REPUBLIC ACT No.

11057

An Act Strengthening the Secured Transactions Legal Framework in the Philippines, Which Shall
Provide for the Creation, Perfection, Determination of Priority, Establishment of a Centralized Notice
Registry, and Enforcement of Security Interests in Personal Property, and for Other Purposes

-PPSA repealed Chattel Mortgage Law

Section 1. Title. -This Act shall be known as the "Personal Property Security Act".

Section 2. Declaration of Policy. -It is the policy of the State to promote economic activity by increasing
access to least cost credit, particularly for micro, small, and medium enterprises (MSMEs), by
establishing a unified and modern legal framework for securing obligations with personal property.

Personal Property Security Act (PPSA)- prescribe the procedures and guidelines for the implementation
of PPSA in order to facilitate compliance

Key benefits:
1. Use of almost all type of movable as collateral- allows grantor to provide almost any type of movable
property as collateral
2. No requirement of possession by secured creditor of collateral- similar to mortgage, unlike pledge;
allows security interest over the collateral even if creditor does not take physical possession.
3. Security interest over future assets- business to give security over a movable property not yet owned
by the business with security interest automatically attaching to property as soon as the business
acquires rights in it.

CHAPTER 1
DEFINITIONS AND SCOPE

Section 3. Definition of Terms. -As used in this Act, the following terms shall mean:

(a) Commodity contract – a commodity futures contract, an option on a commodity futures contract, a
commodity option, or another contract if the contract or option is:

(1) Traded on or subject to the rules of a board of trade that has been designated as a contract market
for such a contract; or

(2) Traded on a foreign commodity board of trade, exchange, or market, and is carried on the books of a
commodity intermediary for a commodity customer;

Commodity contract- a contract providing for the making or taking delivery at a prescribed time in the
future of a specific quantity and quality of a commodity or the cash value thereof, which is customarily
offset prior to the delivery date and includes standardized contracts having the indicia of commodities
futures, commodity options and commodity leverage, or margin contracts

Commodity- any goods, articles, services, rights, interests, including any group or index of any of the
foregoing, in which commodity interests contracts are presently or in the future dealt in.
Forward contract- contract between a buyer and a seller whereby the buyer is obligated to take delivery
and the seller is obliged to deliver a fixed amount of an underlying commodity at a predetermined price
and date. Payment in full is due at the time of the delivery.

Suspension of registration and trading of commodities futures contract:

Under Securities Regulation Code: no person shall offer, sell or enter into commodity futures contracts
except in accordance with rules, regulations and orders the SEC may prescribe in the public interest.
-the public trading of commodities futures contracts is suspended until further ordered by the SEC

(b) Control agreement –

(1) With respect to securities, means an agreement in writing among the issuer or the intermediary, the
grantor and the secured creditor, according to which the issuer or the intermediary agrees to follow
instructions from the secured creditor with respect to the security, without further consent from the
grantor;

(2) With respect to rights to deposit account, means an agreement in writing among the deposit-taking
institution, the grantor and the secured creditor, according to which the deposit-taking institution
agrees to follow instructions from the secured creditor with respect to the payment of funds credited to
the deposit account without further consent from the grantor;

(3) With respect to commodity contracts, means an agreement in writing among the grantor, secured
creditor, and intermediary, according to which the commodity intermediary will apply any value
distributed on account of the commodity contract as directed by the secured creditor without further
consent by the commodity customer or grantor;

Control agreement- refers to an agreement in writing between the grantor, the secured creditor and
the issuer or intermediary or the deposit-taking institution according to the issuer, intermediary or the
deposit-taking institution agrees to follow the instructions of the secured creditor without further
consent of the grantor.
-refers to an agreement in writing between the grantor, the secured creditor, and the intermediary,
according to which the commodity intermediary will apply any value distributed on account of the
commodity contract as directed by the secured creditor without further consent by the commodity
customer or grantor
-a control agreement is an agreement in writing between the grantor and the secured creditor which
perfects the security interests over tangible assets
-a method of perfecting the security interest and, in its most basic form, is a contract made among a
secured creditor, a pledgor and the securities intermediary of the pledgor in which the securities
intermediary grants “control” over the pledged securities to the secured creditor.

Ex: time deposit ka; then nkasanla kay madam x. si madam x ay bibigyan ng control ng time deposit

1. with respect to intermediated securities:

a. be executed in writing by the issuer or the intermediary, the grantor and the secured creditor
b. stipulate that the issuer or the intermediary agrees to follow instructions from the secured creditor
with respect to security, without further consent to the grantor

2. with respect to rights to deposit account, a control agreement shall:

a. be executed in writing among the deposit-taking institution, the grantor and the secured creditor
b. stipulate that the deposit taking institution agrees to follow instructions from the secured creditor
with respect to the payment of funds credited to the deposit account without further consent from the
grantor

3. with respect to commodity contracts:

a. be executed in writing among the grantor, secured creditor and intermediary
b. stipulate that the commodity intermediary will apply any value distributed on account of the
commodity contract as directed by the secured creditor without further consent by the commodity
customer or grantor.

Purpose of a control agreement:

1. it renders a security interest effective against third parties
2. it establishes the priority of the secured creditor that has entered into the control agreement.

-can help ensure the cooperation of the deposit-taking institution or the issuer of securities if the
secured creditor needs to enforce its security right

Meaning of terms:
Securities- shares, participation or interests in a corporation or in a commercial enterprise or profit-
making venture and evidenced by a certificate, contract, instruments, whether written or electronic in
character. It includes but is not limited to:
a. shares of stocks, bonds, debentures…
b. investment contracts, cert of interest or participation in profit sharing agreement…
c. fractional undivided interests in oil, gas, or other mineral rights
d. derivatives like options and warrants
e. certificates of assignments, certificate of participation, trust cert..
f. proprietary or nonproprietary membership cert in corporations
g. other instruments

Issuer- originator, maker, obligor, or creator of security

Intermediary- a person who in the of course of a business or other regular activity maintains securities
accounts for others or both for others and for its own account and is acting in that capacity
-a clearing corporation or a person, including a bank or broker; maintain securities accounts for others
and is acting in that capacity

Deposit account- a demand, time, savings, passbook, or similar account maintained with a bank

Deposit taking institution- a bank as defined in RA No 8791 or the General Banking Law

Section 3(b) vs Section 12(c) and 13(a)

-Section 3(b) refers to a control agreement over securities, deposit accounts, and commodity contracts
-Section 12(c) and 13(a) which refers to control of investment property and deposit account

Section 3(b) vs. Section 18 (e)

-Section 3(b) refers to a control agreement over securities; there is reasonable basis for the position that
only covers uncertificated non-intermediated securities
-Section 18(e)- sets priority rules for certified securities

(c) Grantor –

(1) The person who grants a security interest in collateral to secure its own obligation or that of another
person;

(2) A buyer or other transferee of a collateral that acquires its right subject to a security interest;

(3) A transferor in an outright transfer of an accounts receivable; or

(4) A lessee of goods;

1. Grantor may be:

a. the debtor that secures its own obligation
b. a person that secures the obligation of a debtor

2. A buyer or other transferee of a collateral that acquires its right subject to a security interest is also
considered a grantor to ensure that the PPSA remains applicable even if the grantor has disposed of the
collateral

3. a transferor in an outright transfer of an accounts receivable

4. The PPSA also treats the lessee of goods as a grantor.

Collateral- something pledged as security for repayment of a loan, to be forfeited in the event of a
default.

