Cancellation of Mortgage Annotation on Land Titles in the Philippines
A comprehensive guide for practitioners, lenders, and landowners
1. Introduction
An annotation of a real‑estate mortgage (REM) on an Original or Transfer Certificate of Title (OCT/TCT) serves public notice that the property is encumbered. Once the secured obligation has been fully satisfied—or the lien is otherwise extinguished—the registered owner or mortgagee must cause the cancellation of the mortgage annotation so the title again reflects a clean ownership. Failure to do so can block subsequent sales, subdivisions, or loan approvals. This article consolidates the statutory bases, procedural steps, documentary requirements, fees, timelines, and leading jurisprudence governing such cancellations in the Philippines.
2. Statutory and Regulatory Framework
| Instrument | Key Provisions on Cancellation |
|---|---|
| Civil Code (Arts. 2085–2092, 2121) | Defines the nature of mortgages, modes of extinguishment (payment, confusion, prescription, novation, release, etc.). |
| Property Registration Decree (PD 1529, 1978) | §§ 57–60: registration of liens; § 62: cancellation of encumbrances “by entry” upon filing of a verified petition or instrument of release. |
| Land Registration Act (Act 496) – still cited by jurisprudence | §§ 70–71: role of the Register of Deeds (RD) in entering and cancelling encumbrances. |
| Rules of Court, Rule 74 §7 & Rule 108 | Judicial or administrative correction of entries when the RD cannot act ministerially. |
| LRA Circulars / RD Manual | Prescribe uniform forms (e.g., LRA Form 23, “Cancellation of Mortgage/Encumbrance”) and fees. |
| BSP, Pag‑IBIG, SSS, HLURB guidelines | Agency‑specific clearance formats for government and bank mortgages. |
3. When Can the Annotation Be Cancelled?
- Full Payment and Release – The debt is fully paid and the mortgagee executes a Deed of Release of Real‑Estate Mortgage (DRREM) or Cancellation of Mortgage (CM).
- Partial Release – Only specified lots are freed; a Partial Release is annotated.
- Prescription or Peremption – Action on the secured debt has prescribed (typically 10 years for written contracts), though most RDs still require a court order.
- Extinguishment by Merger or Confusion – Mortgagor becomes the mortgagee.
- Novation/Substitution of Security – The mortgage is replaced by another collateral.
- Court Order – Foreclosure is set aside, or the mortgage is declared null.
- Compromise, Dacion en Pago, or Consignation – Settlements accepted by the mortgagee.
4. Documentary Requirements (Typical RD “Checklist”)
| # | Document | Notes |
|---|---|---|
| 1 | Notarized Deed of Release/ Cancellation signed by the mortgagee (corporate signatory must attach Board Secretary’s Certificate & SEC docs). | |
| 2 | Owner’s duplicate OCT/TCT (or CCT for condominium). | |
| 3 | Original REM or Promissory Note stamped “PAID”—sometimes required for banks. | |
| 4 | Latest Real‑Property Tax Clearance & Tax Declaration (some RDs). | |
| 5 | Valid IDs of parties & SPA if via attorney‑in‑fact. | |
| 6 | Secretary’s Certificate / Board Resolution for corporate mortgagees. | |
| 7 | Registry of Deeds fees receipt (see §7 below). | |
| 8 | Certified true copy of Court Order (if judicial). | |
| 9 | Affidavit of Loss of Title + bond, if owner’s duplicate is lost. |
Electronic titles (eTCT/eOCT) require surrender of the Duplicate eTitle Card or a request for conversion if still in manual form.
5. Procedure at the Registry of Deeds
- Prepare the instrument. Have the Deed of Release (or court order) notarized in the province where executed.
- Pay Documentary Stamp Tax (DST), often ₱30 on releases (Sec. 195, NIRC) at any AAB/BIR eFPS. Present the DST‑paid copy to RD.
- Submit documents to the RD where the title is registered.
- Assessment of fees (see §7).
- Technical examination by the Examiner of Deeds. If ministerial, endorsement goes straight to the Registrar; if questionable, the Registrar may require a Rule 108 petition.
- Annotation:
- Front (Memoranda) Page: “Entry No. ______; Cancellation of Mortgage per Doc. ___, Page ___, Book ___ of _____.”
- Back (Encumbrances) Page: Mortgage annotation is lined out and stamped “Cancelled” with date and signature.
- Release of the updated owner’s duplicate title (1–5 working days for eTCT; 3–15 for manual depending on RD workload).
Tip: Bring a photocopy set for each original as RDs charge per page for certification.
6. Judicial vs. Ministerial Cancellation
| Scenario | Remedy | Governing Rule | Venue |
|---|---|---|---|
| Instrument of Release is complete and genuine. | Ministerial entry by RD. | PD 1529 §62. | Registry of Deeds. |
| Adverse claim, forgery, cloud on title, lost owner’s duplicate, or RD doubts authenticity. | Petition under Rule 108 (cancellation/correction of entry). | Rules of Court Rule 108. | RTC acting as land registration court of the province/city where the land is situated. |
| Mortgage extinguished by prescription but mortgagee refuses to execute release. | Action for Quieting of Title or Specific Performance to compel release. | Civil Code Arts. 476–487; PD 1529. | Proper RTC/first‑level court per jurisdictional amount. |
A court order is always required when the owner’s duplicate title is missing and cannot be reconstituted administratively (LRA Circular No. 35‑2019).
