Philippine Real Estate Laws Ownership

27 Ways to Secure Valid IDs in the Philippines

posted Jul 12, 2017, 7:21 PM by cesar andes   [ updated Jul 12, 2017, 7:27 PM ]

27 Ways to Secure Valid IDs in the Philippines

To comply with the Banko Sental Ng Pilipinas (BSP), circular 564, a client shall be required 
to present at least two (2) valid identification documents (IDs) when engaging in a financial 
transaction with any bank. Valid IDs shall include the following:

1. Passport
2. Current Driver's License
3. Permit to Carry Firearms
4. New Social Security System card (SSS)
5. Government Service Insurance System (GSIS) eCard
6. Professional Regulation Commission (PRC) ID
7. New Tax Identification Number (TIN)
8. Postal ID
9. National Statistics Office (NSO) Authenticated Birth Certificate
10. NSO authenticated Marriage Ceritificate
11. Original and Unexpired National Bureau of Investigation (NBI) Clearance
12. Police Clearance
13. Digitized Voter's ID
14. Philhealth Card
15. Office of Senior Citizen's Affairs (OSCA) / Senior Citizen's Card
16. ACR Identity Card ( I-Card)
17. Consular ID
18. Barangay Certification
19. Philippine Overseas Employment Association (POEA)
20. Overseas Worker's Welfare Administration (OWWA)
21. OFW ID
22. Seaman's book
23. Government Office ID (e.g. Armed Forces of the Philippines, Home Development Mutual Fund (HMDF) ID
24. Certification from the National Council for the Welfare of Disabled Persons (NCWDP)
25. Department of Social Welfate and Development
26. PRA Special Resident Retiree Visa (SRRV) ID
27. Other Valid IDs issued by the Government and its instrumentalities

Home development mutual fund

posted Jul 12, 2017, 7:19 PM by cesar andes   [ updated Jul 12, 2017, 8:07 PM ]

Definition of Terms:

HDMF - Home development mutual fund, otherwise known as Pag-ibig

POP - Pag-ibig Overseas Program

CTS - Contract to Sell

REM - Real Estate Mortgage

CSA - Collection Service Agreement

OCT - Original Certificate of Title

CCT - Condominium Certificate of Title

PDC - Post Dated Checks

Buy Back Guaranty – A guaranty given by a Developer to HDMF that in case the
borrower is in default of payment, the former buys it back from the latter. In exchange of this guaranty, HDMF offers higher loan amount allowing buyers to produce less equity and makes the property more affordable.


1.1 Purchase of a fully developed lot not exceeding 1,000 square meters which should be within a residential area.

1.2 Purchase of lot and construction of a residential unit thereon.

1.3 Purchase of a residential house and lot, or condominium unit inclusive of parking slot, which may be old or brand new.


2.1 Must be a member for at least 24 months as evidenced by the remittance of at least 24 monthly contributions at the time of loan application.

2.2 A new member shall be allowed to make a lump sum payment of 24 months to avail of housing loan.

2.3 Not more than 65 years old at loan maturity and must be insurable.

2.4 Has the capacity to acquire and encumber real property

2.5 Has passed satisfactory background/credit check by the Developer and HDMF

2.6 Has no outstanding Pag-ibig housing loan, either as a principal or co-borrower

2.7 Has no outstanding multi-purpose loan in arrears at the time of loan application.

A qualified Pag-ibig member shall be allowed to borrow up to a maximum 

of P2,000,000.00 pesos which shall be based on the lowest of the following:

(1) The member’s actual need

(2) His loan entitlement

(3) Loan-to-collateral ratio

3.1 Loan entitlement based on contribution: For every P100.00 a member is entitled to P125,000.00
loan amount. For example, a member has a monthly contribution of P800.00 he is entitled to P1,000,000.00 maximum loanable amount; and for P1,600.00 contribution, he is entitled to P2,000,000.00 maximum loanable amount.

POP contributions made in foreign currency shall be converted to its peso equivalent on the date when payment was made, rounded off to the nearest dollar.
For loans up to P500,000.00 which shall be secured by a first real estate mortgage or contract to sell on the property which is bought from a developer and are covered by a buy back guarantee, the member’s loan entitlement shall be based solely on his Pag-ibig contributions.

3.2 Loan entitlement based on capacity to pay:
A member’s loan entitlement shall be limited to an amount for which the
monthly amortization shall not exceed 40% of the member’s net disposable
income as supported by:
a) Latest income tax return (ITR) for the year immediately preceding the date of loan application with attached W2 form, stamped received by the BIR.
b) Certificate of Employment and Compensation (CEC) or pay slip where applicable. The net disposable income shall be the gross family income less statutory deductions and monthly amortizations on outstanding obligations.

3.3 Loan to Collateral ratio

Loan amount: with buy back guaranty without buy back guaranty

Up to P150,000.00 100% 100%

Up to P225,000.00 100% 100%

Up to P750,000.00 100% 90%

Up to P 1 million 90% 80%

Up to P 2 million 90% 70%


Loan Amount and Interest Rate

Up to P 300,000.00 = 6%

Over P300,000.00 up to P 750,000.00 = 7%

Over P 750,000.00 up to P2,000,000.00 = 10.5%

Additional 2% interest shall be imposed if payment is made after due date.