(d) Non-intermediated securities – securities other than securities credited to a securities account and
rights in securities resulting from the credit of securities to a securities account;

Types of securities:
1. based on certification- certified or non-certified
a. A certified security is a security that is represented by a certificate
b. a non certified security is a security that is not represented by a certificate

2. based on intermediation- intermediated or non-intermediated

Intermediated securities- securities credited to a securities account and rights in securities resulting
from the credit of securities through a security account
Securities account- account maintained by an intermediary to which securities may be credited or
debited
Non-intermediated securities- Securities other than securities credited to a securities account and rights
in securities resulting from the credit of securities to a securities account

(e) Notice – a statement of information that is registered in the Registry relating to a security interest or
lien. The term includes an initial notice., amendment notice, and termination notice;

-notice is a statement of information relating to a security interest or a lien

(f) Proceeds – any property received upon sale, lease or other disposition of collateral, or whatever is
collected on or distributed with respect to collateral, claims arising out of the loss or damage to the
collateral, as well as a right to insurance payment or other compensation for loss or damage of the
collateral;

Proceeds- any property received upon sale, lease, or other disposition

-whatever is collected or distributed with respect to collateral
-claims arising out of the loss or damage to the collateral
-right to insurance payment or other compensation for loss or damage of the collateral

Proceeds covers:
-proceeds of sale or other disposition or lease of an encumbered asset
-proceeds of proceeds (ex. receives are generated by the sale of encumbered inventory and proceeds
are deposited in a bank account)
-natural fruits or civil fruits
-proceeds received by transferee

(g) Purchase money security interest – a security interest in goods taken by the seller to secure the
price or by a person who gives value to enable the grantor to acquire the goods to the extent that the
credit is used for that purpose;

1. The seller to secure the price of the goods purchased

2. a person who gives value to enable the grantor to acquire the goods to the extent credit is used for
the purpose

(h) Registry – the centralized and nationwide electronic registry established in the Land Registration
Authority (LRA) where notice of a security interest and a lien in personal property may be registered;

Registry- is the electronic registry where notices of the security interests and liens over personal
property may be registered

(i) Secured creditor – a person that has a security interest. For the purposes of registration and priority
only, it includes a buyer of account receivable and a lessor of goods under an operating lease for not less
than one (1) year;

Secured creditor- a person that has a security interest over the collateral; includes a buyer of account
receivable and a lessor of goods under an operating lease for not less than one year for purposes of
registration and priority only
Operating lease- agreement by which the owner temporarily grants the use of his property to another
who undertakes to pay rent

Finance lease- financial leasing of movable properties (Financing Company Act, Section 3(d))

(j) Security interest – a property right in collateral that secures payment or other performance of an
obligation, regardless of whether the parties have denominated it as a security interest, and regardless
of the type of asset, the status of the grantor or secured creditor, or the nature of the secured
obligation; including the right of a buyer of accounts receivable and a lessor under an operating lease for
not less than one (1) year; and

Security interest- a property right in movable collateral that secures payment or other performance of
an obligation

Liens- pertains to encumbrances that are not security interests created and perfected under PPSA
-notice of lien may be registered by a lien holder without the consent of the person against whom the
lien is sought to be enforced

(k) Writing – for the purpose of this Act includes electronic records.

-intended to ensure that where that term is referred to in the PPSA includes electronic records

Section 4. Scope of the Act.— This Act shall apply to all transactions of any form that secure an
obligation with movable collateral, except interests in aircrafts subject to Republic Act No. 9497, or the
"Civil Aviation Authority Act of 2008", and interests in ships subject to Presidential Decree No. 1521, or
the "Ship Mortgage Decree of 1978".

CHAPTER 2
CREATION OF SECURITY INTEREST

Section 5. Creation of a Security Interest.—

A security interest shall be created by a security agreement,

A security agreement may provide for the creation of a security interest in a future property, but the
security interest in that property is created only when the grantor acquires rights in it or the power to
encumber it.

-Section 5 deals with the creation of a security interest

1. when the security interest is created, the security interest is effective between the parties
2. when the security interest is perfected, the security is effective against third parties

-Under the PPSA, the security agreement is sufficient to make the security interests effective as between
the parties

-a security agreement is the agreement under which a security interest is created

-a security agreement is created by the sale of an account receivable unless otherwise stipulated by all
the parties in the document of sale

Coverage: the term includes-

1. an agreement, regardless of whether the parties have denominated it as a security agreement;
between grantor and secured creditor
2. a contract of sale where the buyer or other transferee of a collateral acquires it subject to a security
interest
3. an agreement for the outright transfer of receivables
4. a financial lease agreement for the lease of goods

Parties- grantor and secured creditor

Grantor- the person who grants a security interest in collateral to secure its own obligation
-or other transferee of a collateral that acquires its right subject to a security interest
-a transfer or in an outright transfer of an accounts receivable
-A lessee of goods
Secured creditor- the person that has a security interest
Debtor-the person that owes payment or other performance of a secured obligation; whether or not
that person is a grantor of the security right securing payment or other performance of that obligation

Essential requisites of security agreement:

1. consent of the contracting parties- manifested by the meeting of the offer and acceptance up on the
thing and the cost which are to constitute the contract; must be given by parties with capacity to give
consent

2. object certain which is the subject matter of the contract- it applies to tangible movable assets such
as inventory, equipment, and goods
-it also applies to intangible assets such as contractual and non contractual receivables, rights arising a
negotiable instrument or a negotiable document, right to payment of funds credited to a bank account
-are there examples include inventory, equipment, deposit accounts, consumer goods, intellectual
property, livestock

-the grantor may create a security interest over existing and future assets
-the grantor may create a security interest over an asset that the grantor already owns, an asset that the
grantor acquires with the proceeds of the secured loan, its receivables, its inventory, it's rights under
one or more contracts

3. cause of the obligation which is established- its cause as the grantor is concerned in the principal
obligation

