S.Y.

2017-2018 REAL ESTATE TRANSACTIONS NOTES

Note: This is merely an encoded version of my hand-written
notes in the subject Real Estate Transactions. This was patterned
from the syllabus given to the class, supplemented by related
laws. Please refer to your own notes for corrections and to your
books/reviewers for supplement. Do not share to others to avoid
spreading beyond our control. Thank You!
INTRODUCTION
A. DEFINITION OF REAL ESTATE, LIMITATION
OF THE COURSE
c. Constitutional Limitation
 Regalian Doctrine - dictates that all lands of the public
domain belong to the State. That the State is the source
of any asserted right to ownership of land and charged
with the conservation of such patrimony. (Definition
from net)
 Lease by natural-born Filipinos: not more than 50
hectares
 Purchase/Homestead/Grant: not more than 12 hectares
 Juridical Entities: only as lessees
- Only for 25 years, renewable for not more than 25
years
- Not to exceed 1000 hectares

Real Estate - refers to the land and all those items which are
attached to the land. It is the physical, tangible entity, together
2. Former Filipino
with all the additions or improvements on, above or below the
 Consider RA 7042 and RA 8179
ground.
 Former natural-born Filipinos can still be transferees of
land
Coverage of the Course:
- Urban Land: 5000 sqm
1) Condominium
- Rural Land: 3 hectares/30,000 sqm
2) Subdivision
 For married spouses
3) Land Use and Zoning
- One of them may avail of the privilege granted,
4) Environmental Consequences
provided, that if both shall avail, the total area
acquired shall not exceed the maximum area fixed.
B. WHO MAY OWN REAL ESTATE (RA 8179)

1. Filipino
RA 8179
Section 10.
a. Definition of Filipino Citizen (Art. IV,
xxx
Constitution)
A transferee may acquire not more than two (2) lots which should be
situated in different municipalities or cities anywhere in the Philippines:
Section 1. The following are citizens of the Philippines: Provided, That the total land area thereof shall not exceed five thousand
[1] Those who are citizens of the Philippines at the time of the adoption (5,000) square meters in the case of urban land or three (3)
of this Constitution; hectares in the case of rural land for use by him for business or other
[2] Those whose fathers or mothers are citizens of the Philippines; purposes. A transferee who has already acquired urban land shall be
[3] Those born before January 17, 1973, of Filipino mothers, who elect disqualified from acquiring rural land and vice versa”.
Philippine citizenship upon reaching the age of majority; and
[4] Those who are naturalized in accordance with law.
3. Foreigner

Laws governing naturalization:  Foreigners can own lands by:

1) RA 9139 – Administrative Naturalization 1) Only by hereditary succession
2) CA 473 – Judicial Naturalization - Legal succession/Intestate Succession
3) RA 9225 – Citizenship Retention and Reacquisition Act - Not by Last Will and Testament
2) Under RA 8179 for former Natural-Born
b. Legal Capacity to enter into a Contract (Art. 37, Filipino Citizens
Civil Code) 3) Under the Parity Agreement for Americans
 Condominiums
Juridical Capacity/Juridical Relations – which is the fitness to  Not more that 40% of the total outstanding capital
be the subject of legal relations, is inherent in every natural stock shall be owned by foreigners
person and is lost only through death.  Usually 1 unit=1 share

