Due Diligence Manual / Guidelines for Raw Land Acquisition

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DUE DILIGENCE MANUAL / GUIDELINES

FOR RAW LAND ACQUISITION

Prepared by the Legal Group

-for -

LBC DEVELOPMENT CORPORATION

LBC PROPERTIES INC.,
SPATHODEA CAMPANULATA INC.,

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Table of Contents

Page

INTRODUCTION ……………………………………………………………………….. 3

I. LOCATION/ ON-SITE DUE DILIGENCE ………………………………………... 4

II. LAND SURVEY DUE DILIGENCE ……………………………………………….. 4

III. CERTIFICATE OF TITLE AND TAX DECLARATION DUE DILIGENCE……… 6

IV. LEGAL/ LITIGATION DUE DILIGENCE ………………………………………….. 12

V. PERSONS /OWNER / SELLER DUE DILIGENGENCE……….……………….. 13

VI. DOCUMENTATION AND CONTRACT DUE DILIGENCE ………………………14

VII. APPENDIX I - DUE DILIGENCE CHECKLIST …………………………….. 17

VIII. APPENDIX II Form -LETTER – OFFER- TO BUY ………………………… 22

IX. APPENDIX III Form – CONTRACT TO SELL …………………………………… 24

X. APPENDIX IV Form – DEED OF ABSOLUTE SALE ………………………….…27

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INTRODUCTION

This document addresses a number of issues involved in completing a due

diligence review for a raw land acquisition ( ―property/ies‖ hereinafter) by a land Buyer /
Developer. This paper divides the land acquisition due diligence review into six (6)
categories as follows:

I. Location/ On-Site Due Diligence;

II. Land Survey Due Diligence;
III. Certificate of Title and Tax Declaration Due Diligence;
IV. Legal/ Litigation Due Diligence;
V. Party-Owner / Seller Due Diligence; and
VI. Documentation and Contract Due Diligence.

This paper devotes a separate discussion to each of the above due diligence
categories.

Included as an appendix to this document is a checklist for Raw Land Acquisition

on each of the due diligence phase of the transaction and the suggested forms of letter
of intent-offer to buy, contract to sell and deed of absolute sale.

Raw lands property/ies that are excluded for acquisition and not covered by the
guidelines in this document are as follows:

i.) Raw lands covered by a Certificate of Land Ownership Award

(CLOA) titles issued under the Comprehensive Agrarian Reform
Law ( Republic Act 6657 otherwise known as the CARP Law);

ii.) Raw lands covered by Emancipation Patent (EPs) title issued under
Presidential Decree No. 27 or the Marcos Agrarian Reform Law;

iii.) Raw lands covered by Patent Titles over Public Lands issued by
the Bureau of Lands with the period of restriction of transfer has not
yet expired;

iv.) Untitled public lands but declared inalienable and non-disposable

by the Department of Environment and Natural Resources.

There are specific strategy and method in acquiring the above lands which are
not included in the discussion in this document.

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I. LOCATION OF PROPERTY/ ON SITE DUE DILIGENCE

II. SURVEY DUE DILIGENCE

The above, being intertwined and related, are discussed herein together.

1. An on-site inspection of the property is necessary to verify and confirm whether

the subject raw land is suitable for the purposes intended as to its location, terrain, right
of way easement or access. An inspection will also aid in verifying whether there are
occupants, tenants or claimants of the property. The inspection of the property is likewise
crucial to determine if the intended project over the subject land for acquisition will be
compliant with local zoning ordinance or compliant with applicable local ordinance and to
determine whether there are current or impending public works project in the area which
may subject the land to expropriation proceedings by the local or national government.

1.1. It is advisable to confirm from the Barangay office where the

property is located if there are occupants, tenants or claimants of the
property. If there are none, to secure a certification that the property is not
tenanted or occupied by any claimants.

1.2 Initial check should also be made with the municipal/city planning
office on any government plans and developments in the location of the
property. Check also if the government has plans to take-over the subject-
property for public use, such as road expansion or for community
development. Further check may also be made with the city / municipality
planning department on other important aspects of proposed project over
property, such as the maximum elevation of the building that can constructed
in the property, the set-backs or indention from the road, structural restrictions
among others.

2. The conduct of a land survey, on the other hand, is necessary to verify and
confirm if the area of the subject property to be acquired and all the boundary markers
thereon are correct including the location of the concrete cylindrical marker/
monuments. Engaging the services of a licensed professional geodetic engineer is
necessary to conduct the survey and to measure the area of the property and thereafter
provide comprehensive survey reports.

3. Land titles or tax declarations do not have any street name and number to pin
point the exact location of the property, thus it is necessary to confirm that the actual
property to be acquired matches the technical description written on the certificate of
title or the boundary stated in the tax declaration ( in case of untitled land). A survey
over the land intended for acquisition is necessary to confirm if the land described on
the title or tax declaration is the actual land to be acquired. This can be validated at the
Register of Deeds or by engaging a private land surveyor or a geodetic engineer.

