Requirements to Execute a Deed of Sale in the Philippines
A comprehensive legal guide for real-property transfers
1. Legal Foundations
| Key Statute | Relevance |
|---|---|
| Civil Code of the Philippines (Arts. 1458 – 1505) | Defines “sale” and prescribes essential and natural elements. |
| Property Registration Decree (PD 1529) | Governs issuance/transfer of Torrens titles. |
| Notarial Law (2004 Rules on Notarial Practice) | Fixes formalities for notarizing contracts, including Deeds of Sale. |
| Tax Code (NIRC, as amended) | Imposes Capital Gains Tax (CGT), Documentary Stamp Tax (DST) and requirements for Certificate Authorizing Registration (CAR). |
| Local Government Code (LGC) & Provincial/City Tax Ordinances | Authorizes Transfer Tax. |
| Family Code (Arts. 96, 124, 124-126) | Requires spousal consent for disposition of conjugal/community property. |
| Special Laws (e.g., Condominium Act, CARP, Indigenous People’s Rights Act, PSA requirements for foreigners) | Apply where relevant. |
2. Substantive (Essential) Requisites
Consent of the parties
- Must be freely given, intelligent, and lawful.
- Seller must have legal capacity (majority age, sound mind, no legal disqualification).
- Spousal consent required if the property is conjugal/community; must appear in the instrument itself.
Determinate Subject Matter
- Property must be identified with precision (Lot & Block, survey plan, technical description, or chassis/engine numbers for vehicles).
Cause or Consideration
- Price must be certain in money or its equivalent.
- If part of the price has been paid previously (earnest money or option), state clearly.
3. Formal Requisites
| Requirement | Why It Matters | Practical Notes |
|---|---|---|
| Written Instrument (Deed of Absolute or Conditional Sale) | The Statute of Frauds requires sales of real property to be in writing for enforceability. | Use clear, unambiguous language; avoid boilerplate that doesn’t match facts. |
| Notarization | Converts a private document into a public one; renders it admissible without further proof; prerequisite for registration with Registry of Deeds (RD). | Sign in person before the notary; present competent, current ID; ensure notary’s details match notarial register. |
| Competent Evidence of Identity | A must under the Notarial Rules. | Passport, driver’s license, UMID, PRC ID, etc.; photocopies attached to notarial file. |
| Number of Pages & Documentary Stamp (₱30 per notarial page) | Notaries cannot notarize if the documentary stamps affixed are insufficient. | Affix the tiny “Doc Stamp” adhesive; not the DST paid to BIR. |
4. Documentary Checklist at the Time of Signing
| Seller must prepare | Buyer must prepare |
|---|---|
| Owner’s duplicate Original Certificate/Transfer Certificate of Title (OCT/TCT). | Taxpayer Identification Number (TIN). |
| Latest Tax Declaration (Real Property Tax). | Buyer’s valid IDs (same as for seller). |
| Real Property Tax (RPT) Clearance for the current year. | Community Tax Certificate (CTC) if required by LGU. |
| Clearance from Homeowners’/Condominium Corp. (if applicable). | Proof of payment (cashier’s checks, bank slips) when paying purchase price. |
| If a corporation: board resolution, Secretary’s Certificate, SEC registration, Articles & By-Laws. | Spousal consent (or waiver) if buyer is married & wishes to classify as paraphernal/ exclusive. |
| If seller is abroad: Special Power of Attorney (SPA) authenticated by PH Consulate or apostilled. | |
| For estate sale: Extra-Judicial Settlement, court approval if minor heirs, BIR eCAR for estate. |
5. Taxes, Fees & Post-Execution Compliance
| Obligation | Who Pays by Custom* | Amount / Deadline | Where to Pay / File |
|---|---|---|---|
| Capital Gains Tax (CGT) | Seller | 6 % of gross selling price or FMV (whichever higher); file BIR Form 1706 within 30 days of notarization. | BIR RDO where property is located. |
| Creditable Withholding Tax (CWT) (corporate seller, non-capital asset) | Buyer | 1.5 %–6 % (depends on zonal value); BIR Form 1606, also 30 days. | Same. |
| Documentary Stamp Tax (DST) | Buyer | 1.5 % of whichever is higher: consideration or FMV; BIR Form 2000-OT; payable within 5 days following the month of notarization (practically, pay alongside CGT). | Same. |
| Certification Fee (eCAR) | Typically Buyer | ₱100 – ₱200 | BIR. |
| Transfer Tax (Local) | Buyer | Up to 0.75 % of selling price or zonal value; must be paid within 60 days of notarization. | Provincial/City Treasurer’s Office. |
| Registration Fee (RD) | Buyer | Roughly 0.25 % of price/value + entry fee (~₱50). | Registry of Deeds. |
*Other allocation is permissible if expressly agreed.