Capacity to Act – which is the power to do acts with legal effect, Q: Can they own improvements?
is acquired and may be lost. A: Yes (e.g.: Buildings)
- Limited by age, insanity etc.
Q: What happens to the purchase of the land when the
buyer eventually becomes a Filipino Citizen?
A: The invalidity will be cured by the subsequent
acquisition of Filipino citizenship.
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S.Y. 2017-2018 REAL ESTATE TRANSACTIONS NOTES
4. Juridical Entity
Omnibus Investments Code (EO 226)
ART. 15. Philippine national shall mean a citizen of the Philippines
or a domestic partnership or association wholly-owned by citizens of the
Philippines; or a corporation organized under the laws of the Philippines
of which at least sixty per cent (60%) of the capital stock outstanding
and entitled to vote is owned and held by citizens of the Philippines; or a
trustee of funds for pension or other employee retirement or separation
benefits, where the trustee is a Philippine national and at least sixty per
cent (60%) of the fund will accrue to the benefit of Philippine nationals:
Provided, That where a corporation and its non-Filipino stockholders
own stock in a registered enterprise, at least sixty per cent (60%) of the
capital stock outstanding and entitled to vote of both corporations must
be owned and held by the citizens of the Philippines and at least sixty
percent (60%) of the members of the Board of Directors of both
corporations must be citizens of the Philippines in order that the
corporation shall be considered a Philippine national.
Filipino Juridical Entity:
1) That which is wholly owned by Filipinos;
2) That which at least 60% of the voting stock is owned by
Filipinos;
3) That which is organized abroad but wholly owned by
Filipinos; and
4) Trustee of funds for pension or other employee
retirement or separation benefits, where the trustee is a
Philippine national and at least sixty per cent (60%) of
the fund will accrue to the benefit of Philippine
nationals.
C. MODES OF ACQUIRING RIGHTS OF
OWNERSHIP AND POSSESSION OF REAL
ESTATE
Civil Code
Art. 712. Ownership is acquired by occupation and by intellectual
creation.
Ownership and other real rights over property are acquired and
transmitted by law, by donation, by estate and intestate succession, and
in consequence of certain contracts, by tradition.
They may also be acquired by means of prescription.
 May land be acquired by occupation? No (Art. 714,
Civil Code)
1. Sale
Civil Code
Art. 1458. By the contract of sale one of the contracting parties obligates
himself to transfer the ownership and to deliver a determinate thing, and
the other to pay therefore a price certain in money or its equivalent.
Art. 1459. The thing must be licit and the vendor must have a right to
transfer the ownership thereof at the time it is delivered.
 Restrictions as to who can be sellers and buyers
Civil Code
Art. 1489. All persons who are authorized in this Code to obligate
themselves may enter into a contract of sale, saving the modifications
contained in the following articles.
Where necessaries are those sold and delivered to a minor or other person
without capacity to act, he must pay a reasonable price therefor.
Necessaries are those referred to in Article 290.
Art. 1490. The husband and the wife cannot sell property to each other,
except:
(1) When a separation of property was agreed upon in the marriage
settlements; or
(2) When there has been a judicial separation or property under Article
191. (1458a)
Art. 1491. The following persons cannot acquire by purchase, even at a
public or judicial auction, either in person or through the mediation of
another:
(1) The guardian, the property of the person or persons who may be
under his guardianship;
(2) Agents, the property whose administration or sale may have been
entrusted to them, unless the consent of the principal has been given;
(3) Executors and administrators, the property of the estate under
administration;
(4) Public officers and employees, the property of the State or of any
subdivision thereof, or of any government-owned or controlled
corporation, or institution, the administration of which has been
intrusted to them; this provision shall apply to judges and government
experts who, in any manner whatsoever, take part in the sale;
(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior
courts, and other officers and employees connected with the
administration of justice, the property and rights in litigation or levied
upon an execution before the court within whose jurisdiction or territory
they exercise their respective functions; this prohibition includes the act
of acquiring by assignment and shall apply to lawyers, with respect to
the property and rights which may be the object of any litigation in
which they may take part by virtue of their profession.
(6) Any others specially disqualified by law.
 As to its object
Civil Code
Art. 1460. A thing is determinate when it is particularly designated or
physical segregated from all other of the same class.
The requisite that a thing be determinate is satisfied if at the time the
contract is entered into, the thing is capable of being made determinate
without the necessity of a new or further agreement between the parties.
Art. 1461. Things having a potential existence may be the object of the
contract of sale.
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S.Y. 2017-2018 REAL ESTATE TRANSACTIONS NOTES

Contract to Sell Conditional Deed Deed of Absolute

The efficacy of the sale of a mere hope or expectancy is deemed subject to of Sale Sale
the condition that the thing will come into existence. There is reservation
Delivery may be
There is reservation of ownership
made upon
The sale of a vain hope or expectancy is void of ownership
execution
Upon fulfilment of
 What can be sold? There is a necessity the suspensive
Ownership is
of executing condition, the
automatically
another contract to transfer of
Civil Code vested upon
transfer ownership ownership becomes
Art. 1462. The goods which form the subject of a contract of sale may be execution
automatic
either existing goods, owned or possessed by the seller, or goods to be
manufactured, raised, or acquired by the seller after the perfection of the
contract of sale, in this Title called "future goods." Note: In a Conditional Deed of Sale, for the purpose of having the
title of the seller cancelled and to register a new title in the
There may be a contract of sale of goods, whose acquisition by the seller buyer’s name, a Deed of Absolute Sale is still needed.
depends upon a contingency which may or may not happen.
2. Donation
 It is an act of liberality whereby a person disposes
 When delivered?
gratuitously of a thing or right in favor of another, who
 Traditio Longa Manu
accepts it. (Art. 725, Civil Code)
 Traditio Brevi Manu
 Waiver of rights is treated as a donation for tax
 Traditio Constitutum Possessorium
purposes.
 Acceptance
Civil Code  Vital in a Donation Inter Vivos
Art. 1497. The thing sold shall be understood as delivered, when it is  Can be made by personally or through an
placed in the control and possession of the vendee. (1462a) authorized person under a special power or a
general grant with sufficient power to accept the
Art. 1498. When the sale is made through a public instrument, the same.
execution thereof shall be equivalent to the delivery of the thing which is  Must be made during the lifetime of the donor.
the object of the contract, if from the deed the contrary does not appear or  The acceptance may be made in the same deed of
cannot clearly be inferred. donation or in a separate public document.