The interest rates on loans over P300,000.00 up to P2,000,000.00 shall be

Fixed for the first five years of the loan. At the beginning of the 6th year,

HDMF shall reprice the outstanding balance of loans based on prevailing

Market rates at point of repricing.


Loan Amount and Term of Loan

Up to P500,000.00 maximum of 30 years

Up to P2,000,000.00 maximum of 20 years


6.1 The loan shall be paid in equal monthly amortizations in such amounts as may fully cover the principal and interest as well as insurance premiums over the loan period and shall be made whenever feasible, through salary deduction.

(a) The borrower shall execute authority to deduct the monthly loan amortizations from his salary and shall secure the conforme of his employer for the purpose.

(b) HDMF and the employer shall enter into a collection agreement stipulating among others, that the deduction for the employee’s Pag-ibig housing loan shall have priority over other obligations of the same nature after all statutory deductions have been effected.

6.2 The monthly amortization shall include the borrower’s Pag-ibig contributions in excess of the mandatory contributions as provided in 3.1

6.3 The first monthly amortization shall be deducted from the loan take out proceeds and succeeding monthly amortization shall commence on the month immediately following loan take out and shall be paid on that day of the month thereafter.

6.4 The monthly amortizations shall be paid to HDMF through any of the following modes:

(1) Accounts covered by a buy back guarantee:

a) Over the counter

b) If the developer has CSA with HDMF, payments shall be remitted to the Developer.

c) Salary deduction

d) Issuance of PDC initially to cover the 12 monthly amortizations. The Developer with CSA with HDMF shall safe keep the PDC’s, otherwise these PDC’s shall be in the possession of HDMF.

e) Auto debit arrangement with banks.

(2) Accounts not covered by buy back guarantee:

a) Salary deduction

b) Issuance of post dated checks initially to cover the 12 monthly amortizations

c) Auto debit arrangement with banks

The loan shall be secured by collateral consisting of the same residential properties to which the loan proceeds are applied.

7.1 For loans which are covered by a buy back guaranty and are secured by properties which are bought from developers, the security shall consist of a First Real Estate Mortgage or a Contract to Sell (CTS) on the subject properties.

7.2 For loans which are not covered by a buy back guaranty and are secured by properties which are bought from developers, the security shall consist of a Contract to Sell on the aforesaid properties fully covering the payment of the obligation.

The loan however, may be secured by a First REM instead of a CTS, and exempted from the buy back provision from loan default, provided any of the following conditions are being complied with:

(1) The borrower pays the advance amortizations for 24 months

(2) The loan-to-collateral ratio does not exceed 70%.

7.3 For loans which do not belong to the category of developers’ accounts, the security shall consist of a first REM on the subject properties and the property must be covered by an original OCT, TCT or CCT issued by the Register of Deeds, free from all liens and encumbrances and must be registered in the name of the borrower.

7.4 Accommodation mortgages shall be allowed only for borrowers who are related up to the first civil degree of consanguinity provided that the owner shall constitute the first mortgage as accommodation mortgagor, to secure the borrower’s obligation or give the latter the special power to do so and the borrower shall undertake and sign as a co-mortgagor.

7.5 The real estate taxes on the property must be updated as of the quarter immediately preceding the date of loan application, and yearly thereafter during the term of the loan. HDMF shall require the borrower to submit a copy of the official receipt of the real estate taxes paid for the preceding year not later than April 30 of the succeeding year. Failure of the borrower to submit proof of payment shall render the outstanding loan due and demandable.

7.6 A preliminary appraisal may be taken prior to actual development upon the request of the developer and payment of the corresponding appraisal fees.,

A collateral inspection to be undertaken upon completion of the house construction and land development for which a collateral appraisal report shall be issued.


8.1 A borrower shall be allowed to prepay his loan in full and in part without prepayment penalty

8.2 Accelerated payments – any amount paid in excess of the required monthly amortizations shall be applied automatically to the principal, unless otherwise expressly requested by the borrower. The treatment of the excess payment the borrower prefers must be noted properly in the Pag-ibig Fund receipt.

The borrower shall be considered in default when he or any of his co-borrowers fails to pay any three consecutive monthly amortizations and or monthly membership contributions and other obligations on the loan

9.1 For loans secured by Contract to Sell (CTS)

(a) Cancellation of CTS

(b) Call against the warranty of the developer to buy back the defaulting account.

9.2 For loans secured by REM

The outstanding loan together with accrued interest, penalties, fees and other charges shall be due and demandable, and shall constitute a lien on the Total Accumulated Value (TAV) of the member’s savings with HDMF.


The borrower shall pay the following fees and charges to HDMF.
P1,000.00 upon filing of application which shall be non-refundable if the loan is disapproved. Then P2,000.00 upon loan take out. Other expenses such as appraisal fees, notarial and documentation fees, as well as taxes pertinent to the sale and transfer of the property to the borrower.

A Pag-ibig member may avail himself of a second Pag-ibig housing loan provided he has fully paid his first housing loan, whether as a principal borrower or as a co-borrower.

