“Higher or lower”


By Atty. Chris de los Reyes

Greetings!  I am Atty. Christopher D. de los Reyes.  You can call me Atty. Chris for short.  I was fortunate enough to be able to communicate with you, the valuable readers of FilAm News.  I intend to relay the latest and interesting developments in Philippine laws which may be of relevance and importance to our readers.

In this first article, the following are relevant and of help to you If you intend to enter in a Deed of Sale in the Philippines.

Common Practice

It is unfortunately customary in the Philippines to declare a “lower” purchase price instead of the actual one in finalizing a Deed of Sale.  Citing the need to reduce the amount of the required taxes, either the seller, buyer or even both of them initiate this scheme to circumvent the taxation laws in the country.  Sometimes, the parties even finalize two (2) separate Deeds of Sale, i.e., the one reflecting the actual purchase price while the other is the purchase price for “BIR purposes”.  If you happened to be incited or encouraged to enter in such schemes, do not do so!

What the Law Says

A good illustration on these matters is what has transpired in a recently decided case by the Supreme Court of the Philippines last 24 November 2020 penned by then Chief Justice himself, Diosdado M. Peralta.  This is an EN BANC case (decided by all members of the Supreme Court itself).

In that case, there are two (2) Deeds of Sale executed by the seller and buyer involving the same property, with identical registration, page and book numbers, in the notarial portion. The preparation of the deed with a lower consideration (or purchase price) was used to evade payment of taxes.  The actual selling price is P130,000.00 and the other with the lower consideration is P30,000.00.  The parties thereto entered in such a scheme to lower the payment of the required capital gains taxes (i.e., 6% of the selling price).

The consequence for this scheme is disastrous.  The Supreme Court sanctioned the Notary Public who notarized these deeds of sale.  The penalties imposed are the following: (a) SUSPENSION from the practice of law for a period of two (2) years; (b) REVOCATION of his present notarial commission; and (c) DISQUALIFICATION from reappointment as a  notary public for a period of two (2) years. He is STERNLY WARNED also that any similar act or infraction in the future shall be dealt with more severely.


According to the Supreme Court, the Notary Pubic in this case violated the Code of Professional Responsibility for lawyers particularly Canon 1 and Rule 1.02 thereof.


Rule 1.02 – A lawyer shall not counsel or abet activities aimed at defiance of the law or at lessening confidence in the legal system.

The Notary Public hereto was found to have assisted the contracting parties in an activity aimed at defiance of law, and displayed lack of respect and made a mockery of the solemnity of the oath.  It is the notary public’s duty to observe utmost care in complying with the formalities intended to protect the integrity of the notarized document and the act or acts it embodies.

By virtue of this latest Supreme Court decided case, the Notary Public may even bring the matter to the Bureau of Internal Revenue (“BIR”), the government body tasked to collect taxes in the Philippines, and report the contracting parties thereto who entered in such a scheme committing or has committed tax evasion which is punishable by imprisonment and prosecuted criminally in the Philippines.

The Notary Public may also refuse to notarize such Deed of Sale.  Under Rule IV, Section 4(a) of the 2004 Rules on Notarial Practice, it is incumbent upon him to guard against any illegal or immoral arrangement or at least refrain from being a party to its consummation.

SEC. 4. Refusal to Notarize. – A notary public shall not perform any notarial act described in these Rules for any person requesting such an act even if he tenders the appropriate fee specified by these Rules if: (a) the notary knows or has good reason to believe that the notarial act or transaction is unlawful or immoral. (Alberto Lopez vs. Atty. Rosendo C. Ramos, A.C. No. 12081, 24 November 2020, Chief Justice Peralta).

Counsel of the Wise

Better put the higher or the actual purchase price instead of the lower one!  That is my friendly advice if you will enter in a Deed of Sale in the Philippines.

God bless to everyone and stay safe!