What is a Contract to Sell (CTS), Deed of Sale (DOS), Transfer Certificate of Title (TCT), Condominium Owner's Copy of Certificate of Title (CCT), and a Tax
Declaration?
A Contract to Sell (CTS) is a contract document executed by both the seller and buyer where the seller promises and binds himself to sell to the buyer a certain
property upon the occurrence of several conditions to be fulfilled by the buyer or both the seller and the buyer, the non-fulfillment of which releases both from their
respective obligations under the terms of the contract. A contract to sell usually provides that title to and ownership of the property is not transferred to the buyer until
full payment of the contract price.
A Deed of Sale (DOS) Upon fulfillment of the sale-contract conditions, which is usually the full payment of the contract price, a DOS is executed by the seller
unconditionally transferring to the buyer title to and ownership of the property which is usually specifically described in terms of technical descriptions as contained in
the existing certificate of title to the property. A DOS is an absolute conveyance of title of ownership from the seller to the buyer, without reservations or conditions, and
is primarily executed by the seller and accepted by the buyer. The DOS might also contain certain restrictions on the use of the property by the owner as contained in
a subdivision mother title or declaration of restrictions previously recorded in the original or existing transfer certificate of title. In the case of condominium units, it is
accompanied by a certificate of the management body of the condominium project that such conveyance or sale is in accordance with the provisions of the
declaration of restrictions of such project.
A Transfer of Certificate of Title (TCT) is an instrument issued by the Registrar of Deeds for the city or province where the land is located declaring the absolute
ownership of a certain real property technically described therein. The TCT is prepared and executed by said Registrar and delivered to the buyer of the property as
the new owner upon submission by the buyer of the DOS and payment of corresponding fees and taxes. It is an indefeasible and conclusive proof of absolute title to
ownership of the property not only between the seller and the buyer but also between the buyer and the rest of the world. However, the TCT may also contain certain
restrictions on the exercise of ownership rights passed on from the previous TCT or mother title or liens and other forms of encumbrances.
A Condominium Owner’s Copy of Certificate of Title (CCT) is an instrument issued by the Registrar of Deeds for the city or province where the condominium project
is located containing a brief description of the land, the condominium conveyed, and name and personal circumstances of the condominium owner. It is issued
upon registration of the DO S conveying the condominium unit, payment of the proper fees, and annotation of the conveyance on the certificate of title covering the
land included within the subdivision project. It is proof of title to and ownership of the condominium unit described therein.
A Tax Declaration is a city or municipal receipt containing description of land where the real estate tax of which has been paid under the name of the payor who may
or may not have title to or ownership of the land being declared. It is a mere proof of possession of the land by the payor and not of ownership. It is not a title or
certificate of ownership.
Value-added Tax
Except for sale of residential lots with gross selling price below P1,500,000, or of residential dwellings with gross selling price below P2,500,000, the sale of real
property will include a value added tax (VAT) at the rate of 12% of the purchase price, zonal value of market value under the Tax Declaration of the property, whichever
is higher, payable on each sale of real property to the BIR.
Documentary Stamp Tax
Documentary Stamp Tax at the rate of 1.5% of the purchase price, zonal values, or the market values under the Tax Declaration of the property, whichever is higher, is
payable to the BIR within ten (10) days after the close of the month when the DOS is signed and notarized.
Local Transfer Tax
Local transfer tax is imposed by the local government unit where the property is located generally at the rate of 0.5% of the purchase price, zonal value, or TD value of
the property, whichever is higher.
Registration fees are payable to the Register of Deeds where the property is located at the rate of P8,796.00 for the first P1.7million plus P90.00 for every P20, 000.00
or fraction thereof in excess of P1.7 million.
Those entitled to own property as fully-fledged Philippine citizensPhilippine citizens who are residents of the Philippines
Philippine citizens who are residents of another country or working overseas who maintain their Philippine citizenship
Philippine dual citizensNatural-born Philippine dual citizens (Those born with a Philippine and foreign citizenship as a result of the concurrent application of the laws of the Philippines and a
foreign country which consider one a citizen of each country, e.g., those born to a Filipino and foreign parent).
