Notarization Requirements for Open Deeds of Sale from Past Years in the Philippines

Introduction

In the Philippine legal system, deeds of sale serve as critical instruments for transferring ownership of property, whether real or personal. An "open deed of sale" typically refers to a document that evidences the sale of property—most commonly vehicles or chattels—but is left incomplete or unnotarized at the time of execution. This practice is prevalent in informal transactions, such as second-hand car sales, where the deed might lack dates, full buyer details, or notarization to facilitate easier resale without immediate registration. However, the absence of notarization can lead to complications in enforceability, registration, and protection against third-party claims.

This article explores the notarization requirements for such open deeds from past years, drawing from the Civil Code of the Philippines (Republic Act No. 386), the Notarial Law (as amended by Republic Act No. 9645), and related jurisprudence. It addresses the validity of these deeds, the process for belated notarization, potential legal hurdles, tax implications, and best practices. Understanding these elements is essential for individuals seeking to formalize old transactions to secure ownership rights or comply with regulatory bodies like the Land Transportation Office (LTO) for vehicles or the Register of Deeds for real property.

Legal Framework Governing Deeds of Sale and Notarization

The foundation for deeds of sale lies in the Civil Code, particularly Articles 1458 to 1504, which define a contract of sale as one where the seller transfers ownership of a thing to the buyer for a price. Contracts are generally valid and binding between the parties upon meeting the essential requisites: consent, object, and cause (Article 1318). Notarization is not a requisite for validity between the contracting parties; it primarily serves to convert a private document into a public one, making it admissible in evidence without further proof of authenticity (Article 1358 and Rule 132, Section 20 of the Rules of Court).

However, for certain transactions, notarization assumes greater importance:

• Real Property: Under Article 1358(1), acts creating or transmitting real rights over immovables, including sales, must appear in a public instrument. While non-notarization does not invalidate the sale between parties, it affects enforceability against third persons. Registration with the Register of Deeds is further required under the Property Registration Decree (Presidential Decree No. 1529) to bind third parties.

• Personal Property (e.g., Vehicles): Sales of movables are perfected by delivery (tradition), and notarization is not mandatory for validity (Article 1496). Nonetheless, agencies like the LTO mandate a notarized deed for vehicle registration transfers (LTO Administrative Order No. AVT-2014-029). An open deed without notarization may suffice informally but exposes parties to risks like disputes over ownership.

The Notarial Law governs the notarization process. A notary public, authorized under Republic Act No. 9645 (Amending the Administrative Code of 1917), must ensure the document's execution complies with rules on acknowledgment or jurat. Acknowledgment involves the signatory appearing before the notary to declare the document as their free act (Section 2, Rule IV, 2004 Rules on Notarial Practice). For open deeds from past years, this can involve ratifying or acknowledging a previously signed but unnotarized document.

Jurisprudence, such as in Heirs of Amada Zaulda v. Zaulda (G.R. No. 201816, 2016), reinforces that non-notarized deeds are binding inter partes but may require additional evidence in court. In Republic v. Sandiganbayan (G.R. No. 152154, 2003), the Supreme Court emphasized the probative value of notarized documents.

Defining an Open Deed of Sale

An open deed of sale is not explicitly defined in statutes but is a colloquial term in Philippine practice, especially for motor vehicles. It typically features:

• Signatures of the seller (and sometimes witnesses) but lacks the buyer's full details, date, or notarization.
• Intent to allow the buyer flexibility in resale or delayed registration, often to avoid immediate taxes or fees.
• Common in informal markets, but risky as it may not prove ownership conclusively in disputes.

For real property, an analogous "open" deed might be an unnotarized absolute deed of sale left undated to defer capital gains tax (CGT) or documentary stamp tax (DST) payments. However, this practice borders on tax evasion if not properly managed, as per the National Internal Revenue Code (Republic Act No. 8424, as amended).

Deeds from "past years" imply execution one or more years prior, raising issues like prescription, authenticity, and compliance with evolving laws.

