CREDIT-TRANSACT·IQN·s· .

SAN BE,DA LAW CENTR_ALIZED'BAR OPERATIONS -'MEMOR~ AID 2019·

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',
..' ,_ ·• good faith: No such. good faith exist if the security
:,
PERSONAL PROPERTY.-' interest·ih the mqvable property-was registered pri_or
-sicuR1_tY:Ac:r · .. to bis-Qbtajninii:t~e
. . . .
p'roperty
~· ~ . (R.A.. 110f?7, Se~.,'21):
. .
(R.A: 11~57) P.roc~e.ds . . . ., . ,

Effectivity o'f the PPSA . ·. . .

. .
Any property- ·received upon s~le, lease _or .. other.
disposition-of collateral,. pr whatever is collected-on
or distrit:)uted 'Nith respect-Jo .the cb!lateral, cl§lims
RA 11057 was passed bn August 17 ,· 2018 and ;:irising out of the loss or damage tci the coll.~teral, as
took .·effect on September 7, 2'018. HoweveJ, t~e weir .as·· right ~a· . insurance paymen.t or- . other
imp)~me,nta~!Orl Qf· ihe PP~A .. sh~II. ?e·. cqnditi.qg_.~,d_ ... compensation_ for.loss or qamag~ of'the_collateral
.up-on the establishment and oreration of the registry·· ··. -(R:A. 11057, Sec. 3, Par. f}, .. ..
(R.A: 11057: Sec._.68). · · · ·
'Perfedicin- in Pra"c·eeds· . . .
. Scope of the PPS~ . . . - · 1 . Proceeds" in th&-fbrm·' of money,·· accounts
, This. act' s,hall appl~. to }ii tr~nsa~tions o'f any form · . rec;:~,iv~IEl: ._peQO!!?~li~ _ln?!';:~.rn~_nt~. o~· ~~-posit ..
that secure an obliqation with movable C<?l.\atE::Sc!I,. . -. . .accourits :... ·a:secunty interest. shall e?(tend;·to ..

-~u
~·xc~p_t ifitere:ists i~.aircr~ft~-.s.ubject.~o ~.A. 9497.-.and · · · : . pro'c~e1is· ~f'ih'e tl;)l!~.t¢r~yw)th_cici_t.f?rth'fr a'ct afl
interests\in ships subj~d to 1?.p,
152l(R.A. 1.1p57~ _ ·. ·, .be tc:iri_ti):iu~~sly p~rfected_; ·· . .
Sec. 4). - · · :. '2·. - Proce~d~ If) . a form different from; money,
. . ; . .r .-r.~T\.. . . t . J :
i\'lad'counts. receivable, negotiabJe. instru'l)l_eots qr
PPSA. repealed. the laws- on ~.onve.'J!ll?[la.lf If_~~s~- _ J.. 'V_ dpp9!it ·~<souhts~ . th'e, se·curity- interest IA :SLJCh
. and r chattel mortgage, an'?;- .. _,~ac_ef~~ a .. " . . · prci.cJ(cl~s~ ·_oe:, perfectf1.-d:; by __ one of the ·
framew,~r~ ·for"sec~reu· .tranfa-
· Sec -. 66):' · ., _ . ; :
.· · : ·, · · : · . · · ·
. J . ' ¥.. :f:h ! •
·· ~ . · · -:
r· <1P1 •.Jt'
_ct,ons_,){Ji?:~ .. 1. ~~-'....:=. ,:f . - --..means-:Q_p:-8P.li~?bl~ · -to ··th.~.· -r~I~- vc:int. tYP~. of_
w· c;oar~a(~1t!Jjn .flfteen (1;i) days .. _qf.~e~ . the
~
graJtonee~ives·su~_ti _pr~.<::~~~s; otherwise, the,
Security ln~er~~J ·. · > , . . ··-~;,
11 _.·1 secil ity inte~t)~ _such ~roce~~:·shall not. be
oth_~! pei:formanc~ of- a_ri ot_»Q~or_; re~J.~f~l~~L::., 'j'.!: -~ '14): /..
w~et~_ef. t~e parties bay~ aepO_ijP._ma~~~_,\i! ·.~s&,a/ r!;; ·Ir' , . ·. ~
. \ . , .
> · ·
. . • ,. .
_
.
. .·
·, (R.A. 110.q7, ~e~: 3 U)). :·'
. ·.. . '. .. · , . ,,
~i-(f):
se:curi~finte're.:3t,_an~. ~.eg;,i_rd es~the_t~yi~1~f
\ ·· .
.. '\'
qSS~t~~lf0:o,bj~ctsf[r;;,t)le.i1:'.SA
_ ....
.· •,. ·
ff;F. t·ff:1-- _ ~6ci}Y.1:~ter-~s.t (1!;.~.---_.110:57, 'Sec.. 3 (b)(1})' -,
~ ~··. ~ ~{&f'.~~-qd1~~C9n!FcftS (~.~.9~.·~.(~},(~l},. . . . · ,
£ ... .'' · .•

