How to Transfer Car Ownership in the Philippines
The process of selling a used car is not as straightforward as it seems. It takes more than handing over your key after receiving payment. There are certain paperwork and legwork that you need to take care of to ensure a smooth transfer of ownership. A vehicle sales transaction may not be considered official until such formalities are completed. You also need to understand why certain processes or requirements must be completed so that you'll avoid unnecessary headaches that may arise from your noncompliance with official procedures.
We have gathered information on the essentials of transferring car ownership in the Philippines to guide you in making a successful and less-stressful handover. Knowing the steps, which government institutions to go to, the documents required and possible fees would hopefully speed up the process and give you an insight into the importance of such transfer of car titles.
Liability of the Registered Owner of a Vehicle
First of all, you must understand that the official owner of a vehicle has certain liabilities and accountabilities. In the Philippines, it has always been a consistent ruling that the registered owner of a vehicle, whether public or private, is primarily responsible to affected parties or third persons and the public for whatever accidents or violations that may occur while the vehicle is being operated. This is referred to as the Registered Owner Rule which is based on the principle that for vehicles under the Public Service Law, it would be challenging to enforce actions for certain violations if the actual owner cannot be identified due to subsequent change of ownership. The issue of having to prove the current owner would complicate whatever legal proceedings or penalties to be imposed if ownership information is blurred.
It is therefore imperative that you transfer your ownership right to the next owner of your car, so that whatever happens to it or whatever mishap it will be involved in after you have disposed of it, the liability will fall on the new owner.
In case something happens before you complete the transfer of ownership, Philippine laws allow the registered owner to demand the new owner to compensate you for whatever expenses you have incurred as a result of your liability for an accident or violation; however, this isn't as easy as it sounds as more litigations and court proceedings may be required before you can recover the amount due.
So, to avoid such a messy situation, it is best to finish the transfer of ownership process as soon as possible. The faster your name is removed from the car title, the more worry-free you become.
Important Steps to Follow in Car Ownership Transfer Process
A deed of sale proves a pre-owned vehicle proves you are the new owner but it doesn't automatically make you the registered owner. While some sellers would volunteer to process the transfer of ownership most likely for reasons related to the Registered Owner rule, the common practice is for the purchaser or the new owner to take care of the legwork and paperwork. It doesn't really matter who does it as long as the pertinent documents are available. Below is a simple yet comprehensive guide on what you need to do to complete the transfer of car titles.
Note though that transfer of ownership applies not only in the buying of secondhand cars. You might have inherited a vehicle from a deceased member of the family or someone may have given the car to you as a gift. Also, if you've bought the car via bank financing, your CR would be encumbered to the bank, and you need to transfer the ownership fully to you after you've settled your loan. For the purposes of this article, however, we will focus on the transfer of ownership for used private cars that were purchased.
Make Sure You Have the Deed of Sale
You need to submit complete requirements to the Land Transportation Office (LTO) and among those documents is the deed of sale. The duly signed and notarized deed of sale is the legal proof that you've bought the ownership rights from the previous proprietor.
A deed of sale for a car or motor vehicle must include the following information:
- Name and permanent address of the seller stating that he/she is the owner of the vehicle
- Specific information about the vehicle, specifically the make or brand; the body type (whether it's hatchback, sedan, SUV, etc.); the series and/or model (for example, Suzuki Celerio, Toyota Vios, Ford Ranger, etc.); the year model; specific color; the motor number; the serial number, vehicle identification number, and/or chassis number; plate number; file number; official receipt (OR); and certificate of registration (CR)
- The amount of sale
- The name and address of the buyer
- Whether it is an absolute sale or there are pre-conditions
- Mileage at the time of sale and other information on the car's condition
- If mortgaged, the assumption for the mortgaged car should be specified
- The date of the transaction or when the sale was completed
- Signature of both parties (seller and buyer)
- Names and signatures of witnesses
- Notary portion
A deed of sale must be duly notarized (signed, sealed, and stamped) by a lawyer, otherwise the document is not legal and binding. This means you are not legally the new owner even if you paid a large sum for the car. You also will not be able to register the car under your name if the deed of sale is not valid.
A sample deed of sale for a motor vehicle would look something like this:
Secure the Necessary Papers from the Seller
Before deciding to buy a used car, make sure the seller could show you the necessary documents, especially the OR/CR and, if available, the latest motor vehicle inspection report (MVIR). If the car was previously encumbered or mortgaged, make sure the seller has already applied the necessary transfer of ownership to his/her name, so that you will have the CR and not the Certificate of Registration Encumbered (CRE). Otherwise, the transfer of ownership process would be more complicated as you would need other necessary documents from the seller such as the Release of Chattel Mortgage stamped by the Registry of Deeds (RD) and OR from the RD.
Secure a Motor Vehicle Inspection Report
The LTO MVIR is necessary for car registration renewal or brand-new registration, so if the vehicle you bought is updated with its registration the seller would be able to furnish you a copy of this. If he/she couldn't provide it, you must have the vehicle inspected and get the MVIR as you would be needing it for your application to transfer ownership to your name.
The MVIR is important because it helps prove that the engine has the same chassis number as the one indicated in the OR/CR and in the actual vehicle. If the numbers don't match then be alarmed as you probably have a chopped-chopped or stolen vehicle and that the transaction is fraudulent.