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3.1. After the conduct of the on-site inspection and after deciding to
proceed in the succeeding due diligence check in acquiring the subject property,
the Buyer will have to request the Seller to allow the conduct of a relocation
survey. The relocation survey will assure the Buyer of the metes and bounds of
the property and that the property to be acquired is actually that stated on the
title. Further, by conducting a relocation survey, the adjacent owners are notified
and summoned and thus if there are any unforeseen questions, the same would
be made known during the relocation survey.

3.2. It is necessary to confirm a road right of way or access to the land for
acquisition. Merely inspecting the property and viewing the actual road is not
sufficient as verification check on the location of the property and access thereto.
It is necessary to check the title and confirm whether or not the land is actually
bounded by a road lot, road, or street. The land surveyor can point this out in the
survey to be conducted. In most case, lands which are subdivided into smaller
lots do not provide for a road in the subdivision plan. It is necessary to have
access to the subject land, otherwise the Buyer will be required to purchase a
right of way, oftentimes at an inflated price such that the buyer is forced to go to
court to litigate the matter and to have the court fix a reasonable price for the
right of way.

The other matters to check in the survey due diligence review are as
follows:

3.3 Check the survey plan and confirm that the same includes a complete
metes and bounds legal description of the property.

3.4. Check the location of third party property rights in the survey plan to
determine if it encroached with the land for acquisition.

3.5. Check to confirm that the survey has the conformity of the owner and
approved by the DENR-Bureau of Land Management.

3.6 Confirm in the survey has as follows: (i) the boundaries and areas of
the subject property and the size, location and improvements thereon; (ii) the
location of all rights-of-way, easements and (iii) all roads and roadways located
on or providing access to the subject property;

3.7. Except as shown on the survey as prepared, confirm that there are no
(i) encroachments upon the subject property by improvements on adjacent
property, (ii) encroachments on adjacent property, streets or alleys by any
improvements on the subject property, (iii) party walls, or (iv) conflicts or
protrusions;

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3.8. Further, except as shown on the survey as prepared , confirm that

there no part of the subject property lies within a flood plain or flood prone area
or flood way of any body of water;

III. CERTIFICATE OF TITLE DUE DILIGENCE

1. An updated certified rue copy of the raw land’s certificate of title shows the
name of the registered owner of the property as inscribed on the title. The certificate of
title also shows the technical description of the property as well as its’ land area.
Through the certificate of title, it can also be initially checked if there are mortgages,
announcements, restrictions, encumbrances or Notice of lis pendens (pending case)
involving the subject property that may have been registered with the Registry of
Deeds.

2. It is necessary to confirm the authenticity of the “Transfer Certificate of Title”

or the ―Original Certificate of Title‖ as in the case may be, covering the subject property
for acquisition. The Buyer is to request the Seller of the property for a photocopy of the
title as the title number and the name of the owner is necessary in requesting for a
certified true copy of the title from the Registry of Deeds. The Buyer will then proceed
and secure an updated ―Certified True Copy‖ of the title from the Register of Deeds of
the city / municipality where the property is located.

2.1 It is more prudent and thus advisable to deal only with titled
property. Majority of real properties in the Philippines are not titled or
registered under the Torrens system. While an untitled property (as
evidenced by only a Tax Declaration) may be acquired, the Buyer
however will not enjoy the benefits of the torrens system of registration
and will be compelled to investigate further the ―chain of ownership‖ from
the present owner up to the first. With a titled property on the other hand,
the Buyer can simply rely on the fact that the owner of the property is that
which is stated in the title.

3. In conducting due diligence review on certificates of title/s of the property

intended for acquisition, the following are to be considered:

• Original Certificate of Title. The original title, which is kept, stored

and on file in the Registry of Deeds.

• Owner’s Duplicate Copy. An exact or carbon copy of the Original

Certificate of Title that is given to the registered owner of the
property.

• Transfer Certificate of Title. When the title to a property is

transferred from the owner to the buyer, a new original Transfer

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Certificate of Title is issued and kept on the record of the Registry

of Deeds which should be the same as the new Owner’s Duplicate
Copy of the Transfer Certificate of Title.

• Judicial Forms. The government forms used in transactions with

registered land with accompanying serial numbers. There are
different kinds of Judicial Forms depending on the purpose.

• Take note of the following Judicial Forms:

No. 108-D Original Certificate of Title – Owner’s Duplicate
No. 109-D Transfer Certificate of Title – Owner’s Duplicate
LRC Form 1-A Condominium Certificate of Title -Owner’s Duplicate

4. The following are guidelines 1 in determining whether an original owner’s

duplicate copy of a certificate of title presented by the Seller to the Buyer, as part of the
due diligence examination, is authentic:

4.1. Check the Paper Material

One of the first matters to check in order to immediately spot a fake

or spurious certificate of title is the physical appearance of the paper. The
Bangko Sentral ng Pilipinas (BSP) is solely responsible for printing the
judiciary forms used in the preparation of the real property titles. The BSP
use a special paper composed of 50% cotton and 50% chemical wood
pulp with artificially colored silk fibers. As such the following are the
security features to look out for in the physical appearance of the title to
ensure its authenticity:

• LRA watermark that can be seen when held against the light.
• fibers of the paper material
• planchettes or the colored circular patterns on the title
• intaglio (technique used in printmaking) on border

According to LRA, fake titles are usually printed in forms made of cartolina
or material of inferior quality.

