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DEED OF SALE OF

REAL ESTATE

Legal Forms
Atty. Jessica Siquijor- Magbanua
Arellano University School of Law

Inocentes, Magsumbol, Magumun


Here are the…

General Principles
SALE OF REAL ESTATE/ PROPERTY
Generally, form in not important for the validity of a sale.

Reason?

Sale is a contract, and contracts, as a general rule, is perfected


by mere consent. No form is required for its validity.

What is the purpose of Forms in a Contract?

Formalities are intended for greater efficacy or convenience or


to bind third persons, if not done, would not adversely affect
the validity or enforceability if the contract between the
contracting parties themselves.
ARTICLE 1358, NCC

“Acts and contracts which have for their object the creation, transmission, modification or extinguishment of
real rights over immovable property must appear in public instrument”.

Q: Is Article 1358 a mandatory provision?

NO. The provision of Art. 1358 on the necessity of a public document is only for convenience, not for validity
or enforceability. It is not a requirement for the validity of a contract of sale of a parcel of land that this be
embodied in a public instrument.
(Dalion vs. CA (182 SCRA 872, 1990))

Q: What will be the effect of non-compliance with Art. 1358?

It merely gives cause of action to the party to the contract in a suit to sue to compel the other party to have
the document covering the contract, acknowledged before a Notary Public. (Biona vs. CA, 362 SCRA 29)

Article 1358 of the Civil Code which requires the embodiment of certain contracts in a public instrument, is
only for convenience; and registration of the instrument only adversely affects third parties, and non-
compliance therewith does not adversely affect the validity of the contract or the contractual rights and
obligations of the parties thereunder. (Estreller vs. Ysmael)

As to third persons:

A sale of a piece of land appearing in a private deed cannot be considered binding on third persons if it is not
embodied in a public instrument and recorded in the Registry of Deeds. (Santos vs Manalili)
FUNCTIONS OF A DEED OF SALE

A Deed of Sale operates as a formal or symbolic delivery of the


property sold and authorizes the buyer to use the document as
proof of ownership. (Dulay Enterprises vs. CA)

Q: How to make it a public instrument?

A: It must be properly subscribed and acknowledged before a


notary public, and when so acknowledged, a deed of sale
enjoys presumption of regularity.
Parties in a Deed of Sale
VENDOR VENDEE
Person/Entity that vends or sells; Is the person to whom something is sold;
The term “vendor” is most often used to a purchaser.
refer to a transaction involving real
property, as opposed to personal
property.
Parties in a Deed of Sale
Vendor/Seller: IF MARRIED the spouse of the seller must signify
his/her KNOWLEDGE and CONSENT to the sale.

Effect:
Without KNOWLEDGE and CONSENT: The contract is VOID. However,
it shall constitute as a CONTINUING OFFER and may be perfected upon
acceptance of the other spouse. Prescriptive period: None, as an
action or defense to declare a contract inexistent does not prescribe
(Art. 1410 NCC);
With KNOWLEDGE but without CONSENT: The contract is VOIDABLE;
the prescriptive period is 5 years from the date of the contract.
(Article 124, Family Code; Fuentes v. Roca, G.R. No. 178902, April 21
2010)

Vendee/Buyer: No spousal consent required


Requirements of Land Registration
Decree
Land Registration Decree Sec. 55 prescribes the content of the
Deed of Sale of Realty: (FNRCF)

1. Full Name
2. Nationality
3. Residence or Postal Address of the Vendor and Vendee
4. Civil Status; and
5. Full Name of Spouse, if any.