-delivery of the collateral is not essential

-PPSA applies to all types of obligations such as monetary and non monetary obligations, present and
future obligations, conditional and unconditional obligations, fixed or fluctuating obligations

Form of security agreement:

1. Written contract- a security agreement must be contained in a written contract signed by the parties
2. Language to be used- the security agreement must provide for the language to be used in agreements
and notices
3. security arrangement in the case of movable property- contracting parties are free to enter into any
form love security arrangements over movable property, as long as the security arrangement covering
the same is not inconsistent with PPSA

Concept of a security interest:

-is a probably right in movable collateral that is created by a security agreement
-an interest in a movable asset that a person can exercise to recover money owed by another person
-a security interest is created by contract; assist the secured creditor in protecting itself against the
consequences of the debtor's fault

Time of effectiveness of a security interest

1. as the security interest arises from the agreement between the parties, the security interest becomes
effective between the parties as soon as they agreement is entered into
2. for future assets, the security interest is created when the grantor acquires rights in the assets or the
power to encumber them
3. the parties can defer the effectiveness of the security interest to a later time

Extinguishment of security interest:

-extinguished when all secured obligations have been discharged and there is no outstanding
commitments to extend credit secured by the security interest

Section 6. Security Agreement.— A security agreement must be contained in a written contract signed
by the parties. It may consist of one or more writings that, taken together, establish the intent of the
parties to create a security interest.

The security agreement shall likewise provide for the language to be used in agreements and notices.
The grantor shall be given the option to have the agreement and notices in Filipino. The Department of
Finance (DOF) shall prepare model agreements in plain English and Filipino.

-the security agreement must be in writing

Contents of the security agreement:

1. the security agreement must:
-reflect the intent of the parties to create a security interest
-identify the parties-describe the secured obligation
-describe the encumbered assets

2. functions of the security agreement:

-provide the statutory basis for granting a security interest
-establish the connection between the security interest and the obligation it secures
-regulate the relationship between the grantor and the secured creditor
-minimize the risk of disputes with respect to the terms of the agreement

3. separate agreement- the security agreement may be a separate contract between the parties
4. the security agreement may list the events of default
-the failure by the grantor to pay when due and the amount owing under the secured obligations
-the failure by the grantor to make a payment to another creditor in respect of a monetary obligation
-the occurrence of the insolvency of the grantor
-any representation made by the grantor or any document delivered to the secured creditor
-any non performance in any material respect by the grantor
----PPSA does not require that the security agreement be notarized
Section 7. Description of Collateral.— A description of collateral shall be considered sufficient, whether it
is specific or general, if it reasonably identifies the collateral. A description such as "all personal
property", "all equipment", "all inventory", or "all personal property within a generic category" of the
grantor shall be sufficient.

-the security agreement must contain a description of the collateral

-a specific description of the collateral is not required in constituting the security interest. PPSA allows
the creation of a security interest on specific personal property or on personal property of a generic
category

Section 8. Right to Proceeds and Commingled Funds and Money.—

(a) A security interest in personal property shall extend to its identifiable or traceable proceeds.

(b) Where proceeds in the form of funds credited to a deposit account or money are commingled with
other funds or money:

(1) The security interest shall extend to the commingled money or funds, notwithstanding that the
proceeds have ceased to be identifiable to the extent they remain traceable:

(2) The security interest in the commingled funds or money shall be limited to the amount of the
proceeds immediately before they were commingled: and

(3) If at any time after the commingling, the balance credited to the deposit account or the amount of
the commingled money is less than the amount of the proceeds immediately before they were
commingled, the security interest against the commingled funds or money shall be limited to the lowest
amount of the commingled funds or money between the time when the proceeds were commingled and
the time the security interest in the proceeds is claimed.

Proceeds:
Extension of security interest proceeds- in regards with secure transactions, the security interest
extends to any proceeds that arise encumbered asset
-Section 8 (a) also extends the security interests to identifiable or traceable proceeds of the collateral
-Section 8 (a) ensures that a security interest in the collateral automatically extends to its identifiable
proceeds
-a security interest in proceeds terminates once it is no longer possible to trace or identify the relevant
asset as derived from the original encumbered asset
-PPSA provides no limitation on the extent of the secured creditors right over the proceeds

Ex: if the collateral with the fair market value of 1M was sold for 1.5M, the secured creditor’s security
interest would be 1.5M.
the only limitation to the security interest over the proceeds would be the amount of the secured
obligation.
Thus, the secured creditor will be able to enforce its security interest on both the original collateral and
the proceeds limited only by the amount of the obligations outstanding at the time of the enforcement

-the security interest extends to natural and civil fruits of the collateral (ex: milk of cow, wool of sheep,
honey produced by bees)

-the security interest extends to claims arising from loss or damage to the collateral
-the security interest extends do insurance payment or other compensation for loss or damage of the
collateral

Right to comingled proceeds:

-Section 8(b) provides the rules where proceeds in the form of funds credited to a deposit account or
money are commingled with other funds or money
xxx(1) The security interest shall extend to the commingled money or funds, notwithstanding that the
proceeds have ceased to be identifiable to the extent they remain traceable:

(2) The security interest in the commingled funds or money shall be limited to the amount of the
proceeds immediately before they were commingled: andxxx

-deals with situations in which money or funds are withdrawn after the proceeds are commingled
-even if money or funds are subsequently added, the security right extends only to the lowest amount
between the time when the proceeds were commingled and the time the security right in the proceeds
is claimed

Ex. if the balance in the bank account immediately after the proceeds were deposited was 6M, then it
went down to 500,000 and at the time of the enforcement was 600,000, the security rights extend only
to 500,000

-Section 8(b) provides an exception to the traceability and identifiability requirement in Section 8(a)
First-in, first-out method- assumes that the first funds to become part of a commingled mass are the
first funds withdrawn from the mass
Last-in, first-out- assumes that the last funds to become part of a commingled mass are the first funds
withdrawn from the mass
Lowest intermediate balance rule- draw walls from the comingled mass are not proceeds of the
encumbered assets

-PPSA provides that if at anytime after the comingling, the balance credited to the deposit account is less
than the amount of the proceeds immediately before they were commingled, the security interest
against the commingled funds or money shall be limited to the lowest amount of the commingled funds.

-upon disposition of the collateral, the security interest extends to proceeds of the collateral without
further act if the proceeds are in the form of money accounts receivables, negotiable instruments or
deposit accounts

Security interest in commingled assets:

1. a security interest in a tangible asset that is commingled in a mass extends to the mass
2. a security interest that extends to a mass is limited to the same proportion of the mass as the quantity
of the encumbered asset bore to the quantity of the entire mass
3. mass means a tangible asset which results when a tangible asset it's so commingled with one or more
other tangible assets of the same kind that they have lost their separate identities

Section 9. Continuity of Security Interest.— A security interest shall continue in collateral

notwithstanding sale, lease, license, exchange, or other disposition of the collateral, except as otherwise
provided in Section 21 of this Act, or agreed upon by the parties.

