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How to avoid scam when buying lots in Panglao Island?


Is the property is clean? This is the very question our new clients never miss to raise, probably because of their personal
unpleasant experience in the past or because of some negative information relayed to them by their friends. If you are a
prospect buyer (and you are reading this), then you should also ask the same question.

Let us first define “clean”. By clean, we mean that the property is free from any lien or encumbrance - that is, t he
property has not been mortgaged to any bank or made as collateral to any loan. By clean, we also mean that that the
seller is the rightful owner of the property – that is, the seller’s ownership is not subject to any dispute. Lastly, by clean,
we mean that the seller has absolute right to sell the property – that is, the seller guarantees you undisturbed possession
after purchase.

Now, how do you check if the property is clean? To answer this question, we will separate the properties covered by a
Certificate of Title and those covered only by Tax Declaration.

Titled Properties
Titled properties are those covered by an Original Certificate of Title or a Transfer Certificate of Title. Now, what are the
things to do?

1. Inspect the site. This is to check if there are occupants in the area other than the owner-seller. It is also
recommended that you bring a copy of the lot plan so you could check the boundaries of the property on site.
When in doubt of the boundaries, you may hire a surveyor (cost is around P3,000 to P5,000).

2. Secure a certified true copy of the title from the Register of Deeds (ROD). If the document appears in
government records, then it is least likely to be fake. You should also check the memorandum of encumbrances,
usually the 3rd or 4th pages, to verify that the property is not subject to any bank loan, lease, adverse claim,
dispute etc.

Note: If the Title is an ORIGINAL Certificate of Title (Katibayan ng Orihinal na Titulo), you should also check the
date of issuance because these kinds of title has a prohibitive period of 5-years – this means that these cannot
be sold or transferred to a new buyer until after 5 years from date of issuance.

3. Proceed to the Assessor’s Office of the Municipal Government. You may secure a copy of the Tax Declaration to
confirm that the owner appearing in such document is the same owner appearing in the certificate of title. You
may also check if the realty taxes, although very minimal, is paid up-to-date.

4. Check the owner’s original copy. When you have decided to buy the property, you may request to compare your
ROD copy of title with that of the owner’s original copy – any difference should be a cause of concern. If the
owner does not have the original copy, all the more you should worry because securing a new original title takes
a long process (not to mention the possibility that the owner has already sold the property and the title is
already with the earlier buyer).

Of course, engaging a reliable licensed broker will help get these things done fast, considering his experience and

*Tax Declaration properties will be discussed in a separate article.

Tax Declaration (TaxDEc) properties in Panglao, Bohol: What is it?

Tax declaration (TaxDec) properties are common in municipalities and provinces. Tax Declaration, as opposed to a
certificate of title, is NOT a conclusive proof of ownership. A TaxDec merely represents that a person has been paying
taxes for a certain parcel of land and, as such, has the preferential right to apply for title. A person who buys the TaxDec
property then acquires such preferential right.

Considering the complex nature of these properties, below are just a few tips to avoid being scammed.

1. Check the Tax Declaration. Almost always, the owner appearing on the TaxDec is already deceased, so you must
do a background check of the person currently selling it. Is the seller an heir, and if yes, is he a lone heir or just
one of the several? (you may check the death certificate of the deceased and birth certificates of the heirs)

If the seller is not an heir but a previous buyer, check the chain of documents on how he became the current
owner of the property.

If on the TaxDec there appears a Administrator or Beneficial User, it is a good rule of thumb that you ask who he
is, if he is still alive and his relationship to the owner.

The size of the property appearing in the TaxDec is not conclusive. You may want to compare the size with that of
the Department of Environment and Natural Resources (DENR) if there is already an existing cadastral map.

2. Secure A&D Certification and Land Status from DENR. Only alienable and disposable (A&D) lands can be applied
for title; hence getting an A&D certification already gives you an idea that the property can be titled.

The Land Status certification will let you check if someone has already applied a title for the property. If there is
and he is NOT the seller of the property, then you should worry. If none, then it is okay because you will be the
one to apply after purchase.

3. Get a Court Clearance. Another way of titling the property is through court process. Hence, it is imperative to
secure a court clearance to determine whether the property you intend to buy has not been applied judicially.

For a more exhaustive discussion, you may want to talk to a licensed broker or a lawyer.
Taxes and Fees in a Real Estate Transaction: What’s there to know?

Whether you are buying or selling a property, it is important to bear in mind that, most of the time, the selling price is
not the end-all of your expenses. There are taxes and fees to complete your real estate transaction. What are these?

1. Capital Gains Tax (CGT) – this amounts to 6% of the (a) selling price as appearing in the Deed of Sale, (b) BIR zonal
value or (c) assessed value, whichever is highest. This is payable to the Bureau of Internal Revenue within 30 days from
date of transaction.

2. Documentary Stamp Tax (DST) – this amounts to 1.5% of the (a) selling price as appearing in the Deed of Sale, (b) BIR
zonal value or (c) assessed value, whichever is highest. This is payable to the Bureau of Internal Revenue on the 5 th day of
the month following the transaction.

Usually, the CGT and DST are paid simultaneously by the person processing your documents.

3. Transfer Fees – This amounts to 0.5% of the (a) selling price as appearing in the Deed of Sale, (b) BIR zonal value or (c)
assessed value, whichever is highest. This is payable to the Assessor’s Office of the Provincial Government, if the
property is located in municipalities, or of the City Government, if the property is located in the city.

3. Transfer Fees –This is payable to the Provincial Register of Deeds (P-ROD), if the property is located in municipalities,
or City Register of Deeds (C-ROD) if the property is located in the city. The fee is based on a schedule of fees . Just to give you an idea, a P 400,000 selling price
cost us around P5,000.00.

A reliable licensed broker will assist you in going through these payments at the government agencies concerned.
Broker’s fee, however, is usually already included in the selling price.

Aside from the fees mentioned above payable to government agencies, there is also Notarial Fee payable to the lawyer
who will prepare and notarize the document of sale.

Who pays these taxes and fees, nowadays, depends on negotiation between the buyer and seller.