Natural-born Philippine citizens who subsequently acquire foreign citizenship involuntarily (i.e., without undergoing foreign naturalization, e.g., marrying a foreign
national whose country automatically considers the Philippine spouse its own citizen) and who have not renounced their Philippine citizenship by any act or omission.
Natural-born Philippine citizens who voluntarily opted to acquire foreign citizenship but eventually chose to reacquire their natural-born Philippine citizenship status
under the Philippine Citizenship Reacquisition Act of 2003 (Republic Act No. 9225), regardless of whether or not they have renounced their previous foreign
citizenship.
There are no area limits on the ownership by Philippine citizens of non-agricultural private land. Private agricultural land acquisition must not exceed a combined total
of 5 hectares (50,000 square meters).Philippine corporations whose capital stock is 60% Filipino-ownedThere are no area limits on the ownership by Philippine corporations of non-agricultural private land. Philippine corporations may lease, but not own, public
agricultural land not exceeding 1,000 hectares for two 25-year periods and own private agricultural land not exceeding a combined total of 5 hectares (50,000 square
meters).
Those entitled to own property under limited conditions
Natural-born Philippine citizens who voluntarily opted to acquire foreign citizenship through naturalization, thereby renouncing their Philippine citizenship, and who do not choose to reacquire Philippine citizenshipUnlike Philippine citizens, former Philippine citizens who are natural-born Filipinos* are only entitled to own either 5,000 square meters of urban land or 3 hectares
(30,000 square meters) of rural land in the Philippines for business or other purposes. The land that may be acquired shall not be more than two parcels situated in
different municipalities or cities anywhere in the Philippines and shall not exceed the stated area limitations. Anyone who has Already acquired urban land is
disqualified from further acquiring rural land and vice versa. In the case of a married couple, the total land area that they are allowed to purchase cannot exceed the
above-stated limitations.
Foreign citizens and corporationsForeign citizens and corporations may acquire and own condominium units where the common area is owned by a condominium corporation, 60% of which is
Filipino-owned. They cannot directly acquire and own land in the Philippines except through intestate hereditary succession, i.e., inheritance by operation of Philippine
laws on intestate succession and not by testate (through a will or testament) succession. They may, however, indirectly own land by subscribing to a Philippine
corporation the capital stock of which is 60% Filipino-owned. They may also lease private land for a maximum of two 25-year periods.
Foreign citizens and corporations investing in the Philippines may lease private land for a 50-year period and can be extended for another 25 years.A natural-born Philippine citizen is one who does not have to do anything to acquire Philippine citizenship, in contrast to a naturalized Philippine citizen who has
to go through a naturalization process to acquire Philippine citizenship.
FOREIGN INVESTORSI am a foreigner, how do I invest in the Philippines?Foreigners may indirectly own land by investing in Philippine corporations registered with the SEC subject to the foreign equity restrictions for ownership of private
land. Such Philippine corporations may then acquire the land for example, Ownership of Condominium Units.Can foreigners directly buy Philippines properties?Unlike private land, foreign nationals and foreign corporations may directly own a condominium unit. However, the land on which the condominium building stands
must be owned by the condominium corporation. When a person buys a condominium unit, he automatically becomes a member of the condominium corporation
which owns the land. Under Philippine law, foreigners are allowed to become members or stockholders of the condominium corporation which owns the land, but
only up to a maximum of 40% of the capital stock of the condominium corporation.
The transfer of a condominium unit shall include the transfer of the appurtenant membership or stockholding in the corporation. No transfer or conveyance of a
condominium unit shall be valid if the concomitant transfer of the appurtenant membership or stockholding in the condominium corporation to a foreigner causes the
alien interest in such corporation to exceed 40%.Seeking to retire in the Philippines?Foreigners intending to retire in the Philippines may apply for the Special Resident Retiree's Visa ("SRRV"), a special non-immigrant visa issued by the Philippine
Bureau of Immigration to foreigners through the retirement program of the Philippine Retirement Authority ("PRA"). For the SRRV to be issued, the PRA requires that a
minimum investment shall be deposited in a PRA-accredited bank by the foreigner. It may only be withdrawn if the foreigner withdraws from the PRA retirement
program. Once issued, the SRRV entitles its holder to multiple entry privileges with the option to reside permanently in the Philippines.
