By authority of the United States, be it enacted by the Philippine Commission, that:
Section 1. Section thirty-four of Act Numbered Four hundred and ninety-six, known as the Land Registration Act, is hereby amended to read as follows:
“Sec. 34. Any person claiming an interest whether named in the notice or not, may appear and file an answer on or before the return day, or within such further time as may be allowed by the court. The answer shall state all the objections to the application, and shall set forth the interest claimed by the party filing the same and apply for the remedy desired, and shall be signed and sworn to by him or by some person in his behalf.”
Section 2. Section thirty-seven of the same Act is hereby mended to read as follows:
“Sec. 37. If in any case without adverse claim the court finds that the applicant has not proper title for registration, a decree shall be entered dismissing the application, and such decree may be ordered to be without prejudice. The applicant may withdraw his application at any time before final decree, upon terms to be fixed by the court: Provided, however, That in a case where there is an adverse claim, the court shall determine the conflicting interests of the applicant and the adverse claimant, and after taking evidence shall dismiss the application if neither of them succeeds in showing that he has proper title for registration or shall enter a decree awarding the land applied for, any part thereof, to the person entitled thereto, and such decree, when final, shall entitle to the issuance of an original certificate of title to such person: Provided, further, That if the adverse claim covers only a portion of the lot and said portion is not properly delimited on the plan attached to the application, the court, upon pronouncing judgment, in case the same be in favor of the adverse claimant, shall order the latter to file a plan of the portion awarded to him, duly approved by the Director of Lands: And provided, finally, That the court shall in its judgment determine the strictly necessary expenses incurred by the applicant for fees for the registration of his application in the office of the clerk of the court and for the publication thereof, and shall order the adverse claimant to whom a portion of the land applied for has been awarded to pay to the applicant such part of said expenses as may be in proportion to the area awarded to said adverse claimant, unless the court finds that the applicant, upon filing the application, acted in bad faith or knowing that he had right to the land awarded to another, in which cases he shall not be entitled to any refund. In case the adverse claim is for the entire lot, the refund of expenses to which the applicant is entitled as provided in this Act shall also include the actual cost of making the plan of the lot in question.”
Section 3. Section thirty-eight of the same Act is hereby amended to read as follows:
“Sec. 38. If the court after hearing finds that the applicant or adverse claimant has title as stated in his application or adverse claim and proper for registration, decree of confirmation and registration shall be entered. Every decree of registration shall bind the land, and quiet title thereto, subject only to the exceptions stated in the following sections. It shall be conclusive upon and against all persons including the Insular Government and all the branches thereof, whether mentioned by name in the application, notice or citation, or included in the general description ‘To all whom it may concern.’ Such decree shall not be opened by reason of the absence, infancy, or other disability of any person affected thereby nor by any proceeding in any court for reversing judgment in decrees, subject, however, to the right of any person deprived of land or of any estate or interest therein by decree of registration obtained by fraud to file in the competent Court of First Instance a petition for review within one year after entry of the decree, provided no innocent purchaser for value has acquired an interest. If there is any such purchaser, the decree of registration shall not be opened, but shall remain in full force and effect forever, subject only to the right of appeal herein before provided. But any person aggrieved by such decree in any case may pursue his remedy by action for damages against the applicant or any other person for fraud in producing the decree. Whenever the phrase ‘innocent purchaser for value’ or an equivalent phrase occurs in this Act, it shall be described to include an innocent lessee, mortgagee, or other encumbrancer for value.”
Section 4. Section thirty-nine of the same Act, as amended by Act Numbered Two thousand and eleven, is hereby further amended to read as follows:
“Sec. 39. Every person receiving a certificate of title in pursuance of a decree of registration, and every subsequent purchaser of registered land who takes a certificate of title for value in good faith shall hold the same free of all incumbrance except those noted on said certificate, and any of the following incumbrances which may be subsisting, namely:
“First. Liens, claims, or rights arising or existing under the laws or Constitution of the United States or of the Philippine Islands which the statutes of the Philippine Islands can not require to appear of record in the registry.
“Second. Taxes within two years after the same have become due and payable.
“Third. Any public highway, way, private way established by law or any Government irrigation canal or lateral thereon, where the certificate of title does not state that the boundaries of such highway, way, or irrigation canal or lateral thereof, have been determined.
“But if there are easements or other rights appurtenant to a parcel of registered land which for any reason have failed to be registered, such easements or rights shall remain so appurtenant notwithstanding such failure, and shall be held to pass with the land until cut off or extinguished by the registration of the servient estate, or in any other manner.”
Section 5. This Act shall take effect on its approval.