Deed of Sale of Motor Vehicle Philippines [An A to Z Guide]

At the time of buying a second-hand car, you check its physical appearance and how it runs. But along with these things, you must check the official documents related to the transaction to make sure that the car you are about to purchase has a clear title. The most important document needed at the time of buying or selling a second-hand car in the Philippines is a ‘Deed of Sale’.

The appropriate knowledge of ‘Deed of Sale’ leads to a smooth and trouble-free transaction and saves you from future legal issues, read on to know more.

What is the Deed of Sale of Motor Vehicle?

It is a legal paper, a contract, in its most basic form. Something you should know about if you are selling or buying a used car. It helps you dodge the headaches when things go out of control.

The deed of sale validates and registers the sale /purchase of a particular vehicle. In addition, it acts as proof that both the seller and buyer have arrived at an alliance of sale or purchase

It not only protects the buyer but also the seller from the conflicts or dilemmas that could take place in the future. 

A contract under the Philippines law has three elements -

• Consent of the contracting parties
• An object certain that is the subject matter of the contract
• The cause of the obligation that is established

In the case of the contract of sales, in this case for motor vehicles, the contract is consummated at the moment there is a meeting of minds upon the subject and price. 

Why is the Deed of Sale important?

A deed of sale is evidence supporting the sale of the motor vehicle. While a car can be sold/purchased verbally, however, a verbal contract is unenforceable without the exchange of goods. Meaning, the court cannot compel the parties to honor their agreement. 

Also, the language used in the deed of sales is not important unless it concerns registering sales with the LTO (Land Transportation Office).

When is the Deed of Sale needed?

A deed of sale is required at the time of the sale or purchase of a motor vehicle.

Who drafts the Deed of Sale? 

A deed of sale of a motor vehicle is generally sketched by the one who is selling the vehicle. However, there is no such rule or obligation, a buyer can also prepare a deed of sale, in case the seller does not come prepared with the document. 

The reason a seller generally prepares the contract is that he/she has more on stake when it comes to proper and timely execution of the deed of sale.  In case of doubt when there is an accident, it is presumed that the person driving the vehicle is the registered owner. 

What is mentioned in the Deed of Sale?

Deed of Sales comprises the details regarding the transaction, including:

• Names and identity of the parties involved
• Addresses of the parties
• Vehicle details
• Certificate of registration number
• Mark, series, & type
• Motor & chassis number
• Year model,
• Plate number
• LTO file number.
• Along with an acknowledgment and the sum paid for the vehicle. 

Is the Deed of Sale valid without a notary?

No. The mentioned document should be notarized, or else, the document will just be a piece of paper with no power. As a result, it will not fulfill the crucial goal of protecting the buyer as well as the seller.

Accompanying the deed of sales should be following additional documents like photocopies of the valid government identification cards of the parties (at least two) with specimen signatures (usually three) on the photocopied page. 

Also read: Your ultimate guide to selling pre-loved cars in the Philippines

What is the protocol for a car buyer?

According to the law, if you are buying a used car, then you should register the vehicle at the Land Transportation Office (LTO) after the ownership shifts to your name. The deed of sale is the only paperwork that confirms the payment has been cleared and both parties are agreed.

Also, the deed of sale of motor vehicles does not change the ownership. In order to get the ownership transferred, the buyer is required to register and transfer the ownership of the car.

It’s not entirely the responsibility of the buyer, but the seller should also make sure that the new owner will shift the ownership to his/her name.

This will help the previous owner to prevent the troubles that can arise if the car is involved in an accident.

What does the Registered Owner Rule state? 

The Registered Owner Rule in the Philippines declares that, if your name is registered on the certificate of registration, then you will be responsible if the vehicle gets involved in a road accident.

No matter who was driving the car, the owner will be responsible for the actions. That’s the reason why you should transfer ownership while selling your car to prevent such troubles in case of accidents.

In addition to that, the deed of sale will also support the seller to verify that the car was traded to a new owner.

Remember 

You should not sell off your vehicle without an open deed of sale, as it’s entirely for your security. In the case of a buyer, you should take care of such documents and must be aware of the warning symptoms at the time of buying a used car. Make sure not to proceed with the payment if the seller does not have an open deed of sale of motor vehicle.

Also Read: Things to remember while transferring the ownership of your car