EMMANUEL P.

FERNANDEZ
LTD

1.What is a deed

A deed refers to a written document executed in accordance with law, wherein a person grants
or conveys to another a certain piece of land. It is also considered as an evidence of ownership,
but its registration before the Registry of Deeds where the land is located is necessary before
the land is registered in favor of the new owner, and a Transfer Certificate of Title is issued in
his name. The most common examples of these are deeds of sale and deeds of donation.

 legal form transfers property to one party including property rights. The deed serves as a proof
that the transfer occurred. Once you have signed the documents, it means you have fully
understood that all rights to the property will be transferred from the seller to the buyer.

2.How to register the deed of sale with Registry of Deeds

The deed must be duly notarized before a Notary Public. The notarized deed must then be
presented within 30 days from its notarization or within five (5) days after the close of the month
from the date the deed was notarized to the Bureau of Internal Revenue (BIR), or authorized
agent bank, to pay the capital gains tax and other required taxes. After payment of taxes, file
and submit to the BIR the documents relative to the transfer of property, such as the notarized
deed of sale, which are needed for the issuance of a tax clearance and a Certificate Authorizing
Registration (CAR). You may now also proceed to the City Treasurer’s Office to pay the transfer
tax.

After going through the above-mentioned process of payments and submission of documents,
you may now apply before the Registry of Deeds for the issuance of a Transfer Certificate of
Title in your name, and with the Assessor’s Office for the issuance of new Tax Declarations over
the property.

3.What are the Taxes and other fees that must be paid in connection with transfer of
real property in the name of another?

The seller pays for the following:

 Capital gains tax equivalent to 6% of the selling price on the deed of sale or the zonal
value, whichever is higher;
 Withholding tax if the seller is a corporation;
 Unpaid real estate taxes due, if any;
 Agent / Broker’s commission.

The buyer pays for the following:

 Cost of Registration:
 Documentary Stamp Tax, at 1.5% of the selling price or zonal value or fair market value,
whichever is higher.
 Transfer Tax, at a rate of 0.5% of the selling price, or zonal value or fair market value,
whichever is higher.
  Registration fee, which is 0.25% of the selling price, or zonal value or fair market value,
whichever is higher.
 Incidental and miscellaneous expenses incurred during the registration process.

Please take note that nothing prevents the parties to the sale from agreeing upon who shall pay
what.

4.What are other deeds need to be registered with the registry of deeds?

If the purpose is to transfer title of the property in the name of another, it is necessary that the
deed evidencing such transfer of ownership, such as deeds of sale, deeds of donation, deeds of
extrajudicial settlement, among others, should be registered with the Registry of Deeds.
However, if there is no transfer of ownership involved, the deed or instrument showing the
involvement of the real property in any transaction, or any charge or claim affecting the real
property, may be registered in order to bind third persons. Under the law, every conveyance,
mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land
shall, if registered, filed or entered in the Registry of Deeds, shall be constructive notice to all
persons from the time of such registration, filing or entering

If there is no transfer of ownership, how are the dealings registered with the Registry of
Deeds?

Such dealings may be registered with the Registry of Deeds by filing the instrument that
creates, transfers, or claims such interests, and by a brief memorandum thereof made by the
Register of Deeds upon the Certificate of Title. A similar memorandum shall also be made on
the owner’s duplicate. The cancellation or extinguishment of such interests shall be registered in
the same manner.

5.What is annotation of liens or encumbrance on title

Annotation of liens or encumbrances is an indication at the back of the Certificate of Title that
the property covered is subject to claims or charges appearing therein, and shall constitute a
notice upon anyone dealing with the property covered by the Certificate of Title. In such case, if
a lien, such as mortgage, is annotated at the back of the title, then anyone dealing with the
property shall be deemed notified of such mortgage, and he shall have an inferior right over the
property as against the mortgagee.

Under the Torrens System, the purchaser of the property is not required to explore further than
what the title indicates, and may rely in good faith on what appears on the face of the title.
However, if he has notice of the defect of the vendors title, or any claim that the property may be
subjected to (such as when the defect on the title, or the claim over the property is annotated in
the title), the buyer cannot claim good faith.