4.2. Check the Copies

Check the if the initials, signatures, technical description,

annotation and other component elements in the front and the back of the
original copy are exactly the same as the duplicate copy. The original
owner’s duplicate copy is supposed to be carbon copy of the original title

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Issued by the Land Registration Authority (LRA)

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on file with the Registry of Deeds. If there are variations, the title is
spurious.

4.3. Check the Serial Number

The serial number of the Judicial Forms for the original copy should
be printed in red while the duplicate copy should be in black. The serial
number of the title should follow the serial numbers of the other titles from
the particular Registries of Deeds from which the title came from.

4.4 Check the Dates

A number is assigned to the Judicial Form found on the upper left-

hand corner of the form. Below the number is the year when the form was
printed or revised. If the Judicial Form of the title was prepared before the
date when the form was printed or revised, the title is spurious.

4.5. Check the Title and Seal

The duplicate copy should have the words ―OWNER’S DUPLICATE

CERTIFICATE” on the left side margin of the Judicial Form. There should
also be a red seal—which should not blot or stain when wet—affixed on
the lower left corner of the form. The original copy does not contain either
of these feature.

4.6. Check the Title Number

Check the last two digits of the title number, which should match
the page number of the registration book noted on the upper right corner
of the title.

4.7. Check the Reconstituted Tags

A lost or destroyed title needs to be reconstituted. A reconstituted

original copy of the title should have the letters ―RO‖ before the title
number while a reconstituted transfer certificate of title should then have
the letters ―RT‖ before the title number.

4.8. Check the Register of Deeds

Check if the person who signed the title was the actual Registrar of
Deeds at the time when the title was issued.

4.9. Check the Entry Book

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Check if the entry of a related transaction in the Primary Entry Book

to confirm if the title was issued on the basis of a duly registered
document.

4.10. Check the Enumeration Book

Check the Enumeration Book or logbook to confirm which

personnel was assigned to prepare the title on a certain date and the
serial number of the judicial form used.

4.11. Check the Releasing Book

Check the Releasing Book to confirm if there was a title of such

number that was released by the registry on that date.

4.12. Check the History / Traceback of the title

If necessary, trace the history of the title to determine the

genuineness of its source. This may entail going back to the mother title,
the derivative titles and relevant documents.

5. Confirm that title is clean. To confirm that property is not mortgaged (no
liens & encumbrances on the title to the property), examine the dorsal portion/ the back
of the title with the heading ―Encumbrances‖. The succeeding pages of the title must be
empty to qualify the same as ―clean‖. There are instances however the space provided
for the technical description of the property on the front page of the title is not enough
and the description of the property is continued on the ―Encumbrances‖ page, which is
all right.

5.1. In the copy of the title on file with the Register of Deeds are
annotations called the ―involuntary liens‖ (i.e. claims of third parties and the
government, road right of way, etc.). While the title may still be registered in the
name of a person, ownership might have been transferred, questioned, or
otherwise affected, and this can be seen at the back of the title on file with the
Registrar of deeds.

5.2 If there are encumbrances or annotations at the back of the title,

request the owner / seller to cause the cancellation thereof. Encumbrances may
be cancelled through the registration of a Court Order or with an Affidavit of the
party concerned as in the case may be;

6. Untitled Lands/ Tax Declarations

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6.1. Roughly forty six percent (46%) of all lands in the Philippines are untitled.
Majority of these untitled raw lands are under Tax Declaration (commonly referred to
as "tax dec" property).

6.1.1 Tax Declarations issued by the Assessor’s Office of the City or

Municipality where the property is located shows the ―Market Values‖ of the
property and the value of the improvements thereon as the ―Tax Base‖ of the
property. It also shows the Property Identification Number and the boundaries, in
general, of the property.

6.1.2. Acquiring an untitled parcel of land covered only by a Tax

Declaration is equivalent to buying the rights of the person declared as owner
thereof. A tax declaration is not an evidence of ownership over a parcel of land
but issued for land taxation purposes only. A tax declaration is however evidence
of possession as no person would be paying land taxes over a property if he is
not in possession thereof. This right of possession may ripen into a certificate of
title under certain condition and requirements through an application for titling
filed in court or through an administrative procedure for titling before the Bureau
of Lands.

