CREATION.
Security interest is created under PPSA by
PERSONAL PROPERTY
SECURITY ACT (RA 11057)
DEFINITIONS AND SCOPE
G.R. – PPSA applies to all transactions that secure an
obligation with movable collateral
Exception – Interests in aircrafts; interests in ships
Transitional Period. – the period from the date of effectivity of
PPSA until the date when Registry has been established and
operational,
Thus, transitional period is from September 7, 2018 until the
date when the registry has been established and operational.
- All pledges and mortgages created pursuant to Civil
Code and Chattel mortgage Law remain effective
between parties
- But upon expiration of the Stransitional period, the
binding effect as against third parties of chattel
mortgage is lost, UNLESS the requirements of
PPSSA are complied with.
- The system of conventional pledges and chattel mortgages
are “replaced with a framework for secured transactions”
Article 2127 is modified with regard to property included in
REM. “REM extends to natural accessions, to the
improvements, growing fruits and the rents or income not yet
received. These personal properties no longer covered by
Art. 2127.
- The secured transaction under PPSSA is called security
agreement.
- Security interest. - is a property right in a collateral that
secures payment or other performance of obligation
Proceeds. – even when collateral is disposed, security interest
extends to its identifiable or traceable proceeds. – proceeds
are any property received upon sale, lease or other disposition
of collateral
- the Parties to security agreement under PPSA are grantor
and secured creditor
Grantor.
1. Person who grants security interest in collateral;
2. Buyer or other transferee of collateral that acquires its right
subject to a security interest;
3. Transferor of an accts. receivable; or
4. Lessee of goods.
Secured Creditor – is a person that has a security interest.
STAGES IN THE LIFE OF SECURITY INTERST.
1. Creation
2. Perfection
3. Enforcement
security agreement.
PERFECTION. Security interest (S.I.) created becomes
effective against third parties the moment it is perfected.
Perfected by:
1. Registration of notice with the Registry
2. Possession of collateral by Secured Creditor
3. Control of investment property and deposit account
- S.I. in any tangible asset may be perfected by registration or
possession
- SI in investment property or deposit acct. may be perfected
by registration or control.
Perfection by Control. A security interest in a deposit acct. or
investment property may be perfected by control through:
1. Creation of S.I. in favor of deposit-taking institution or
intermediary.
2. Conclusion of control agreement.
3. Investment property that is an electronic security – notation
of security interest in the books of issuer.
ENFORCEMENT. – personal security may be enforced after
default through sale or disposition of collateral publicly or
privately.
- Grantor and any other secured creditor – who holds S.I. in
collateral at least 5 days before date of notification – are
entitled to receive notice 10 days before the disposition of
collaterak.
- Grantor and any other secured creditor or person entitled to
notice may redeem the collateral, unless there is waiver,
collateral is sold or acquired by secured creditor or the secured
creditor retained the collateral.
- The secured creditor may retain collateral in case of:
proposal for full/partial satisfaction of secured obligation unless
there is an objection from person entitled to receive such
proposal.
- In bak deposits, secured creditor may w/o judicial process,
apply the balance of deposit acct. to obligation secured by
deposit acct.
PRIORITY INTEREST. – priority of S.I. and liens in the same
collateral shall be determined according to time of registration
of notice of perfection by other means.
TRANSFEREE EXCEPTIONS. – Any party who obtains in
ordinary courts of business, any movable property containing
security interest shall take the same free of such S.I. provided
he was in good faith. No such good faith shall exist if the
security interest in the movable property was registered prior to
his obtaining the property.
EFFECT OF GRANTOR’S INSOLVENCY. – S.I. perfected
prior to the commencement of insolvency proceedings in
respect of the grantor shall remain perfected and retain the
priority if had before commencement of insolvency
proceedings.