Process for Getting an MVIR
Download a copy of the MVIR form from the LTO official website. Fill out the necessary details. Bring the form along with the vehicle's OR/CR to the nearest LTO office. You will be given a blue form for the inspection and the vehicle engine and chassis stencil will be given to you by an LTO officer. Be sure to transact with LTO officers only, not with fixers and possible scammers.
If securing an MVIR is not possible prior to secure a motor vehicle clearance, don't worry as you can do this at the PNP-HPG office later.
Secure a Motor Vehicle Clearance Certificate from the PNP-HPG Once your documents are ready, getting a motor vehicle clearance certificate, also referred to as the Philippine National Police Traffic Management Group (PNP TMG) clearance, from the PNP-Highway Patrol Group (PNP-HPG), is officially the first step in the transfer of ownership process. You cannot move on to the next step if you don't have this much-needed clearance.
- You need to submit the following documents to secure the TMG certificate.
- The original deed of sale/transfer/conveyance (refer to an earlier discussion on the format and requirements), or if applicable, the Writ of Execution from the court authorizing the transfer
- Original LTO OR/CR; if a vehicle is still mortgaged, the original CRE
- Original copy or Cancellation/Release/Assumption from Chattel Mortgage, if the vehicle is/was mortgaged
- Original copy of Company Secretary's certificate, if the vehicle's previous owner is a company or corporation
- Macro-etching certificate (vehicle engine and chassis stencil in LTO's authorized blue form)
- Confirmation of OR/CR (Cir-91-137) is issued by an LTO agency
- If the vehicle was acquired via an insurance company, original certification from the insurance company that the vehicle was not declared a total loss/wreck prior to sale
- Original copy of special power of attorney (SPA) if the transaction was done by a representative
- The Taxpayer's Identification Number (TIN) of both the seller/previous owner and the buyer/new owner
- 2 valid IDs of both seller and buyer
Where and When to Apply
Go to Camp Crame or any HPG office, look for the Action Officer in duty. Offices are open from Mondays to Fridays at 8AM to 5PM, and according to new government service policy, there's no noon break in all TMG HPG headquarters nationwide.
Step-by-Step Procedure and the Estimated Time It Would Take to Complete the Steps
It will take at least three working days to get the TMG clearance from the day of application. Here are more specific details on the process and timeline:
- Get an application form from the Receiving Section and fill it out.
- Submit the filled-out form along with the required documents. Steps 1 and 2 would take at least 30 minutes including queuing.
- You will be required to pay the necessary fees at the Land Bank of the Philippines. If you are applying at Crame or the Pasay office, Land Bank is just nearby.
- Present your payment slip at the Receiving Section of HPG MVCD and get a copy of the claim stub and action slip.
- If you do not have the blue form and MVIR yet, proceed to the Motor Vehicle Inspection Section for a physical inspection of the car and have the engine and chassis number macro-etched or stenciled. Steps 4 and 5 would take at least 2 hours and 35 minutes to accomplish.
- The full process will be done the following day, which include the processing of documents submitted (may take 1 hour), records verification (may take 8 hours), encoding and printing of clearance (at least 2 hours), counter-checking (30 minutes), final processing and certificate signing by the clearance officer (1 hour), and stamping of certificate by the clerk (1 hour).
- On the third day, you can claim your certificate. Releasing of the document will take at least 10 minutes.
Submit the Requirements to the LTO
Now that you have secured the TMG clearance, prepare the documents needed for the transfer of ownership and submit them to the nearest LTO office or Online District Office:
- Original copy of the CR or CRE
- Original copy of OR of latest MVUC and other fees
- Original copy of the deed of sale/transfer/conveyance (with the assumption of mortgage with bank's conformity)
- Confirmation of OR/CR if the transacting district office is different from the district office indicated in the current CR If submitting a CRE, written consent from the financing company in case of CRE
- PNP-HPG MV Clearance Certificate
- Duly accomplished and approved MVIR
- Appropriate Insurance Certificate of Cover (COC)
- TIN of both buyer and seller
It is advised that you bring at least four photocopies of the documents so that you won't have to look for photocopy machines later. Also, bring photocopies of two valid ID cards of the buyer and the seller, and affix 3 specimen signatures on the respective photocopies.
Step-by-Step Procedure for the Transfer of Ownership Application
- Submit all the required documents at the transaction counters. The evaluator will check your documents for completeness and validity, and if they check out, it will give you a computation of the necessary fees.
- If you do not have an MVIR yet, your car will be subjected to actual inspection and you will be given a duly accomplished MVIR.
- Settle the fees at the Cashier and you will be issued an OR.
- Proceed to the Releasing Counter for the new OR/CR, plates, stickers, and other essential documents proving the new ownership.
Estimated Turnaround Time
Some LTO offices claim that it would take 7 days to transfer car ownership from the day of application; however some car owners say that it actually takes 21 to 30 days depending on the district office you went to.
Selling a car or buying a secondhand car entails effort and time, so best to have all required documentation ready upon actual sales transactions. All possible loose ends should also be tied up first so that you'd have a worry-free selling or buying experience.
USED CAR BUYERS GUIDE LIST
- Before Buying a Car
- Buying a Used Car
- Selling your Car
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