~- s~Gurity _mteres.t: -1s er l!ed e~/,a Jf: .C!l.~{g)~-. \1{,<~a~e ot;.o.od~_(Jec. 3 (.C)'(~)) .. ;.
agreement,-under wh1c~ the.d~~t.?r. gr~u,ts .~sec11~. , :~~~lJl)Js R~c~i~~~.1.~. (?~'?-},Ci)}.;_ :"'- ~ :.:· ..• , :- .
. intere:>t· in Jhe _a_ebt?rs·:·p~?P~rty-.;asf.G.cilta~~ra¥o8 . - ?-~1t:eiguiprr.J~.~t .. (~f~--!J_;:·. · .:· : ·. ·. :_/' ·;.,_:, ·,.,
.1o<?f1·or other ol51Jgat1on (R.A..11Q5z~e·~j,(~~~llfo~v~n~~fSec.7); · · ·.• >-.-.·· ··.· ... .' '. .' ..
. ,. ·· -- ·. · - _· . -~-~ ./·f}(.{)~7~epo~it.Ae9ount (s'~c. B (b)),: . ' · ·.• · _ .
Characteri_?tiss of Se~urit~ ln~~-r~~t. ~GAF~ Z. M. t\11r\~¥r;ri~f p~o:p~(tf(~~<?·., 12); · . · . -: , . · ..... :
_ 1, ~o~s_en~ual .c?~t~?_c.t_-}t,.always·.ar~s~~~-the ·. · .(;~~ ~e·gtti_abl.e.ln}'tfµrri_e~ts _(Sec. 11(a)):" - . . · ..
. me.etmg·,·of. Hie min.El~· ot_-the .. g~antor:. _ancr.i:tb~edutity ·certificate ($.ec.d $(a)); · ."i · · . · .. ·
·.secµred ci:_edi,t~r;_.~-'. .·, :'. ~ . . <·,-: .... ·,:.,.--.,:'.. . 11 ... Ele~tr0nif; Se~urities:(s~c;.18'(tJj; . . . , -< :: ,.
2. ·· ~cc,·e_ss~gry. Qbh9at1on- bec~u.qe it CaJ)n9f·exist . . . :1:2. Co·nsum·ecgoods;(Sec/23(6))·:· / , .... . . .'
: \..W!tholJt ava,lid;princlpaLQblJgatio_n;_ .... ··, ·,.') :' \ . 13:'-lntellectLfai·pr,9perti($e,c:23(c)J; .· ·. /· . ·, ... ·
3. ~or.mal - reg[~tration.}.~ Yegis_try·is 11eces_s~rym ·. . 1.4. pv_estQ_~k(Sec. 24j;. ·.: -. · · . · . ' ... , . . ~·
·",:brder to.bind thi'rd·.per~bnS,;<· · .' ... ' ··: ... • ·,_'.-:, · · _ · · 15: Fixtur.es· ·. accession·s· anch commingled ·goods :
4 .. -!!~ilatfiiral contract:·~ OrJl/t?.·e cr~di~?f.:is ~~li~e~
to_:. 'pe'rform ·by· d1sch.arging,··.tne ._hen·. l!ppn. · .. ·..
• '. ~-- (-Se~... ;hs). , . '·- ..... · . -~
.._ '- ·. . .
> · ' ./-. · . :.,
" . ··. ~ :· . .;
. "fulfiilmentof.the pri_risip.a_l obliga(icm .• : . ,- : · .·. ; ~-.. .. ·A security agr~~m:ent'.may.,p,r:ov.i9e)o~ ttw c_r~aJ_ii:m o(,
· · · ~· · ·~: · - · .. · · ·· . . . ~r se.cutity: ii:itere:~t. Jn. c! ·. future ·property,' ~ot · the .
ExtenF .. ' .. _ . ' . - · . ·. · . secµrity inte'rest iQ that pfpp~rty is cre~Hed on!Y'W~~n-
. Secur\ty · interest , . cpn,tir:i1,1es, · .. [ri: , qolJa.t~ral th~ 1~·~rart~( acg~i~.e~::·righ't(~·~· i(.or:.-.th~. ~~w~i"/Oc ,.
. liQMithstandir)g sale., lease/excl;Jange,: or <?tt,er encumber·1t. (R_.~. 11Q51; .. Sec; 5 'f'ar.·b). ;-~ '.
disppsition/of 'ttie .:ccillater.?I .. :-~ncj :·e?(ten_ds · to its__ .. .· · · ·
ic;lentiriable' pr'-trace~ble pr,o~ee.ds. (R.A. 1'1~57; :Ser . . Form· : . . . ,. . . . . . . ,.
9) · · . ' · · . - . · ·· · ... ·. ' · '. _· .· A security. agreementni.ust pe 'Contained\n a written
'. · ' ' confraGt $igned by'the parties'.. It i'ylay consist .oto:nei
Ex~'e'ption.: ·Any barty wtio ~btaj,~s::J~. ttie· or~i~c;irYi·. . 6r 'mcfre. wffting~. that, taken .toge~ber,, es\ab1i.sh the
- course. of ··business, :any movable · pr.61:)erty - i~terit cif.ttietparties to cr~ateasecl'.Jrity' inter.est (R.A.
c~:int?°if)ing_ a S~~urity,· inf~f8S~ ~ha,11_" ta~E(the· Si:]me. 110,5-f, :Sec:: 6). . ' ' .
free of.such securi_ty in't~r_est p~c;,vicle·d he. was ·in ·