A qualified Pag-ibig member who has an existing housing loan may avail himself of an additional housing loan for the following purposes:
(a) house construction or improvement of a house constructed on a lot purchased through a Pag-ibig loan; or
(b) home improvement

Steps in Pag-ibig Loan Application

A. Attend a loan counselling session at the Pag-ibig office concerned and be briefed on the eligibility. Accomplish a preliminary loan counseling questionnaire, Housing Loan Application (HLA) and Membership Status Verification Slip (MSVS). This will find out if one has an outstanding obligation with
Home Development Mutual Fund (HMDF). If eligible, secure the following documents:

* Members Status Verification Slip (MSVS)

* Notarized Housing Loan Application (HLA), Principal / Co-borrowers

* Latest payslip duly certified by the employer (Indicate printed name and designation of assigned signatory)

* Notarized Certificate of Employment Compensation (CEC)

* Income Tax Return (ITR) with W2 form

* Proof of billing address (Electric bills, PLDT. water bills, subscriptions, letters, credit card billing)

* Certified true copy of Condominium Certificate of Title (CCT). Latest title and its trace back through the Registry of Deeds

* Tax Declaration of the property and/or parking

* Tax Receipts of the property

* Contract to Sell (CTS)

* Special Power of Attorney (if applicable) (SPA). a) marriage contract / Birth Certificate. B. Valid ID's (Passport, License, Voters I.D. SSS I.D., Company I.D.

* Location Plan and vicinity map signed by surveyor

* Building, Electric, Sanitary Permits

* Building / Floor plans signed by the borrower

* Specification and Bill of Materials signed by a licensed Engineer.

* License to Sell, Certificate of Registration and Development Permit (if applicable)

* Note: Incomplete documents shall not be accepted. Submit two (2) sets of documents. Original / photocopy. Always bring the original for authentication and verification. Filing fee: P1,000

B. Receive Notice of Approval / Letter of Guarantee and sign loan documents

C. Proceed to BIR and present Deed of Absolute Sale (DOAS) between the developer of the condo unit and applicant for payment of documentary stamps and capital gains tax (if needed).

D. Proceed to the City Hall for payment of transfer tax

E. Proceed to the Registry of Deeds for payment of Registration Fees for the transfer of title.

F. Proceed to the Notary Public for notarization of Loan Mortgage Agreement (LMA) and annotation of mortgage with the Registry of Deeds.

G. Proceed to Assessor's office to secure new tax declaration in the name of the applicant.

H. Secure occupancy permit from the local government Unit.

I. Submit the following documents to Pag-ibig office concerned:

* Original Transfer Certificate of Title (TCT) or Condominium Certificate of Title (CCT) in case of a condominium unit, in the name of the applicant with annotated mortgage.

* DOAS with original Registry of Deeds stamp.

* New tax declaration in the name of the applicant.

* Updated real estate tax receipt (if applicable)

* Occupancy Permit

* Assignment of loan proceeds to the developer

J. Release of loan proceeds to the developer

F. Start amortization on the month immediately following loan take out / final loan release.

Important Note: The requirements above may appear voluminous and the steps may be troublesome to follow through. On the other hand, our group of consultants are trained to work closely with developers so that all these requirements will be complied with for our buyers's worry free transaction and minimal participation in the process. We do not charge any fees for processing or any commission whatsoever. The developers will take care of us and their prices remain the same even if sales are made without the agents or brokers.


posted Jul 12, 2017, 7:16 PM by cesar andes   [ updated Jul 12, 2017, 7:41 PM ]



P1,000 - upon filing of housing loan application with required documents (non-refundable)
P2,000 – appraisal fee (upon filing of loan application, non-refundable)
P2,000 – upon take-out (deducted from the loan proceeds) 

1. Housing Loan Application with recent ID photo of borrower/co-borrower (if applicable) (2 copies, HQP-HLF-068/069)
2. Proof of Income (see details at the back)
3. One (1) valid ID (Photocopy, back-to-back) of Principal Borrower and Spouse, Co-Borrower and Spouse, Seller and Spouse and Developer’s Authorized Representative and Attorney-In-Fact, if applicable
4. Transfer Certificate of Title (TCT) (latest title, Certified True Copy). For Condominium Unit, present TCT of the land and Condominium Certificate of Title (CCT) (Certified True Copy).
5. Updated Tax Declaration (House and Lot) and Updated Real Estate Tax Receipt (photocopy)
6. Contract-to-Sell or similar agreement between the buyer and seller
7. Vicinity Map/Sketch of the Property

1. TCT/CCT in the name of the borrower/co-borrower/s (if applicable) with proper mortgage annotation in favor of Pag-IBIG Fund (Owner’s Duplicate Copy)
2. TCT/CCT in the name of the borrower/co-borrower/s (if applicable) (Certified True Copy) with proper mortgage annotation in favor of Pag-IBIG Fund (RD’s copy)
3. Updated Tax Declaration (House and Lot) and Updated Real Estate Tax Receipt (Photocopy) in the name of the borrower/co-borrower/s, if applicable
4. Loan Mortgage Documents
a. Loan and Mortgage Agreement duly registered with Registry of Deeds with original RD stamp (HQP-HLF-162/163)
b. Deed of Absolute Sale duly registered with Registry of Deeds with original RD stamp
c. Duly accomplished/notarized Promissory Note (HQP-HLF-086/087)
d. Disclosure Statement on Loan Transaction (HQP-HLF-085)


* For Locally Employed, any of the following:
a. Notarized Certificate of Employment and Compensation (CEC), indicating the gross monthly income and monthly allowances or monthly monetary benefits received by the employee
b. Latest Income Tax Return (ITR) for the year immediately preceding the date of loan application, with attached BIR Form No. 2316, stamped received by the BIR
c. Certified One (1) Month Payslip, within the last three (3) months prior to date of loan application
NOTE: For government employees, the Certified One (1) Month Payslip, within the last three (3) months prior to date of loan application, must be submitted together with CEC or ITR.

