Below is a comprehensive discussion of the key provisions and considerations you should look for when reviewing a Deed of Absolute Sale in the Philippines. Please note that while this write-up is based on Philippine laws and customary practice, it does not constitute legal advice. If you need further clarification or have a complex legal issue, it is best to consult a qualified attorney.

1. Definition and Purpose of a Deed of Absolute Sale

A Deed of Absolute Sale (also sometimes called a “Deed of Sale” or “Contract of Sale”) is a legal instrument that formalizes the transfer of ownership from a seller (the “Vendor”) to a buyer (the “Vendee”). In the Philippine context:

Absolute Sale means the sale is unconditional, and the title is transferred to the buyer upon execution and compliance with essential requisites (i.e., payment of the purchase price and necessary taxes/fees).
A Deed of Absolute Sale is typically used to transfer real property, such as land or a condominium unit, but the concept can also apply to personal property (e.g., vehicles).

2. Governing Laws

In the Philippines, the primary legal framework for sales of property is found in:

The Civil Code of the Philippines (primarily Articles 1458 to 1637).
Presidential Decree No. 1529 (Property Registration Decree) and its subsequent amendments for registration procedures.
Local Government Code provisions for local taxes, including transfer taxes.
Bureau of Internal Revenue (BIR) Regulations for capital gains tax, documentary stamp tax, and other relevant taxes.

3. Essential Elements of a Valid Sale

Under the Civil Code, a contract of sale has the following essential elements:

Consent (Offer and Acceptance) – The seller and the buyer must agree on the terms without defects in consent (no fraud, mistake, or undue influence).
Object – The property to be sold must be determined or determinable.
Cause or Consideration – The price must be certain, in money or its equivalent.

If any of these elements is missing, the contract (or Deed of Absolute Sale) may be declared invalid or unenforceable.

4. Important Clauses and Provisions in a Deed of Absolute Sale

4.1. Parties to the Contract

Correct Identification
Make sure that the complete names, addresses, civil status, and citizenship of both the seller and the buyer are correctly indicated. If a party is married, the spouse’s name (and marital consent, if applicable) often needs to be reflected to avoid complications.
Capacity to Enter into a Contract
Each party must possess the legal capacity to contract (e.g., of legal age and mentally competent). If one of the parties is a juridical entity (like a corporation or partnership), ensure that the signatory has authority (through a Board Resolution or Secretary’s Certificate) to represent the entity.

4.2. Description of the Property

Technical Description and Title Details
The Deed should accurately describe the property, including the Transfer Certificate of Title (TCT) or Condominium Certificate of Title (CCT) number, the name of the registry of deeds, and the technical description (boundaries, lot number, survey plan references, etc.).
Area and Exact Measurements
The total land area must be clearly stated and should match the official title and survey. For condominiums, the floor area or unit number and any appurtenant common areas must be noted.

4.3. Purchase Price and Payment Terms

Stipulated Purchase Price
The agreed price must be stated in writing. In the Philippines, a Deed of Sale often indicates the “true and actual amount” to avoid disputes and tax penalties.
Payment Terms and Schedule
If there is a down payment or installment schedule, this must be clearly laid out. For an absolute sale, typically, the entire payment is acknowledged as received upon signing, but variations exist.
Earnest Money (if applicable)
This is a sum paid by the buyer to show genuine interest. Clarify whether the earnest money will form part of the purchase price or is forfeitable if the buyer defaults.

4.4. Representations and Warranties

Title and Ownership
The seller must represent that they are the lawful owner of the property, free from liens and encumbrances (e.g., mortgages, adverse claims, annotations).
Authority to Sell
Particularly important if the seller is not the registered owner on the title (e.g., an heir or an attorney-in-fact holding a Special Power of Attorney). The Deed should explicitly state the seller’s authority to dispose of the property.
Condition of the Property
Some Deeds may include clauses about the property’s current physical and legal condition. If there are existing tenants or occupants, this needs to be disclosed, as the buyer may assume responsibility.

4.5. Taxes, Fees, and Expenses

Capital Gains Tax (CGT) and Documentary Stamp Tax (DST)
Under Philippine tax law, the seller is generally responsible for the CGT, and the buyer is generally responsible for DST unless agreed otherwise. Be clear on which party will shoulder which tax.
Transfer Tax and Registration Fees
Typically, the buyer pays for the transfer tax (imposed by the local government unit) and registration fees with the Registry of Deeds. Again, these can be subject to mutual agreement.
Other Expenses
Include any other costs, such as notarial fees, lawyer’s fees, and other documentary requirements (e.g., homeowner’s association dues, condominium association fees).