With regard to movable property, its delivery may also be made by the
delivery of the keys of the place or depository where it is stored or kept.
 Form of Contract of Sale: Public Instrument (Art. 1358,
Civil Code)
Q: If the sale was made through an improperly
notarized contract, can a seller still demand payment?
A: Yes
 Despite not being properly notarized, the sale is
still binding as to the parties and they are still
bound by their contract
CASE: Bitte v. Jonas
G.R. No. 212256; December 9, 2015
Not having been properly and validly notarized, the deed of
sale cannot be considered a public document. It is an accepted
rule, however, that the failure to observe the proper form does
not render the transaction invalid. It has been settled 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.
Contract to Sell vs. Conditional Deed of Sale v. Deed of
Absolute Sale
Void Donations (Art. 739, Civil Code)
1) Those made between persons who were guilty of
adultery or concubinage at the time of the donation;
2) Those made between persons found guilty of the same
criminal offense, in consideration thereof; and
3) Those made to a public officer or his wife, descendants
and ascendants, by reason of his office.
3. Succession
 A mode of acquisition by virtue of which the property,
rights and obligations to the extent of the value of the
inheritance, of a person are transmitted through his
death to another or others either by his will or by
operation of law. (Art. 774, Civil Code)
 The rights to the succession are transmitted from the
moment of the death of the decedent. (Art. 777, Civil
Code)
Kinds of Succession:
1) Testamentary
a) Notarial Will
b) Holographic Will
2) Intestate
a) Sole Adjudication
b) Extrajudicial Settlement
Who may be a testator?
 Those not expressly prohibited by law
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S.Y. 2017-2018 REAL ESTATE TRANSACTIONS NOTES
 At least 18 years of age and of sound mind
Intestate Succession
1) If a person dies without a will, or with a void will, or one
which has subsequently lost its validity;
2) When the will does not institute an heir to, or dispose of
all the property belonging to the testator. In such case,
legal succession shall take place only with respect to the
property of which the testator has not disposed;
3) If the suspensive condition attached to the institution of
heir does not happen or is not fulfilled, or if the heir dies
before the testator, or repudiates the inheritance, there
being no substitution, and no right of accretion takes
place;
4) When the heir instituted is incapable of succeeding,
except in cases provided in this Code. (Art. 960, Civil
Code)
Extrajudicial Settlement
 If the decedent left no will and no debts and the heirs are
all of age, or the minors are represented by their judicial
or legal representatives duly authorized for the purpose,
the parties may without securing letters of administration,
divide the estate among themselves as they see fit by
means of a public instrument filed in the office of the
register of deeds, and should they disagree, they may do
so in an ordinary action of partition. (Sec. 1, Rule 74)
Affidavit of Sole Adjudication
 If there is only one heir, he may adjudicate to himself the
entire estate by means of an affidavit filed in the office of
the register of deeds.
Summary Settlement of Estate of Small Value
 Whenever the gross value of the estate of a deceased
person, whether he died testate or intestate, does not
exceed ten thousand pesos.
4. Prescription
 Acquiring ownership through the lapse of time
Ordinary Prescription
 There is possession in good faith
 With just title
 Concept of an owner which should be open,
continuous, exclusive and notorious (OCEN)
 10 years
Extraordinary Prescription
 Possession in bad faith
 Without just title
 30 years
Tacking
 Presupposes a former owner occupying the land before
another became a possessor-in-interest. Here, the time of
possession of the former owner and the subsequent
possessor-in-interest are combined in order to comply
with prescription.
Continuous Possession
 If there is possession from a previous time up to a
present time.
5. Public Grant
 Homestead/Free Patent/TSA/Sales Patent
 Restriction as to Transfer
 The land cannot be transferred to another person
not qualified under the law, within 5 years from
the grant
 Exception: by way of hereditary succession
6. Involuntary Grant
Expropriation
 It is the taking of private property by the government
for just compensation when it is for a public purpose.
 Just Compensation- full and fair equivalent of the
property taken from its owner by expropriation.
 Owner’s loss as the measure
Foreclosure – a remedy available to the mortgagee by which he
subjects the mortgaged property to the satisfaction of an
obligation.
 Judicial – Mortgagee files as action for the court to
seize the property and have it sold and the proceeds be
