Who Pays for Notarization of a Deed of Sale in the Philippines? A Comprehensive Guide

In the Philippines, real property transactions must be in writing and notarized to comply with legal requirements and be enforceable. One of the most common documents executed for such transfers is the Deed of Absolute Sale (often simply referred to as a “Deed of Sale”). Notarization is crucial because a notarized Deed of Sale is considered a public document and enjoys greater weight of evidence in court, ensures authenticity, and facilitates the transfer of the property’s title.

However, an often-asked question is: “Who is responsible for paying the notarial fee?” Below is a comprehensive overview of the typical practices, legal references, and practical considerations on this topic.

1. Legal and Customary Framework

1.1 General Rule Under the Civil Code

Under Philippine law, there is no explicit provision in the Civil Code of the Philippines that categorically states which party must pay the notarial fees. Instead, it is common for contracts or mutual agreements to dictate how expenses are allocated.

Article 2208 of the Civil Code (pertaining to attorney’s fees and expenses of litigation) does not specifically address who pays for the notarial fee; it primarily covers scenarios where legal costs are awarded in a court proceeding.
Contractual Freedom: Parties are generally free to stipulate the allocation of incidental expenses, including notarial fees, in the Deed of Sale.

1.2 Common Practice

Despite the absence of a strict statutory rule, real estate transactions in the Philippines typically follow a widely observed practice:

Seller shoulders the capital gains tax (or the creditable withholding tax, depending on the circumstances).
Buyer pays for the documentary stamp tax, transfer tax, and registration fees for transferring the title into the buyer’s name.
The notarial fee is often shared or paid by the buyer as part of the closing costs. However, the final arrangement can vary.

In short, absent an agreement stating otherwise, both parties commonly agree on a convenient arrangement—sometimes it is split equally; other times, the buyer pays as part of their total “cost to close,” or the seller pays it if already handling the entire documentation process.

2. Importance of Notarial Acknowledgment

2.1 Effect of Notarization

Form and Enforceability: A deed of sale for the conveyance of real property must be in a public instrument (notarized) for it to be registerable with the Register of Deeds.
Evidentiary Weight: A notarized instrument is presumed regular, valid, and authentic on its face. This presumption can only be overcome by strong, clear, and convincing evidence to the contrary.

2.2 Registration Requirements

Notarized documents are required for the subsequent steps to effect a valid transfer:

Payment of Taxes: The Bureau of Internal Revenue (BIR) typically requires a notarized Deed of Sale to compute and collect the relevant taxes (capital gains tax, documentary stamp tax).
Register of Deeds: A duly notarized Deed of Sale is needed to facilitate the transfer of the property title from the seller to the buyer.

Without notarial acknowledgment, the deed is not valid for registration and does not confer the same benefits or presumptions.

3. Allocation of Notarial Fees

3.1 Contractual Stipulation

The most definitive way to determine who pays the notarial fee is a written stipulation in the Deed of Sale or any ancillary agreement. If the Deed of Sale explicitly states that the seller or buyer shall cover the notarial fee, that clause is typically controlling (provided it does not violate law, morals, or public policy).

3.2 Negotiation Factor

If the Deed of Sale does not specify who pays for notarization, parties often refer to:

Local Customs: It is common practice in some regions for the seller to handle the cost of notarization as part of preparing the Deed of Sale.
Industry Norms: In bigger transactions (e.g., through real estate agents or developers), the buyer might be accustomed to paying or dividing the cost of notarization as part of closing fees.
Practical Arrangements: If the buyer chooses the notary public and has a pre-existing relationship with them, the buyer might pay to expedite the process, or vice versa if the seller arranges the documentation.

4. Amount of the Notarial Fee

4.1 The Notarial Law and Guidelines

The Notarial Practice Law (A.M. No. 02-8-13-SC, effective 2005) and its relevant rules do not mandate a fixed notarial fee for real estate transactions.
The Integrated Bar of the Philippines (IBP) issues suggested notarial fees, but these can vary greatly depending on:
1. The amount or value of the property.
2. Local or regional IBP chapters’ guidelines.
3. Complexity of the transaction (e.g., if there are special provisions or extensive legal review required).

4.2 Usual Range

The notarial fee for a standard Deed of Absolute Sale can range from ₱1,000 to several thousand pesos, depending on the property’s value and the notary public’s professional rates. High-value transactions might command higher fees.

5. Relevant Considerations and Tips

Clarity in the Deed: To avoid disputes, the Deed of Sale should clearly state which party is responsible for the notarial fee.
Practice Varies by Region: Customary practices can differ by locality. Consult a local broker, real estate lawyer, or notary to understand local norms.
Bundle of Expenses: The notarial fee is usually small relative to the overall transaction costs such as taxes, registration fees, and related transfer costs. Thus, some parties simply divide “all incidental costs” evenly.
Choosing the Notary: Whoever is preparing or reviewing the documents may designate the notary, especially if they have an existing relationship. This choice can influence the amount of the notarial fee.
Due Diligence: Verify the notary’s authority and ensure they have a valid notarial commission within the jurisdiction where the property is located or the document will be executed. An improperly notarized deed can lead to legal complications.

6. Frequently Asked Questions

6.1 Can the buyer insist on splitting the fee if the seller refuses to pay?

Yes. By default, there is no hard rule; it comes down to negotiation. The seller can refuse, but in practice both parties often aim for a smooth closing and split costs in a way that is mutually acceptable.

6.2 Are verbal agreements about who pays the notarial fee valid?

Verbal agreements can be valid under some circumstances, but a written clause in the Deed of Sale is always preferable to avoid misunderstanding.

6.3 What if no agreement was made in the Deed, and the notarial fee remains unpaid?

Typically, neither party can complete the sale without notarization. In this situation, one or both parties will bear the cost to move forward. Failure to notarize means the Deed of Sale cannot be registered, effectively stalling the transfer of title.

6.4 Does the BIR or Registry of Deeds care who pays the notarization?

No. Their requirement is simply that the Deed of Sale must be duly notarized to process taxes and registration. They do not involve themselves in the arrangement or allocation of notarial fees.

7. Conclusion

In the Philippine context, there is no strict, uniform rule on who must pay for the notarization of the Deed of Sale. The guiding principle is freedom of contract and party autonomy—the parties themselves decide how to allocate costs, including notarial fees, either through explicit stipulations in the Deed of Sale or by following common practice.

If the Deed of Sale is silent on the matter, typical arrangements often see the buyer bearing the notarial cost or both parties splitting the fee. This flexibility underscores the importance of clear, written agreements to prevent confusion or disputes after the fact. By explicitly addressing notarial fees in the Deed of Sale, buyers and sellers can ensure smoother transactions and protect their interests during the property transfer process.