-security interest shall continue and collateral notwithstanding sale, lease, license, exchange, or other
disposition of the collateral.
Exceptions:
1. when the parties agree otherwise
2. if a party obtains in good faith the movable property in the ordinary course of business

-section 9 applies only to a non enforcement scenario

Section 10. Contractual Limitation on the Creation of a Security Interest.—

(a) A security interest in an account receivable shall be effective notwithstanding any agreement
between the grantor and the account debtor or any secured creditor limiting in any way the grantor’s
right to create a security interest.

(b) Nothing in this section shall affect any obligation or liability of the grantor for breach of the
agreement in subsection (a).

(c) Any stipulation limiting the grantor’s right to create a security interest shall be void.

(d) This section shall apply only to accounts receivable arising from:

(1) A contract for the supply or lease of goods or services other than financial services;

(2) A construction contract or a contract for the sale or lease of real property; and

(3) A contract for the sale, lease or license of intellectual property.

-contractual limitation on the creation of a security interest is valid. it is void if the receivables are listed
under section 10(d)

-an assignment of receivables is generally effective despite a contractual restriction on assignment

agreed upon between the assigner and the debtor
-a security interest in certain accounts receivable shall be effective notwithstanding any agreement
between the grantor and the account debtor

-receivable- refers to a right to payment of a monetary obligation, excluding a right to payment

evidenced by a negotiable instrument, a right to payment of funds credited to a bank account and a
right to payment under a non intermediated security
-section 10 applies only to the trade receivables enumerated in clause 10(d)
-section 10 does not apply to other types of receivables such as receivables arising from a loan
-section 10 does not apply to finance receivables

-any stipulation limiting the grantor's right to create a security interest shall be void

CHAPTER 3
PERFECTION OF SECURITY INTEREST

Section 11. Perfection of Security Interest.—

(a) A security interest shall be perfected when it has been created and the secured creditor has taken
one of the actions in accordance with Section 12.

(b) On perfection, a security interest becomes effective against third parties.

Perfection- refers to any act authorized by the PPSA and the rules that makes a security interest binding
against third parties. on perfection, a security interest becomes effective against third parties

Security interest v. perfected security interest- a security interest upon the parties to the security
agreement while a perfected security interest is effective against third parties

-a security interest is perfected when it has been created and the secured creditor has taken one of the
actions in accordance with section 12.
-the creation of a security interest is a prerequisite for the perfection of the security interest

Section 12. Means of Perfection.— A security interest may be perfected by:

(a) Registration of a notice with the Registry;

(b) Possession of the collateral by the secured creditor; and

(c) Control of investment property and deposit account.

A security interest in any tangible asset may be perfected by registration or possession. A security
interest in investment property and deposit account may be perfected by registration or control.

-section 12 provides various means of perfecting a security interest. registration of a notice is available
for all types of movable assets
1. for tangible assets, by the secured creditor taking possession of the asset
2. for the investment property and deposit account, by the conclusion of the control agreement and the
other means provided in section 13

Registration- the process of filing a notice with the registry

-mere possession of a tangible asset does not create a security interest

-perfection of a security interest can be achieved through possession
Possession-gives-notice-theory- requires filing of a notice regarding the collateral would be redundant as
possession would give actual notice to the diligent searcher
The possession exception to the notice requirement is based on two assumptions:
1. a person who lands against certain things of collateral will look at the collateral before landing against
it

2. looking at the collateral in the possession of a third party will alert the searcher to the possible
existence of a security interest

-section 12(b) assumes that when another party is in possession of the collateral, the searcher will or
should assume that the party in possession may have a security interest in the collateral.

-possession refers to the holding of a thing or the enjoyment of a right

-to satisfy the requirement of actual possession, there must be a real relinquishment by the grantor of
the physical custody over the collateral
-the grantor cannot qualify as an agent for the secured creditor

-a third party may take possession on behalf of the secured creditor

Benefit of possession by third parties:

-the secured creditor may not have the capacity of properly safeguarding the collateral
-the secured creditor may not have the storage space for the collateral

A security interest in tangible assets may be perfected by either:

1. registration of a notice
2. possession whether actual or constructive

a security interest in intangible assets may be perfected by either:

1. registration of a notice
2. conclusion of a control agreement- shall be executed under oath and shall indicate the date and time
of its execution

a security interest in intermediated securities may be perfected by:

1. registration of a notice
2. creation of a security interest in favor of the deposit taking institution or the intermediary
3. conclusion of a control agreement

-the security agreement or control agreement shall be executed under oath and shall indicate the date
and time of its execution

a security interest in electronic non intermediated securities may be perfected by:

1. Registration of a notice with the registry
2. execution of a control agreement between the grantor and secured creditor
3. control through notation of a security interest in the books maintained by or on behalf of the issuer
for the purpose of recording the name of the holder of the securities
a security interest in investment property that is electronic security held by an intermediary may be
perfected by:
1. Registration of a notice with the registry
2. the execution of a control agreement between the intermediary, the grantor and secured creditor

Section 13. Perfection by Control.—

(a) A security interest in a deposit account or investment property may be perfected by control through:

(1) The creation of the security interest in favor of the deposit-taking institution or the intermediary;

(2) The conclusion of a control agreement; or

(3) For an investment property that is an electronic security not held with an intermediary, the notation
of the security interest in the books maintained by or on behalf of the issuer for the purpose of
recording the name of the holder of the securities.(b) Nothing in this Act shall require a deposit-taking
institution or an intermediary to enter into a control agreement, even if the grantor so requests. A
deposit-taking institution or an intermediary that has entered into such an agreement shall not be
required to confirm the existence of the agreement to another person unless requested to do so by the
grantor.

Control- Is the intangible’s equivalent to possession of tangibles

-The mere creation of the security interest in favor of the deposit taking institution is automatically
effective against third parties

-if the secured creditor is a party other than the deposit taking institution, the security interests may be
perfected through the conclusion of a control agreement

Control agreement- an agreement entered into by the grantor, the creditor, and
1. with respect to securities, the issuer or the intermediary
2. with respect to a deposit account, the deposit taking institution
3. with respect to commodity contracts, the commodity intermediary

-Section 13(a)(3) deals with uncertificated non intermediated securities

Section 14. Perfection in Proceeds.—

(a) Upon disposition of collateral, a security interest shall extend to proceeds of the collateral without
further act and be continuously perfected, if the proceeds are in the form of money, accounts
receivable, negotiable instruments or deposit accounts.