applied to the obligation
 Right of Redemption
1) Bank: 1 year from date of registration
2) Not a bank: no right of redemption but
merely Equity of Redemption (90-120 days
from ______)
 Extrajudicial – to sell a property inserted in a real estate
mortgage
 Filed with the Executive Judge through the Clerk
of Court as the Ex-officio Sheriff
 Right of Redemption:
1) Natural person: 1 year from registration of
Certificate of Sale with the RD
2) Not natural: earlier than registration or 3
months from foreclosure, whichever is
earlier. (Simply, registration or 3 months
from foreclosure, whichever is earlier)
7. Lease
 One of the parties binds himself to give to another the
enjoyment or use of a thing for a price certain, and for a
period which may be definite or indefinite. However,
no lease for more than ninety-nine years shall be valid.
(Art. 1643, Civil Code)
 Consideration: payment of rentals
 Must be recorded with the RD
Q: If there was no recording, can a buyer of the land
terminate the lease?
A: Yes.
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S.Y. 2017-2018 REAL ESTATE TRANSACTIONS NOTES
 Lease is binding to 3rd persons only when there is
registration. Thus, when there is no registration,
the buyer will not step into the shoes of the lessor.
Unlawful Detainer
 Grounds for Judicial Ejectment:
1) The lease period has expired;
2) The failure to pay rent;
3) Violation of any of the conditions of the contract;
and
4) Lessee uses thing in manner not stipulated.
 Filed within 1 year from last demand
 Jurisdiction: MTC regardless of the assessed value of
the property
 Right of possession only can be decided upon.
Q: If any of the grounds are present, does the lessor have the right
to padlock the door?
A: No. The lessor might be subjected to a criminal case of
Coercion.
 Remedy: File an Unlawful Detainer case
Q: Is demand necessary when the ground is the expiration of the
lease?
A: No. Demand is only necessary for the other grounds, other
than #1.
Tolerance as another ground for an unlawful detainer case
 Requirement: Demand Letter
 The demand letter makes the stay unlawful
 Tolerance must first be proved because otherwise,
it will be considered as a case for Forcible Entry
since possession becomes unlawful from the very
beginning.
Implied Lease
 Lessee stays beyond the period of the contract and
the lessor allows the same
 Period: depends upon manner of the payment
(weekly, monthly, yearly)
Investor’s Lease Act (RA 7652)
 Any foreign investor investing in the Philippines
shall be allowed to lease private lands (Sec. 4)
 Incentive for investing
 No lease contract shall be for a period exceeding
fifty (50) years, renewable once for a period of not
more than twenty- five (25) years.
 The leased area shall be used solely for the
purpose of the investment upon the mutual
agreement of the parties
 “Investing in the Philippines” shall mean making
an equity investment in the Philippines through
actual remittance of foreign exchange or transfer
of assets, whether in the form of capital goods,
patents, formulae, or other technological rights or
processes, upon registration with the Securities
and Exchange Commission
8. Usufruct
 It gives a right to enjoy the property of another
with the obligation of preserving its form and
substance, unless the title constituting it or the law
otherwise provides.
9. Accession
 The ownership of property gives the right by
accession to everything which is produced
thereby, or which is incorporated or attached
thereto, either naturally or artificially. (Art. 440,
Civil Code)
CERTIFICATE OF TITLE
Best proof of ownership over a property?
 Land: Certificate of Title
 Building/House: Tax Declaration
Annotations in the title
 Registration
 Serves as constructive notice
PD 1529
Section 51.
xxx
The act of registration shall be the operative act to convey or affect the
land insofar as third persons are concerned, and in all cases under this
Decree, the registration shall be made in the office of the Register of
Deeds for the province or city where the land lies.
 What may be annotated:
1) Conveyance
2) Mortgage
3) Lien
4) Attachment
5) Order
6) Judgment
7) Instrument/Entry
Adverse Claim
 By mere affidavit
 To apprise 3rd persons that there is a controversy over
the ownership of the land
 To protect/preserve the right of the adverse claimant
during the pendency of the controversy
 Must be able to show the ff.:
1) Claimant’s right/interest in a registered land
which is adverse to the title holder
2) Right arose subsequent to the date of
registration
 Money claim cannot be registered as an adverse claim
 Period of Validity: 30 days from date of registration
 However, cancellation is not automatic. Thus, it makes
as adverse claim valid until cancelled
 Cancellation is made by a verified petition in court
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S.Y. 2017-2018 REAL ESTATE TRANSACTIONS NOTES

