In the Philippines, a Torrens Title—whether an Original Certificate of Title (OCT) or a Transfer Certificate of Title (TCT)—is considered the best evidence of ownership. However, ownership is rarely "absolute" in the sense of being free from obligations. Behind the front page of a title lies the Memorandum of Encumbrances, a chronological list of claims, liens, and restrictions that "run with the land."

Clearing these entries is essential for owners who wish to sell, mortgage, or enjoy unburdened use of their property.

What is a Memorandum of Encumbrances?

The Memorandum of Encumbrances is located on the back (or subsequent pages) of the title. It serves as public notice of any third-party rights or legal limitations affecting the property. Under the Torrens System, whatever is not annotated on the title generally does not bind innocent third parties; conversely, anything annotated is legally binding on everyone.

Common types of encumbrances include:

Mortgages: Real Estate Mortgages (REM) in favor of banks or individuals.
Levy on Execution/Attachment: Claims by creditors through a court order.
Adverse Claims: A sworn statement by someone claiming a right or interest over the property adverse to the registered owner.
Lis Pendens: A notice that the property is the subject of pending litigation.
Section 7, Republic Act No. 26: A two-year lien regarding the reconstitution of a lost title.
Easements: Rights of way or restrictions on usage.

The Process of Cancellation

Cancellation is the legal act of "removing" an entry from the title. In practice, the Registry of Deeds (RD) does not erase the entry; instead, they stamp or type "CANCELLED" over the specific memorandum and provide a new entry number explaining why the cancellation occurred.

1. Cancellation of Real Estate Mortgages (REM)

When a loan is fully paid, the bank or creditor issues a Release of Real Estate Mortgage.

Requirement: The owner must present the notarized Release of Mortgage along with the Owner’s Duplicate Copy of the TCT/OCT.
Procedure: File these at the RD and pay the registration fees. The RD will then annotate the cancellation on the original and the owner’s copy.

2. Cancellation of Adverse Claims

Under Section 70 of Presidential Decree No. 1529 (Property Registration Decree), an adverse claim is effective for only thirty (30) days from the date of registration.

Automatic Expiry? While the law says it is effective for 30 days, it does not disappear automatically.
Requirement: The owner must file a Verified Petition for Cancellation of the Adverse Claim. In many jurisdictions, a simple letter-request to the Register of Deeds suffices if the 30-day period has lapsed, though some RDs require a court order if the claimant contests the cancellation.

3. Cancellation of Notice of Lis Pendens

A Notice of Lis Pendens ("suit pending") can only be cancelled under specific conditions:

By Court Order: If the case is dismissed, or if the notice is for the purpose of molesting the adverse party, the court may order its cancellation.
By Final Judgment: Once a decision becomes final and executory and the property is no longer in dispute.

4. Cancellation of the "Section 7" Lien

If a title was administratively reconstituted (because the original was lost in an RD fire or flood), a lien is placed for two years to protect anyone who might have had an interest in the original title.

Requirement: After two years from the date of reconstitution, the owner can file a Verified Petition in court (or a request with the RD, depending on the circumstances) to lift this restriction.

Legal Requirements for Cancellation

While specific documents vary based on the encumbrance, the general requirements include:

The Original Owner’s Duplicate Certificate of Title: You cannot cancel an encumbrance without presenting the actual physical title.
The Legal Instrument of Cancellation: This is the document proving the encumbrance should be removed (e.g., Release of Mortgage, Certificate of Finality of a Court Case, or a notarized Affidavit of Consolidation).
Payment of Fees: Registration fees and Information Technology (IT) fees must be paid to the Land Registration Authority (LRA).
Valid IDs and Tax Clearance: Usually required to verify the identity of the person requesting the cancellation.

Why Cancellation is Necessary

Failure to cancel an encumbrance, even if the underlying obligation is fulfilled, creates significant "clouds" on the title.

Marketability: Buyers will rarely purchase a property with an active mortgage or adverse claim.
Financing: Banks will not accept a title as collateral if there are existing liens or a Notice of Lis Pendens.
Succession: It is significantly more difficult for heirs to settle an estate if the titles are burdened with decades-old encumbrances that were never formally cancelled.

Judicial vs. Administrative Cancellation

Administrative Cancellation: Done directly at the Registry of Deeds. This applies to voluntary encumbrances (like mortgages) or those that have a prescribed legal expiration (like an expired adverse claim in some jurisdictions).
Judicial Cancellation: Requires filing a petition in the Regional Trial Court (RTC). This is necessary for involuntary liens where the claimant refuses to release the claim, or for complex issues like the cancellation of a Notice of Lis Pendens or the lifting of a Section 7 lien.