6.1.3. There are two types of Tax Declaration over untitled property/ies:

i.) The alienable and disposable lands (A & D) untitled lands which are
properties under public domain but private in character and are not
required for forest purposes. This lands may be acquired and may
eventually be titled;

ii.) The non-alienable and non-disposable lands which includes

timberland, forest protected areas, national parks, mineral lands
etc. The only legal way to acquire possession and use over these
type of untitled lands is through application for a special
government tenure or lease among which is Special Forest Land
Use Agreement (FLAG).

6.1.4 Once the alienable and disposal lands are released by Congress or
the DENR covering the zone of the untitled property, the declared owner or his
successor -in-interest can immediately apply for a title either in court ( for judicial
titling) or through the Bureau of Land for Application for Patent Title.

6.1.5. The DENR is the government agency which certifies whether a

certain untitled land covered by a tax declaration is alienable and disposable or if
the land and its forest are protected land which cannot be acquired.

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6.2. After finding the prospective untitled land for acquisition, check the tax
declaration with the City or Municipal Assessor’s office at the City Hall to confirm
whether the taxes of the subject property are updated and paid off every year. The
Assessor’s Office will issue a copy of the Tax declaration Form to show the latest real
estate tax settlements. This form is needed as a reference when transferring the real
estate tax under the name of the buyer –transferee.

6.2.1. Check the history of the Tax Declaration by making a traceback

from the first/new declaration over the untitled land to current and latest tax
declaration and secure copies of the previous waiver of rights or deed of transfer
of rights over the untitled lands. These documents are required for future titling
purposes and to show that the subject land is now private in character and had
ceased to be public lands.

6.2.2. Check in whose the Tax Declaration of the property is declared. If

the declared owner is the same person the Buyer is dealing with. Confirm if the
declared owner has children or if they are they married for documentation
purposes. It is important to ensure that the declared owner’s heirs or spouse
have no objection in the transfer of the declaration.

6.2.3. To transfer a tax declaration over a parcel of land under the name
of a new transferee, the document to be executed is either a Waiver of Rights
over Untitled Land or a Deed of Absolute Sale over an Untitled Land. In both
documents, an Acknowledgement Receipt is required.

6.2.4. It is recommended to cause the survey the property if acquiring

only a portion from a bigger portion of the land or if the entire tax declaration
property has not been surveyed as of yet.

6.2.5. It is suggested to obtain the services of a trusted geodetic engineer

to ensure the land is properly marked and measured. It is also important to
ensure that the site plan as prepared by the geodetic engineer is certified and
signed by DENR.

6.2.6. Once all of the above are settled and the Waiver of Rights are
executed in favor of the buyer’s name and duly notarized, the next procedure is
to proceed to the Municipal Hall Assessor’s Office for the transfer of the Tax
Declaration under the Buyer’s name. A Transfer Tax of 0.5% of the selling price
or zonal value or fair market value is required to be paid by the Buyer. Required
to be presented before the Assessor’s Office is the Waiver of Rights and
Government Issued Identification of the Buyer and the transferor.

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IV. LEGAL / LITIGATION DUE DILIGENCE

Confirm that there is no litigation or pending court cases involving the

property/ies to be acquired. Initial check may be made from the annotations of
encumbrances at the back of the certificate of title. An annotation of a ―Notice of
Adverse Claim‖ in the title indicates that there is a potential case to be filed by a
claimant to the property. An annotation of a ―Notice of Lis Pendens‖ (―pending case‖) in
the title indicates that there is already a full blown case already pending in court
involving the subject property.

Other annotations in the title to check indicating active court cases affecting the
subject property are: ―Levy on Execution‖; ―Certificate of Sale‖ or ―Levy on Attachment‖.
The annotations of ―Levy on Execution‖ and ―Certificate of Sale‖ on the title indicate that
the property was already subject of an auction sale conducted by the Court to satisfy a
judgment it rendered in favor of a prevailing / winning party. The annotation of a ―Levy
on Attachment‖ indicates that the property has been held by the court as security for
any decision that will be rendered by the court on a pending case.
The annotation of ―Notice of Adverse Claim‖ and ―Levy on Attachment‖ may be
removed only by a Court Order. Properties with titles containing these annotation may
be acquired after the annotations have been cancelled without affecting the buyer in
good faith defense of the Buyer.
The annotation of ―Notice of Lis Pendens‖ can be removed only after the pending
case has been decided with finality by the Court. It is not advisable to acquire properties
which title has this annotation as the buyer will be acquiring the same subject to the
outcome of the case and the buyer will not be able to claim the defense of buyer in good
faith.
The annotation in the Title of a ―Levy on Execution‖ or ―Certificate of Sale‖ can
no longer be cancelled as the properties covered by the said title is considered already
sold by virtue of a final order of the Court. Properties with titles containing these
annotations can no longer be acquired.

Properties which titles contains annotations involving “Section 7 of Republic Act

No. 26” (annotations on reconstituted title) and annotation relating to ―Section 4 Rule 74
of the Rules of Court‖ (annotation on liability of estate in case of extra-judicial settlement
of estate) can still be acquired. The said annotations can easily be cancelled by a Court
Order and by an affidavit executed by the persons concerned respectively.