Notice of Lis Pendens

 Shows that a property is involved in an action/suit RIGHTS AND OBLIGATIONS OF
 Notice to the entire world for them to deal with the
property at their own risk since the rights that they DRAMATIS PERSONAE
have acquired may be subjected to the result of the
action
 Purpose: to avoid inconvenience A. DEFINITIONS
 Deemed cancelled after final judgment in favor of the
defendant
1. Condominium
 Grounds for Cancellation: (Sec, 14, Rule 13)
 An interest in real property consisting of separate
1) Annotation was for purpose of molesting the title
interest in a unit in a residential, industrial or
of the adverse party
commercial building and an undivided interest in
2) Annotation is not necessary to protect the title of
common, directly or indirectly, in the land on
the party who caused it to be recorded
which it is located and in other common areas of
 Does not create a lien
the building. (RA 4726)
 Does not impose an obligation on the owner but
on the prospective buyer
2. Unit
 A part of the condominium project intended for
Rule 13 any type of independent use or ownership,
Section 14. Notice of lis pendens. — In an action affecting the title or including one or more rooms or spaces located in
the right of possession of real property, the plaintiff and the defendant, one or more floors (or part or parts of floors) in a
when affirmative relief is claimed in his answer, may record in the office building or buildings and such accessories as may
of the registry of deeds of the province in which the property is situated be appended thereto. (RA 4726)
notice of the pendency of the action. Said notice shall contain the names
of the parties and the object of the action or defense, and a description of
3. Project
the property in that province affected thereby. Only from the time of
 It means the entire parcel of real property divided
filing such notice for record shall a purchaser, or encumbrancer of the
or to be divided primarily for residential purposes
property affected thereby, be deemed to have constructive notice of the
into condominium units, including all structures
pendency of the action, and only of its pendency against the parties
thereon. (PD 957)
designated by their real names.

4. Common Areas
The notice of lis pendens hereinabove mentioned may be cancelled only
 It is the entire project excepting all units separately
upon order of the court, after proper showing that the notice is for the
granted or held or reserved. (RA 4726)
purpose of molesting the adverse party, or that it is not necessary to
protect the rights of the rights of the party who caused it to be recorded.
5. To Divide
 To divide the ownership thereof or other interest
Note: The above-mentioned annotations need not be made in the
therein by conveying one or more condominiums
Owner’s Duplicate Title as long as it is made with the title in the
therein but less than the whole thereof. (RA 4726)
possession of the RD
 Thus, always ask for the Certified True Copy of
Commercial and Industrial Condominium
the title with the RD to check annotations
 Includes shopping centers, professional offices,
residential units
Buyer in good faith
 No notice of another’s interest or right in a
Advantages of a Commercial Condominium
particular property
 Avoids limitations of lease, rent, expiration of
 Pays full and fair price
lease, and capricious landowners
 Purchaser cannot close his eyes to facts which
 Enable owners to project more accurately future
should put a reasonable man on guard and claim
costs
that he acted in good faith
 Owners have a say as to how their property will
(e.g.: In buying land where the title is not in the
be maintained
name of the seller, the buyer cannot disregard
such fact and later on claim good faith)
B. RIGHTS AND OBLIGATIONS

Process
1) Annotation of the Master Deed in the Title of the land;
2) Registration of the Project with the HLURB;
3) Submission of Condominium Plan to the HLURB for
approval;
4) Publication