* For Self Employed, any of the following Proof/s of Income:
a. ITR, Audited Financial Statements, and Official Receipt of tax payment from bank supported with DTI Registration and Mayor’s Permit/Business Permit
b. Commission Vouchers reflecting the issuer’s name and contact details (for the last 12 months)
c. Bank Statements or passbook for the last 12 months (in case income is sourced from foreign remittances, pensions, etc.)
d. Copy of Lease Contract and Tax Declaration (if income is derived from rental payments)
e. Certified True Copy of Transport Franchise issued by appropriate government agency (LGU for tricycles, LTFRB for other PUVs)
f. Certificate of Engagement issued by owner of business
g. Other document that would validate source of income

* For Overseas Filipino Workers (OFW), any of the following:
a. Employment Contract
-Employment Contract between employee and employer; or
-POEA Standard Contract
b. Certificate of Employment and Compensation (CEC)
-CEC written on the Employer/Company’s official letterhead; or
-CEC signed by employer (for household staff and similarly situated employees) supported by a photocopy of the employer’s ID or passport
c. Income Tax Return filed with Host Country/Government
NOTE: If documents are in foreign language/s, English translation is required.

ADDITIONAL REQUIREMENTS (if applicable only)

* Upon Loan Application
-For OFW members
a. Special Power of Attorney (SPA) notarized prior to date of departure. For OFW member abroad, a SPA notarized by a Philippine Consular Officer, or SPA notarized by a local notary (of the country where the member is working) but duly authenticated by the Philippine Consulate.
b. The Fund may also require any or a combination of the following documents:
*Payslip indicating income received and period covered
*Valid OWWA Membership Certificate
*Overseas Employment Certificate
*Passport with appropriate visa (Working Visa)
*Residence card/permit (permit to stay indicating work as the purpose)
*Bank remittance record
*Professional License issued by Host Country/Government
NOTE: If documents are in foreign language/s, English translation is required.
-Insurance Coverage
a. Health Statement Form (Medical Questionnaire)
*For borrowers over 60 years old
*For borrowers up to 60 years old, if loans is over P2.0 M to P6.0 M
b. Health Statement Form (Medical Questionnaire) and Copy of the result of medical examination conducted prior to assignment overseas as required by the employment agency
*For OFW borrowers over 60 years old
-For Purchase of Lot with Construction of House (PLCH)
b. Building Plans, Specification with Bill of Materials duly signed by the Licensed Civil Engineer or Architect
-For Properties Purchased from a Developer/Corporation/ Association
a. License to Sell (Applicable to Developer only)
b. Secretary’s Certificate on the Authorized Signatory of the Developer/Corporation/Association
c. One (1) valid ID of the Corporate Secretary and Authorized Signatory of the Developer/Corporation/ Association (Photocopy, back-to-back)

* Prior to Loan Release
-Surety bond (for properties that are subject to the lien imposed by Section 4 Rule 74 of the Rules of Court)
-Collection Servicing Agreement with Authority to Deduct Loan Amortization or Post Dated Checks, if applicable
-For Purchase of New Residential Unit only
a. Occupancy Permit
-For PLCH only
a. Occupancy Permit
b. Building Plans/Electrical/Sanitary Permits duly approved by the building officials

Philippine Real Estate Laws Ownership

posted Jul 12, 2017, 7:13 PM by cesar andes   [ updated Jul 12, 2017, 7:53 PM ]

Philippine Real Estate Laws Ownership, Practice, Taxes


Real Estate Ownership

Ownership is the independent right of a person to the exclusive enjoyment and control of a property including its disposition and recovery subject only to the restrictions established by law and rights of others.


Fee simple consists of the so called “bundle of rights” which are inherent in or appurtenant to ownership, without any limitations or restrictions other than those imposed by law or contract. The bundle of rights include the following: 1) Right to possess 2)Right to use and enjoy 3) Right to the fruits 4) Right to dispose 5) Right to vindicate or recover

1) Those imposed in general by the State in the exercise of the power of taxation, police power, and power of eminent domain.
2) Those imposed by law such as legal easement, requirement of legitimate succession, zoning, building code, rent control, urban and agrarian reform, subdivision regulations, escheat.
3) Those imposed by the grantor of the property on the grantee by contract, such as donation, last will, or usufruct.
4) Those imposed by the owner himself, such as voluntary easement, lease, mortgage.