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V. PERSONS / OWNER / SELLER DUE DILIGENCE

The Buyer concerned of a raw land must check the validity of ownership and the
capacity of the Seller to sell the property.

1. It is necessary to confirm that the Sellers are the actual owners. When dealing
with an individual property owner, it is basic to confirm their identify by requesting for
government issued identification papers (i.e. passports, driver’s license). The identity of
the Sellers may also be confirmed from interviews with the neighbors of the Sellers.

1.1. If can be avoided, it is advisable to pass-up Sellers carrying

Special Power of Attorney (SPA) and deal with the actual Sellers themselves. A
common source of property litigation is those involving SPAs. This is an
instrument that empowers a party to deal with the property of another, usually for
the purpose of selling the property. Oftentimes, unscrupulous individuals procure
an SPA surreptitiously from the unwitting owner who is led to believe that the
document being signed is something else.

1.1.1 If the Buyer must deal with property being sold through an
SPA, it is advisable to verify the authenticity of the SPA document as well.

1.1.2 Inquire and confirm on the whereabouts of the registered

owner/s. Inquire for the reason why the registered owner of the property
cannot do the transaction himself/herself and check if the reason is valid.
Confirm that the SPA document is accompanied by copies of valid
Identification Document (ID’s)of both the registered owner and the
attorney-in-fact / representative and verify the validity of these ID’s.
Confirm also the stamps and the notarization seal on the SPA document.
Check if the lawyer that notarize the document is legitimate and has the
authority to notarize public documents. The SPA is considered a ―public
document‖ as such it must be registered in the notarizing lawyer’s notarial
record book and the local courts’ record book as well. If there are no
records in any of the two record books mentioned, then the SPA is
questionable.

2. It is advisable to prefer to those properties registered in the names of actual

Sellers themselves. There are cases where properties are titled in the names of the
grand parents or great-grandparents of the present owners. Thus, there is still the need
to execute an extra-judicial settlement, which has a ―grace period‖ of two (2) years
within which an excluded heir can question the settlement and the sale. This type of
litigation is fairly common and is the usual source of problems.
.
3. If the property is an inheritance, the sale document must be accompanied
by either a Judicial Order on Settlement of Estate or liquidation of Assets of the
deceased; an Extra-Judicial Settlement of Estate document or an Court Order allowing

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the enforcement of a will (if the owner died with a last will and testament) all duly
registered with the Registrar of Deeds It is necessary also to draw-up a family tree
enumerating the heirs of the deceased registered owner/s to identify which party to
confer with or will receive the payment of the selling price.

4. If the property is owned by a juridical person such as a cooperative,

corporation, foundation, partnership, a board resolution stating the intention to sell the
said property and appointment of the juridical person’s representative, which are
authorized by the board of directors. This board resolution shall then be accompanied
by an updated General Information Sheet of the Corporation, Foundation or
Cooperative that show who are the authorizing board of directors, as well as the valid
identification document of the directors and their appointed representative or officers.

5. If the property is owned by a married couple, it is necessary to confirm the

property relationship of the spouses in relation to the subject-property. It is necessary to
verify and confirm the following the property relations of the Spouses for documentation
purposes and to determine whether the consent of the other spouses is required on the
sale:

i. Is the subject-property an exclusive or paraphernal of the wife or

capital property of the husband?
ii. Is property it part of absolute community of property? Is it a
conjugal property?
iii. Are the married couples have a ―Pre-nuptial Agreement‖ that
separates their properties?
iv. Do the married couples have Judicial Separation of Properties?
v. Does the sale needs marital consent from both spouses?
vi. Are both the married couples still alive?
vii. Are the married couples present to sign the Absolute Deed of Sale?

VI. OFFER TO BUY / CONTRACT AND DOCUMENTATION DUE DILIGENCE

After the subject property have been thoroughly inspected, the title thereof
comprehensively checked in details, the identity of the Owners and / or Seller have
been confirmed and the selling price and terms of payment have been discussed, the
next phase is to submit a letter of intent or an offer to buy. An offer to buy, once
conformed to by the Owner/s / Sellers, is a valid and binding agreement which will
essentially tie-up the Sellers / Owners to sell the property to the Buyers.

1. Letter Of Intent/ Offer To Buy

1.1 In the letter-offer to buy to be submitted to the Seller/Owner, the following

details are to be indicated:

i. The name of the registered Owner/s or Sellers.

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ii. Location and identification of the property to be acquired.

iii. Expression of intention to acquire the subject-property.

iv. The price or valuable consideration for the sale of the subject-
property.

v. The payment terms, amount of downpayment and other terms and

conditions on the manner of payment on the sale of the subject
property.

vi. Indicate which party will assume payment of the required taxes on
the sale.

vii. Indicate how much would be paid as ―Earnest Money‖ to reserve

the property for acquisition.

viii. Indicate the schedule of payment of the remaining balance.

ix. Indicate the period for the owner /seller is to conform to the letter
offer.