. .
712 2019 SAN SEDA LAW GENTRALIZED·BAROPERATIONS.
. \
 A description of the collateral shall be considered 3. Perfection by Control
sufficient, whether it 'is specific or general. if it Control of the security interest.- is . perfected
reasonably identifies. the collateral. (RA .. 110.57, ·_ · automatically if 'the depo_sit taking· Institution or
Sec: 7) · -c- -, the intermediar:y ·. fs '. the secured · creditor .
. Otherwise, a control agreeme'nt or'.notation· of
Perfection of Security [nterest . the. security interest is necessary (R.A. 11057,
A 'security interest .shatl be: perfected when it has· Sec.-13). ·
been created and the secured creditor has taken-one
of thefollowinqactions (R.A. 11'057, Sec . .-'11): · . Assignment of Security Interest
-1, -, Registration. of a notice with the Registry (Sec. If a secured creditor assigns a perfected security.
. 12;-Par'. a); - · . · . if']tere$t, an amencfmeht notice.may be registere'd_to
2. Possession of the- collateral· by the, secured renect the assignment (R.A. 11057, Sec.' 16).
creditor (Sec. 12, Par. b); · · ··
-3. ,Cor-i'troi'· of investment- property anc deposit The Regi_stry . . . .
-.', account [Sec: 12;· Par. c). '/ ."" . The Registry shall: pmvide electronic .means for
. . . ... . .
. . ,\ r'egistiation an.d searching of notices (R.A. 11057,
On perfection, a security· interest becomes effective • Sec. 26, Par: 8). ·
aqainstthird parties (9ec. 11 ). . . .
-lnf~rmation .· contained in the.: registry shall be
A security i~terest in any ta~gible asset mJy be . . considered as' a. public ;re{cord .. The: electrO:nic.
perfected by- regi_stration or-possession .. A security . rec9rds of the -Registry· shall be the· official records
interest in investment- property anddeposlt account ·, "(R.A. 11057, Sec. 27). ..- . ; .. ·:
may be perfected by registration or. control (R.f.\.
11057.,. S$CS. H _& 1-~)- .. · ·.. ~ .: , ; .. ·. :_Regi_~lration · contributes to the effici_ent· ...
.&