Land, in its legal signification, extends from the surface downwards to the center of the earth and extends upwards indefinitely to the skies. The surface and subsurface of rights of an owner entitle him to construct thereon any works or make any plantations and excavations without detriment to servitudes and special laws. Air right is the right of an owner to use and control the air space over his land subject to the requirements of aerial navigation, laws, or contract.

Hidden treasure belongs to the owner of the land, building, other property on which it is found. When the discovery is made on the property of another, or of the State or any of its subdivisions, and by chance, one-half of the treasure shall be allowed to the finder. If the finder is a trespasser, he shall not be entitled to any share of the treasure. If the things found be of interest to science or arts, the State may acquire them at their just price, which shall be divided in conformity with the rule above stated. Hidden treasure, for legal purpose, is understood to be any hidden unknown deposit of money, jewelry, or other precious objects, the lawful ownership of which does not appear.

1) In General – The ownership of property gives the right by accession to everything which is produced thereby, or which is incorporated or attached thereto, whether naturally or artificially.
2) With Respect to Produce of Property – To the Owner belongs the:
a) Natural fruits – the spontaneous product of the soil
b) Industrial fruits – those produced by land cultivation or labor
c) Civil fruits – the rental income of buildings and /or lands
3) With Respect to Immovable Property:
a) The owner of the land on which anything has been built, sown or planted in good faith shall have the right:
aa) To appropriate as his own the works, sowing or planting after payment of indemnity provided by law, or
bb) To oblige the builder or planter to pay the price of the land. However, the builder of planter cannot be obliged to pay for the land if its value is considerably more than that of the building or planting. In such case, he shall pay reasonable rent if the owner does not choose to appropriate the building after proper indemnity. The parties shall agree on the terms of the lease and in case of disagreement, the court shall fix the terms thereof.
b) The owner of the land on which anything has been built, planted or sown
In bad faith may:
aa) Demand the demolition of the work or removal of the planting or sowing at the expense of the builder or planter, or
bb) compel the builder or planter to pay the price of the land and the sower, the proper rent. The landowner is also entitled to damages from the builder planter or sower.
cc) To the owners of land adjoining the banks of rivers belong the accretion which they gradually receive from the effects of the current of the water.
dd) Whenever a river, changing its course by natural causes, opens a new bed through a private estate, the new bed shall become a public dominion.

Modes of acquiring title

Private Grant –voluntary transfer or conveyance of private property by a private owner, such as sale or donation.

Public Grant – acquisition of alienable lands of the public domain by homestead patent, free patent, sales patent, or other government awards.

Involuntary Grant – acquisition of private party against the consent of the former owners, such as foreclosure sale, execution sale, or tax sale

Inheritance – acquisition of private property through hereditary succession
Reclamation - filling of submerged land, subject to existing laws and government regulations.

Accretion – acquisition of more lands adjoining the banks of rivers due to the gradual deposit of soil as a result of the river current

Prescription – acquisition of title by actual, open, continuous, and uninterrupted possession in the concept of owner for the period required by law

1. General Rule – Only Filipino citizens and corporations at least 60% capital of which is owned by Filipinos are entitled to acquire and own land in the Philippines.
2. Exceptions to the General Rule – Alien acquisition of real estate in the Philippines is allowed in the following cases:
a) Acquisition before the 1935 Constitution.
b) Acquisition thru hereditary succession if the acquiree is a legal heir.
c) Purchase of not more than 40% interest in a condominium project
d) Purchase by former natural born Filipino citizens subject to limitations prescribed by B.P. 185 and R.A. 8179
3. A Filipina who marries an alien retains here Philippine citizenship (unless the law of her husband’s country makes her assume the citizenship of her husband because of such marriage) and can therefore acquire real estate in the Philippines.

1. Mode of acquisition is not limited to voluntary deeds (such as sale or donation) but includes involuntary deeds (such as foreclosure, execution or tax delinquency sale)
2. Maximum area that may be acquired:
a) For residential purpose – 1,000 square meters of urban or one hectare of rural land.
b) For business purpose – 5,000 square meters of urban land or 3 hectares of rural land.
Business purpose refers to the use of land primarily, directly, and actually in the conduct of business or commercial activities in the broad areas of agriculture, industry, and services, including the lease of the land but excluding the buying or selling thereof.

In case of married couple where both spouses are former natural born Filipino citizens, both of them may avail of the right provided that the total acquisition shall not exceed the maximum area allowed.

A transferee who acquired urban or rural land for residential purpose while still a Filipino citizen may acquire additional urban or rural land for residential purpose which, when added to that already owned by him, shall not exceed the maximum area allowed by law.

Rule in case of double sale: The priority of rights in case of double sale of titled property shall be governed by the following rules:

1. The buyer who acquired in good faith and was the first to register the sale shall have a better right.

2.If none of the buyers registered the sale, the buyer who acquired to good faith and was the first one in possession shall have a better right.

3. If none of the buyers registered the sale or took possession, then the buyer who acquired in good faith and has the oldest title shall have a better right

Contract of Sale and Contract to Sell

1. Distinction: In a contract of sale, there is already a transfer or ownership. In a contract to sell, there is no transfer of ownership yet but merely a mutual promise to buy and sell

. Criterion: The test to determine whether a contract is a contract of sale or a contract to sell is not the manner of payment – whether cash or installment, but whether or not there is conveyance of ownership in the dispositive or grant clause of the deed. There is transfer of ownership when the dispositive clause states that the vendor “hereby sells, transfers and conveys unto the vendee in a manner absolute and irrevocable x x x”

Rights of buyer who has paid two years or more of installments:

1. To pay, without additional interest, any installment due within the grace period which is equivalent to one month for every year of installment payment, provided that such right can only be availed of once every five years.

