“An ounce of prevention is better than a pound of cure.”

– Benjamin Franklin, a world famous polymath, Statesman and Diplomat

By Realttorney

A concerned real estate buyer sent me a query that goes this way: Is it okay to buy land with an open deed of sale?

According to GS, the prospective seller (MC) allegedly bought the land from the registered owner (IDJ) indicated in the land title, and IDJ merely executed an “open” deed of sale. At this point, GS showed photocopies of the SSS and Voter’s Identification card along with the “open” deed of sale.

I am writing about this as a service to all those who might be similarly situated today or in the future. Don’t be convinced to part with your hard earned money with such schemes or modus operandi.

For those unfamiliar with what an “open” deed of sale, it is a document commonly used in the sale of motor vehicles. While it is commonplace practice in buying and selling motor vehicles, the same cannot be said when it comes to the sale of real properties in the Philippines.

What do you need to know to make sure the Deed of Absolute Sale of land is a legal and executable document? Here are the three essential tips to know:

1. Everyone must know that the sale of real property in the Philippines should be in WRITING and subscribed by the party charged for it to be enforceable. This is based on Article 1403 (2) of our Civil Code.

2. The Deed of Absolute Sale should be executed by and between the seller and buyer. Typically, the seller should be the registered owner indicated in the land title and/or the tax declaration.

Of course, the seller and/or the buyer can be represented by their attorneys-in-fact, who must be duly appointment for such solemn duty of executing a Deed of Sale through a notarized Special Power of Attorney.

3. Both seller and buyer (or their attorney-in-fact) must appear before the notary public to sign the Absolute Deed of Sale in the presence of the said notary and their material witnesses.

In the alternative, the seller or buyer may appear at different times before the same notary public before the deed of sale is notarized. Or, the seller can appear before a notary public and have the deed of sale notarized and send the notarized deed to the buyer who then appears before a different notary public to sign the same deed and have it notarized separately.

What is the important take-away from this article? Remember that the sale of real property – embodied in Deeds of Absolute Sale – should be in writing and subscribed by the Seller (who is the registered owner indicated in the land title and/or tax declaration) or his/her attorney-in-fact (armed with a duly executed Special Power of Attorney).

A final word on the notarization of Deeds of Sale. In The Estate of Pedro C. Gonzales and Heirs of Pedro C. Gonzales vs. The Heirs of Marcos Perez, (G.R. No. 169681, November 5, 2009) our Supreme Court noted that when the Deed of Sale is not subscribed and sworn to before a notary public then it is not a public document, and therefore, does not comply with Article 1358 of the Civil Code.

In brief, Article 1358 requires the sale of real property or of any interest therein must appear in a public document.

Nonetheless, the Highest Court of the land stated that “it is a settled rule that the failure to observe the proper form prescribed by Article 1358 does not render the acts or contracts enumerated therein invalid. It has been uniformly held that the form required under the said Article is not essential to the validity or enforceability of the transaction, but merely for convenience.” [See James Estreller, et al. v. Luis Miguel Ysmael, et al., G.R. No. 170264, March 13, 2009; Tigno v. Aquino, 486 Phil. 254, 268 (2004)]”

“Stated differently, although a conveyance of land is not made in a public document, it does not affect the validity of such conveyance. Article 1358 does not require the accomplishment of the acts or contracts in a public document in order to validate the act or contract but only to ensure its efficacy.” [See The Estate of Pedro C. Gonzales and Heirs of Pedro C. Gonzales vs. The Heirs of Marcos Perez]

What is the efficacy that is ensured when a Deed of Sale is notarized? The usefulness of a notarized Deed of Sale is that it is among the required documents by the BIR to be submitted in order to transfer the land title and/or documents in the name of the seller to the name of the buyer. Without a notarized Deed of Sale, taxes cannot be paid and the transfer of the property from seller to buyer cannot be effected.

Just to be clear, a non-notarized Deed of Sale does not invalidate the meeting of the minds of the party to sell a particular real property. However, it is very much important to have the Deed of Sale notarized before a Notary Public so that it becomes a public document necessary for submission to the BIR to start the process of transferring ownership of the said real property.