estal:llishment of. a sy?tem of priority ·security

interests, by' aJ?plying priority rules.based 00,:the tirne
of registr<;1tibn. · · · ·
- ·. . •.
_' Notice~,. , .
. . The. . dutie:{ of. the' -Registry -shall' 1be-- .- fT1erely
·. -·:c· ,.'\

. ( . , • . administrative in -nature. ·s'y; 're-gistei'ing, a ·notice or

refusing o reg1s er a.notice, th.er Registry,:does not
determine the sufficiency., correctne.s~;-.authenticity,
or validity of any fnformatiqrkontained'in'.the.notice
. · B/ possession
. . ·:...
·.. . · •· ..
- (R.A:.11057, Sec. ~5, Par.~- . · .
·~· . ) ; . . ·.. .. .. ·,. ·~ , . . ~. .. . . ~-:-,
-:' ·-
By Control Priority ..Rules . . , .. , .
· The' priority .. of security··interests· and . liens ih · the
......... ··. '\ . safT)e collateral ·shall ·.Qe determined acc:;prding'·to ·
..
7
•· 1·-, : . Pe~eitib~ by'Re~i-st;~i'ti6h. . -~:- a
' time 'of_~egistratiori of n9tic_e cir.. per:fe~_tion· by other.
means, without regard lo·the ·order of creation ·ot the ·:.
,. A ~ecwity.Lnterest.i_n_ 1.) atanqlblernovable asset.·
; . . ' 'such .c!s··m:otpf VE;,fi'ic!e, ~>'
i_r:ivest.m,enfpt~pe~fy;- .. ·
security ir.iter.ests_~nd,lieos
I . - ··.'
(R.A:::1-1057, Sec. ~7)
. . '.
'.
• . : : .s.~c~ as ~e.~Uifite~. ~) a_ deposit a'G.C:_R~~rit such as .
.:.· P'riorits, for Perfection _by·Control-· '·· ,.,
· -: . , ~<:IV}ngt_ .~c.cq~n! .. m~y ~e_·· .. P~rf'.ecte.P,_ qy
·1. A security iriterest .in a.-·deposit account with
·· reg1~J~t1_o~_Q(the se?urity lnt~re'st in !fig re~i.stry. ·
· · ·. resp$c:'t· tti which · the -s.ecure c~editor · is the
)-'~OQ:registrati~Jn :dbes' ·.IJO.t aff~c( il'rimediate :: . ·_. . .. depos\t~taking instiiu_tio'n or . 'th~:, intermediary
'parties (Filipir,a~.Marbie·:corp. v, /AC, G.R. No. · · • ·-shall' h'ave priority ayer·' a competing- secu'rity
· ~ [;6801Q:_Maf_ 30, t'986J., _· -·. ._ :·:\ _: •.. . · int~rest perfecte_d by-pny method., . _ . . .
0A
. ·. . .
'2. security- ·interest in ··a deposit ·account .or· .
""'\ .

·. 2 . . -p~_rfection:by· Pdsse·s~i-on . ·. .1. i_n\estment _property 'that' is .:per:fectecj a by.