4.6. Delivery and Transfer of Ownership

Delivery of Title and Documents
The contract usually indicates when and how the original owner’s duplicate certificate of title will be handed over.
Possession
It is crucial to stipulate when the buyer can physically possess the property. Typically, possession transfers upon payment of the price and signing of the Deed unless otherwise agreed.
Obligation to Transfer Title
The seller should be obliged to cooperate in effecting the transfer of ownership in favor of the buyer. This includes signing any additional documents necessary to register the sale.

4.7. Default or Breach Clauses

Remedies for Breach
The Deed should specify the remedies if one party fails to comply with the terms. For instance, if the buyer fails to pay, the seller may rescind the contract and keep any earnest money.
Penalties or Damages
If there is a delay in payment, the Deed might specify interest or penalty charges.

4.8. Dispute Resolution

Venue and Jurisdiction
The Deed can include a stipulation on where legal actions may be filed if disputes arise (e.g., courts of the city/municipality where the property is located or where one of the parties resides).
Alternative Dispute Resolution (ADR)
Some parties incorporate mediation or arbitration clauses to resolve issues quickly and cost-effectively.

4.9. Signatures and Notarization

Signatures of Both Parties
Ensure that the seller and buyer sign all copies of the Deed. Where a spouse’s consent is necessary (due to conjugal or community property), their signature should be included.
Notary Public
Under Philippine law, a Deed of Sale must be notarized to become a public document and for ease of registration with the Registry of Deeds. A non-notarized Deed of Sale is valid between the parties, but cannot be registered and will not be binding on third parties.

4.10. Other Special Provisions

Condition Precedent or Subsequent
If the sale is subject to certain conditions (e.g., the seller must secure a Clearance from the Home Development Mutual Fund or “Pag-IBIG” first), these should be stated.
Authority to Mortgage or Encumber Before Transfer
Sometimes, the buyer needs to mortgage the property to finance the purchase. The Deed might clarify whether the seller allows or disallows this prior to title transfer.
Survival of Warranties
A clause stating that the seller’s representations and warranties survive the execution of the Deed can protect the buyer in case the seller’s statements turn out false later on.

5. Post-Execution Steps

Once the Deed of Absolute Sale is properly signed and notarized, the buyer should proceed with:

Payment of Taxes
- BIR Filing and Payment: Capital Gains Tax (CGT) must be paid within 30 days from the sale, and Documentary Stamp Tax (DST) must be paid on or before the fifth day of the month following the notarization.
Apply for Tax Clearance
Submit the Deed and proof of tax payment to the BIR. Secure the Certificate Authorizing Registration (CAR).
Transfer Tax Payment
This is paid to the local government unit where the property is located.
Register the Sale with the Registry of Deeds
Submit the notarized Deed, CAR, and payment receipts. The Registry of Deeds will issue a new TCT or CCT in the buyer’s name.
Update Tax Declarations
After registering the property, the buyer should update the tax declaration with the local assessor’s office.

6. Red Flags and Common Pitfalls

Incorrect or Outdated Title Information
A mismatch in the technical description, TCT/CCT number, or the registered owner’s name can cause significant delays and disputes.
Unsettled Liabilities (Mortgages, Liens, or Encumbrances)
Always check the Encumbrance section on the title. Hidden or undisclosed liabilities can remain with the property even after the sale if not cleared.
Unpaid Real Property Taxes
Large outstanding real property tax liabilities may become the buyer’s problem if not cleared before the transfer.
Incomplete Signatures
Missing any required signatures (particularly from spouses or co-owners) can invalidate the Deed or block registration.
Failure to Pay Taxes on Time
Delayed payment of Capital Gains Tax or DST can lead to penalties, surcharges, and complications with the BIR.

7. Practical Tips

Conduct a Thorough Due Diligence
- Request a certified true copy of the title directly from the Registry of Deeds.
- Obtain updated tax declarations and check any property tax obligations.
- Verify if there are special laws (e.g., laws on land classification or agrarian reform) that affect the property.
Engage Professionals
- Consider hiring a lawyer experienced in real estate transactions.
- Engage a licensed real estate broker who can help verify property details and facilitate tax and registration processes.
Insist on Authenticity and Accuracy
- Use the final official measurements, property information, and keep an eye out for suspiciously low declared values.
- Ensure the seller’s name on the title and their identification documents match exactly.
Secure and Keep Copies
- Keep multiple notarized copies of the Deed.
- Make sure to secure official receipts for all tax payments.

Conclusion

A Deed of Absolute Sale is a cornerstone document in any real estate transaction in the Philippines. Ensuring that it is accurate, complete, and complies with the law can save you from protracted legal battles and unexpected liabilities. The most critical aspects—accurate identification of the parties, proper property description, clear payment terms, and a well-defined allocation of taxes and fees—can prevent common pitfalls. Always practice due diligence and consult with legal and real estate professionals to ensure that your interests are fully protected throughout the process.