. He is estopped to deny his landlord title, or assert a better title not only in himself, but also in some third person while he remains in possession of the leased premises and until he surrenders possession to the landlord. (Munar v. CA, GR No. 100740, 1994); (Frederico Geminiano, et al. v. CA, et al., GR No. 120303, 1996)

Estoppel applies even if the lessor had no title at the time. The relation of lessor and lessee was created and may be asserted not only by the original lessor, but also by those who succeed to his title. As lessees, they knew that their occupation of the premises would continue only for the life of the lease. They cannot be considered as possessors nor builders in good faith. (Racaza v. Susan Realty, Inc., GR No. L- 20330, 1966); (Vda. De Bacaling v. Laguna, GR No. L-26694, 1973); (Santos v. CA, 221 SCRA 42, 1993)

Even if the lessor promised to sell, it would not make the lessee possessor or builder in good faith so as to be covered by the provisions of Art. 448 of the NCC, if he improves the land. The latter cannot raise the mere expectancy of ownership of the land because the alleged promise to sell was not fulfilled nor its existence even proven. (Jurado, Civil Law Reviewer, 2008)

The owner of the land on which a building has been built in good faith by another has the option to buy the building or sell his land to the builder, he cannot refuse to exercise either option. (Sarmiento v. Agana, GR No. L-57288, 1984)

Note: For lessees, do not apply the rules on BPS. Apply Art. 1678 which states: If the lessee makes, in good faith, useful improvements which are suitable to the use for which the lease is intended, without altering the form or substance of the property leased, the lessor, upon termination of the lease shall pay the lessee one- half of the value of the improvements at that time. Should the lessor refuse to reimburse said amount, the lessee may remove the improvements, even though the principal thing may suffer damage thereby. With regard to ornamental expenses, the lessee shall not be entitled to any reimbursement, but he may remove the ornamental objects, provided no damage is caused to the principal thing, and the lessor does not choose to retain them by paying their value at the time the lease is extinguished.

Owner of the land on which improvement was built by another in good faith is entitled to removal of improvement only after landowner chose to sell the land and the builder refused to pay for the same. Where the land value is greater than the improvement, the landowner cannot compel the builder to buy the land. A forced lease is then created and the court shall fix the terms thereof in case the parties disagree thereon. (Depra v. Dumlao, GR No. L-57348, 1985)

The right to choose between appropriating the improvement or selling the land on which the improvement of the builder, planter or sower stands, is given to the owner of the land (not the court) (Ballatan v. CA, GR No. 125683, 1999)

Improvements made prior to the annotation of the notice of lis pendens are deemed to have been made in good faith. After such annotation, P can no longer invoke the rights of a builder in good faith. Should E opt to appropriate the improvements made by P, it should only be made to pay for those improvements at the time good faith existed to be pegged at its current market value. (Carrascoso v. CA, GR No. 123672, 2005)

(2) Identity of land

How to prove:

• Survey plan approved by the Land Management Bureau (LMB)
• Technical description of the land
• Tax declarations