(b) Upon disposition of the collateral, if the proceeds are in a form different from money, accounts
receivable, negotiable instruments or deposit accounts, the security interest in such proceeds must be
perfected by one of the means applicable to the relevant type of collateral within fifteen (15) days after
the grantor receives such proceeds; otherwise, the security interest in such proceeds shall not be
effective against third parties.

-section 14 states the rules on when the security interests in proceeds becomes perfected and binding
on third parties

-Section 14(a), the perfection of the security interest in the collateral extends automatically to the
proceeds if these requisites are met:
1. there is a perfected security interest in the collateral
2. the collateral is disposed
3. the proceeds take the form of money, receivables, negotiable instruments or deposit accounts
Ex: upon the sale of inventory subject to a security interest that is effective against third parties, a
security interest in any identifiable receivables arising from the sale of the inventory is effective against
third parties with no further act

-Sec 14(b), if the proceeds are not in the form of money, receivables, negotiable instruments or deposit
accounts, the security interests in the proceeds will remain perfected only if the security interests is
perfected by the means applicable to the type of collateral within 15 days after the grantor receives the
proceeds
Ex: if the proceeds take the form of a tangible asset, the security interest in the proceeds will cease to be
continuously effective against third parties if the secured creditor does not take the steps necessary to
make IT security right effective against third parties within 15 days after the grantor receives the
proceeds

Section 15. Change in Means of Perfection.— A security interest shall remain perfected despite a change
in the means for achieving perfection: Provided, That there was no time when the security interest was
not perfected.

-possible to change from one mean of perfection to another mean

Ex. the secured creditor May 1st take possession of a tractor as the means of perfection.
after taking possession, the secured creditor registers a notice and then transfers back possession of the
tractor to the grantor.
-the secured creditor who took possession of the tractor wheel still have priority if it registers the
security interests prior to the return of the tractor to the grantor

-section 15 ensures that a security interest that was initially perfected by one means and that is later
perfected by means remains perfected provided there is no time the security interest was not perfected

Section 16. Assignment of Security Interest.— If a secured creditor assigns a perfected security interest,
an amendment notice may be registered to reflect the assignment.

-a security interest is a property right that may be assigned.

-if the creditor assigns the perfected security interest, and amendment notice may be registered to
reflect the assignment
 CHAPTER 4
PRIORITY OF SECURITY INTEREST

Section 17. Priority Rules.— The priority of security interests and liens in the same collateral shall be
determined according to time of registration of a notice or perfection by other means, without regard to
the order of creation of the security interests and liens.

-the concept of priority is at the core of every successful secure transaction regime
-it is the primary means in which conflicts of rights in a grantor’s assets among competing claimants

Priority- refers to the right of a person in an encumbered asset in preference to the right of a competing
claimant
-a competing claimant is a creditor of a grantor or other person with rights in an encumbered asset that
may be in competition with the right of a secured creditor in the same encumbered asset

-PPSA allows the creation of more than one security interest over the same asset in order to utilize the
full value of the asset
-the rule is that priority between competing security interests and liens is determined by the order in
which the security interest was perfected

-the priority of security interests and liens on the same collateral shall be determined according to the
time of registration of a notice or perfection
Perfection by registration- if all security interests over the collateral was perfected by registration,
priority among competing claimants will be determined by order of registration, regardless of the order
of creation
Perfection not involving registration- if the competing security interests over the same collateral was
perfected other than registration in the registry, priority is determined by order of perfection
-this situation will not be common
Perfection involving different means of perfection- under section 17, the priority of security interests
and liens shall be determined according to time of registration of a notice or perfection by other means
-priority is determined by the order of perfection of the security interests

Rules on the priority of security interests:

1. tangibles-priority given to the security interests of a person who provides services or materials with
respect to goods
-priority given to registered purchase money security interest in equipment, consumer goods, inventory
-priority given to security interest perfected by registration or possession
2. deposit account- priority given to a deposit taking institution with the right of set off
-priority given to the perfected security interest of a deposit taking institution
-priority given to a security interest perfected through a control agreement
-priority given to security interest perfected by registration
3. investment property in the form of certificated securities- priority given to the security interests
perfected by possession of the certificate
-priority given to a security interest perfected by registration of a notice with the registry
4. investment property consisting of securities held with an intermediary- priority given to the security
interests of the intermediary
-priority given to the security interest perfected by a control agreement
-priority given to the security interest perfected by a registration of a notice with the registry
5. investment property consisting of electronic securities not held with an intermediary
-priority given to the security interest perfected by notation
-priority given to the security interest perfected by control agreement
-priority given to the security interest perfected by registration
6. investment property consisting of negotiable instruments
-priority given to security interest perfected by possession-priority given to security interest perfected
by registration of a notice with the registry

Section 18. Priority for Perfection by Control.—

(a) A security interest in a deposit account with respect to which the secured creditor is the deposit-
taking institution or the intermediary shall have priority over a competing security interest perfected by
any method.

(b) A security interest in a deposit account or investment property that is perfected by a control
agreement shall have priority over a competing security interest except a security interest of the
deposit-taking institution or the intermediary.

(c) The order of priority among competing security interests in a deposit account or investment property
that were perfected by the conclusion of control agreements shall be determined on the basis of the
time of conclusion of the control agreements.

(d) Any rights to set-off that the deposit-taking institution may have against a grantor’s right to payment
of funds credited to a deposit account shall have priority over a security interest in the deposit account.

(e) A security interest in a security certificate perfected by the secured creditor’s possession of the
certificate shall have priority over a competing security interest perfected by registration of a notice in
the Registry.

(f) A security interest in electronic securities not held with an intermediary perfected by a notation of
the security interests in the books maintained for that purpose by or on behalf of the issuer shall have
priority over a security interest in the same securities perfected by any other method.

(g) A security interest in electronic securities not held with an intermediary perfected by the conclusion
of a control agreement shall have priority over a security interest in the same securities perfected by
registration of a notice in the Registry.
(h) The order of priority among competing security interests in electronic securities not held with an
intermediary perfected by the conclusion of control agreements is determined on the basis of the time
of conclusion of the control agreements.

