Legal basis and authority
- The Circular is issued pursuant to Section 4 (d-1) in relation to Section 5(e) of R.A. 4136, as amended, otherwise known as the Land Transportation and Traffic Code of the Philippines.
- The Circular establishes regulations governing annotation and/or cancellation of chattel mortgage and related liens under its coverage rules (Section 1).
Policy purpose for third-party notice
- A chattel mortgage, attachment, and other lien or encumbrance must be recorded with the Register of Deeds and the Land Transportation Office to affect third persons (Section 2).
Coverage of transactions and instruments
- The Circular covers the annotation and/or cancellation of chattel mortgage, attachment, and other lien or encumbrance (Section 1).
- The Circular applies to transactions involving motor vehicles, using the Certificate of Registration (CR) and Certificate of Registration Encumbered (CRE) frameworks (Sections 3 and 4).
Venue rules for annotation and cancellation
- As a general rule, annotation and/or cancellation must be effected at the District Office that issued the latest Certificate of Registration (Section 3).
- Annotation and/or cancellation may be effected in another District Office if the following conditions are met (Section 3):
- The residence or place of business of the motor vehicle owner, or the place where the motor vehicle is being used or operated, is within the geographical area of responsibility of a District Office other than the one that issued the latest Certificate of Registration or Certificate of Registration Encumbered.
- The chattel mortgage contract and/or release of chattel mortgage contract is duly recorded with the Register of Deeds of the province where the mortgagor resides and the Register of Deeds of the province where the motor vehicle is being used or operated.
- The Certificate of Registration (for annotation) or Certificate of Registration Encumbered (for cancellation), and the official receipt of payment of registration fees, are duly confirmed by the issuing district office pursuant to Memorandum Circular No. 91-137.
- The motor vehicle is physically inspected by the District Office accepting the annotation and/or cancellation.
- For transactions within the National Capital Region, annotation and/or cancellation of chattel mortgage must be effected only in the same District Office that issued the Certificate of Registration or Certificate of Registration Encumbered (CRE) (Section 3).
- When the confirming District Office confirms the documents and receipts, it must record the transaction on the face of all outstanding copies of the CR and CRE of the vehicle concerned (Section 3(c)).
Second mortgage annotation requirement
- If the mortgaged property is mortgaged again by the mortgagor, written consent of the mortgagee is required.
- The written consent must be endorsed at the back of the Chattel Mortgage Contract and must be recorded at the Register of Deeds (Section 4).
- The existence of the prior mortgage must be indicated on the new Certificate of Registration Encumbered (CRE) (Section 4).
Recording and required encumbrance book
- The record of all encumbrances of motor vehicles must be kept in a Book of Motor Vehicle Encumbrances (Section 5).
- The Book must include these columns: motor number, chassis number, file number, plate number, certificate of registration (CR or CRE), and the time, date, and number of entry (Section 5).
Fees for annotation and cancellation
- A fee of PHP 100.00 must be collected for every annotation and/or cancellation of chattel mortgage, attachment and lien or encumbrance (Section 6).
Repealing and conflict clause
- Any circulars, memoranda, or regulations that conflict with these guidelines are modified, amended, or superseded accordingly (Section 7).