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S.Y. 2017-2018 REAL ESTATE TRANSACTIONS NOTES
5) Certificate of Registration
6) Issuance of License to Sell
1. Obligation to have the Master Deed registered
 Sec. 4 of RA 4726 requires the registration of the Master
Deed
 Recorded in the Registry of Deeds of the province/city
in which the property lies
 The Master Deed must also be duly annotated in the
corresponding certificate of title of the land, if the latter
had been patented or registered under either the Land
Registration or Cadastral Acts
 Contents:
a) Description of the land on which the building or
buildings and improvements are or are to be
located;
b) Description of the building or buildings, stating
the number of stories and basements, the number
of units and their accessories, if any;
c) Description of the common areas and facilities;
d) A statement of the exact nature of the interest
acquired or to be acquired by the purchaser in the
separate units and in the common areas of the
condominium project. Where title to or the
appurtenant interests in the common areas is or is
to be held by a condominium corporation, a
statement to this effect shall be included;
e) Statement of the purposes for which the building
or buildings and each of the units are intended or
restricted as to use;
f) A certificate of the registered owner of the
property, if he is other than those executing the
master deed, as well as of all registered holders of
any lien or encumbrance on the property, that
they consent to the registration of the deed;
g) The following plans shall be appended to the deed
as integral parts thereof:
1) A survey plan of the land included in the
project, unless a survey plan of the same
property had previously be filed in said
office;
2) A diagrammatic floor plan of the building or
buildings in the project, in sufficient detail to
identify each unit, its relative location and
approximate dimensions;
h) Any reasonable restriction not contrary to law,
morals or public policy regarding the right of any
condominium owner to alienate or dispose of his
condominium.
2. Obligation to have the Project registered
 Merely proforma, there is already a format
 The owner or the real estate dealer interested in the sale
of lots or units, respectively, in such subdivision project
or condominium project shall register the project with
the Authority by filing therewith a sworn registration
statement. (Sec. 4, PD 957)
 The requirement in the Urban Development and
Housing Act to develop an area for socialized housing
equivalent to at least 20% of the total subdivision area
or total subdivision project cost does not apply to
condominium projects.
- The same is applicable only for subdivision
projects
3. Obligation to have the Condominium Plan
approved
 Merely proforma
 Rule III of the IRR of PD 957 provides for the
requirements for the approval of the Condominium
Plan
 Undertaking to commence the development within 3
years from the issuance of the development permit
4. Obligation to secure a License to Sell
 The owner or dealer to whom has been issued a
registration certificate shall not, however, be authorized
to sell any condominium unit in the registered project
unless he shall have first obtained a license to sell the
project within two weeks from the registration of such
project. (Sec. 5, PD 957)
Requirements: (Sec. 8, Rule IV, IRR)
a) Program of development (bar chart with S-curve, Gantt
chart/PERT-CPM, etc.) signed and sealed by licensed
engineer or architect indicating work activities,
duration and costing.
b) Affidavit of undertaking to perform the following:
1) Segregation of the individual titles for all lots or
units within the project;
2) Submission of proof that titles to the saleable lots
or units have been issued, which proof may
include a certification from concerned register of
deeds indicating the lots/blocks or units or data
similar to those required under the requirement
for Certificate of Registration only when required
by the Board;
3) Submission of a Certified True Copy of title of the
common areas/open space, which title shall
expressly indicate the kind of common use
approved therefor, on or before a definite date (to
be specified by applicant subject to approval by
the Board).
c) Duly accomplished and notarized fact sheet
d) Proof showing the required minimum level of
development before the issuance of license to sell: (Per
Board Res. No. 830-A, Series of 2009)
1) For subdivision projects – land clearing and
grubbing, road tracing and entrance gate if
included in the brochure or advertisement.
2) For condominium projects – excavation per
approved plan/excavation permit.
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S.Y. 2017-2018 REAL ESTATE TRANSACTIONS NOTES
5. Obligation to pay publication of notice of the
pending application
 Sec. 9, Rule IV, IRR
 HLURB will be the one to cause the publication
 The applicant will merely pay
 Two (2) newspapers of general circulation, one
published in English and another in Pilipino, once
a week for two (2) consecutive weeks
 A 3’ x 6’ billboard notice of the project shall be posted
on the project site until the issuance of the license to
sell.
 Failure to publish the notice of filing of registration
statement within two (2) weeks from receipt of notice to