. A • s,e§urity inter.est ni'ay ·:~~ perfected. by control_.'.~greell')en.f shall have a· priority oyer a
. 'possession.whfcft Is ho1c:1lng o't=t_he._instrument: com·peting. ·security. interest of' dep6sit-takfng .
., · ir:istitution· or the jntermediary. · .·· ·
.. . . .. :_ . .- ·_ .. . . ....... .
Under the.Civi] Code, po?s,es·sion .was essential 3. · The orqer of pri~rity among competing security
.. for~ I_h~ cr'e'$,t1pr, · 'pt a.
)e:.cu_rity . in· P,er~onal
..
interests in a:· d.eposit a<;:counl':-or investment
property'.that were perf~d.ed:by th_e:cciriclusion .
: ;Pf~per'1y: Und_er tQe ·_ppsA, posses~ion is.• only
. · . · requir~d for third party effecuvene·ss. · . of control .agreements shall '·be determined on .
. the basis of the tin,e of conclusion or'the control
·agreements. · · ·

2019 SAN SEDA LAW CENTRALIZED BAR OPERATIONS-, 713

 CREDIT: TRAN.SACTIONS
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SAN'BEOA LAW CENTRALIZED BAR OPERATIONS - MEMORY AID ·2019
.rnrssew;;wqm w;:ti;:@st & & ~ 1w ut• :tsw e @< .. at e,n . :.;1t:-:i.:fin a ¥# .ffi1t@4s s;nse @'~Xii t::•z;c q;;:&P=ttA,&9, ¥i I
4. Any r:ights to set-off that. the deposit-taking 2. · ~lth judicial.process .
. institution may have against a qrantor'sriqhtto . If u'pon default, the,secur_ed creditor.cannot take
payment of funds credited to a deposit account .. pb$Session ·.of the. collateral without br~·ach of
shall have a priority over a security interest-in the p~ac~. !_he secured creditor: . ·
... deposit account.. . . . '.
5. A security interest ln a security certificate a. Snail .be entitled to an. 'expedited hearing
.perfected 'by the secured creditor's possession upon application for the· possession of. the
ot. the certificate shall have ·priority· over a· - . · .collateral; .:
: competing - security interest perfected by . b. Provided the debtor; grantor,· and if the
reqistration ofa notice in the-Registry. · , collateral· is a fixture,· any, real.. estate
. 6. A 'security interest ·ir:i. electronic .securities not rnortqaqee, .. a · copy of the· 'application,
held .yhh an intermediary perfected by a notation . including all' .supportinq evidence and
of the security interests in 'ftie books maintained documents; . . . .
for that purpose by or on behalf of'.the issuer c. _ Is entitle,d to an orae(gra.nting possession of
a
shall have priority 'over security interestin the - the collateral upon the court' finding that a
same securities perfected by any other method: default has .occurred under the security
7 .. A security inter~st _ in· .electroriic securities not aqreernent. -

u: .fQ/
'.
.helo .with -an Intermediary perfected by the. . . .
conclusion of a. control' agreement· shall have .. . . . ~es'sor of the collateral refuses to yield
priority_ over a security _interest in the~sa'ii;'"e go.~.session:. -. _ '. . .. ..
· secudti~~ perfected by registratio.},_oftt'noti~i~
the R_\:ltJ1stry. . ·
- 8. The order of priority-among co~ple®,9ie~urity.. : ,
~ , /'-. ~ (_~ . . . ._i, njo~gee has th: riqht to m_~intain:
£in_act10..n. 0 recover possession: or
. 2: RecJ/er )>~~~pleviri the -collateral from-the
. . .
· · 1