5.1 Steps to Secure Certificate Authorizing Registration (CAR)
Present the signed and notarized Deed plus required annexes to BIR.
Submit:
- Seller’s and buyer’s TINs
- Original title & photocopy
- Tax Declaration (land & improvements)
- RPT clearance & official receipt
- Sworn Declaration of No Improvement (if vacant lot) or Certificate of Improvement
- IDs and SPA/Corporate documents if applicable
Pay CGT/CWT and DST.
BIR issues payment forms, then prints and stamps the CAR (green for individual sale, yellow for corporate).
5.2 Transfer of Title
Registry of Deeds:
- Lodge CAR, Deed of Sale (original + 2 copies), original owner’s duplicate title, proof of tax payments, and Transfer Tax receipt.
- RD cancels old TCT; issues new TCT in buyer’s name within a few days to a few weeks depending on the registry.
City Assessor’s Office:
- Update tax declaration to reflect new ownership; present new TCT and CAR.
6. Special Situations & Additional Requirements
| Scenario | Extra Requirement |
|---|---|
| Sale by a Corporation | Secretary’s Certificate citing board resolution authorizing sale & signatory; SEC verification of officers. |
| Foreigner as Buyer | Must buy condominium unit or acquire land via Philippine corporation (max 40 % foreign ownership) or hereditary succession. |
| Property still under mother title | Subdivision plan with LRA approval and DENR/LMB survey, Lot Allocation Plan, Clearance from HLURB/ DHSUD. |
| Agricultural land > 5 ha | DAR clearance (CARP compliance); also consider retention limits. |
| Indigenous ancestral domains | Free and Prior Informed Consent (FPIC) & NCIP certification. |
| Minors or Persons with Disability | Guardian’s Court Order approving sale. |
| Properties mortgaged | Bank’s Deed of Release or Cancellation of Mortgage; original annotated title showing cancellation. |
| Right-to-Way sales / easements | Compliance with Art. 622 et seq., zoning clearance, LGU deed of restrictions. |
| Condominium | Clearance from condo corporation; latest dues certification; Master Deed reference. |
7. Drafting Tips & Common Pitfalls
- Exact Name Matching – Names in the Deed, IDs, TIN certificates and title must match verbatim (middle initials vs. full names, “Jr.” vs. “Jr”, etc.).
- Technical Description Errors – Transposed coordinates or lot numbers will delay CAR and title transfer; lift directly from title/approved survey.
- Unpaid Real Property Taxes – BIR will not issue CAR without RPT clearance. Pay delinquency with surcharges first.
- Family Code Violations – Selling spouse alone is voidable; register of deeds will often flag but parties sometimes miss this in haste.
- SPA Defects – If executed abroad, must be apostilled (after 14 May 2019) or consularized. Photocopied SPA will not suffice.
- Estate with Minor Heirs – Extra-Judicial Settlement must be approved by court for minors; otherwise CAR will be denied.