6.How you replace lost certificate of title

In case of loss or destruction of an owner’s duplicate certificate of title, due notice under oath
shall be sent to the Register of Deeds of the province or city where the land lies as soon as
such loss or destruction is discovered. If a duplicate certificate is lost or destroyed, or cannot be
produced by any person applying for the entry of a new certificate in his name, or for the
registration of any instrument, a sworn statement of the fact of such loss or destruction may be
filed by the registered owner or other person in interest.
Upon the petition of the registered owner or other person in interest, the court may, after notice
and due hearing, direct the issuance of a new duplicate certificate, which shall contain a
memorandum of the fact that it is issued in place of the lost duplicate certificate, but shall in all
respects be entitled to the same faith and credit as the original duplicate, and shall thereafter be
regarded as such for all purposes.

7.What is real estate mortgage

Mortgage is the charging of real property by a debtor to a creditor as security for a debt, on the
condition that it shall be returned on payment of the debt within a certain period.

The mortgage extends to the natural accessions, to the improvements, growing fruits, and the
rent or income not yet received when the obligation becomes due, and to the amount of the
indemnity granted or owing to the proprietor from the insurers of the property mortgaged. In
case of expropriation, the mortgage likewise extends with the declarations, amplifications and
limitations established by law, whether the estate remains in the possession of the mortgagor,
or it passes into the hands of a third person.

Kinds of mortagages
1.Voluntary – one that is constituted by the agreement of the parties. Legal mortgages
include cases contemplated by the 2nd paragraph of Art 2125 which provides that the
persons in whose favor the law establishes a mortgage have no other right to demand
the execution and the recording of the document in which the mortgage is formalized.
2.Legal mortgage - A legal mortgage is the most secure and comprehensive form of security
interest. It transfers legal title to the Mortgagee and prevents the mortgagor from dealing
with the mortgaged asset while it is subject to the mortgage.
3.Equitable – is a contract that appears to be a sale with a right of repurchase or an
absolute sale which in reality is a contract whereby no transfer of ownership is intended
bu the real intention is only to constitute a security.

Art 1602 An equitable mortgage is one which, although lacking in some formality, or
form, or words, or other requisites demanded by a statue, nevertheless reveals the
intention of the parties to charge real property as a security for a debt.

Essential requisites:
a. The parties enter into what appears to be contract of sale
b. But their intention is to secure an existing debt by way of mortgage

Essential requisites of mortgage

 To secure the fulfillment of a principal obligation

 The  mortgagor  should  be  the  absolute  owner  of  thing mortgaged
 The mortgagor should have free disposal of the thing
 When  the  principal  obligation  becomes  due,  the  thing mortgaged may be alienated to
secure payment
 For a mortgage to  be validly  constituted  and to prejudice third  persons,  the  mortgage 
should  be  recorded  with  the Registry of Property
NOTE: no  validly  constituted  mortgage  if  the  deed  of mortgage is a mere private document

When equitable mortgage is presumed?

An equitable mortgage is one which, although lacking in some formality, or form, or words, or
other requisites demanded by a statute, reveals the intention of the parties to charge real
property as security for a debt, and contains nothing impossible or contrary to law.

For a presumption of an equitable mortgage to arise, two requisites must first be satisfied,
namely: that the parties entered into a contract denominated as a contract of sale and that their
intention was to secure an existing debt by way of mortgage. [23] There is no single conclusive
test to determine whether a deed of sale, absolute on its face, is really a simple loan
accommodation secured by a mortgage. Article 1602, in relation to Article 1604 of the Civil
Code, however, enumerates several instances when a contract, purporting to be, and in fact
styled as, an absolute sale, is presumed to be an equitable mortgage. Thus:

ART. 1602. The contract shall be presumed to be an equitable mortgage, in any of the
following cases:
(1) When the price of a sale with right to repurchase is unusually inadequate;
(2) When the vendor remains in possession as lessee or otherwise;
(3) When upon or after the expiration of the right to repurchase another instrument
extending the period of redemption or granting a new period is executed;
(4) When the purchaser retains for himself a part of the purchase price;
(5) When the vendor binds himself to pay the taxes on the thing sold;
(6) In any other case where it may be fairly inferred that the real intention of the parties is
that the transaction shall secure the payment of a debt or the performance of any other
obligation.