7. Fees and Taxes (2025 schedule)*
| Fee | Basis | Typical Amount |
|---|---|---|
| Registration Fee | LRA Circular 93‑A (per ₱1,000 mortgage amount) minimum ₱1,060, but many RDs use a flat rate ₱1,040 – ₱1,500 for releases. | |
| Entry Fee | PD 1529 §99 | ₱50 – ₱100 |
| Technical/Research Fee | Local LRA circular | ₱150 – ₱300 |
| Documentary Stamps (BIR) | NIRC §195 | ₱30 fixed |
| Certification/CTC Fee | PD 1529 §109 | ₱230 first page + ₱20/page |
*Exact amounts vary by province and later LRA circulars.
8. Effect of Cancellation
- Erasure of Encumbrance – Title becomes “free and clear” for new transfers, mortgages, or consolidation.
- Restoration of Registrability – The RD can now register a deed of sale that was previously refused because of the subsisting mortgage.
- Priority Doctrine – Any subsequent lien is now first in rank, unless earlier annotated.
- Tax Consequences – No CGT/VAT triggered; DST already minimal.
9. Selected Jurisprudence
| Case | G.R. No. | Doctrine |
|---|---|---|
| DBP v. CA (331 Phil 492, 1996) | 119163 | Mortgage remains valid between parties even after cancellation error by RD; cancellation may be annulled if done without authority. |
| Heirs of Malate v. Gamboa (G.R. 150098, Apr 22 2004) | A forged deed of release does not divest the mortgagee; annotation may be reinstated through a Rule 108 petition. | |
| Metrobank v. Macion (G.R. 218301, Jan 11 2016) | RD may refuse ministerial cancellation when release is unacknowledged or signatory lacks authority. | |
| RCBC v. Hi‑Tor Solar (G.R. 214800, Mar 6 2017) | Cancellation is discretionary when material facts require evidence aliunde; proper remedy is an ordinary civil action. |
10. Special Scenarios
- Pag‑IBIG or SSS Mortgages – Borrower must first secure a Notice of Full Payment and Release of Real‑Estate Mortgage from the agency’s Loans Recovery Division.
- Bank‑Initiated Release – Many banks directly file the release with the RD; some deliver the notarized release to the borrower—verify who shoulders the fees.
- Condominium Certificates of Title (CCT) – Same rules, but the condo corporation’s lien (if any) must be cleared separately.
- Agrarian‑reform CLOA titles – Still require DAR clearance if mortgage is allowed under §6 of DAR A.O. No. 9‑2006.
- Electronic RD (e‑Title) Provinces – LRA’s Anywhere‑to‑Anywhere (A2A) service lets a Manila buyer cancel a Davao mortgage without personal appearance, via authenticated courier.
11. Practical Tips and Common Pitfalls
- Name Discrepancies: Ensure the mortgagor’s name on the release matches the title; otherwise, secure a Sworn Affidavit of One and the Same Person and request simultaneous correction.
- Expired Notarial Commission: RDs reject releases notarized by a lawyer whose commission lapsed at execution date—check the notary’s seal.
- Unlocated Mortgagee: When the mortgagee (e.g., defunct rural bank) cannot be found, file an action for quieting of title or judicial cancellation and serve summons on the BSP receiver/liquidator.
- Lost Owner’s Duplicate: File a Petition for the Issuance of a New Title in Lieu of the Lost One (Sec. 109, PD 1529) before cancellation can proceed.
- Multiple Mortgages: Cancel in reverse order of registration; otherwise, priority issues arise.
12. Sample Deed of Release (Essential Clauses)
“NOW, THEREFORE, for and in consideration of the full payment of the aforementioned obligation, the MORTGAGEE hereby RELEASES, DISCHARGES, AND QUITSCLAIMS unto the MORTGAGOR the mortgage constituted on the property described in TCT No. ____________, and authorizes the Register of Deeds of ___________ to CANCEL the annotation thereof on both the original and the owner’s duplicate certificate of title.”
Remember to include:
- Doc Stamp Acknowledgment (₱30 DST)
- TINs of signing parties
- Ocular identification of property (Lot/Blk/Survey No.)
- Authority of corporate signatory (Secretary’s Certificate)
13. Conclusion
Cancelling a mortgage annotation is largely a ministerial act—but only after the Registry of Deeds is given a clear, authentic, and duly‑executed evidence of extinguishment or a competent court order. Understanding the statutory touchpoints of PD 1529, the Civil Code, and relevant jurisprudence will help owners, lenders, and counsel navigate the process smoothly, minimize RD rejections, and restore the marketability of Philippine land titles.