publish issued by the Board, the owner/developer shall
be required to re-file the application for Certificate of
Registration.
Performance Bond
 Sec. 6, PD 957 and Sec. 12, Rule IV, IRR
 Necessary for the issuance of a License to Sell
 To guarantee the construction and maintenance of the
roads, gutters, drainage, sewerage, water system,
lighting systems, and full development of the
subdivision project or the condominium project and the
compliance by the owner or dealer with the applicable
laws and rules and regulations.
 May be in the following forms:
1) Surety bond callable upon demand amounting to
20%
2) Real estate mortgage to be executed by the
applicant as mortgagor in favor of the Republic of
the Philippines
- at least 20% of the total development
cost
3) Other forms
a) Cash Bond
b) Fiduciary deposit made with the cashier
and/or disbursing officer of the Board
c) A certificate of guaranty deposit issued by
any bank or financing institution of good
standing in favor of the board for the total
development cost
d) A letter from any bank of recognized
standing certifying that so much has been set
aside from the bank account of the applicant
in favor of the board which amount may be
withdrawn by the chief executive officer of
the board or by his duly authorized
representative, at any time the principal fails
or refuses to comply with his duties and
obligations under the bond contract; and
e) Any irrevocable credit line to be utilized in
the development of the project from any
bank of recognized standing and a
refinancing re-structuring program
indicating sources of funding from duly
accredited funding institutions.
Exempt Transactions (Sec. 7, PD 957)
 A license to sell and performance bond shall not be
required in the sale of a condominium unit by or for the
account of a mortgagee in the ordinary course of
business when necessary to liquidate a bona fide debt.
Note: The application for a certificate of registration must be
subscribed and sworn to
 If not under oath, there can be legal consequences
 Since there is a jurat in an application for a
certificate of registration, failure to comply with
the undertakings made in such would create
criminal liability for perjury and estafa
 Estafa because you made an assurance to comply
with your undertakings, thus, causing people to
part with their money
CASE: Sps. Co Chien v. Sta. Lucia Realty
G.R. No. 162090
January 31, 2007
6. The right to vote for an amendment or
revocation of the Master Deed (Sec. 4(2), RA
4726)
 The Master Deed is considered as the contract between
the condominium project and the unit owner
 Upon acquisition of the unit, the unit owner binds
himself to what is stated in the Master Deed
How to amend?
1) Notify the registered owners
2) Simple majority vote of the owners
 For residential or commercial use, per unit of
ownership basis; or
 In the case of mixed use, simple majority shall be
on a floor area of ownership basis
 E.g.: 5000m²
Simple majority: 2501m²
3) Submission of the amendment/revocation to the
HLURB and the City Engineer for approval before it
can be registered
7. Obligation of the unit owners to be bound by a
Declaration of Restrictions (Sec. 9(2), RA 4726)
 The Declaration of Restrictions must be registered on
the title of the land on which the project stands
 Consequence: binds all condominium owners and
constitutes a lien on all condominium owners
Mandatory Contents
1) As to management body
2) Voting majorities
3) Quorum
4) Notices
5) Meeting date
6) Other rules
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S.Y. 2017-2018 REAL ESTATE TRANSACTIONS NOTES
Permissive Contents
1) Matters as to the management body – how constituted
or qualified
2) Manner or procedure for amending restrictions
3) Independent audit of accounts
4) Reasonable assessments to meet authorized
expenditures
5) Matters as to liens
6) Partition and dissolution of the condominium
corporation
PURCHASE OF A CONDOMINIUM UNIT
 Includes:
1) Undivided interest in the common areas
2) Separate condominium unit
3) Membership in the condominium corporation
4) Easement of airspace
5) Easement of ingress, egress and support for
common areas
 Purchasers become owners of a unit and co-owners of
the common areas
 Consequences as owners (Sec. 6f, RA 4726)
 Each condominium owner shall have the exclusive
right to mortgage, pledge or encumber his
condominium and to have the same appraised
independently of the other condominium owner is
personal to him.
 Art. 486, Civil Code
 Each co-owner may use the thing owned in
common, provided he does so in accordance with
the purpose for which it is intended and in such a
way as not to injure the interest of the co-
ownership or prevent the other co-owners from
using it according to their rights. The purpose of
the co-ownership may be changed by agreement,
express or implied.
 Sec. 6e, RA 4726
 Each condominium owner shall have the exclusive
right to paint, repaint, tile, wax, paper or
otherwise refinish and decorate the inner surfaces
of the walls, ceilings, floors, windows and doors
bounding his own unit.
 What can be encumbered?
 The unit and the undivided interest in the
common areas
 Art. 493, Civil Code as to the effect of alienation or
mortgage as to the common areas
 xxx the effect of the alienation or the mortgage,
with respect to the co-owners, shall be limited to