In any of the foregoing case, any money, fruits, or other benefit to be received by the vendee as
rent or otherwise shall be considered as interest which shall be subject to the usury laws.

Process in registration of mortgage

1.Execute the document of mortgage.

2.There must be two witnesses present.
An affidavit of good faith is also necessary, which shall state that
“We (the parties) severally swear that the foregoing mortgage is made for the purpose of
securing the obligation specified in the conditions thereof, and for no other purpose, and that
the same is a just and valid obligation, and one not entered into for the purpose of fraud.” (Sec.
5)
3. Go to a notary public, who will notarize the document. 
4.Pay the documentary stamp tax within the first five days of the succeeding month.  The
documentary stamp tax is a percentage of the value of the property mortgaged. 
5.Go to  the  Office  of  the  Register  of  Deeds  (of the place where the property is located)
and  pay  the registration fees.  Before you pay the registration fees, the
government  will  require  you  to  update  payment  of  realty taxes  on  the 
property.   
The Registration process in turn is as follows:
 a.   Present deed of mortgage together with
b.   Owner’s Duplicate and affidavit of good faith
c.   Payment of fees

6.After payment of the registration fees, the mortgage will be annotated on the title.

This shall be done as follows:
a.    ROD shall enter upon original certificate of title and upon duplicate a
memorandum (date, time of filing, signature, file number assigned to
deed)
b.    ROD to note on the deed the date and time of filing, and reference to
volume and page of the registration book in which it was registered.

What is pactum commisorium

Pactum commissorium is a stipulation whereby the thing pledged or mortgaged or subject of

antichresis shall automatically become the property of the creditor in the event of nonpayment of
the debt within the term fixed. Such stipulation is null and void. (NCC, Art. 2085)

Elements of pactum commissorium

 There is a pledge, mortgage or antichresis d'f a property by way of security; and
 There is an express stipulation for the automatic appropriation by the creditor of the
property in case of non- payment.

NOTE:
What are prohibited are those stipulations executed or made simultaneously with the original
contract, and not those subsequently entered into.

Pactumn Commissorian when allowed

The law on pledge allows an exception to the prohibition against pactum commissorium.

Under Article 2112,_at the first auction, the thing is not sold, there will be another setting for the
second auction following the same formalities. If there is still no sale effected, the pledgee is
now allowed to appropriate the thing pledge. The act of appropriation ipso jure transfers
ownership of the thing to the pledgee.
(Pineda)

This is not against the law, since what the law prohibits is only the acquisition by the creditor of
the property mortgaged after non-payment of debt, and the above stated article simply
authorizes him to sell it with the aforesaid conditions, which authorization is inherent in the
ownership and not against morals and public order.

8.Drafting of Extrajudicial Settlement - what is extrajudicial settlement

If the mortgage was foreclosed extra-judicially:

 A certificate of sale executed by the officer who conducted the sale shall be filed with the
Register of Deeds who shall make a brief memorandum on the certificate of title.
 In the event of redemption by the mortgagor, the same rule provided for in the second
paragraph of this section shall apply. (The certificate or deed of redemption shall be filed
 with the Register of Deeds, and a brief memorandum shall be made by the Register of
Deeds on the certificate of title of the mortgagor.)
 In case of non-redemption, the purchaser at foreclosure sale shall file with the Register of
Deeds, either a final deed of sale executed by the person authorized by virtue of the
power of attorney embodied in the deed of mortgage, or his/her sworn statement
attesting to the fact of non-redemption (power of attorney is an instrument authorizing
another to act as one’s agent).
 The Register of Deeds shall issue a new certificate in favor of the purchaser after the
owner’s duplicate of the certificate has been previously delivered and cancelled.

9.How good faith determined?

To determine whether respondents are buyers in good faith, the Court's pronouncement
in Spouses Bautista v. Silva38 is instructive:

A holder of registered title may invoke the status of a buyer for value in good faith as a
defense against any action questioning his title. Such status, however, is never presumed
but must be proven by the person invoking it.

