Annotating a Mortgage on a Land Title While a Transfer Is Still Pending

A Philippine-law guide for practitioners, lenders, and registrants

1. Why this situation arises

A buyer and seller have executed a Deed of Absolute Sale, but the deed has not yet been registered with the Register of Deeds (RD). While the transfer is “in limbo,” the (would-be) owner or the seller—sometimes both—wants to use the land as collateral. The lender, in turn, needs an annotated Real Estate Mortgage (REM) on the face or dorsal page of the existing certificate of title to ensure priority and constructive notice.

2. Governing statutes & regulations

Source	Key provisions
Civil Code	Art. 2124-2127 (perfection & formalities of REM); Art. 1626 (double sale rule)
Presidential Decree (PD) 1529 – Property Registration Decree	§53 (registration of conveyances), §60-62 (primary entry book & priority), §71 (registration/annotation of mortgages), §68-69 (dealings while transfer certificate is “subject to pending registration”)
Land Registration Authority (LRA) Circulars	e.g., LRA Circ. No. 88-2016 on sequential numbering; LRA Circ. No. 35-2019 on electronic titles
Bangko Sentral ng Pilipinas (BSP) Regs.	Manual of Regulations for Banks (MORB) on collateral valuation & REM documentation
Revenue Regulations	RR No. 13-99 & 12-2018 (BIR Certificate Authorizing Registration or “CAR” prerequisite for transfer, but not for mortgage annotation)

(Always pair these with the latest RD/LRA issuances for your locality.)

3. Basic concepts recapped

Pending transfer – A conveyance (sale, donation, exchange, hereditary transfer) whose deed has been entered in the RD’s Primary Entry Book but has not yet ripened into a new Transfer Certificate of Title (TCT).
Annotation – A marginal note on the title and on its owner’s duplicate that memorializes an adverse claim, lien, encumbrance, notice of levy, or, here, a mortgage.
Priority principle – §60 PD 1529: “He who is first in time in the Primary Entry Book, is first in right,” subject to good-faith defenses.
Constructive notice – Once annotated, the whole world is deemed to have notice of the REM; subsequent buyers or encumbrancers take subject to it.

4. Who may mortgage—and whose consent is needed?

Scenario	Who signs the REM?	Consents you’ll need
Seller still holds title; buyer’s deed unregistered	Seller (registered owner)	1) Buyer (to avoid breach of sale warranty) 2) Spousal consent under Art. 124 FC if conjugal
Buyer has lodged deed; pending issuance of new TCT	Either Seller or Buyer¹	1) Other party’s conformity 2) Spousal consent
Estate sale pending settlement	Judicial administrator or heirs	Court approval if estate under settlement
Corporation as owner	Corp. via board resolution & Secretary’s Cert.	SEC doc stamps; notarial requirements

^{1 If the RD has already “logged” the deed, most RDs will require the buyer (incoming owner) to join—or at least consent—to the mortgage because equitable ownership has shifted. Always check local RD practice.*}

5. Documentary checklist

Real Estate Mortgage (REM) contract
Owner’s duplicate certificate of title (OCT/TCT)
Deed of Sale / transfer document (if already filed)
Latest Tax Declaration & Real Property Tax clearance
BIR CAR (needed only if you intend to register the transfer simultaneously; not required solely for a mortgage annotation)
Special Power of Attorney if signed by an attorney-in-fact
Notarial & Documentary Stamp Taxes (DST on REM: PhP 20.00 for every PhP 5,000 of the secured amount)
Transfer tax – not payable for mere annotation of a REM
Registration fees – Schedule per LRA & RD; usually 0.25% of the amount secured, plus entry fees
Bank clearance / credit committee approval (internal to lender)

6. Step-by-step procedure at the Register of Deeds

Primary Entry: Present the REM and supporting docs at the window. The RD assigns an Entry Number and time-stamp.
Technical examination: The examiner checks (a) authority of signatories, (b) completeness, (c) math of DST, (d) subsisting liens.
Computation & payment: Pay registration fees and DST (if not yet affixed).
Annotation:
- If the transfer deed is already in the primary book but precedes the REM, the RD will annotate the mortgage under the same title—not yet on the new TCT.
- The marginal note typically reads:
  
  “Entry No. __**; _____ o’clock, ____ **. Real Estate Mortgage executed by _____ in favor of _____ to secure ₱****_, due on _____; Doc. No. ___, Page ___, Book ___, Series of ___.”
Return of Owner’s Duplicate: RD releases the updated duplicate with the annotation.
Issuance of new TCT (later): When the deed of sale meets all tax clearances, the RD cancels the old TCT and issues a new one carrying forward the mortgage annotation to the face of the new title.