Other benefits under the retirement program include exemption from exit clearance and re-entry permits; exemption from customs duties and taxes for the importation
of personal effects up to US$7,000; exemption from travel tax if the stay in the Philippines is less than a year from the last entry date; exemption from the Bureau of
Immigration's annual registration requirement; assistance in obtaining an Alien Employment Permit; tax-free remittance of annuities and pensions; and guaranteed
repatriation of the investment. The minimum amount of investment required is generally US$75,000, if the foreigner is 35 to 49 years old, and US$50,000, if 50 years
old and above. The minimum investment policy doesn't only apply to foreigners, former Philippine citizens and former Ambassadors are required a minimum
investment of US$1,500, while retired employees of the Asian Development Bank are required a minimum investment of US$25,000. The foregoing investment may,
at the option of the foreigner, be converted to Philippine Pesos or into an approved area of investment such as investment in shares of Philippine corporations as
above-discussed.Married to a Philippine National?Yes. But the Title of the property will be named under the spouse who has a Philippine citizen status.Foreign ownership - by succession?Ownership of assets (whether shares of stock or real property) may also be transferred through donation or succession.
The transfer of property by succession is subject to estate tax at a rate based on the total value of the net estate. The net estate is the total gross estate of the decedent
less allowable deductions. For purposes of computing the gross estate, the fair market value of real property transferred by succession shall be the higher of the
zonal value or the market value under the Tax Declaration of the real property. The estate tax imposed under Philippine tax laws shall be credited with any estate tax
that the estate of the non-resident decedent may have paid to the authority of a foreign country, subject to certain limitations.
LEGAL & DOCUMENTARY REQUIREMENTSWhat documents or requirements do I need to purchase a property, secure finance and/or finalize a purchase.The required document varies depending on the type of property you purchase and the sellers requirements.
- Reservation agreement form for non- auction properties.
- 1% reservation deposit (doesn't apply to auction properties) plus 10% exchange payment or as specified by the seller
- Buyer Information Sheet
- Housing and Land Use Regulatory Board Form (HLURB)
- Association Letter
- Life Form
- 1904 form TIN Number (if required)
- Additional Supplemental Agreement (If required)
- Bank Financing / Pag–ibig documents
- Credit Approval
- SPA (Special Power of Attorney)
- Signed computation sheet
- After your reservation, there will be additional documents required by the seller to complete a finance application or your purchase.
Requirements for non- natural born Filipinos are as follows:Same as above plus-
Photocopy of valid ID (preferably passport), containing spelling that is the same as Final Reservation Agreement and TIN validation
Tax identification number validation (E-TIN or 1904/1903), containing spelling that is the same as the Final Reservation Agreement and passport/ID
Photocopy of marriage contract (if applicable)
SEC registration certificate, articles of incorporation and by laws(if purchasing in a corporation)
If paying Cash or you have secured finance supplied elsewhere (ie. not the seller), you requirements are as follows:
Same of the above plus
Copy of Credit Approval or bank statement confirming cash balance for purchase or deposit
1% reservation deposit (doesn't apply to auction properties) plus 10% exchange payment or what ever payment is agreed upon by the seller
Balance of purchase price within 30 days, unless approved by the seller.
To qualify for a Pag-IBIG housing loan, a member must satisfy the following requirements:
a. Must be a member under the Pag-IBIG I for at least 24 months, as evidenced by the remittance of at least 24 monthly
contributions at the time of loan application.
b. Not more than 65 years old at the date of loan application and must be insurable; provided further that he is not
more than 70 years old at loan maturity;
c. Has the legal capacity to acquire and encumber real property;
d. Has passed satisfactory background/credit and employment/business checks conducted by the developer and the Pag-IBIG
Fund;
e. Has no outstanding Pag-IBIG housing loan, either as a principal borrower or co- borrower;
f. Has not availed of a Pag-IBIG housing loan that was foreclosed, cancelled, bought back due to default, or subjected
to dacion en pago, which shall include cases where the borrower is no longer interested to pursue the loan and
surrenders the property;
g. May have an outstanding Pag-IBIG multi-purpose loan but which is updated in payments at the time of loan application.
A member whose multi-purpose loan is in arrears shall be required to pay his arrears over the counter to update his account.