2.To receive a thirty-day notarial notice of cancellation before his contract can be cancelled for delinquency

Rights of buyer who has paid less than 2 years of installment

1. The grace period to pay without additional interest due is fixed as 60 days

2. For cancellation of contract due to delinquency, the buyer is only entitled to receive a 30-day notarial notice of cancellation without right to receive the cash surrender value pf his payments

Right to refund under P.D. 957 & Maceda Law

Presidential Decree 957: Right to refund applies when the developer fails to complete the development within the required period. Refund is 100% of total payments

Maceda Law: Right to refund applies as a requisite for cancellation of contract due to delinquency when the buyer has paid at least 2 years. Refund is 50% of total payments; additional 5% per year after the 5th year.

MACEDA LAW (R.A. 6552) When the buyer is delinquent in his payment
Objective: To protect installment buyers of real estate against onerous and oppressive conditions.
Applicability – Applies to sale or financing of residential estate on installment payment covered by contract to sell and not sale with mortgage, but excluding industrial lots, commercial building, and sales to tenants under R.A. 3844.
Rights of buyer who has paid two years or more of installments: a) To pay, without additional interest, any installment due within the grace period which is equivalent to one month for every year of installment, provided that such right can only be availed of once every five years. b) To receive a thirty-day notarial notice of cancellation before his contract can be cancelled for delinquency. c) To receive the cash surrender value of his total payments before his contract can be cancelled due to delinquency. The refund is equivalent to fifty percent of total payments and, after the fifth year, an additional five percent per year of installment payment, but not to exceed ninety percent of total payments. d) To transfer or assign his right to the contract e) To register or annotate his contract on the title f) To pay, without additional interest, the full principal balance of the price before the term of the contract.

Rights of buyer who has paid less than two years of installment – The buyer has practically the same rights as a buyer who has paid two years or more of instalmments, except for the following differences:
a) The grace period to pay without additional interest on any installment due is fixed at sixty days
b) For cancellation of contract due to delinquency, the buyer is only entitled to receive a thirty-day notarial notice of cancellation but without right to receive the cash surrender value of his payments.

In the condominium concept of ownership, absolute ownership by a foreigner is allowed not to exceed forty percent interest in the project. The unit owner is the absolute owner of the space within the interior surface of his unit, but is only a co-owner of the exterior façade of the unit.

Absolute ownership of his unit
Co-ownership of land and common areas
Exclusive easement of the space of his unit
Non-exclusive easement to common areas for ingress or egress
Right to sell, lease, or mortgage his unit
Right to repair, paint, decorate the interior surface of his unit
Right to participate and vote in condominium corporation meetings

Pay the realty tax on his unit
Pay the insurance on his unit
Pay the shared monthly dues for maintenance of common areas/amenities/garbage disposal
Comply with use restrictions

P.D. 957 When the developer fails to complete the development within the required period
The refund is 100% of total payments less penalty interest plus legal interest of money


Capital Gains Tax - Income tax payable to the BIR for the sale, transfer, or other disposition of real estate classified as capital asset. .

Transfer Tax - A tax payable to the local government unit for sale, transfer or other disposition of real estate, whether capital or ordinary asset

Withholding Tax - A tax payable to the BIR on the sale, transfer or other disposition of real estate classified as ordinary asset.

Cost approach - a method of estimating the fair market value of an improvement by estimating present reproduction cost and deducting depreciation.

Economic life - The period during which a property can be profitably used or expected to generate more income than expenses.

Principle of diminishing returns - States that the application of more factors of production will tend to increase net income up to a certain point, beyond which the introduction of more factors of production will tend to decrease net income.

Principle of Progression - An appraisal principle which holds that the value of a property tends to be enhanced by association with superior properties

Principle of Regression - An appraisal principle which holds that the value of a property tends to be adversely affected by association with inferior properties.

Principle of Substitution - an appraisal principle which holds that the value of a replaceable property is inferred from the value of an equally desirable substitute property.

Presentation: concept – It is an orderly written or oral explanation of facts and figures that make a given property attractive to a prospect. Scope of coverage: 1. Property Identification – location, block number, lot number, lot area and dimensions, floor area, type of property, terrain, view, description of improvements, zoning classifications, facilities and amenities, titled or to be titled, price, terms, discounts, financing. 2. Advantages and benefits – quality of neighborhood, availability of public transportation, proximity to public marker / schools / hospitals, reasonableness of price. 3. For income properties – present potential income, return of investment. 4. Lot and vicinity plan, subdivision map, and pictures of the property

Demonstration: concept – It is the process of showing the property and pointing out its physical qualities and other advantages and benefits to arouse the desire to own it. Preparing for demonstration: Preparation of checklist of physical attributes and other data which may be the object of prospect’s inquiry. Update availability with the developer.
Organization of selling points to be emphasized
Anticipation of possible objections
Appointment with prospect and notice to owner
üSelection of ideal route to create a favorable impression of the neighborhood