~n~erests· i~ e'lectro.nic-sJ~cu~iti~s n~jlclJ.{J.l~·an:" ,.s'=, ~~gag'@,,f-bbrr' ro.m ,<i11'.lY 'person · in··. P.b$ses~ion
.iritermediary ·. P,erfec!e_d_ bJ''A!l:~fc0nclu.s1.on \lb
1.._~ w (R.'A\. 11{5l', ~ec: -4~)..
control aqreernents 1~· ae;e.rmin·e..{on the; ~:as1s ~ J'.1\.\·_ · ·. • .· -~: : \-, ... _ _ . ·. · .' . • ...
of the. ti.me of C?rJt~usion 9.t th. ··. control f'V"°' Enforce!T!e,:it·.er~s\of .Securj_ty lf'!teresf ,
agree_~~nts (R.A. 1'-105,, _'sect,8). · . _ ~, - :ii ~ryrg1est _ra~k~~~)u~e,d ~reditor ~r the c.r~di~or .
__ - ·· -_ · -- - ; ·N_ . -~--· !Ill ~4Rf'asec_unty: 1~.t~r~.stt ~h?t.·has th~ highest ~nor1ty
Enforcement of .Se.c~nty. l~terest . . .. · · ~q:zmn,O'Verot~•er ·se~u,1ty"'mj~{ests:, exercises_ th~ -~1~M ~f
. ·1Ji:,d- ~Hhe· f:'PSA, ·.at,sec:;urit$:it,e'e_ ~t~nforGed: - ""'enforle_ ~-e1t-
e.l}~er throUJgh re.2,ove,y, d1sposit1on, or
·, e.ithe~. by ._r:i::ciY:_ery, . disp.?sitiol)J'\or. ~1JJ10n.; · nirn J)f re~~ntio I _ ·.·
J.sec/: 46)~ _· .
_cerj?;!f! ca~~~ •. the -~-~cured :cre<i/itor'°'-sl~~se~~
repossess.ion ,of ttie collatera,._. _. .
~-l~r-zti;:l - . . , f:- . . · , . · '1
_ o) . . · . - !!,~~:dle.s,not Ji{oh1b1t ·those· i,v1.t~)?werpnon.ty:
· : .· ·
0

_- .. - - _ · . _-. - .. - r ,· ·. · - _ · . : · . - t0~~1'!11T1~ee 'enfo;9ement.. How~ver; .. t~e P.PSA ·

Repqs.session is a preljminary proce,ss Ina ni~~'r°'."l<.:rtr(~e~ne:righ_t- of'_fake ·oyer to .ttie high_er_ranlsing ·
- _ und~~aken by i3 secured.c'reditpr s~kin~Jo.e~'e.'...£.!..1..!s~e{a·~rtqi,t.bV. ·, · . . ,
\\~\..0 ·\ .. . · . ,. · - .
·M
its· secu.rity interes1,'- It mat_.be un·ae air~ittiout~
· judicial prcicess~ot,wjth.judkial process .. · "Uj. lft~o¥e~n ~~ecial ~ases.-. : .:< · . ..
• •• • "'\· ·· :". •• • ••• •
0•
_ • • • •Loon€.lotflrough 1ris.tr.u.ct1_or:i );>Y. ·the ~ecur~d · cred1to(
..

,1.: · Witl:foutJ!Jdicjc)I pr~ce~s · .- .. .
. a.. lf,.ttie • _sec.wily a~r~e.rn~nt. ·~o· _ stipulates,
... prc)Vid,ed that· 'PQ.~~eS$iOh .. -can _be taken,
without breach,of. i;ieace; . · ,~
.. : . :a) -_ • .
t,,iot~·:: The' - breach: oL peac·e sb.a11.. , (r\c;:lude
_ ent!3riii'g_:thE:iPrivate re~i~erc.e;ofJh~ granter
without p.ermissicih,'· resorting. to physical
-~iolence · , Of . it:i~imidation, .•. or.. ,IJeing
§IC,t:Ompar:iietj by"a ic:jw· .enf,or.cement ofDcer.
with~.ut~j!:Jdiqial pro_cess '-'.- ~ _-:-·: _.. · · · '. .·. .·- ·,.. - .
·. .1.: . lnsfruct}Q-~ -~c~pu.rt-de,qt~rJo. rri~k_e payment to ,
... ' th'e s,e~ut¢~ cre,e:!.itc>.r>~~d.~f-PIY:SUCn~~ayni,E:ritt~
_. the ·satisfactiorf of ~he. obligati<,'}[1 :secwed l;>y' the
,. ' . . . se:Curily inter.~st after dedli.cting ,,the,:Securec;_j
·creditor'i rea{o.na.f>(e''collE?cti~ri'-.expe.ns·es; .... '.
a
2 .. In i)egoti9ple ·ddcu,rnent tM13t Js p~rfected by''·
·. JjOS?essi.on",' ·p(oceed :as }o. the . ri~gp~rable.,.,
do'cufoent br gobds'.·covered' by-,the negotiable·
document; . '.· • ' • . I . ·'.·