If the vendor is a Corporation: State whether it is legally


qualified to acquire private lands.
Deed of Sale of Registered Land
Contents (also applicable in the sale of personal
property): (Vet-PeCO-DeFA)
1. Venue and Title
2. Personal Circumstances
3. Consideration
4. Operative Words
5. Description of Property (specify the technical
description that appeared in the TCT or OCT;
6. Fact of Ownership
7. Acknowledgment
Deed of Absolute Sale
• A real estate purchase will not be complete without
the “Deed of Absolute Sale”.
• This legal form transfers property to one party
(including property rights). The deed serves as a proof
that the transfer occurred.
• Once the parties have signed the documents, it means
they fully understood that all rights to the property will
be transferred from the seller to the buyer.
• It is also important to note that the deed of absolute
sale should have no stipulated conditions attached
other than the buyer's payment.
Contract of Absolute Sale vs. Contract
to Sell vs. Conditional Contract of Sale
Contract of Absolute Contract to Sell Conditional Contract of
Sale Sale
A sale is absolute when A bilateral contract whereby It is conditional where the
no condition is imposed the prospective seller, while sale contemplates a
and ownership passes to expressly reserving the contingency, and in
the vendee upon ownership of the subject general, where the
delivery of the thing property despite delivery contract is subject to
subject of the sale (NCC, thereof to the prospective certain conditions, usually
Art. 1497). buyer, binds himself to sell in the case of the vendee,
the said property exclusively the full payment of the
to the prospective buyer agreed purchase price and
upon fulfillment of the in the case of the vendor,
condition agreed upon, that the fulfillment of certain
is, full payment of the warranties.
purchase price (Coronel v. CA,
G.R. No. 103577, October 7,
1996).
Here are the:

FORMALITIES
REQUIRED
Different Forms of Deed of Sale of Real
Estate
• Deed of Sale of Registered Land
• Deed of Sale of Unregistered Land
• Deed of Sale of Private Agricultural Land
• Deed of Sale of Registered Land Under Pacto
De Retro
• Deed of Sale of a Portion of Real Estate
• Sale of Land with Mortgage
• Sale of Condominium Unit
Sample Deed of Absolute Sale of
Registered Land
DEED OF ABSOLUTE SALE

KNOW ALL MEN BY THESE PRESENTS:

This DEED OF ABSOLUTE SALE is made, executed and entered into by:

(______NAME OF SELLER______), of legal age, single/married to (name of


spouse), Filipino, and with residence and postal address at (address of seller),
hereinafter referred to as the SELLER/VENDOR

-AND-

(____________NAME OF BUYER_________), Filipino and with residence and


postal address at (Address of Buyer), hereinafter referred to as the
BUYER/VENDEE.
Sample Deed of Absolute Sale
WITNESSETH:

WHEREAS, the SELLER is the registered owner of a parcel of land with improvements located at
_______(address of property)_____ and covered by Transfer Certificate of Title No. __________
containing a total area of ______________________________ (____) SQUARE METERS, more or less,
and more particularly described as follows:

TRANSFER CERTIFICATE OF TITLE NO. _____________

Property Descriptions

Transfer Certificate of Title No. __________


Location : ______________________________
Lot Area : ___________________________ square meters
Lot No. : ______________________________

Boundaries
North : ___________________________
East : ___________________________
West : ___________________________
South : ___________________________
Sample Deed of Absolute Sale
WHEREAS, the BUYER has offered to buy and the SELLER has agreed to sell the above
mentioned property for the amount of ______________________ (Php ________)
Philippine Currency;

NOW THEREFORE, for and in consideration of the sum of


(________________________________) (Php _____________) Philippine Currency,
hand paid by the vendee to the vendor, the SELLER DO HEREBY SELL, TRANSFER, and
CONVEY by way of Absolute Sale unto the said BUYER, his heirs and assigns, the
certain parcel of land together with all the improvements found thereon, free from all
liens and encumbrances of whatever nature including real estate taxes as of the date
of this sale.

IN WITNESS WHEREOF, the parties have hereunto affixed their signatures, this ___ day
of ____________, 20__ at _________________________, Philippines.

(Signature of Seller) (Signature of Buyer)


_________________ ___________________
Name of Seller Name of Buyer
Sample Deed of Absolute Sale
WITH MARITAL CONSENT:

(Signature of Seller’s Spouse) (Signature of Buyer’s Spouse)


________________________ _________________________
Name of Seller’s Spouse Name of Buyer’s Spouse

SIGNED IN THE PRESENCE OF:

_______________________ _____________________
Sample Deed of Absolute Sale
ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES )


CITY OF __________________ ) SS.

BEFORE ME, a Notary Public for and in the City of ___________________, this
___________________, personally appeared
______Seller/Vendor_________________ exhibiting to me his Passport No.
_____________ issued on ________________ and set to expire on
_____________, and ____ Buyer____ exhibiting to me her Passport No.
_____________ issued on _____________ and set to expire on
________________ as their competent evidence of identity bearing their
photograph and signatures, who are known to me and to me known to be
the same persons who executed the foregoing instrument and acknowledged to
me that the same is their own free act and voluntary act and deed.