-if the secured creditor is the deposit taking institution or the intermediary, it shall have priority over all
competing security interests perfected by any method

-conflict is between:
a. a security interest over the deposit account or investment property perfected by control
b. a security interest perfected by a method other than control
Sec 18(b)- should have priority over a competing security interest except a security interest

Another conflict:
a. security interest over a deposit account or investment property perfected by control
b. subsequent security interests over the same deposit account or investment property

Another conflicts:
a. the security interest of various secured creditors in the deposit account
b. the right to set off of the deposit taking institution that holds the deposit account

Section 18(d)- any rights to set off that the deposit taking institution may have against a grantor's right
to payment of funds credited to a deposit account shall have priority over a security interest
-does not grant the deposit taking institution a write of set off
-security interest through the payment of funds credited to a bank account is subordinate to the deposit
taking institutions right under other law

Another conflict:
a. the security interest in a certificated security perfected by possession of the secured creditor of the
certificate
b. the security interest in the same security perfected by a registration of a notice in the registry

Section 18(e)- a security interest in a security certificate perfected by the secured creditors possession of
the certificate shall have priority over a competing security interest perfected by registration of a notice
in the registry

Another conflict:
a. The security interest in uncertificated non intermediated security (electronic security)
b. the security interest and the same security perfected by a registration of a notice in the registry

Section 18(f)- a security interest in electronic securities not held with an intermediary perfection by a
notation of the security interests in the books maintained for that purpose by or on behalf of the issuer
shall have priority over a security interest in the same securities perfected by any other method

Another conflict:
a. the security interest in an uncertificated non intermediated security
b. the security interest in the same security for affected by a registration of a notice in the registry
Section 18(g)- a security interest in electronic securities not held with an intermediary perfected by the
conclusion of a control agreement show have priority over a security interest in the same securities
perfected by registration of a notice of registry

Another conflict:
a. the security interest in an uncertificated non intermediated security perfected by the conclusion of a
control agreement
b. the security interest in the same security perfected by subsequent conclusions of other control
agreements

Section 18(h)- The order of priority among competing security interests in electronic securities not held
with an intermediary perfected by the conclusion of control agreements is determined based on the
time of conclusion of the control agreements

Section 19. Priority for Instruments and Negotiable Documents. -A security interest in an instrument or
negotiable document that is perfected by possession of the instrument or the negotiable document shall
have priority over a security interest in the instrument or negotiable document that is perfected by
registration of a notice in the Registry.

- Under section 19, a security interest in an instrument or negotiable document that is perfected by
possession of the instrument or the negotiable document shall have priority over a security interest in
the instrument or negotiable document that is perfected by registration of a notice in the registry
-possession reveals over registration

-section one of the negotiable instruments law

Section 1. Form of negotiable instruments. - An instrument to be negotiable must conform to the
following requirements:
(a) It must be in writing and signed by the maker or drawer;
(b) Must contain an unconditional promise or order to pay a sum certain in money;
(c) Must be payable on demand, or at a fixed or determinable future time;
(d) Must be payable to order or to bearer; and
(e) Where the instrument is addressed to a drawee, he must be named or otherwise indicated therein
with reasonable certainty.

Section 20. Priority and Plight of Retention by Operation of Law. -A person who provides services or
materials with respect to the goods, in the ordinary course of business, and retains possession of the
goods shall have priority over a perfected security interest in the goods until payment thereof.

-the highest priority rule is found in section 20

-it provides that a person who provides services or materials with respect to the goods and retains
possession of the goods shall have priority over a perfected security interest in the goods until payment
-Section 20 Priority prevails over all other perfected security interests over the goods

1. a person provides goods or services with respect to the goods

2. the supplier provides this goods or services in the ordinary course of business
3. the supplier is unpaid
4. the supplier retains possession of the goods
Coverage of section 20:
a. credits for the making, repairs, safekeeping or preservation of personal property
b. credits for the transportation of goods and incidental expenses
c. warehousemen's lien
d. hotel keepers lien

Section 21. Transferee Exceptions. -Any party who obtains, in the ordinary course of business, any
movable property containing a security interest shall take the same free of such security interest
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.

-the grantor retains his ownership of the collateral. the grantor may sell the collateral
-the buyer may take the property subject to the security interest

-the buyer takes the movable property free of the security interest if the buyer was in good faith

-section 21 poses an issue to a buyer who purchases movable property from a seller who sells the goods
in the seller's ordinary course of business

Section 22. Effect of the Grantor’s Insolvency on the Priority of a Security Interest. -Subject to the
applicable insolvency law, a security interest perfected prior to the commencement of insolvency
proceedings in respect of the grantor shall remain perfected and retain the priority it had before the
commencement of the insolvency proceedings.

-a security interest effective against third parties remains effective against third parties
-section 22 is important in creating a legal environment that promotes the extension of secured credit
because a security right that is not recognized in insolvency proceedings is of little value to a prospective
secured creditor

Section 23. Purchase Money Security Interest.—

(a) A purchase money security interest in equipment and its proceeds shall have priority over a
conflicting security interest, if a notice relating to the purchase money security interest is registered
within three (3) business days after the grantor receives possession of the equipment.

(b) A purchase money security interest in consumer goods that is perfected by registration of notice not
later than three (3) business days after the grantor obtains possession of the consumer goods shall have
priority over a conflicting security interest.

(c) A purchase money security interest in inventory, intellectual property or livestock shall have priority
over a conflicting perfected security interest in the same inventory, intellectual property or livestock if:

(1) The purchase money security interest is perfected when the grantor receives possession of the
inventory or livestock, or acquires rights to intellectual property; and
(2) Before the grantor receives possession of the inventory or livestock, or acquires rights in intellectual
property, the purchase money secured creditor gives written notification to the holder of the conflicting
perfected security interest in the same types of inventory, livestock, or intellectual property. The
notification sent to the holder of the conflicting security interest may cover multiple transactions
between the purchase money secured creditor and the grantor without the need to identify each
transaction.

(d) The purchase money security interest in equipment or consumer goods perfected timely in
accordance with subsections (a) and (b), shall have priority over the rights of a buyer, lessee, or lien
holder which arise between delivery of the equipment or consumer goods to the grantor and the time
the notice is registered.

Section 3(h)- definition of purchase money security interest

Super-priority rule- a feature of the law of most states

-a purchase money security interest over the collateral prevails over a perfected security interest over
the same collateral

Consumer goods- goods that are used or acquired for use primarily for personal, family or household
purposes
-goods primarily used or intended to be used by the grantor for personal, family or household purposes

-it is not the nature of the goods but rather the use to which they are put or the purpose for which they
are bought that determines the classification

-a purchase money security interest in consumer goods shall have priority over a conflicting security
interest provided that
a. the grantor obtains possession of the consumer goods
b. the purchase money security interest is perfected by registration of notice not later than three
business days

Inventory- refers to tangible assets held by the grantor for sale or lease in the ordinary course of the
grantor’s business, including raw materials and work in process
-inventory shall have priority over a conflicting perfected security interest in the same inventory if:
a. the purchase money security interest is perfected when the grantor receives possession of the
inventory
b. before the grantor receives possession of the inventory the purchase money secured creditor gives
written notification to the holder of the conflicting perfected security interest in the same types of
inventory