the portion which may be allotted to him in the
division upon the termination of the co-
ownership.
CASE: Sunset View Condominium Corporation v. Campos
G.R. No. L-52361
April 27, 1981
Title of the Condominium
 Depends on how the common areas are held
1) If held in common by all the unit owners – title is
issued individually
2) If held by the condominium corporation – it is the
corporation that owns the common areas
- The unit owners are not direct owners of
the common areas
- Unit owners are merely given a
Condominium Owner’s Copy
8. Right to be issued a Condominium Owner’s
Copy
 The annotation as to conveyances are made in the
title covering the land and not in the
Condominium Owner’s Copy
 Annotation is made upon registration of the
conveyance of the condominium and the payment
of fees
9. Right to be issued title to land as co-owners
 This can be done only if the common areas are held by
the unit owners in common
 Sec. 19, RA 4726
 At the request of all the condominium owners and
upon surrender of all their "condominium
owner's" copies, cancel the certificates of title of
the property and issue a new one in the name of
said condominium owners as pro-indiviso co-
owners thereof
10. Exclusive easement of airspace
 Legal easement- exclusive easement to airspace
encompassed by the boundaries of the unit
 Such easement passes with the unit and is inseparable
from the same
 Effect: no easement to preserve scenic views or to
provide sunlight access for solar panels or to stop
neighbors from erecting trees and buildings
11. Easement of ingress, egress and support for
common areas
TRANSFER OF A CONDOMINIUM UNIT
12. Right to sell and dispose of the condominium
unit
 This right is absolute, however, subject to
limitations as provided by the Master Deed,
Declaration of Restrictions, and law.
 Limitations:
1) If the common areas are owned in common
by the unit owners
- Transfer can be made to Filipinos only
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S.Y. 2017-2018 REAL ESTATE TRANSACTIONS NOTES
- If a corporation, 60% of the outstanding
Area of unit and area of parking
capital stock must be owned by
space, if any (sqm)
Filipinos = Percentage of interest of
- Rationale: the sale of the condominium unit in the common areas
Total saleable area of all units +
unit comes with it an ownership over
Total area of parking lots
the land where the project stands, thus,
the constitutional prohibition as to
aliens  Ownership of the common areas determines the kind of
- Exception (can be transferred to aliens): title issued, as discussed earlier, and determines the
hereditary succession managing body
2) Owned by a corporation
- Foreigners can be transferees as long as 14. To be governed by a management body (Sec.
the 40% limitation is not violated 9, RA 4726)
 Another limitation under Sec. 6g, RA 4726 (Right
of First Refusal)
 Management bodies:
- Each condominium owner has also the
1) Condominium Corporation
absolute right to sell or dispose of his
2) Association of Condominium Owners
condominium unless the master deed
3) Board of Governors elected by the condominium
contains a requirement that the property
owners
be first offered to the condominium
owners within a reasonable period of
Condominium Corporation
time before the same is offered to
 The management body must be a corporation
outside parties  Like any other corporation
 No conveyance of condominiums or part thereof,  Must comply with the citizenship requirement
subsequent to the original conveyance thereof  Term of the corporation is co-terminus with the life of
from the owner of the project, shall be registered the condominium project, thus, as long as there is a
unless accompanied by a certificate of the
functioning unit
management body of the project that such
 Purposes:
conveyance is in accordance with the provisions
1) To hold the common areas
of the declaration of restrictions of such project.
2) Management of the project
(Sec. 18, RA 4726) 3) Other purposes which may be necessary
 Articles of Incorporation and By-laws must not be
violative of the Master Deed and Declaration of
COMMON AREAS Restrictions
- The Master Deed and Declaration of
13. Right to enjoy the common areas Restrictions are superior
 A unit owner ceases to become a shareholder when
 What are the common areas? they cease to be the owner of the unit
- Stated in the Master Deed - Such transfer must be recorder in the
 Sec. 6a, RA 4726 (not part of the unit) stock and transfer book of the
- bearing walls, columns, floors, roofs, corporation
foundations and other common  Advantages of a Condominium Corporation:
structural elements of the building; - Allows foreigners to be transferees and
lobbies, stairways, hallways, and other owners of a condominium unit, subject
areas of common use, elevator to the 40% limitaion
equipment and shafts, central heating,
central refrigeration and central air-
conditioning equipment, reservoirs,
tanks, pumps and other central services
and facilities, pipes, ducts, flues, chutes,
conduits, wires and other utility
installations, wherever located, except
the outlets thereof when located within
the unit.
 Sec. 6c, RA 4726
- Unless otherwise, provided, the
common areas are held in common by
the holders of units, in equal shares,
one for each unit.
- Alternative method:
10