The suggested Form of the letter-offer to buy is annexed as Appendix I to

this document.

2. Contract Phase

2.1. If the payment for the sale of the subject property is to be made in
full–spot cash payment, a deed of absolute sale is to be prepared. If the payment
however is to be made on installment terms with additional conditions on the
sale, a contract to sell is to be prepared. The following provisions are suggested
to be included in the contract to sell

2.1.1 Define in the contract to sell that ―Property‖ to be acquired

includes all improvements thereon and any rights that Seller/ Owner owns
in intangible property (including permits, licenses, surveys, maps,
transferable utility contracts, engineering plans and development
contracts, and other contract rights)

2.1.2 Negotiate the amount of the downpayment to be made;

2.1.3 Finalize the agreement on whose account the taxes on the

sale are to be charged. Capital Gains Taxes and Real Property Taxes are
normally for the Account of the Sellers while the other taxes and fees are
subject to the agreement of the parties.

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2.1.4 Specify the Seller’s representations and warranties on the

sale as follows:

i. Seller’s own indefeasible title to the Property.

ii. Seller is authorized to sign the contract and duly

organized, validly exists (if a corporation or juridical
person).

iii. Seller has not placed dangerous or hazardous

materials on the property.

iv. There are no occupants or tenants on the subject

property and no other parties in possession of all or
any portion of the property;

v. There are no actions, suits, claims, assessments,

condemnation proceedings, or other proceedings
pending or, to the knowledge of the Seller, threatened
that could materially adversely affect the ownership of
the property or Seller’s ability to deliver under the
Contract.

vi. Limit the Seller’s remedies for breach of contract to

retention of the Earnest Money with claim for
damages.

vii. Make sure Contract is assignable (if necessary)

Prepared by:

ATTY. RONALD G. TUGONON

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APPENDIX I

DUE DILIGENCE CHECKLIST - RAWLAND ACQUISITION

Property Location

Registered / Declared Owner

Lot Area (sq/m)

OCT / TCT No.

Tax Declaration No.

INSPECTION / LOCATION/ SURVEY

SPECIFIC CONCERN Y N DETAILS / NOTES/COMMENTS

With Concrete Cylindrical Monuments

Located

With Fence / Perimeter Wall / Party Wall

With Road Right of Way – Access to Main

Road
- With Appropriate Access to Property Site

-Future Road Expansion Plan by Local

Government
-Traffic / Roadway Improvements

- Existing Easement identified

With Occupants / Lessees / Tenants

With Certificate of Non-Tenancy From the

Barangay having jurisdiction over the
property

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Compliance with local zoning ordinance

Relocation Survey Conducted

Aerial Photographs available

CERTIFICATE OF TITLE/ TAX DECLARATION

SPECIFIC CONCERN Y N DETAILS / NOTES/COMMENTS

Raw Agricultural land with title

Raw Agricultural land without title (Tax

Declaration) – Alienable and Disposable
With Original Certificate of Title (OCT)
Compared with the Certified Copy issued by
the Registry of Deeds
With Transfer Certificate of Title (TCT)

TCT With title trace back to OCT

TCT under e-title

Reconstituted Title (RT)

TCT / OCT with annotation of encumbrance

Untitled land with Tax Declaration (TD) –with

trace back to First TD
TCT Verified at Registry of Deeds

Tax Declaration verified as Assessor’s Office

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PERSONS/ OWNERSHIP / SELLER DETAILS

SPECIFIC CONCERN Y N DETAILS / NOTES/COMMENTS

Land registered under Seller’s Name

Registered Owner/s Deceased – confirmed

with Death Certificate

Registered Owner Still Living – With Special

Power of Attorney (SPA) issued to third
persons

Identity of Owners / Sellers confirmed and

verified ( checked government issued
identification)

Authenticity of SPA confirmed and verified

Property Inherited by Sellers

-With prepared family tree graphs from

deceased registered owner to the heirs
-Identity of Heirs confirmed and verified -with
Birth Certificates of Heirs
-With Extrajudicial Settlement of Estate
Document signed / executed by Heirs and
duly published
-With Court Order on Judicial Settlement of
Estate

-With Court Order allowing the Last Will &

Testament of the deceased Owner/s

-With Administrator named to the Property

of the deceased owner

-With Executor named by deceased owner

-Estate Tax Settled by Heirs

Property Registered under name of Married

Couples - Confirmed with Marriage
Certificate – Both Still Living

- Property - part of Absolute

Community of Property

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-Property - part of Conjugal Partnership

of Gains

- Part of Separate Property of the

Spouses

- Exclusive / Paraphernal Property of

the Wife

- Exclusive / Capital Property of the

Husband

- With Court Order / Decree of

Annulment of Marriage

- With Pre-nuptial Agreement

LEGAL / LITIGATION INVOLVING PROPERTY

SPECIFIC CONCERN Y N DETAILS / NOTES/COMMENTS

TCT / OCT without encumbrance / annotation

TCT / OCT with annotation of encumbrance

- With annotation of Mortgage,

Certificate of Sale on Foreclosure
Sale

- With annotation of Notice of Adverse

- With annotation of Notice of Lis

Pendens
- With annotation of Notice of Levy on
Execution

- With annotation of Notice of Levy on

Attachment
- With annotation of encumbrance
under Sec.7 R.A. 26
- With annotation of encumbrance
under Sec.4 Rule 74 of the Rules of
Court.