Intellectual Property- shall include copyright, trademarks, service marks, patents, industrial design and
trade secrets
-intellectual property shall have priority over a conflicting perfected security interest in this same
intellectual property if:
a. the purchase money security interest is perfected when the grantor acquires rights to intellectual
property
b. the purchase money secured creditor gives written notification to the holder of the conflicting
perfected security interest in the same intellectual property
Under Model Law, the purchase money security interest will have priority:
a. if the agreement for the sale or license of the intellectual property to the grantor has been concluded
b. if two conditions are met before the agreement for the sale or license of intellectual property has
been concluded

Livestock- Section 23(c) shall have priority over a conflicting perfected security interest if:
a. the purchase money security interest is perfected when the grantor receive possession of the
livestock
b. the purchase money secured creditor gives written notification to the holder of the conflicting
perfected security interest in the same livestock

Equipment- tangible asset other than inventory or consumer goods, or livestock, that is primarily used
or intended to be used by the grantor in the operation of its business

Sec 23(a)- purchase money security interest in equipment shall have priority over a conflicting perfected
security interest in the same equipment and proceeds if:
a. the grantor obtains possession of the equipment
b. the purchase money security interest is perfected by registration of notice not later than three
business days after the grantor receives possession of the equipment

23(c)(2)- multiple transactions; may cover multiple transactions between the purchase money secured
creditor and the grantor without the need to identify each transaction

Section 24. Livestock. -A perfected security interest in livestock securing an obligation incurred to enable
the grantor to obtain food or medicine for the livestock shall have priority over any other security
interest in the livestock, except for a perfected purchase money security interest in the livestock, if the
secured creditor providing credit for food or medicine gives written notification to the holder of the
conflicting perfected security interest in the same livestock before the grantor receives possession of the
food or medicine.

-under section 24, security interests over livestock will have this order of priority
1. perfected purchase money security interest in the livestock
2. perfected security interest in the livestock securing an obligation to enable the grantor to obtain food
or medicine over the livestock
3. perfected security interest over the livestock to secure other obligations

Section 25. Fixtures, Accessions, and Commingled Goods. -A perfected security interest in a movable
property which has become a fixture, or has undergone accession or commingling shall continue
provided the movable property involved can still be reasonably traced. In determining ownership over
fixtures, accessions, and commingled goods, the provisions of Book II of Republic Act No. 386 or the
"Civil Code of the Philippines" shall apply.

-a perfected security interest in a movable property shall continue provided the movable property info
can still be reasonably traced
-a fixture is property attached to an immovable or movable
 CHAPTER 5
REGISTRATION – REGISTRY

Section 26. Establishment of Electronic Registry.—

(a) The Registry shall be established in and administered by the LRA.

(b) The Registry shall provide electronic means for registration and searching of notices.

-the registry is the centralized and nationwide electronic registry established in the Land Registration
Authority (LRA)

-the following information shall be established within six months from the publication of the rules:
1. initial notice of security interest and lien in personal property
2. amendment notice providing new information or continuing the period of effectiveness of an initial
notice
3. termination notice

-the registry shall provide electronic means for registration and searching of notices.
-the LRA shall issue the necessary guidelines on the use and management of the registry

Key features of the Registry:

-the registry will be electronic
-to perfect the security interest, mere notice is registered with the registry
-the PPSA has no deadline for the registration of the security interest. registration can be made at
anytime after the security agreement is concluded
-the PPSA provides a grantor based indexing and not asset based indexing

Section 27. Public Record.—

(a) Information contained in a registered notice shall be considered as a public record.

(b) Any person may search notices registered in the Registry.

(c) The electronic records of the Registry shall be the official records.

-the electronic records of the registry shall be the official records

-the processing of all information shall be in accordance with the provisions of RA 10173 (Data Privacy
Act)
Official Record- information produced or received by a public officer or employee, or by a government
office in an official capacity or pursuant to a public function or duty
Public record- information required by laws, executive orders, rules, or regulations to be entered, kept
and made publicly available by a government office

Section 28. Sufficiency of Notice.—

(a) An initial notice of security interest shall not be rejected:

(1) If it identifies the grantor by an identification number, as further prescribed in the regulations;

(2) If it identifies the secured creditor or an agent of the secured creditor by name;

(3) If it provides an address for the grantor and secured creditor or its agent;

(4) If it describes the collateral: and

(5) If the prescribed fee has been tendered, or an arrangement has been made for payment of fees by
other means.

(b) If the Registry rejects to register a notice, it shall promptly communicate the fact of and reason for its
rejection to the person who submitted the notice.

(c) Each grantor must authorize the registration of an initial notice by signing a security agreement or
otherwise in writing.

(d) A notice may be registered before a security agreement is concluded. Once a security agreement is
concluded, the date of registration of the notice shall be reckoned from the date the notice was
registered.

(e) A notice of lien may be registered by a lien holder without the consent of the person against whom
the lien is sought to be enforced.

(f) Description of the collateral in a notice shall be entered in English.

-notice registration simplifies the registration process and minimizes the administrative and archival
burden on the registry system

1. The registrant is relieved of the delay and cost of having to provide proof of the underlying security
documentation
2. the registry is relieved of the need to provide storage facilities for that documentation and to employ
staff to scrutinize it
3. registration of a notice rather than a document is sufficient because of the legal consequences of
registration
Initial notice:
-The notice submitted to the registry in such form required to perfect the security interest over the
collateral covered by the notice
-the PPSA does not expressly state who submits the initial notice
-the initial notice must contain the following information:
a. the grantor’s identification number
b. the name of the secured creditor or its agent
c. the address for the grantor and secured creditor or its agent
d. a description of the collateral in English
-The grantor is a natural person, the grantor shall be identified through the name appearing in the
government issued identification
-if the grantor is a juridical person, the grantor shall be identified through its name in the most recently
registered articles of incorporation

-The initial notice must contain a description of the collateral in English

a. the description is sufficient if it reasonably identifies the collateral
b. the initial notice need not describe the collateral specifically. Ex: grantor’s watch
c. the secured creditor should avoid describing the collateral in a manner that may require it to register
and amendment notice due to subsequent events. Ex: all equipment located in 123 Makati City
d. If the collateral are a generic category of present and future assets, it is sufficient if the description
refers to the generic category. Ex: all present and future receivables owing to the grantor
e. The parties may enter into several security agreements overtime

-The PPSA does not require the notice to indicate the amount secured

Under Section 28(c)- The grantor must authorize the registration of an initial notice by signing a security
agreement or otherwise in writing

-the registration of the initial notice is ineffective unless authorized by the grantor in writing

Under Section 28(d)- a notice may be registered before a security agreement is concluded; the notice
may be registered prior to the creation of the security right

-the advanced registration of the notice will not create and will not perfect the security right

-once a security agreement is concluded, the date of registration of the notice shall be reckoned from
the date the notice was registered

-advanced registration will not necessarily protect a secured credit against other competing claimants
but it has other advantages such as:
a. it facilitates the grantor's access to credit
b. if the voids the risk of a registration being ineffective

-advanced registration may be prejudicial to the grantor identified in a registered notice if a security
agreement is never concluded
Section 29. One Notice Sufficient for Security Interests Under Multiple Security Agreements. -The
registration of a single notice may relate to security interests created by the grantor under one (1) or
more than one security agreement.