- Zonal Value vs. Selling Price – BIR always applies the higher figure; don’t under-declare or you risk penalties (25 % surcharge + interest).
- DST Adhesive vs. DST Tax – Confusing the two causes notary hold-off; adhesive stamps are separate from the DST paid to BIR.
8. Timeline Overview (Best-Case)
| Day | Milestone |
|---|---|
| 0 | Draft, review, and notarize Deed of Absolute Sale. |
| 0 – 2 | Gather IDs, titles, RPT clearances, tax declarations, board resolutions/SPAs. |
| 2 – 10 | File with BIR; pay CGT/CWT & DST; await CAR release (some RDOs 3–5 days; may extend to 15+ days). |
| 10 – 20 | Pay Transfer Tax at Treasurer’s Office; submit documents to RD; new TCT issued. |
| 20 – 30 | Update Tax Declaration at Assessor’s Office. |
Delays arise when documents are incomplete, survey issues exist, or titles have adverse annotations (lis pendens, levy, mortgage).
9. Checklist Summary
Before Signing
- Verified clean title (no liens/encumbrances).
- Due diligence on identity & capacity of parties.
- Agreed purchase price and terms.
- Spousal consent & marital property regime checked.
At Signing / Notarization
- Deed printed in at least four originals (Seller, Buyer, Notary, RD).
- Parties sign every page; initial corrections.
- Notary confirms IDs; adhesive stamp affixed; Notarial Register entry.
After Signing
- Pay taxes (CGT/CWT, DST).
- Secure CAR from BIR.
- Pay Transfer Tax.
- Register Deed & secure new title.
- Update tax declaration and HOA/Condo records.
10. Penalties & Legal Consequences of Non-Compliance
| Misstep | Possible Consequence |
|---|---|
| Failure to pay CGT/DST on time | 25 % surcharge + 12 %/yr interest; CAR withheld; deed may be rescinded for breach. |
| Unnotarized Deed | Cannot be registered; unenforceable under Statute of Frauds; subject to higher risk of fraud. |
| Forged IDs / Signatures | Criminal liability for falsification (Revised Penal Code Arts. 171-172). |
| No spousal consent (conjugal) | Voidable sale; spouse may annul within 5 yrs (Art. 1391 CC). |
| Under-declaration of price | Tax evasion investigation; deficiency assessments; donor’s tax imposition if discrepancy deemed a donation. |
11. Practical Pointers for Practitioners & Parties
- Engage a licensed geodetic engineer for verification if the land has no approved subdivision plan or the lot is part of a bigger parent title.
- Secure a certified true copy (CTC) of the title from the RD on the eve of signing to confirm no new adverse annotations.
- Keep digital scans of all signed documents and official receipts; BIR and RD sometimes misplace originals.
- Use escrow or manager’s checks to document payment flows; helps prove full consideration for CGT vs. estate tax later.
- Schedule notarial signing early in the day; some notaries limit documents to conform with the “one day, one entry” rule.
- Check LGU zoning for reclassification issues; agricultural‐to‐residential conversions need DAR/LGU action.
- For big-ticket corporate deals, consider securing a tax ruling in advance to confirm tax treatment (e.g., tax-free exchanges under Sec. 40 (C)(2) NIRC).
12. Conclusion
Executing a valid Deed of Sale in the Philippines is more than simply signing a template before a notary. It is a multi-layered process anchored on statutory requisites, tax compliance, and precise documentary support. Both sellers and buyers protect themselves—and avoid costly delays—by understanding (1) the substantive requirements that make a sale valid, (2) the formalities that allow it to be enforced and registered, and (3) the taxes and post-execution steps that legally consummate the transfer.
When in doubt, consult a licensed Philippine lawyer or notary public who regularly handles real-estate conveyancing, and verify the latest issuances of the Bureau of Internal Revenue, Registry of Deeds, and local treasurer’s office, as procedures and rates may be updated by circular.