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- - Other encumbrances and annotation to

the title

With Court Order / documents/ Affidavits

cancelling annotation / encumbrance to TCT /
OCT

DOCUMENTATION / CONTRACTS

SPECIFIC CONCERN Y N DETAILS / NOTES/COMMENTS

With Letter of Intent / Offer to Buy from

Buyer

With Earnest Money Payment

Full Spot Cash Payment

Payment in Terms – With Schedule of

Payment

With Agreed Downpayment Amount

Capital Gains Taxes for the Account of ______

Documentary Taxes for the Account of

_______
Real Property Taxes for the Account of
________
Registration Fee for the Account ________

With Contract to Sell (CTS) – Reviewed and

Submitted to the Seller

- With Standard Seller’s Warranty and

Undertaking

- Rights under the CTS assignable

- With provision on forfeiture /

cancellation

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APPENDIX II

(LETTER -OFFER TO BUY)

–Date-

- Name Of Owner/s – Seller/s

- Postal Address-

Dear Mr. / Mrs. _________:

Please consider this letter as confirmation of our offer to purchase your

property consisting of ________ hectares / square meters more of less located at
Brgy. ________, Municipality of __________, Province of _________, described
under Transfer Certificate of Title No. ____________ of the Registry of Deeds of
________________

(in case of untitled property state: “ described under Tax Declaration No.
_________ issued by the Municipal Assessor’s Office of __________, Province of
__________ and declared under the name of ______________”).

Earnest Money

Upon your conformity below, we shall tender an irrevocable earnest

money in the sum of _______________ PESOS (P ______,____.00) (hereinafter
referred to as “earnest money”). The said earnest money shall be considered as
part of the total purchase price and shall be deducted from the downpayment
for the purchase of the subject property.

Contract to Sell and Schedule of Payment

Our offered purchase price of the above property is ___________________

PESOS (P ___________.00) which shall be paid under the following schedule less
the above earnest money amounting to _________________ PESOS (P
__________.00):

i.) The sum of ___________________ PESOS (P 250,000.00) to be paid

as downpayment upon execution of the contract to sell for the subject property
which shall take place on or before ______ after the signing of this agreement;

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ii.) The sum of _____________________ PESOS (P ________.00) to be paid

after on or before ___________ from the execution of the contract to sell and the
preceding second payment;

iii.) The sum of ______________________ PESOS (P _________.00) to be

paid on or before _______ from the preceding third payment;

(add additional schedule of payments based on the number of months

of amortization)

Warranty of the Parties

The parties warrant that each has taken all appropriate and necessary
authorities to authorize the execution and performance of this Agreement.

If the foregoing terms and conditions are acceptable to you please signify
your conformity on the space provided below and return ONE (1) copy to us.

This letter shall constitute as the Agreement between you and the
undersigned and shall be immediately be effective.

Very truly yours,

_____________________
Buyer

Conforme:

______________
Seller

_______________
Spouse

_______________
Date

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APPENDIX III

(CONTRACT TO SELL)

CONTRACT TO SELL
KNOW ALL MEN BY THESE PRESENTS:

This Contract to Sell is made and executed and entered into by:

Name of Seller, of legal age, Filipino, single/married to Name of the

Spouse of Seller, with residence address at Postal Address of the Seller in the
Philippines, hereinafter referred to as the SELLER;

-AND-

Name of Buyer, of legal age, Filipino, single/married to, Name of Spouse of

Buyer and with residence and postal address at Address of the Buyer in the
Phiippines, hereinafter referred to as the BUYER;

WITNESSETH:

WHEREAS, the SELLER is the registered owner of a parcel of land with

improvements located at Address of the property for sale in the Philippines and
covered by Transfer Certificate of Title No. 000000 containing a total area of
LAND AREA IN SQUARE METERS (000sqm) SQUARE METERS, more or less,
issued by the Registry of Deeds of City/Municipality;

WHEREAS, the BUYER has offered to buy and the SELLER has agreed to
sell the above mentioned property under the terms and conditions herein below
set forth;

NOW THEREFORE, for and in consideration of the total sum of THE

CONTRACT PRICE FOR THE PROPERTY FOR SALE (P0,000,000.00) Philippine
Currency, and of the covenants herein after set forth the SELLER agrees to sell
and the BUYER agree to buy the aforesaid property subject to the following
terms and conditions:

1. A down payment payable to the SELLER with total amount of

P__________.00 shall be paid upon signing of this Contract to Sell.