This instrument, consisting of (__) pages, including the page on which this
acknowledgment is written, has been signed on the left margin of each and every
page hereof by the concerned parties and their witnesses, and sealed with my
notarial seal.
Sample Deed of Absolute Sale
WITNESS MY HAND AND SEAL, at the place and date above-written.

ATTY __________________________________
COMMISSION NO. _________________________
NOTARY PUBLIC for _________________________
UNTIL DECEMBER 31, 2007
OFFICE: _________________________
ROLL NO. 00001
IBP Lifetime Roll No. 1234567 ; 01/07/07 ; LA UNION
MCLE COMPLIANCE No. __________; July 7, 2016

Doc. No. 123


Page No. 69
Book No. VII
Series of 2007
Important Facts that should also be
stated in Acknowledgment
If the Deed of Sale covers more than one parcel
of land and the instrument consists of more
than one page, including the page where the
acknowledgment is written, these facts should
be stated in the acknowledgment.
Notes to Remember:
Every document of Transfer or Alienation of Real
Property Filed with the Register of Deeds shall be
accompanied with an extra copy of the same with
copy shall be transmitted by said officer to the City
or Provincial Assessor. (RA No. 456)

Q: Who shall bear the expenses for the execution


and registration of the sale? Vendor or Vendee?
A: It shall be borne by the vendors, unless there is a
stipulation to the contrary.
Deed of Sale of Unregistered Land
Similar in many aspect to that of Deed of Sale for Registered Land, however it
differs on the following:
a. Don’t mention that the vendor is a registered owner of certain parcel of
land.
b. As to Description, since there is no Certificate of Title, State the nature of
each piece of land and its improvements, situation, boundaries, area in
sq.meters, whether or not the boundaries are visible on the land by mean of
monuments or otherwise, what they consist, assessment made on the said
property for current years; assessed value of the property for the year.
c. Before “IN WITNESS WHEREOF” clause , we must state the following in the
Deed:

“ The above-described real estate, not having been registered under Act No.
496 nor under the Spanish Mortgage Law, the parties hereto have agreed to
register this instruments under the provisions of Sec. 194 of the Revised
Administrative Code, as amended by Act. No. 3344”.
Deed of Sale of Private Agricultural
Land
Notes to Remember:
In addition to the requisites of law for the due registration of
an ordinary deed of sale of land, a deed of sale of private land
must conform with the Constitution of the Philippines (Sec. 7,
Art. XII of the 1987 of the Constitution)

“Save in the case of hereditary succession, no private lands


shall be transferred or assigned except to individuals,
corporations, or associations, qualified to acquire or hold
lands of public domain”- that is only Filipino citizens, or the
corporations or associations at least 60% of the capital of
which is owned by such citizens.
Deed of Sale of Private Agricultural
Lands
• In case the vendee alleges to be a citizen of the Phils., the Deed of Sale must be
accompanied by an “Affidavit of the Vendee” stating how and when such citizenship of
the vendee has been acquired;
• Such affidavit is necessary only in case the vendee is a naturalized Filipino citizen. It is
not applicable to natural born citizen or even to natural born citizen of the Philippines
who lost his Filipino Citizenship because the latter may still be a transferee of private
lands, subject to limitations provided by law;
• If by naturalization, the “Certificate of Naturalization” of a Certified Copy thereon,
must be exhibited to the notary who shall make a notation of the particulars thereof in
the deed;
• If the vendee is personally known to the notary public to be a Filipino Citizen, these
requirements may de dispensed with, in which case the notary will recite such fact in
the body of acknowledgment or elsewhere in the deed.
• If the vendee is a juridical person, the deed must state that it has a constitutional right
to acquire public and private lands in the Phils, and when the Deed is to be registered in
the Register of Deeds, it must be accompanied by a “Certificate of the SEC” showing
that the Corporation or association is duly registered in his office, and by an “Affidavit of
the Treasurer” of the corporation/association stating that not less than 60% of the
capital thereof is owned by Filipino Citizens
DEED OF SALE OF REGISTERED LAND
UNDER PACTO DE RETRO
Just indicate this stipulation in the body of the Deed:
“The the vendor, for and in consideration of the sum of _______, to him in hand paid and
receipt whereof is hereby acknowledged, does hereby SELL, TRANSFER, and CONVEY, under
PACTO DE RETRO unto the said VENDEE, his heirs and assigns, the above described
propery….”

