Why is it necessary to register or cancel a mortgage?
To make the real property mortgage valid, it is necessary for both the mortgagor and the mortgagee to annotate the Deed of Mortgage on the owner’s duplicate copy of the title and on the title existing within the records of the Registry of Deeds where the land is located. In this case, the registration of mortgage serves as a notice to a third party that the property is subject to a mortgage agreement. To register the mortgage and have it annotated means to comply with the rules set by the Republic of the Philippines. Article 2125 of the Civil Code of the Philippines provides:
“In addition to the requisites stated in Article 2085, it is indispensable, in order that a mortgage may be validly constituted, that the document in which it appears be recorded in the Registry of Property. If the instrument is not recorded, the mortgage is nevertheless binding between the parties.”
Moreover, to make the registration of a real estate mortgage valid and binding is to follow Section 60 of the Presidential Decree 1529 which states that:
“Upon presentation for registration of the deed of mortgage or lease together with the owner's duplicate, the Register of Deeds shall enter upon the original of the certificate of title and also upon the owner's duplicate certificate a memorandum thereof, the date and time of filing and the file number assigned to the deed, and shall sign the said memorandum. He shall also note on the deed the date and time of filing and a reference to the volume and page of the registration book in which it is registered.”
Following the aforesaid Section, the annotation of the mortgage on the title will remain until such time that the mortgagor fully satisfied the obligation set in the agreement indicated on the Deed of Mortgage. Further, in such cases, when the mortgage was already settled the mortgagor may, at his expense, requests to make the annotation be cancelled on the Registry of Deeds. In fact, under Section 62 of the Presidential Decree 1529, “A mortgage or lease on registered land may be discharge or canceled by means of an instrument executed by the mortgage or lessee in a form sufficient in law, which shall be filed with the Register of Deeds who shall make the appropriate memorandum upon the certificate of title.”
Relative thereto, the cancellation of mortgage will undergo court proceedings and that the foreclosure of mortgage undergoes legal procedures which will take a tedious and expensive way of cancellation.
Nonetheless, in terms of planning to invest a real estate asset, one should consider any annotations indicated at the Memorandum of Encumbrances on the title to make sure that the real estate property someone intends to buy is clean from any issues which may lead to litigation.