wher:i taRing poss·ession or cor:if~onting the 3.' - In a depcisi! acc9ueft :nJ~,i(ltcJtn~tj by fh,e se~.ure~·-
.· gr_?r.itbr. _- .·.', .. : - .. >~ ":' . ~- : : - . ·-.. cred,i.tm .... ·~pp'ly ·.tn~···bal~r19.e_'~of. \1)'.~:· de,_p'q$it
0is _ a9ci?.ur:it:to the, o.~lig_i;i_tjon ~ect.ireq ·py t,t:ie c;_jepo$it
b .. · If - the· ~:ollateral. -a fixture:_ .the. ·_s·ecured accciun_t; and . . :.. . . . . . ' .
creditoi;';if it nas,-p'riority,ov~r.all .. aw·n'ers and .. 4. In othe.r cases of s~curity interes,t- in .a. d.eposit_
rn'ortgages·, m.ay re'mpve the·fixture_from tti~ a<;:courit p,erfe¢ied ·. "by'_' c;cinfr.ol, . instruct the .
. re~1· property to whiGh it is a.ffixed, pmv.ided ' d_ep9sit-ta~ir1g iiis.titytion. to -p-~y,.the halar')ce bf .
he.~).<ercises. dU\'l :care [Sec. 47f: . 'the dep9sh acCOUQt. tc{ the. s"e'c1,i'red creditor's
account (S.ec: -48) .. · ·

2018 SAN~EDAL.AW
. .
CENTRAll.ZED
. . BAR OPERATIONS
'
,!
 CREDl·T-TRANSACTIO-NS
SAN BEDA LAW ffNTRALIZED BAR OPERAT(ONS - MEf>:,ORY AID 2019 .

Disposition of the Collateral . . c. · The 'satisfaction. of obllqations secured by.

After· default, · a .. secured creditor . may sell or any subordinate security interestor .lien •in
otherwise, dispose · of the -, collateral,. publicly or- .. the collateral if·a written demand and proof
.privately, -in its present condition .or following any of the interest' " are · received · before·
commercially reasonable preparation or processing. . . . distribution of the proceeds is completed.
. . 2. The s.eclJred creditor shall account to·t11e grantor·
. The. secured· creditor may buy the.
collateral at: any for' any surplus, an.d,' unless .otherwise. agreed·,
publicdisposition, or at a private disposition, but only the debto_r is liabl~ for any. d~_fiqiency (Sec_. 52).' -
if thecollateral is ofa.kind that is costornarnysotd on . •, . . - . . "'·
a recognized market · or ,the . subject' of widely
- ,:•
. Note: Although- the PPSA grants the higher-rc;Jnked
. distributed standard price
., quotation (Sec ... 49). . se.cu'r.ed .cr~ditor the rig~t fo.~~k.E:3-0Ver 'enforCef\)eht, .
if,th~ higher"ranked cred\to(fails _tp take over)t'does.
Note: Disposition after default is similar to · not share tn the .Proc.~~_ds of_ the gisposition effec_ted
' extrajudicial . foreclosure, under · the laws· "arr Real by a lower ranked se'cured creditor: . . . .
Estate Mortgc1ge. · ·· · · · · ,',-.., • ·,, I

• - ' . 1.