“That the vendor, in executing this conveyance, hereby reserves the right to REPURCHASE,
and the VENDEE, in accepting the same, hereby obligates himself to RESELL, the property
herein conveyed within a period of____ years from and after the date of this instrument for
the same price of______. Provided, however, that if the VENDOR shall fail to exercise his
right to repurchase as herein granted within the period stipulated, then this conveyance
shall become absolute and irrevocable, without the necessity of drawing up a new deed of
absolute sale, subjects to the requirements of law regarding consolidation of ownership of
real property.”

(NOTE:
Usually, such stipulation is place before “IN WITNESS WHEREOF” clause of the Deed)
(To affect 3rd persons, an affidavit of consolidation of ownership is necessary)
Deed of Sale of a Portion of Real Estate
This kind of Deed of Sale must be accompanied by
the “plan of the whole property” showing all the
portions or lots into which it has been subdivided,
and a technical description of or not, both verified
and approved by the Bureau of Lands.

Before the “IN WITNESS WHEREOF” clause or in


“NOW THEREFORE” clause, the remaining portion
of a parcel of land from which the above-described
portion was segregrated must also be described.
SALE OF LAND WITH MORTGAGE
• The parties are: VENDOR-MORTGAGEE and VENDEE-
MORTGAGOR
• Before the “IN WITNESS WHEREOF” clause, the following
stipulation may be stated:
“That in order to guarantee the fulfillment of the above
obligations, the VENDEE-MORTGAGOR does hereby
MORTGAGE unto the VENDOR-MORTGAGEE, his heirs and
assigns, the real estates hereinabove described, together with
all the buildings and improvements thereon, under the
express stipulation that if the said VENDEE-MORTGAGOR shall
well and truly pay or cause to be paid unto the VENDOR-
MORTGAGEE the aforesaid obligations, then this MORTGAGE
shall be of no further force and effect and shall be
enforceable in the manner prescribed by law”.
SALE OF CONDOMINIUM UNIT
• Parties:

DEVELOPER PURCHASER
Generally the absolute and The buyer of the
registered owner of the parcel condominium unit
of land to which the
Condominium project is set up

Described in the Body of the Contract the following:


