Real estate is a risk mitigation tool. It provides inflation protection… What is nice about it is it’s a way to compound wealth over time.
– Chad Tredway, Head of Real Estate Americas, JP Morgan Asset Managment
By Realttorney®
Property ownership is a cornerstone of financial stability and wealth-building in the Philippines. However, the benefits of owning land can be maximized significantly when land titles are secured for these real properties.
Land titles are more than just pieces of paper. They are the linchpins of security, value, and opportunity in real estate ownership. The Supreme Court said that a certificate of title is merely an evidence of ownership or title over the particular property described therein.
This article delves into the reasons why landowners should prioritize obtaining land titles, highlighting the legal security, enhanced property value, and access to government programs and incentives that come with titled land instead of untitled ones.
The Legal Landscape of Land Titles in the Philippines. Before we delve into the benefits, it is crucial to understand the legal framework governing land titles in the Philippines. The Torrens system, adopted from the Massachusetts Land Registration Act of 1898, is the backbone of the country’s land registration system.
The Torrens system was adopted in this country because it was believed to be the most effective measure to guarantee the integrity of land titles and to protect their indefeasibility once the claim of ownership is established and recognized.
If this is so, what are the benefits for landowners if they apply for land titles over their lands?
Legal Security and Protection from Fraud. The Supreme Court said in Ebancuel vs. Ancierto, et al. (G.R. No. 214540, July 28, 2021) that “it is a fundamental principle in land registration that the certificate of title is evidence of an indefeasible and incontrovertible title over the property in favor of the person in whose name it is registered. The title serves as conclusive evidence of the ownership of the land described therein.”
The Torrens system ensures that land titles are conclusive against all claims except those noted in the certificate of title. By registering property under the Torrens system, landowners gain legal protection and recognition of their ownership against everyone else.
Hence, the person who has a Torrens title over the property is entitled to its possession. Likewise, the registered owner has the exclusive right to use, lease, or sell the land. Moreover, the landowner of a titled property has the right to the fruits of the land and to evict any illegal occupant on the said land.
In addition, the certificate of title becomes the best proof of ownership of a parcel of land. Having a Torrens title provides a stout defense against any fraudulent claims of ownership and possession. And, in the Philippines, there is no shortage of fraud committed against landowners.
Yet the Supreme Court has always ruled in favor of owners of registered lands with Torrens titles against usurpers and illegal occupants with unsubstantiated self-serving claims. However, at the same time, landowners must also know that the Torrens system CANNOT be used for the perpetration of fraud against the real owner of the parcel of land.
It should be emphasized that the Torrens system merely confirms ownership but does not create it. What does this mean?
In a 1915 case, the Supreme Court held that “the registration under the Torrens system and the issuance of a certificate of title do not give the owner any better title than he had. He does not obtain title by virtue of the certificate.”
To be clear, the mere possession of a duly registered Torrens title does not automatically make the possessor a true owner of the parcel of land described therein. If a person acquires a certificate of title under the Torrens system which includes, by mistake or oversight, land that can no longer be registered under the system, he does not, by virtue of the certificate alone, become the owner of the land illegally included.
Furthermore, in various cases, the Supreme Court has always held that the Torrens system CANNOT be used to protect a usurper from the true landowner, shield the commission of fraud, or enrich oneself at the expense of another.
Enhanced Property Value and Marketability. According to the Philippine Valuation Standard (PVS), which incorporates the International Valuation Standards (IVS), titled real properties are generally valued higher than untitled properties due to the legal security and protection they generally offer.
Why? Because potential buyers and investors have greater confidence in the legality and security of their investment in real properties with clear or “clean” certificates of title. Titled lands also provide clear ownership and protection against disputes and fraud.
Moreover, the process of verifying ownership and ensuring that there are no encumbrances is straightforward when a property is titled. This simplicity and transparency make titled properties more attractive to buyers, leading to quicker and more profitable sales.
The difference in value between titled and untitled parcels of land can vary significantly depending on location, market conditions, and other factors. However, according to experienced licensed real estate appraisers, it is common for titled properties to be valued 15-35% higher than untitled parcels of land.
This premium reflects the added security, marketability, and potential for financing that comes with having a certificate of title that is “clean”.
Access to Financing. Major financial institutions are more likely to approve loans or mortgages for titled land than untitled ones. Hence, securing a certificate of title opens up various opportunities for landowners to leverage their assets for financial gain and wealth-building.
For instance, a titled property can be used as collateral for a business loan, enabling the owner to invest in new ventures or improve existing ones. Or a titled agricultural land can serve as collateral to develop and make more productive a farm for the benefit of both the owner and the broader community.
Also, a titled residential land can be used to finance the building of a house or a renovation of an existing one. These cannot be done if the parcels of land are untitled. Hence, the benefits of having a titled parcel of land are irrefutable.
In conclusion, securing a certificate of title is a vital step for landowners in the Philippines. The benefits of legal security and protection, enhanced property value and marketability, and access to finance far outweigh the costs and effort involved in obtaining a land title.
As the Philippine real estate market continues to evolve, landowners who prioritize securing their Torrens certificates of titles will be in a better position to protect their investments, capitalize on market opportunities, and contribute to the nation’s development.
As a final note, always remember that a land title is not just a document. it is a key to security, prosperity, and peace of mind. Please don’t wait for disputes or missed opportunities to prompt you into action. Secure your land title today and reap the rewards of a well-protected and valuable property.
Transform your untitled land into an asset. Register now and equip yourself with the comprehensive knowledge to navigate the intricacies of land titling. Join us in this three-hour lecture that will walk you through the essentials of titling untitled lands in the Philippines.
The lecture is entitled, “Best Practices Guide to Titling Untitled Properties,” brought to you by the Center for Global Best Practices. For more information call Glaisie Falculan at (+63 949) 870-1832 or (+632) 8842-7148 or 59. Or kindly send her an email via glaisie.cgbp@yahoo.com.
Register now to begin 2025 with asset protection ideas.
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Atty. Jojo is a real estate attorney, an estate planning attorney, a licensed real estate broker, and a PRC-accredited Lecturer/ Speaker for Training Programs in Real Estate. He is a Chartered Trust and Estate Planning (CTEPTM) professional committed to educating Filipinos about the value and importance of incorporating real estate in their estate plan.
