Customary Practice of Annotating Lease Agreements on Certificates
- Despite the absence of a legal requirement, it is customary for LTO district offices to note the lease agreement on the Certificate of Registration (CR) and Official Receipt of Payment.
- The notation typically reads "LEASED TO ___________" and is usually made upon the request of leasing or financing companies.
- This annotation serves to notify third parties about the existing lease agreement and protects the interests or liens of the lessees and lessors over the motor vehicle.
Legal Basis for Registration of Encumbrances (Section 5(e) of R.A. 4136 as amended)
- Mortgages, attachments, and other encumbrances on motor vehicles must be recorded with the LTO to be enforceable against third parties.
- Voluntary encumbrances, such as lease agreements, must also be properly recorded on the face of all outstanding copies of the vehicle's certificate of registration for validity against third parties.
Registration and Notation of Lease Agreements as Voluntary Encumbrances
- Motor vehicles subject to lease agreements are classified as having voluntary encumbrances for legal purposes.
- A Certificate of Registration with the notation "LEASED TO _______" shall be issued to reflect the lease arrangement.
Fees and Charges
- A fee of P100.00 is imposed for every annotation or cancellation of the lease agreement on the Certificate of Registration.
Effectivity and Compliance
- The memorandum circular became effective immediately upon issuance on October 12, 1995.
- Strict compliance with these provisions is mandated by the LTO.