a. As part of “Whereas” clause:
“Whereas the Developer intends to set up a condominium project (the “Project”) on
the above-described parcel of land consisting of ____ apartments or units (the
“Unit(s)”) in accordance with the provisions of RA 4726, otherwise known as
Condominium Act, and pursuant to an instrument dated___Doc No.___Page No.___,
Book No.___, Series of ___of the Notarial Register of _____ consisting of a Master
Deed (Part I) and Declaration of Restriction (Part II), copy of which is hereto attached
as Exhibit I and made an integral part hereof.”
Sale of Condominium
• Master Deeds= contains the incidents of the
condominium grant;
• Declaration of Restrictions= contain condition which
shall constitute as lien upon each condominium in the
project and shall inure to and bind all condominium
owners in the project; it shall provide for the
management of the project by any of the following:
condominium corporation; association of
condominium owners; board of governors elected by
condominium owners, or management agent elected
by owners or by the boards named in the Declaration.
Sale of Condominium Unit
In “Now therefore” clause:
“Now therefore, for an in consideration of the foregoing premises, and the payment of the
purchase price herein below specified, the Developer has agreed to sell, transfer and convey to
the Purchaser the Unit(s) described below, subject to the provision hereinafter set forth, to wit:
Sec. 1. The Unit(s) Purchased
(Describe the unit purchased, and describe also the assigned parking space opposite each unit)
Note: The parking space is assigned and set aside to the exclusive use of such unit as a Limited
Common Area pursuant to Master Deed.
Sec. 2. Price and Terms of Payment
(State the Down Payment and the Balance, Interest, Terms of Payment, Manner of Payment)
Sec. 3. Delivery
(The date the unit is to be delivered; Effect of failure to deliver; Notice to purchaser upon
completion of unit)
Sec. 4. Title to the Units
(Ex. Upon full payment by the Purchaser of the full amount of the purchase price stipulated
under Sec. 2 hereof and otherwise upon full compliance by the Purchaser of all obligations
herein, the Developer will convey the purchaser of all the rights and interest of the former in and
to the Unit(s) subject hereof, together with interest in the Common Areas and on the
Condominium corporation appurtenant to such Unit(s).
Sale of Condominium
Sec. 5. Taxes and Assessments
(Ex. The Purchaser, in proportion to his unit-holding as specified in Master Deed, agrees to pay to the
Developer all the taxes and assessments levied…)
Sec. 6. Assignment
(Ex. Purchaser may not assign the contract without written consent of the Developer)
Sec. 7. Entire Contract
(Ex. This serves as the entire agreement between the parties, Developer is not bound by any representation
not contained in this contract)
Sec. 8. Incorporation by Reference
(Ex. This contract shall be deemed subject to the provisions of the Condominium Act, the Master Deed, the
Declaration of Restrictions, and the By-Laws of the Condominium Corp.)
Sec. 9. Inflation or Devaluation
(Ex. In the event of the material variation in the value of Phil. currency due to inflation or devaluation, the
outstanding balance of purchase price herein stipulated shall be adjusted in favor of Developer…)
Sec. 10. Automatic Cancellation of this Agreement
(Ex. Should he purchaser fail to make the payment of any monthly installments together with interest and all
taxes and assessments stipulated, the Contract, by mere fact of non-payment expires by itself and become null
and void without the necessity of judicial declaration to the effect; If purchaser continue in possession he shall
become a mere intruder or unlawful detainer).
Important Reminders when it comes to Sales of
Condominium (Per Condominium Act)

Q: Who can own condominiums?


A:Filipino citizens and corporations can own
condominiums. Foreigners, however, are restricted to
owning no more than 40 percent of the total and
outstanding capital stock of a corporation, which must be
Filipino-owned and controlled.

Q: Who can own condominium units?


A:Again, Filipino citizens and corporations can own
condominium units. This time, however, foreigners, by
virtue of the Condominium Act, are allowed to purchase
and acquire condominium units.
Sample Deed of Conditional Sale
DEED OF CONDITIONAL SALE

Similar in many respects with Deed of Absolute Sale, however take


note of this major differences:

In the Body, you may state the following:

“That upon signing of this contract the VENDEE shall pay the VENDOR
a down payment of P _______; that the remaining balance shall be
paid in full upon transfer of title and tax declaration in the name of
the VENDEE;

That the VENDOR reserves his right of ownership over the subject
lands until full payment of the consideration;
Sample Contract to Sell
CONTRACT TO SELL

Similar in many respects with that of Absolute Sale, however it differs


mainly on the following:
In the Body, under “NOW THEREFORE” clause:

“Upon full payment of the total price, the SELLER/VENDOR shall sign
and execute a DEED OF ABSOLUTE SALE in favor of
the BUYER/VENDEE. TheSELLER/VENDOR shall likewise execute
and/or deliver any and all documents, including but not limited to the
original copy of Transfer Certificate of Title, Tax Declaration and all
other documents necessary for the transfer of ownership
from SELLER/VENDOR to the BUYER/VENDEE”.
Reminder:
“The parties are free to provide in the Deed of
Sale any stipulations, clauses, terms and
conditions that are not contrary to law, morals,
good customs, public order and public policy.
Here are…

THE REMEDIES
REMEDIES IN SALE OF REAL ESTATE/PROPERTY AFTER
THE CONTRACT OF SALE HAS BEEN PERFECTED
We have previously distinguish between Contract of Sale vs. Contract
To Sell vs. Conditional Contract of Sale.

