(Philippine Context)

In the Philippine real estate market, it is common to encounter land offered for sale that lacks a Transfer Certificate of Title (TCT) or an Original Certificate of Title (OCT). Instead, the seller presents only a Tax Declaration. While these properties are often priced lower, they carry significant legal risks that every prospective buyer must understand.

Understanding the Nature of a Tax Declaration

Under Philippine law, specifically established in numerous Supreme Court rulings, a Tax Declaration is not conclusive evidence of ownership. It is merely a proof of possession and an indicia of a claim of ownership.

The primary purpose of a Tax Declaration is for real property taxation. While it can support a claim of ownership when coupled with "open, adverse, and continuous possession" for the period required by law, it does not have the same indefeasibility as a Torrens Title.

The Primary Risks

Buying land without a title exposes the buyer to several critical vulnerabilities:

Ownership Disputes: Since the land is not registered under the Torrens System, "Double Sales" are harder to detect. The seller might have sold the same rights to multiple parties, and the first to possess in good faith usually has the better right, leading to protracted litigation.
Government Reversion: The land might be part of the public forest, a military reservation, or a protected area (inalienable and non-disposable). If the land is not alienable and disposable (A&D), it can never be titled, and the government can reclaim it at any time without compensation.
Hidden Encumbrances: Unlike a TCT where liens, mortgages, and adverse claims are annotated on the back, a Tax Declaration does not reflect these burdens. You may unknowingly "buy" someone else's debt or a legal battle.
Overlapping Claims: Without a verified survey plan approved by the Land Management Bureau (LMB) or the Department of Environment and Natural Resources (DENR), the boundaries of the property are often unclear, leading to boundary disputes with neighbors.

Essential Legal Steps Before Buying

If you decide to proceed with the purchase of "untitled" land, you must perform exhaustive due diligence to mitigate the risks mentioned above.

1. Verify Land Classification

Visit the CENRO (Community Environment and Natural Resources Office) or PENRO of the area. Request a certification that the land is classified as Alienable and Disposable (A&D). If it is classified as forest land or public domain, stop the transaction immediately.

2. Trace the History of Possession

A Tax Declaration is only as strong as the history behind it.

Request a Trace Evidence or a "Chain of Tax Declarations" from the Assessor’s Office.
Ensure the taxes have been paid religiously.
Verify that the seller is the one currently in actual physical possession of the land.

3. Conduct a Relocation Survey

Hire a licensed Geodetic Engineer to conduct a survey based on the technical description in the Tax Declaration. This confirms if the area stated matches the actual ground area and checks for overlaps with titled properties.

4. Check for Pending Cases

Verify with the local Regional Trial Court (RTC) and the Municipal Trial Court (MTC) if there are any pending land registration cases or civil disputes involving the property or the seller.

The Transfer Process

If the due diligence is satisfactory, the legal transfer follows these steps:

Deed of Absolute Sale: Execute a formal Deed of Absolute Sale. It must be notarized to be a public document.
Payment of Taxes: Within the prescribed periods, pay the Capital Gains Tax (CGT) and Documentary Stamp Tax (DST) at the Bureau of Internal Revenue (BIR) to obtain the Certificate Authorizing Registration (CAR).
Transfer Tax: Pay the Transfer Tax at the Local Treasurer’s Office.
Assessor’s Office: Submit the CAR, the Deed of Sale, and the Transfer Tax receipt to the Provincial or City Assessor. They will cancel the seller's Tax Declaration and issue a new Tax Declaration in your name.

The Ultimate Goal: Titling

Holding a Tax Declaration should be a temporary state. To secure your investment, you should immediately initiate Administrative Titling (via Free Patent if applicable) or Judicial Titling (Land Registration proceedings under PD 1529).

Important Note: Only a Torrens Title issued by the Register of Deeds provides a state-guaranteed, indefeasible proof of ownership that protects you against third-party claims after one year from its issuance.