Negotiation: concept – It is the process of reconciling the opposing views of the parties to a transaction as to price and terms. Items which should be covered in negotiation:
Price and terms and discounts
Expenses for execution and registration of sale
Date for delivery of property
Items included or excluded in a sale
Manner of payment & financing
•Update Payment of Eletricity, Water, Telephone
•Update Payment of Realty Tax
•Penalties or Forfeiture in case non-compliance
•Who is going to process the documents and deadline
•Appointments for Earnest money, or sales contract or deed f sale

Common difficulties
*Silent objection – hesitancy of the prospect to express his objection thereby depriving the broker of the opportunity to answer or overcome it
*Presence of supposed advisers of the prospect who give negative remarks which tend to undermine the transaction
*Failure or inability to analyze prospects real need and affordability
*Promise of a prospect to call the broker which is almost always broken
*Waiting advice from spouse or relative who were not present during the tripping
*Broker’s failure to identify time wasters such as window shoppers or speculators

*Persuading the prospect to visit the developer’s office to be able to hold the property with a reservation fee
*Securing papers/documents from developers such as copy of title, lot plan, deed of restrictions, copies of reservation agreement, deed of restrictions, contract to sell, deed of sale

*Securing papers/documents from prospects such as copy of income tax returns, bank statements, certificate of employment, copy of passport, TIN, residence certificate etc

*Arrangement of appointment between parties for contract signing and payment

Non-forfeiture of Payments. No installment payment of the buyerMay be forfeited by the developer when the buyer who is not delinquent, and after due notice, desists from further payment due to failure of the developer to complete within the required period. The buyer may at his own option, be reimbursed with total amount paid including amortization interest, with interest thereon at legal rate.

Mortgage of Project – No mortgage of any lot by the project owner/developer without permit to mortgage from HLURB. Permit to mortgage may be granted upon submission of proof that the loan proceeds will be used for development and verified undertaking by the mortgagee to release from the mortgage any lot/unit whose loan value has been paid. In case a mortgage was executed by owner/developer pursuant to HLURB permit to mortgage, the buyer may at his own option, pay his installmentdirectly to the mortgagee.

Alteration of Plans – any alteration in the approved plans relating to open spaces, facilities and other forms of development require prior approval from HLURB (now LGU) and written consent of Homeowners Asscociation

Advantages of condominium Concept
Enhance affordability by fractionalizing cost of land & building
Facilities utilities, amenities and services will cost less to build and maintain
Economy in land space. Families holding title contiguous lands of say 40 or 50 square meters by obtaining adequate housing by consolidating their lots and constructing a condominium project
Enhances marketability because foreigners can buy
Multiples saleable or rentable floor areas by as many storeys put upEliminates the routinary chores of daily maintenance, security, and garbage collection associated with single-detached dwellings

Rights of unit owner
1.Absolute ownership of his unit.
2.Co-ownership of land and common areas.
3.Exclusive easement of the space of his unit.
4.Non-exclusive easement to common areas for ingress or egress.
5.Right to sell, lease, or mortgage his unit.
6.Right to repair, paint, decorate the interior surface of his unit.
7.Right to participate and vote in condominium corporation meetings.

Obligations of condominium unit owner
1.Pay the realty tax on his unit.
2.Share the realty tax on the land and common areas.
3.Pay the insurance on his unit.
4.Share the insurance on the common areas.
5.Comply with use restrictions.
6.Pay dues and assessments.
7. Give other unit owners the priority right to buy his unit (right of first refusal). If so required by the master deed.

Dues and Assessments
1.The Deed of Restriction usually provides for two kinds of assessments:

a.) Regular assessment – a monthly obligation to fund ordinary project expenses, such as security, garbage collection, repair and maintenance of the common areas, electricity and water bills on the common areas and realty tax and insurance on the common areas.

b.) Special assessment – this is imposed as the need arises, such as the need for replacement of the generator.

Extent of interest in common areas

In the absence of any provision in the master deed, all unit owners shall have equal share in the common areas. If the intent is to pro-rate the unit owners’ interest on the common areas, such fact must be expressly provided in the master deed. The interest based on floor area of ownership is arrived at by dividing the unit area by the total floor area of all condominium units.

Condominium Corporation

Optional and Mandatory Requirement. The condominium corporation is optional if no unit will be sold in foreigners. However, the corporation is mandatory if some units, not exceeding forty percent interest in the project, will be sold to foreigners, in which case title to the land will be transferred in the name of the condominium corporation and thus comply with the constitutional mandate that corporations may acquire real estate provided that at least sixty percent of its capital or membership is Filipino
1.Principal Purposes: a) To hold title to the land and b) To set as the management body of the condominium project.
2.Conflict with Master Deed. In case of conflict between the articles of incorporation of the condominium corporation and the master deed of the condominium project, the latter should always prevail because:

a) It is the matter deed which gives birth in the condominium project. The project cannot exist without a master deed, but it can exist without a condominium corporation.

The condominium law specifically provides that the articles of incorporation and by-laws of the condominium corporation shall not conflict with the master deed.