A buyer for value in good faith is one who buys property of another, without notice that
some other person has a right to, or interest in, such property and pays full and fair price
for the same, at the time of such purchase, or before he has notice of the claim or interest
of some other persons in the property. He buys the property with the well-founded belief
that the person from whom he receives the thing had title to the property and capacity to
convey it.

To prove good faith, a buyer of registered and titled land need only show that he relied on
the face of the title to the property. He need not prove that he made further inquiry for he
is not obliged to explore beyond the four corners of the title. Such degree of proof of good
faith, however, is sufficient only when the following conditions concur: first, the seller is
the registered owner of the land; second, the latter is in possession thereof; and third, at
the time of the sale, the buyer was not aware of any claim or interest of some other
person in the property, or of any defect or restriction in the title of the seller or in his
capacity to convey title to the property.

Absent one or two of the foregoing conditions, then the law itself puts the buyer on notice
and obliges the latter to exercise a higher degree of diligence by scrutinizing the certificate
of title and examining all factual circumstances in order to determine the seller's title and
capacity to transfer any interest in the property. Under such circumstance, it is no longer
sufficient for said buyer to merely show that he relied on the face of the title; he must now
also show that he exercised reasonable precaution by inquiring beyond the title. Failure to
exercise such degree of precaution makes him a buyer in bad faith.

Involuntary dealings with registered land.

Section 69. Attachments. An attachment, or a copy of any writ, order or process issued by a
court of record, intended to create or preserve any lien, status, right, or attachment upon
registered land, shall be filed and registered in the Registry of Deeds for the province or city in
which the land lies, and, in addition to the particulars required in such papers for registration,
shall contain a reference to the number of the certificate of title to be affected and the registered
owner or owners thereof, and also if the attachment, order, process or lien is not claimed on all
the land in any certificate of title a description sufficiently accurate for identification of the land or
interest intended to be affected. A restraining order, injunction or mandamus issued by the court
shall be entered and registered on the certificate of title affected, free of charge.

NATURE OF ATTACHMENT
 Legal process of seizing another’s property in accordance with a writ or judicial order for
the purpose of securing satisfaction of a judgment yet to be rendered
 Writ of attachment is used primarily to seize the debtor’s property to seize the debtor’s
property in order to secure the debt or claim of the creditor in the event that a judgment is
rendered
 Jurisprudence: a party who delivers a notice of attachment to the RD and pays the
corresponding fees has a right to presume that the official would perform his duty
properly
 In involuntary registration, entry thereof in the day book is sufficient notice to all persons of
such adverse claim. The notice of course has to be annotated at the back of the
corresponding original certificate of title, but this is an official duty of the RD which may
be presumed to have been regularly performed

3 kinds of attachments

Kinds of Attachment (2012 BAR)

Preliminary
Attachment
It is one issued at the
commencement of the action or
at any time before entry of the
judgment as security for the
satisfaction of any judgment that
may be recovered in the cases
provided for by the rules. The
court takes custody of the
property of the party agains
whom the attachment is
directed.
NOTE: This is the regular form of
attachment which refers to
corporeal property in the
possession of the party.
(Regalado, 2012)
Garnishment A kind of attachment in which
the attaching party seeks to
subject his claim either the
property of the adverse party in
the hands of a third person
called the garnishee, or money
which the third person owes the
adverse party.
NOTE: Garnishment does not
involve the actual seizure of the
property which remains in the
hands of the garnishee. It refers
to money, stocks, credits and
other incorporeal property
which belong to the party but are
in the possession or under
control of a third person.
Garnishment does not lie against
the funds of the regular
departments or offices of the
Government, but funds of public
corporations are not exempt
from garnishment. (PNB v.
Palaban, et al., G.R. No. L-33112,
June 15, 1978; Regalado, 2012)
Levy on
execution
The process after judgment has
become executory by which the
property of the judgment obligor
is taken into the custody of the
court before the sale of the
property on execution for the
satisfaction of a final judgment.
Pursuant to a writ of execution,
the sheriff or an officer of the
court appropriates the property
of the judgment debtor as a
preliminary step to the sale on
execution of the property.