. . . .The innocent buyer at the dispositjon of t~e collatE)ral

, Commercial Reasonableness c:!cqJire~ · the granto.r's. righl.in the a~set free -~f the
.A . disposltion · i~'·.cornmercially reasonableiif the . _ ·rights c:if any secured creditor or l[en holder ·(R.A.
secured .creditor . disposes of- the collateral 'ln 11057, Sec:.53). · ·., · ·. . . · ·
. conformity with corrimercjal practices .among dealers
in that typeof property. ·. . . · · . . , . . Retention.of Collateral
. R,ele.ntiqn of collateral is the .i::esult of. itn_ offef_on. the,.
:part of the se<;:ured· cre9itoJ (\h'e proR9sal) ~n.d the:
·. acc~ptan~e q\
th~ proposal ~Y the. p~rtje$ entitled to
rece1~he..,1~1J>posal: . . . -: , . . • .: · _ .
1. - 1.n ·_'case;Jh~ proposal rs for full. ~at,_~factron,
. . ·. acceptree i.s. deem~d ~iv_en· .uh_le.ss the parties
· deliv~;a~,ol::}j~ction in writing.. _ ·~·
2. .If-. th~ Rrop~$i:!I is ·· fo.r ., pa~ial satisfaction,
"·'
_acceptance· .~
·must 1$ e . y·a· m1rmat1ve
b1;;_estc) bl'h'db · · ,,,
65'~~1it iff YJriting,of all the parties .(.Sec. ·o4f. .
-.~· .. ~ .~. .. . .··.::·.
:· · Note: Ttiis is similar to.dacion' ei:i ·pago, 'not pactum
commisoriurn b:ecause there is'an· offer or.'approval, .
. and irocGttr$ only after default ·. .'.- .. · .. ~ · - · ·-
. The right;of redemption under the.pPS~ pa"rtak~s of.· . . . '
an equity of· redernptlon as -ltmay- be e?(ercised·· . $t~ps_ -in_ Applying·. the Rule~ fo: Preferen.ce :and -·
.... unless: . . . . ·. . .. - . . . . co·nc::1:1rr~.rfce .'of ·cre.difs:. as ·c11riehded:·bf R.A
· 1.. The person entitled, Jo. redeem . h.9J not, after : . . . 11057: .. ,· ·. · ' . · · . · .. ·. .~.:. · .. _ .· · ·
,,.~ . . ......;.,. ·,
default-waived in writing the right ot redeem; ·
~- The collateral i$: sold or disposed, acquired "oi Note:. The. following is nof y~t effectiJe as no: I.R.'F?:. .
collected. by the secured 'creditor or-until :,th~, . yet hf!S· bee']_·issued as of the date-·of printl{Jg, and .,
conclusion of an .aqreernent · by the secured PPSA 's. implementation is conditioned · vpon the . ·
·c,reditor for tha·t purpose;.- .: ., · ·· · . restablishment . anfl. operation of.. the R~gistr/ .in . .
, 3. The · secured· creditor retained the .:qollate'ral . af;cordarice with' Sec . .' 68 df1he PPSA. . . · ..
· · -:(R.A. J?t.057, ·s~c . .45). _·. .r-

St~p 1:. ···~ ,-·. ~:..·

Application ~f thJ P~o~e~d~'- . . . ·."· Determine, if · the . liabilities exceed the· assets ..
·1. - The proceeds of disposition shall be. applied in Categ:orize the· cr~di~s in_to· the· toi19wing:·thr~e
'. t_he' followfng order: . .· . · · · ·. ' · · · . - ¢ategories: "'· . ·-· · . .. ·.· . ._ . .
: a: The reasonable expenses of takinq.holdinq, :1.. .Special_ Pref~rred Creg_its inArt.'·2242 ·and· RA - ·
.. : preparing· for.dlspositicn, and disposing of. . No. 11057; · . v . • ' • ·

. the · . collateral, · · including reasonable 2. .'Ordinary Preferred .Credits under Art. 2244;
. 'attornev's feesand legai .expenses fnc'=!_rred 3. Cpmm9n er.edits under·Art.'2245. . : .. : .. -
:· bythe secured creditor; . . . . ' . '. ·.
· 'b. The satisfaction of the obligation secured by Step 2: . . . . . .
the securltytnterest of the enforclnq secured . D~terrilihe or make an -inventory of the assets or,
creditor, and · · ,. prope'rtie:s of
t~e insolven~ debt0r.. - . •.
 C-REDI.T TRANSACTl·Q:N~S
SAN BE_fJJ!, LAW CENTRALIZED BAR OPEl}ATION!> ~ MEMORY AID 2019

-Step.Sr. .
Seg,r.egate specific immovables under Art. 2242 of QUA$.i'-'-CONTRACT.S.
. the .Civit, Code. Only credits in numbers (.1)' of Art. .. (ART$. ~i4_2·-2176.)
. 2242:enjoy preference, allother credits enumerated
therein'; have no· preference and · the · rule · on
concurrence. applies to these .credits, ,

. •'
·. ·;

:, ...
... ...

.r r-; .