Requirements for Notarization of Open Deeds from Past Years

Notarizing an open deed from past years is feasible but subject to strict requirements to ensure integrity:

1. Appearance and Acknowledgment:

   • The signatories (seller and buyer) must personally appear before a notary public to acknowledge the document as their voluntary act.
   • If signed years ago, the notary will execute an acknowledgment certificate, not a jurat (which certifies oath or affirmation for contemporaneous execution).
   • Per the 2004 Rules on Notarial Practice (A.M. No. 02-8-13-SC), the notary must verify identities via competent evidence (e.g., government-issued IDs) and ensure no vitiation of consent.

2. Completion of the Deed:

   • An "open" deed must be completed before notarization: insert dates, buyer details, and any missing information.
   • Retroactive dating is permissible if it reflects the actual transaction date, but falsification can lead to perjury charges (Article 171, Revised Penal Code).

3. Documentary Requirements:

   • Original deed and copies.
   • Proof of identity and capacity (e.g., if corporate, board resolution).
   • For vehicles: Original Certificate of Registration (CR) and Official Receipt (OR).
   • For real property: Title certificate, tax declarations, and clearances.

4. Notary's Jurisdiction and Competence:

   • The notary must be commissioned and within their territorial jurisdiction (Section 11, 2004 Rules).
   • Fees are regulated by the Supreme Court (e.g., P200-P500 for acknowledgments, per A.M. No. 08-1-05-SC).

5. Tax Compliance:

   • Belated notarization triggers tax obligations as if executed currently.
   • CGT (6% of selling price or zonal value) and DST (1.5% of consideration) must be paid via BIR Form 2000.
   • Penalties for delay: 25% surcharge, 12% interest per annum, and compromise fees (Revenue Regulations No. 13-2018).

If the original seller is deceased or unavailable, notarization becomes complex. Heirs may ratify via an extrajudicial settlement (Rule 74, Rules of Court), but this requires publication and no debts.

Challenges and Legal Hurdles with Deeds from Past Years

Several issues arise with old open deeds:

• Prescription and Laches: Actions to enforce sales prescribe in 10 years for written contracts (Article 1144, Civil Code). Notarization does not revive prescribed claims but formalizes existing ones.

• Authenticity Concerns: Notaries may refuse if fraud is suspected. Forgery invalidates the deed (Article 1403(3), Civil Code).

• Third-Party Rights: Non-notarized deeds do not bind innocent third parties. For vehicles, LTO may reject registration if the chain of title is unclear.

• Evolving Laws: Deeds predating digital requirements (e.g., e-notarization under Republic Act No. 11904, the Notarial Act of 2022) must comply with current standards.

• COVID-19 Impacts: During the pandemic, remote notarization was allowed temporarily (Supreme Court issuances), but standard in-person rules apply post-2022.

Case law like Spouses Alcantara v. Nido (G.R. No. 165133, 2010) highlights that delayed notarization does not cure defects if consent was flawed initially.

Procedure for Notarizing Open Deeds from Past Years

1. Prepare the Document: Complete all blanks, ensure accuracy.

2. Secure Tax Clearances: Pay CGT, DST, and obtain BIR Certificate Authorizing Registration (CAR).

3. Appear Before Notary: Parties acknowledge the deed.

4. Register the Document:

   • Real property: File with Register of Deeds.
   • Vehicles: Submit to LTO for transfer.

5. Handle Special Cases: If one party is abroad, use consular notarization (Vienna Convention on Consular Relations).

Consequences of Non-Compliance

Failure to notarize can result in:

• Inadmissibility in court without secondary evidence.
• Inability to register, leading to fines (e.g., LTO penalties up to P5,000).
• Tax evasion charges (up to 10 years imprisonment under Tax Code).
• Ownership disputes, potentially resolved via quieting of title actions (Article 476, Civil Code).

Conclusion

Notarizing open deeds of sale from past years in the Philippines is a vital step to formalize transactions, ensure enforceability, and comply with regulatory requirements. While not essential for inter-party validity, it provides evidentiary strength and protects against third-party claims. Parties should act promptly to avoid prescription, pay requisite taxes, and consult legal professionals to navigate complexities. This process underscores the importance of proper documentation in upholding property rights under Philippine law.