When the Deed of Sale is not notarized, is it valid? This is one of the questions I received from my readers and I already answered the inquiry. I think I should make a blog on the topic because this is a common issue when you buy a property. So, let us discuss this topic. QUICK ANSWER
(1) Notarial of the Deed of Sale is not required for the validity of the contract. What is important is the parties agree on the transaction of the sale of the parcel of land and its improvements (e.g. house).
(2) Notarial of the Deed of Sale is required for the registration of the property. You need it when you transfer the title under your name as required by the Property Registration Decree.
DISCUSSION
I. NOTARIAL OF DEED OF SALE IS NOT REQUIRED FOR VALIDITY OF CONTRACT
The notarization of a contract is not required to prove its validity as stated in Article 1356 of the Civil Code.
Art. 1356. Contracts shall be obligatory, in whatever form they may have been entered into, provided all the essential requisites for their validity are present. However, when the law requires that a contract be in some form in order that it may be valid or enforceable, or that a contract be proved in a certain way, that requirement is absolute and indispensable. In such cases, the right of the parties stated in the following article cannot be exercised.
Contracts are deemed obligatory, in whatever form they may have been entered into, provided all the essential requisites for their validity are present.
What are the essential requirements for a valid contract? Article 1318 of the Civil Code enumerates the following essential requisites and notarial is not one of them:
Art. 1318. There is no contract unless the following requisites concur: (1) Consent of the contracting parties; (2) Object certain which is the subject matter of the contract; (3) Cause of the obligation which is established.
The notarization converts the contract into a public document. Article 1358 of the Civil Code requires "acts and contracts which have for their object the creation, transmission, modification or extinguishment of real rights over immovable property; sales of real property..." should appear in a public document. This can be done through notarization. It suggests therefore that the sale of land must be notarized.
However, the absence of notarization does not affect the validity of the sale. Moreover, the public document is required only for the convenience and greater protection of the parties. In addition, registration is needed only to make the contract effective against third persons. In Tigno vs Aquino (G.R. No. 129416; November 25, 2004) the Supreme Court said:
... what then is the effect on the Deed of Sale if it was not notarized? True enough, from a civil law perspective, the absence of notarization of the Deed of Sale would not necessarily invalidate the transaction evidenced therein. Article 1358 of the Civil Code requires that the form of a contract that transmits or extinguishes real rights over immovable property should be in a public document, yet it is also an accepted rule that the failure to observe the proper form does not render the transaction invalid. Thus, it has been uniformly held that the form required in Article 1358 is not essential to the validity or enforceability of the transaction, but required merely for convenience. We have even affirmed that a sale of real property though not consigned in a public instrument or formal writing, is nevertheless valid and binding among the parties, for the time-honored rule is that even a verbal contract of sale or real estate produces legal effects between the parties. (emphasis added)
In short, the notarization of the Deed of Absolute Sale of real property (e.g. residential lot, house and lot) is valid between the parties even if it is not notarized.
However, I still suggest that when you enter into a contract in the sale of land, you must convert your private contract into a public document. Why? A public document enjoys the presumption of validity and regularity. Meaning: the public document is admissible in evidence in court without further proof of its authenticity and due execution. A public instrument is one which is acknowledged before a notary public or any official authorized to administer oath, by the person who executed the same.
II. NOTARIAL OF DEED OF SALE IS REQUIRED
Under Presidential Decree No. 1529 or Property Registration Decree, it is necessary for the Deed of Sale to be notarized. Section 112 states:
Section 112. Forms in conveyancing. The Commissioner of Land Registration shall prepare convenient blank forms as may be necessary to help facilitate the proceedings in land registration and shall take charge of the printing of land title forms.
Deeds, conveyances, encumbrances, discharges, powers of attorney and other voluntary instruments, whether affecting registered or unregistered land, executed in accordance with law in the form of public instruments shall be registerable: Provided, that, every such instrument shall be signed by the person or persons executing the same in the presence of at least two witnesses who shall likewise sign thereon, and shall acknowledged to be the free act and deed of the person or persons executing the same before a notary public or other public officer authorized by law to take acknowledgment. Where the instrument so acknowledged consists of two or more pages including the page whereon acknowledgment is written, each page of the copy which is to be registered in the office of the Register of Deeds, or if registration is not contemplated, each page of the copy to be kept by the notary public, except the page where the signatures already appear at the foot of the instrument, shall be signed on the left margin thereof by the person or persons executing the instrument and their witnesses, and all the ages sealed with the notarial seal, and this fact as well as the number of pages shall be stated in the acknowledgment. Where the instrument acknowledged relates to a sale, transfer, mortgage or encumbrance of two or more parcels of land, the number thereof shall likewise be set forth in said acknowledgment.
In short, "deeds, conveyances, encumbrances, discharges, powers of attorney and other voluntary instruments, whether affecting registered or unregistered land, executed in accordance with law in the form of public instruments shall be registerable"... meaning, the contract must be notarized.
In the case of Gallardo vs. Intermediate Appellate Court (G.R. No. L-67742; October 29, 1987), the Supreme Court ruled that an unnotarized private deed of sale of land is definitely not registerable under the Land Registration Act. In the said case, the Supreme Court affirmed the findings of the Court of Appeals. In particular, the non-registerable of the unnotarized private deed of sale, to with:
True, as argued by appellants, a private conveyance of registered property is valid as between the parties. However, the only right the vendee of registered property in a private document is to compel through court processes the vendor to execute a deed of conveyance sufficient in law for purposes of registration. Plaintiffs-appellants' reliance on Article 1356 of the Civil Code is unfortunate. The general rule enunciated in said Art. 1356 is that contracts are obligatory, in whatever form they may have been entered, provided all the essential requisites for their validity are present. The next sentence provides the exception, requiring a contract to be in some form when the law so requires for validity or enforceability. Said law is Section 127 of Act 496 which requires, among other things, that the conveyance be executed "before the judge of a court of record or clerk of a court of record or a notary public or a justice of the peace, who shall certify such acknowledgment substantially in form next hereinafter stated."
Such law was violated in this case. The action of the Register of Deeds of Laguna in allowing the registration of the private deed of sale was unauthorized and did not lend a bit of validity to the defective private document of sale.
The above discussion only limits to the question of the importance of the notarial in the deed of sale of land (and its improvement, if any). It is for information purposes only under the general topic. You must consult your lawyer for your specific case. Should you need some assistance in buying a residential lot, house-and-lot, or condo unit, please contact us at 0908 301 7398 for free assistance.