Tip: For e-Torrens provinces, steps 2-4 are done in the LRA’s e-Title system; make sure the e-TDN is generated for DST proof.

7. Priority & risk allocation

First in time, first in right. If the deed of sale (Entry No. 1) precedes the REM (Entry No. 2) and both eventually register, the buyer’s ownership is subject to the mortgage.
Double Sale scenarios (Art. 1544, CC). A second buyer who (i) registers first in good faith, before the mortgage is annotated, can defeat both the mortgage and the first buyer. Vigilant recording is key.
Mortgagor in good faith. The SC in Development Bank of the Phils. v. CA (G.R. 120071, 1998) upheld an REM inscribed after the buyer lodged his deed but before buyer obtained title: seller was still the registered owner, so REM bound the land.
Equitable mortgage pitfalls. If the “REM” is intended merely as additional security to a conditional sale, the court may re-characterize it. Proper form and separate consideration are essential.

8. Cancellation & release

Release of Mortgage or Cancellation of REM (signed by mortgagee & witnessed / notarized).
Owner’s duplicate title with annotation of release.
Entry in primary book; pay nominal fee.
If the new TCT is already out, the release must be entered on that new title, not the old one.

9. Selected jurisprudence

Case	G.R. No. / Date	Doctrine
De León v. IAC	73508, Oct 27 1987	An REM by the registered owner after executing an unregistered deed of sale is valid and binds the land until buyer registers.
Spouses Abalos v. Heirs of Gomez	158989, Sept 1 2006	Buyer’s unregistered deed is inferior to a later-dated REM if the REM is annotated first.
Sps. Estreller v. Court of Appeals	109645, Jan 19 1999	Annotation operates as constructive notice to the world; subsequent purchasers in bad faith are bound.
DBP v. CA	120071, Jan 15 1998	RD cannot refuse annotation even if transfer taxes unpaid, because mortgage is a separate transaction from transfer.

10. Practical drafting tips for lawyers & loan officers

Recite the pending transfer in the REM’s “Whereas” clauses to put everyone on record.
Attach a Seller’s Undertaking to register the deed promptly and surrender the new TCT for re-validation of the REM within X days.
Include a “loss of constructive possession” clause—borrower promises not to alienate or further encumber the property until the new TCT carries the REM.
File a Notice of Lis Pendens if the transfer is litigated; this blocks subsequent encumbrances.
Use one Entry Number when simultaneously filing deed + REM; pay two sets of fees but preserve a single chronological thread.

11. Due-diligence checklist for lenders

Authenticate the title via RD Certified True Copy not older than seven days.
Verify Real Property Tax is current; arrears become a superior lien.
Check for BIR Warrants or adverse claims.
Inspect physical possession; under Heirs of Malateo, an unregistered possessor may still challenge.
Require borrower to escrow taxes & insurance pending title transfer.

12. Common pitfalls & how to avoid them

Pitfall	Consequence	Fix
RD refuses annotation because CAR not yet issued	Delays & interest-rate risk	Cite DBP v. CA; mortgage ≠ transfer, CAR not prerequisite
Seller mortgages after receiving full price without buyer’s knowledge	Fraud/double encumbrance	Buyer should lodge deed immediately and monitor RD day book
Bank releases loan without seeing the REM marginal note	Unsecured loan if borrower absconds	Condition loan release on CTC with annotated REM
Incomplete SPA form	RD rejects filing	Use LRA-prescribed SPA template; attach photocopy of IDs

13. Sample marginal note (model language)

Entry No. 2025-0915-00421; 10:32 a.m., 15 September 2025 — Real Estate Mortgage executed by Juan Dela Cruz in favor of ABC Bank, Inc. to secure the principal amount of ₱5,000,000.00, maturing 15 September 2030, with 12% p.a. interest, covering Lot 5, Blk 3, PSD-04-012345, as per Doc 191, Page 42, Book VI, Series of 2025 of Notary Atty. Ma. Santos.

14. Final take-aways

Registration confers priority, not validity. A mortgage is valid between the parties upon signing, but enforceable against third persons only upon annotation.
Pending-transfer status does not bar annotation. The RD must accept the REM for entry (§53 & §71, PD 1529).
Time is of the essence. In the Torrens system, speed determines who wins in double-sale or double-encumbrance contests.
Always coordinate filings. Best practice is a single-window approach: file the deed, tax docs, and REM together, pay all fees in one RD visit, and walk out with a date-stamped owner’s duplicate.

Disclaimer: This article is for information only and does not constitute legal advice. Laws, issuances, and RD practices change; consult Philippine counsel or the LRA/RD with jurisdiction over the property for specific transactions.