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2. The balance in the amount of in the amount of _____________

PESOS (P_________.00) shall be shall be paid over a period of _______
(____) months in the sum of ____________ PESOS per month until fully
paid.

3. All pending real estate tax up to the time of sale, Capital Gains
Tax, Documentary Stamp Tax, shall be for the account of the SELLER.

3. Notarization fees, Registration Fee, Transfer Fees and all

miscellaneous fees and expenses to transfer the certificate of title in the
name of the new owner shall be for the account of the SELLER;

4. Possession to the subject property shall be delivered by

the SELLER to the BUYER upon full payment of the Downpayment;

5. ADDITIONAL TERMS AND CONDITIONS SUCH AS Delivery of

the property shall be given by the SELLER to the BUYER devoid of any
tenants;

(6. TERMS AND CONDITIONS MAY VARY ON A CASE-TO-CASE

BASIS. CONTRACTING PARTIES MAY ADD, SUBTRACT, EDIT, ANY OR
ALL PARTS OF THIS CONTRACT TO SELL AS THEY SEE FIT)

7. Upon full payment of the total price, the SELLER shall sign
and execute a DEED OF ABSOLUTE SALE in favor of the BUYER. The
SELLER shall likewise execute and/or deliver any and all documents,
including but not limited to the original copy of Transfer Certificate of
Title, Tax Declaration and all other documents necessary for the transfer
of ownership from SELLER to the BUYER.

8. In case the SELLER could not fulfill any of the obligations stated
in this Contract to Sell, the BUYER shall be entitled to a full refund plus
____ percent (__ %) interest per month until full payment of the refund.

IN WITNESS WHEREOF, the parties have hereunto affixed their

signatures, this _____ day of _______________________ 20________ at
___________________________________, Philippines.

_________________________ ___________________________
SELLER BUYER

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SIGNED IN THE PRESENCE OF:

_____________________ ______________________

ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES)

_____________________________)S.S.

BEFORE ME, a Notary Public for and in the above jurisdiction

personally appeared this _____day of________________ 201_ in
____________________ the following:

Name Government Issued Identification

known to me and by me known to be the same persons who executed the

foregoing instrument consisting of ____ (__) pages including this page and
who acknowledged to me that the same is their free and voluntary act and
deed.

WITNESS MY HAND AND NOTARIAL SEAL on the date and in the

place above written.

Doc No. _____;

Page No. _____;
Book No. _____;
Series of 20___;

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APPENDIX IV

(DEED OF ABSOLUTE SALE)

DEED OF ABSOLUTE SALE

KNOW ALL MEN BY THESE PRESENTS:

This DEED OF ABSOLUTE SALE is made, executed and entered into by:

Name of Seller, of legal age, Filipino, single/married to Name of the

Spouse of Seller, with residence address at Postal Address of the Seller in the
Phiilppines, hereinafter referred to as the SELLER;

-AND-

Name of Buyer, of legal age, Filipino, single/married to, Name of Spouse

of Buyer and with residence and postal address at Address of the Buyer in the
Phiippines, hereinafter referred to as the BUYER;

WITNESSETH:

WHEREAS, the SELLER is the registered owner of a parcel of land with

improvements located at ADDRESS OF THE PROPERTY FOR SALE IN THE
PHILIPPINES, and covered by Transfer Certificate of Title No. 0000 containing
a total area of LAND AREA IN SQUARE METERS (000) SQUARE METERS, more
or less, and more particularly described as follows:

TRANSFER CERTIFICATE OF TITLE NO. ____

(TAX DECLARATION NO. ________)

“Technical Description of the property found inscribed on the Certificate of

Title”

WHEREAS, the BUYER has offered to buy and the SELLERS has agreed
to sell the above mentioned property for the amount of

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_____________________________________________________ (P ___________________)
Philippine Currency;

NOW THEREFORE, for and in consideration of the above-mentioned

amount, hand paid by the vendees to the vendors, the SELLER DO HEREBY
SELL, TRANSFER, and CONVEY by way of Absolute Sale unto the said BUYER,
his/her heirs and assigns, the certain parcel of land together with all the
improvements found thereon, free from all liens and encumbrances of whatever
nature including real estate taxes as of the date of this sale.

IN WITNESS WHEREOF, the parties have signed this Deed of Absolute

Sale this _____ day of ________, 20___.

_________________________ ___________________________

SELLER BUYER

SIGNED IN THE PRESENCE OF:

_____________________ ______________________

ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES)

_____________________________)S.S.

BEFORE ME, a Notary Public for and in the above jurisdiction

personally appeared this _____day of________________ 201_ in
____________________ the following:

Name Government Issued Identification

known to me and by me known to be the same persons who executed the

foregoing instrument consisting of ____ (__) pages including this page and
who acknowledged to me that the same is their free and voluntary act and
deed.

WITNESS MY HAND AND NOTARIAL SEAL on the date and in the

place above written.

Doc No. _____;

Page No. _____;
Book No. _____;
Series of 20___;
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