Importance of Knowing the difference is the fact that there is


difference in the applicable remedies to Contract of Absolute Sale
contra Contract to Sell.
Contract of Absolute Sale and Contract to Sell
Conditional Sale
the remedies are: the remedies are:

1. Specific Performance 1. Resolution


2. Rescission 2. Damages
3. Damages
Remedies when condition on Price Payment not fulfilled:
contract of sale contract to sell Conditional
Contract of Sale
If seller had delivered since ownership was retained the non-
the subject matter by the seller by express happening of
previously without reservation until full payment of the condition
reserving title, it the price, and the contract is may be waived
would mean that extinguished, then no action is by the obligee
ownership has been necessary other than recovery of who may still
transferred to the possession in case buyer refuses seek specific
buyer, and seller to voluntarily deliver; performance.
cannot recover
ownership until and the non-happening of the
unless the contract is condition prevents the contract
resolved or rescinded from coming into existence (i.e.,
by court action. extinguishes the contract) and
consequently neither rescission
or specifi c performance may be
pursued
Other Differences
Contract of Sale Conditional Contract of Contract to Sell
Sale
the basis of rescission must the issue of breach is
be substantial breach. completely irrelevant

rescission may be pursued with forfeiture of the it becomes imperative that


amounts paid when that has been expressly provided the amounts paid must be
for. returned and there would
be no basis upon which to
retain them since there
was no breach upon which
a claim of damage may be
interposed.
Other Differences
Contract of Sale Conditional Contract of Contract to Sell
Sale
the applicable rules are the remedies of rescission
found in Articles 1191 and being incompatible
1592 providing for the thereto, the applicable
remedy of rescission, but rules are found in Articles
when there is a suspensive 1184 and 1545. The issue
condition, Article 1545 of whether the breach was
allows the seller to choose casual or serious under
between rescission or Article 1191 is completely
waiving the condition irrelevant in a contract to
sell
Applicability of Maceda Law

2 types of “qualified buyers” are afforded protection:

a. one who has paid at least 2 years of installments in all


transactions or contracts involving the sale or financing
of real estate on installment payments. Properties
covered include residential condominiums, apartments,
houses, townhouses, and house and lots, among others,
but excluding industrial lots, commercial buildings, and
sales of properties to existing tenants. (under Section 3)
b. one who has purchased any of the properties
enumerated above, but who has paid less than two
years of installments. (under Section 4)
Applicability of Maceda Law

In simple terms, as it is stated in Section 3, buyers are entitled to a refund, as well as


grace periods, so long as they have paid for at least two years.

On defaulting

buyers who default on their payments of installments are entitled to pay, without
additional interest, the unpaid installments due within the total grace period they
have earned. This total grace period has been fixed at the rate of a one-month grace
period for every one (1) year of installment payments made. However, this right can
only be exercised by the buyer once in every five years of the life of the contract and
its extensions.

On contract cancellation

If the contract is canceled, the seller shall refund to the buyer the cash surrender
value of the payments on the property, which is equivalent to 50 percent of the total
payments made. After five years of installments, an additional five percent for every
year of payments will be added, but not to exceed 90 percent of the total payments
made. For this to apply, the actual cancellation of the contract must take place 30 days
after receipt by the buyer of the notice of cancellation. This notice of cancellation or a
demand for rescission at that must be by a notarial act and upon the full payment of
the aforementioned cash surrender value to the buyer.
Applicability of Maceda Law

• In Section 4, it is highlighted that the buyer is entitled


to a grace period of not less than 60 days. This is
counted from the date the installment became due.

• The seller, on the other hand, is entitled to the


cancellation of the contract, if the buyer fails to pay the
installments due at the end of the grace period. The
seller, however, must first notify the buyer of the
cancellation, or of the demand for rescission of the
contract. This notice or demand must be by a notarial
act and shall only render the cancellation or rescission
effective 30 days after such notice or demand has been
made.
Applicability of Maceda Law

Q: Can you sell/assign the property in question?

Yes, since this is clearly explained in Section 5 – that those buyers


covered by Sections 3 and 4 have the right to sell or assign their rights
over the property to another person. They may also reinstate the
contract if they so choose by updating the account during the given
grace period. This transaction, however, must be made prior to the
actual cancellation of the contract. The corresponding deed of sale or
assignment must be done by notarial act. Yes, since this is clearly
explained in Section 5 – that those buyers covered by Sections 3 and
4 have the right to sell or assign their rights over the property to
another person. They may also reinstate the contract if they so choose
by updating the account during the given grace period. This
transaction, however, must be made prior to the actual cancellation of
the contract. The corresponding deed of sale or assignment must be
done by notarial act.