LTO: Chattel Mortgage Required for Motor Vehicle Registration

The LTO Central Office issues the circular to address reports that some district offices register mortgaged motor vehicles without presenting the chattel mortgage registered with the Office of the Register of Deeds.
The circular directs LTO offices to prevent any registration transaction from proceeding unless the chattel mortgage has been properly registered and presented for the required registration process.
Concerned LTO personnel must enforce the chattel mortgage registration requirement in all relevant motor vehicle dealings.
LTO personnel who fail to enforce the requirement—whether deliberately or not—face sanctions under pertinent laws, rules, and regulations.

Section 4.2.17 of the Motor Vehicle Manual of Operations on Motor Vehicle Registration governs the procedure to be followed.
Section 4.2.17 requires that in all dealings or transactions on motor vehicles, a chattel mortgage or release thereof must be first registered with the Office of the Register of Deeds before any registration transaction is effected.
LTO registration must therefore be conditioned on the prior registration of the chattel mortgage (or the release) with the Office of the Register of Deeds.
District offices must not effect registration of mortgaged motor vehicles unless the registered chattel mortgage is presented in accordance with the required procedure.

The registration process for mortgaged motor vehicles must follow the ordering rule in Section 4.2.17: Register of Deeds first, then LTO registration transaction.
The circular requires district offices to correct any practice that allows registration to be effected without the presentation of the chattel mortgage registered with the Office of the Register of Deeds.
The applicable procedure applies to all dealings or transactions on motor vehicles involving a chattel mortgage or its release.
LTO personnel must apply the procedure consistently across registration transactions involving mortgaged vehicles.

The circular applies to the registration of mortgaged motor vehicles handled by LTO district offices.
The circular covers dealings and transactions on motor vehicles involving a chattel mortgage.
The circular also covers dealings and transactions involving the release of a chattel mortgage.
The requirement governs the sequence of transactions: the Register of Deeds registration must occur before any LTO registration transaction is effected.

The circular requires strict enforcement of the chattel mortgage first registered rule.
LTO personnel who fail to enforce the requirement are subject to appropriate administrative, civil or criminal sanctions.
The applicable sanctions are those allowed by pertinent laws, rules and regulations.
Liability under the circular extends to failures occurring whether deliberately or not.