Annotations on Certificates of Titles

In our previous article, Property buying checklist,  we discussed that buyers looking to purchase real estate should obtain a copy of the Transfer (or Original) Certificate of Title covering the property.

Certificates of titles may contain annotations such as claims, liens, mortgages, disputes, conditions, and restrictions on the use or disposition of the property, which buyers should investigate further before proceeding with their purchase.

Below are some of the more common annotations on certificates of titles:

1. Contracts of  Lease

A lease of real estate must be recorded in the Registry of Property for it to be binding upon third persons. (Article 1648, Civil Code of the Philippines)

In practice, property owners are hesitant to have their certificates of titles annotated and leases that are recorded are long term leases, those that involve substantial amounts and commercial leases.

2. Real Estate Mortgages

Real Estate Mortgages  or REM are also annotated upon certificates of titles where the property serves as a collateral to secure the payment of a loan.

An unregistered REM is still valid but only between the parties and not third persons. (Article 2125, Civil Code of the Philippines)

When a certificate of title contains a REM annotation, the buyer takes it with the knowledge that the property may be foreclosed by the creditor.

3. Extrajudicial Settlement of Estate

An annotation is placed on new certificates of title issued pursuant to the distribution and partition of a decedent’s real property to warn third persons on the possible interests of excluded heirs or unpaid creditors. The annotation creates a legal encumbrance or lien on the real property in favor of the excluded heirs or creditors. Accordingly, when a buyer purchases a real property despite the annotation, he must be ready for the possibility that the title could be subject to the rights of excluded creditors or heirs. (Sec. 4, Rule 74 of the Rules of Court; Tan v. Benolirao, et al., G.R. No. 153820, October 16, 2009)

This lien may be cancelled after 2 years by filing a petition to cancel.

4. Easement or Right of Way

An easement is a real right on a property giving another property some right over it. (Private Development Corp v. Court of Appeals, G.R. No. 136897, November 22, 2005)

Easements are either voluntary or legal and differ in grounds for creation and dissolution or cancellation.

Accordingly, when a buyer discovers an easement of a right of way annotated on the certificate of title, it must investigate further to determine the scope and conditions of the easement.

5. Attachments and Orders by a Court

There are various orders issued by courts that may be annotated on certificates of titles. One of the most common is an attachment on the property where the property is levied upon to serve as a security for the satisfaction of any award or for the enforcement of an award already made in a final judgment against the registered owner.

There are also other orders issued by courts which may be annotated upon the certificate of title.

6. Notice of Lis Pendens

This notice is an announcement to the whole world that a particular property is involved in a court dispute and serves as a warning that one who acquires an interest over the property does so at its own risk and gambles on the result of the dispute. (Republic of the Philippines vs. Sandiganbayan, et al., G.R. No. 222364, September 5, 2018)

7. Affidavits 

Affidavits of Adverse Claim. The law allows a person who claims an interest in registered land which is adverse to the registered owner to make a statement in writing of its right or interest on the property, submit it to the Register of Deeds and have the claim annotated upon the certificate of title. (Sec. 70, PD 1529)

While the law provides that an adverse claim shall be effective for 30 days, the Supreme Court has ruled that an annotation of Adverse Claim is not automatically cancelled nor does the Register of Deeds have the power to cancel the annotation without an order from the court. (Sajonas v. CA, G.R. No. 102377, 05 July 1996)

Affidavit of Loss. The law provides that in case of loss of an owner’s duplicate certificate of title, a sworn statement of the fact of loss shall be filed with the Register of Deeds of the province or city where the land is located. (Sec. 109, Presidential Decree 1529)

The annotation of the Affidavit of Loss is a requirement for the filing of a Petition for the issuance of a new owner’s duplicate certificate of title.

Affidavit of Correction. There are cases where there is a typographical error in the technical description of the property in the certificate of title. For example, where the description should be beside Block 15 instead of Block 5. In such cases, an affidavit with the proper supporting documents may be executed and annotated upon the certificate of title indicating the correct details considering that once a title is issued the Register of Deeds will not allow the re-issuance of a corrected title absent any court order. By annotating this affidavit, once the certificate of title is transferred the correction will be reflected on the newly issued certificate of title.

Affidavit of Exclusive or Paraphernal Property. When a seller of a property is married, by default marital consent is required for any disposition of the property. If the seller can prove that the property is by law exclusive property, then marital consent is not mandatory. Accordingly there are certificates of titles with Affidavits of Paraphernal or Exclusive Property annotated on them whereby one spouse declares that the property belongs exclusively to the other spouse. (Art. 111, Family Code of the Philippines; Art. 140, Civil Code of the Philippines)

8. Reconstituted Title

Lost and destroyed certificates of titles that were reconstituted pursuant to Republic Act (RA) No. 26 will contain an annotation of RA 26 which provides that within 2 years from the date of reconstitution, any person who has a right or interest that was noted on the lost or destroyed title but which was not carried over to the new title may ask the Court to have the right or interest annotated on the reconstituted title.

These annotations may be removed after 2 years via a Petition with the Court.

9. Deed of Restrictions

Restrictions covering land and the master deeds for condominium projects are also regularly annotated upon certificates of titles. In the case of subdivisions, developers annotate the Declaration of Restrictions on the certificates of titles of the buyers or provides for the obligation of buyers to be bound by the restrictions in the sale document at the time of purchase. For condominiums, the Condominium Act provides that a condominium owner shall register the declaration of restrictions, which shall be annotated on the certificates of titles included in the project. (Sec. 9, Republic Act No. 4726)

10. Special Powers of Attorney

There are Special Powers of Attorneys (SPA) annotated on certificates of titles whereby the registered owner gives another person the right to act for and on its behalf. A SPA is a specific power given to another which is why buyers should obtain copies of the SPA to ascertain the scope of the powers given.

There are other annotations that one may find on certificates of titles such as the Deeds of Sales and Certificate Authorizing Registration issued by the Bureau of Internal Revenue.

Copies of the documents annotated on certificates of titles are available upon request from the Registry of Deeds with the payment of a fee which buyers are well-advised to obtain once there are annotations on certificates of titles.

Lastly, for annotations such as mortgages, claims, liens and the like, which may affect the validity of the purchase or right of ownership of the sellers, buyers are advised to ensure that these are cancelled before proceeding with the transaction.

(The author, Atty. John Philip C. Siao, is a practicing lawyer and founding partner of Tiongco Siao Bello & Associates Law Offices, a professor at the MLQU School of Law, and an Arbitrator of the Construction Industry Arbitration Commission of the Philippines. He may be contacted at [email protected]. The views expressed in this article belong to the author alone.)