Rate of Real Estate Tax

a) In Provinces – not exceeding one percent of assessed value.

b In Cities and Metro Manila Municipalities – not exceeding two percent of assessed value.

Special Education Fund Tax – an annual levy on real estate equivalent to one percent of assessed value which shall be in addition to the basic real estate tax

Date of Payment of basic realty tax and SEF tax:

a)May be paid in four equal quarterly installments on or before March 31, June 30, September 30, and December 31.

Payment in advance of the schedule is entitled to not more than twenty percent discount.

Delinquent payment shall be subject to interest of two percent per month but in no case to exceed thirty six months


Rate and Basis Tax – the rate of capital gains tax is six percent computed on the following basis:

a) Sale of Lot: - Basis is price per deed of sale or lot zonal value, whichever is higher.

b) Sale is Lot with improvement: - Basis is price per deed of sale, or lot zonal value plus improvement value, whichever is higher.

Conditions for exemption from Capital Gains Tax:

a) The seller is a natural person and the capital asset sold is his principal residence (family home).

b) The proceeds of the sale will be used to acquire / purchase construct a new family home.

c) The BIR is duly notified by the taxpayer within thirty days from the date of sale through a prescribed return, of his intention to avail of the tax exemption.

d) The tax exemption can only be availed of once every ten years.

If there is no full utilization for the proceeds of the sale, the portion of the gain presumed to have been realized from the sales shall be subject to capital gains tax

Installment Sale – A sale is considered on installment basis when the initial payment in the year of sale is twenty-five percent or less, in which case the transferor may opt to pay initially a portion of the tax in accordance with the following formula:

Initial Tax = Initial Payment x Total Tax

Total Price


Transactions Subject to Withholding Tax – Sale, exchange, or transfer of ordinary asset by natural persons, corporations, estate or trust.

Rates and Basis – Computed on the same basis as capital gains tax, the rates of creditable withholding tax.

Rate of Withholding Tax

0% - When the property sold is part of an HLURB registered socialized housing project of the seller

1.5% - When the seller is habitually engaged in real estate business and the price does not exceed P500,000.00

3.0% - When the seller is habitually engaged in real estate business and the price is over P500,000.00

5.0% - When the seller is habitually engaged in real estate business and the price exceeds P 2 million.

6.0% - When the seller is not habitually engaged in real estate business.

1.Concept – A tax payable to the local government (City or Provincial Treasurer) for the sale or other disposition of real estate, regardless of classification of the property.
2.The rate is not more than one percent for properties located in cities and municipalities in Metro Manila, and not more than one-half percent for properties outside of Metro Manila.
3.Basis is the contract price or market value per tax declaration whichever is higher. However, the local government may enact an ordinance prescribing as basis the contract price or zonal value, whichever is higher.

1.On Sales – P15.00 per P1,000.00 or a major fraction thereof, computed on the same basis as capital gains tax, and payable within five days following the month when the document was notarized.
2.On Mortgages – P20.00 for first P5,000.00 and P10.00 per P5,000.00 after the first P5,000.00

On leases – P3.00 for first P2,000.00 or fraction thereof, and additional P1.00 for every P1,000.00 or fraction thereof in excess of the first P2,000.00 for each year of the term of the lease

SALIENT FEATURES OF E-VAT RELATING TO REAL ESTATE Concept : Expand Value Added Tax is an indirect tax. It can be passed on to the buyer. However, it is should be inputed or built-in the price. The sales contract cannot stipulate the “E-VAT shall be for the account of the buyer.”

Transactions subject to E-VAT
1.Sale, barter or exchange or real estate held primarily for sale to customers in the ordinary course of trade or business where the annual gross sales or invoice exceed P750,000.00, except sale by real estate dealers and/or lessors of house and lot and other residential dwellings price P1.5 Million and below.
2.Lease of real estate for commercial use when the annual gross receipts exceed P750,000.00
3.Lease of real estate for residential use when the monthly rental per unit exceeds P10,000,000 and the annual gross receipts exceed P750,000.00

Liability as non-VAT taxpayer
1.In cases where the real estate dealer or lessor is not subject to E-VAT, he shall be liable as a non-VAT taxpayer subject to three percent tax. However, he has the option to register as VAT taxpayer subject to 10% VAT with the benefit of input tax.

Commissions of real estate brokers are subject to E-VAT if the annual gross receipts exceed P550,000.00, otherwise they shall be subject to seven percent tax.

Real estate dealers are not allowed to withhold the E-VAT from commissions of real estate brokers

Computations of E-VAT payable
1.E-VAT payable = output tax (sales receipts x 1/11) less input tax (purchase receipts x 1/11)

Credit for input tax can only be availed of if the payee is VAT-registered.

Basis of E-VAT
1.Cash/Deferred payment plan – Basis is the contract price or zonal value whichever is higher. In the absence of zonal value, basis shall be market value per tax declaration or contract price, whichever is higher.

Installment Plan – Basis is actual consideration received, including interests and other charges. However, upon full payment, if the zonal value is higher than the total receipts / collection, the additional E-VAT shall be paid accordingly

Expenses for execution and registration of sale In the absence of any stipulation to the contrary, the seller shall pay for the execution and registration of the sale.

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