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Brainstorm: The Next Generation | Open deed of sale?

Someone recently asked me “Attorney, paano mag register sa LTO ( Land Transportation Office) ng “Open Deed of Sale” ng kotse na nabili ko sa buy and sell?

Caught unawares, my mind automatically scanned what I could remember from my law school studies in Sales as well as Transportation Law but, for the life of me, I could not remember anything called an “Open Deed of Sale.”

So, I candidly asked him what he meant by an “Open Deed of Sale” and he seemed shocked that I did not know and he looked amused when he said “Attorney Oi, yang Open Deed of Sale gud, yang napirmahan na ng may-ari pero blanko pa ang buyer, ganyan man yan sa mga buy and sell ng second-hand na kotse, hindi mo yan alam?”

I could not stop my “tikalon” Ilonggo blood from kicking in and I curtly replied, “Sorry ha, hindi kasi ako bumibili ng second hand” (daw mangaranon guid), and then I proceeded to explain to him that what was done was ILLEGAL.

Joking aside, it is apparently a very prevalent practice in the car “buy and sell” business to have car sellers sign blank deeds of sale which will be filled up and notarized only when someone buys the car so that the sale could be registered with the LTO.

People should be told that this practice is ILLEGAL, and it is fraught with danger for the sellers, the buyers, the traders and even the lawyers who notarize such “open deeds of sale”.

Every car seller should know that, for as long as a vehicle is registered in his name, he can be held liable for any damage or injury that may be caused using the said vehicle even in it happens long after he already sold the car.

The Supreme Court has repeatedly ruled that “The registered owner of a motor vehicle whose operation causes injury to another is legally liable to the latter” (Metro Manila Transit Corp. v. Cuevas, G.R. No. 167797, [June 15, 2015]).

What if the car that was sold, and, while being driven by the eventual buyer, but still registered in the name of the seller, runs over a pedestrian who ends up in the Intensive Care Unit for three (3) months? Did the seller, who signed an “open deed of sale”, consider this risk when he sold his car?

This is just on civil liability. What if the car or motorcycle is used in killing someone and all that the witnesses could remember is the plate number of the vehicle? Can you imagine the trouble that the registered owner would have to go through when the registration is traced to him, just to prove that he was not involved in the crime?

Similarly, buyers of cars under an “open deed of sale” are also taking a huge risk. It should be pointed out, that such cars are rarely checked against the LTO database or that of the Philippine National Police Highway Patrol Group (HPG) at the time when these were bought by the traders.

Buyers of such vehicles can suddenly find themselves at the receiving end of a criminal case if the car turns out to have been stolen or was involved in a crime somewhere else and they are caught using it or, when they themselves brought it to the HPG to get the motor vehicle clearance certificate for purposes of transferring the registration.

Traders face a similar risk because when such vehicles turn out to have been illegally sourced or involved in a crime, the buyers would, of course, point to the traders who sold the cars to them. Do such traders even get good contact details from the sellers? What if the sellers used fake, or falsified, registration papers? The traders would probably find out only when these papers are submitted to the LTO for the transfer of the registration to the eventual buyers. What then?

The lawyer who will notarize an “open deed of sale”, when the seller did not, in fact, appear before him to acknowledge the document, commits a grave violation of the Notarial Law and the Rules on Notarial Practice that could, a the very least, cause their suspension from the practice of law or even disbarment.
That fact is that everyone involved could be held criminally liable for Falsification of Public Documents by falsely making it appear that the vehicle was sold directly by the original seller to the eventual buyer when the truth is that it was sold by the seller to the trader who then sold it to the buyer.

This illicit practice of using such “open deeds of sale” is quite obviously a shortcut to avoid the payment of the taxes and expenses involved in doing it properly by having the seller execute a deed of sale in favor of the trader, transferring the registration to the trader, and then having the trader execute a deed of sale in favor of the eventual buyer and then transferring the registration to the said buyer.

Savings are savings, you may say, but the BIG question is, ARE THE SAVINGS WORTH THE RISK OF, NOT ONLY CIVIL, BUT EVEN CRIMINAL LIABILITY? Isip-isip siguro muna.

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