-the registration of a single notice may relate to security interests created by the grantor under one or
more than one security agreement

Section 30. Effectiveness of Notice.—

(a) A notice shall be effective at the time it is discoverable on the records of the Registry.

(b) A notice shall be effective for the duration of the term indicated in the notice unless a continuation
notice is registered before the term lapses.

(c) A notice substantially complying with the requirements of this Chapter shall be effective unless it is
seriously misleading.

(d) A notice that may not be retrieved in a search of the Registry against the correct identifier of the
grantor shall be ineffective with respect to that grantor.

Effectiveness of Notice:
Section 30(a)- the notice is effective at the time it is discoverable on the records of the registry

Section 30(b)- I notice she'll be effective during the term stated in the notice unless it continuation
notice is registered before the term lapses
-the security interest remains perfected during the term stated in the notice
-continuation notice; what must be registered is an amendment notice extending the effectiveness of
the notice

Section 30(c)- a notice substantially complying with the requirements of chapter 5 shall be effective
unless seriously misleading

Ineffectiveness of notice:
Section 30(d)- I notice that may not be retrieved in a search of the registry against the correct identifier
of the grantor Shelby ineffective with respect to that grantor

Section 31. Seriously Misleading Notice. -A notice that does not provide the identification number of the
grantor shall be seriously misleading.

-a notice is seriously misleading if it does not provide the correct identification number of the grantor

Section 32. Amendment of Notice.—

(a) A notice may be amended by the registration of an amendment notice that:

(1) Identifies the initial notice by its registration number; and

(2) Provides the new information.

(b) An amendment notice that adds collateral that is not proceeds must be authorized by the grantor in
writing.

(c) An amendment notice that adds a grantor must be authorized by the added grantor in writing.

(d) An amendment notice shall be effective only as to each secured creditor who authorizes it.

(e) An amendment notice that adds collateral or a grantor shall be effective as to the added collateral or
grantor from the date of its registration.

-PPSA does not state who submits the amendment notice

-the secured creditor in the registered initial notice is authorized to register and amendment notice
-to be valid, the amendment notice may be filed by the secured creditor alone or by the grantor grant

-PPSA does not state whether a new or separate grantor authorization is required for amendment notice

-an amendment notice shall be effective only as to each secured creditor who authorizes it

the following should be covered in the amendment notice:

1. correction of errors or omissions in the initial notice
2. post registration changes in the name and address of grantor
3. post registration changes in the name and address of secured creditor
4. post registration changes in the secured creditor
5. description of new collateral
6. addition of buyer of collateral as new grantor
7. extension of. For effectiveness of notice

-PPSA prescribes no. For the registration of an amendment

Section 33. Continuation of Notice.—

(a) The period of effectiveness of a notice may be continued by registering an amendment notice that
identifies the initial notice by its registration number.

(b) Continuation of notice may be registered only within six (6) months before the expiration of the
effective period of the notice.

-these rules apply to extend the effectiveness of a notice:

1. and amendment notice must be registered within six months before the expiration of the effective
period of the notice
2. the amendment notice must identify the initial notice by its registration number

Section 34. Termination of Effectiveness of a Notice.—

(a) The effectiveness of a notice may be terminated by registering a termination notice that:

(1) Identifies the initial notice by its registration number; and

(2) Identifies each secured creditor who authorizes the registration of the termination notice.

(b) A termination notice terminates effectiveness of the notice as to each authorizing secured creditor.

-the effectiveness of a notice may be terminated before the expiration of the term stated in the initial
notice.
-each secured creditor must authorize the filing of the termination notice. creditors who did not
authorize the filing of the termination notice will not be bound by the termination notice.

-section 35 provides certain duties of the registry

Section 35(c)- if the secured creditor submitted the notice, the registry shall provide a copy of the
electronic records of the notice to the secured creditor

Section 36. Search of Registry Records and Certified Report.—

(a) The Registry shall communicate the following information to any person who requests it:

(1) Whether there are in the Registry any unlapsed notices that indicate the grantor's identification
number or vehicle serial number that exactly matches the relevant criterion provided by the searcher;

(2) The registration number, and the date and time of registration of each notice; and

(3) All of the information contained in each notice.

(b) If requested, the Registry shall issue a certified report of the results of a search that is an official
record of the Registry and shall be admissible into evidence in judicial proceedings without extrinsic
evidence of its authenticity.

Section 37. Disclosure of Information.—

(a) The secured creditor must provide to the grantor at its request:

(1) The current amount of the unpaid secured obligation; and

(2) A list of assets currently subject to a security interest.

(b) The secured creditor may require payment of a fee for each request made by the grantor in
subsection (a) in this section, but the grantor is entitled to a reply without charge once every six (6)
months.
(c) A security interest in a deposit account shall not:

(1) Affect the rights and obligations of the deposit-taking institution without its consent; or

(2) Require the deposit-taking institution to provide any information about the deposit account to third
parties.

Section 38. Fees Set by Regulation.—

(a) The fees for registering a notice and for requesting a certified search report shall be set by regulation
issued by the DOF for the recovery of reasonable costs of establishing and operating the Registry.

(b) The fee structure or any change thereof under subsection (a) shall further consider that the same
shall not be burdensome to either lender or grantor.

(c) There shall be no fee for electronic searches of the Registry records or for the registration of
termination notices.

(d) The Registry may charge fees for services not mentioned above.

-this is to enhance transparency and certainty regarding security rights in movable assets

Section 38- no fee will be collected for electronic searches or for the registration of termination notices

Section 39. When the Grantor May Demand Amendment or Termination of Notice. -A grantor may give a
written demand to the secured creditor to amend or terminate the effectiveness of the notice if:

(a) All the obligations under the security agreement to which the registration relates have been
performed and there is no commitment to make future advances;

(b) The secured creditor has agreed to release part of the collateral described in the notice;

(c) The collateral described in the notice includes an item or kind of property that is not a collateral
under a security agreement between the secured creditor and the grantor;

(d) No security agreement exists between the parties; or

(e) The security interest is extinguished in accordance with this Act.

-section 39 states the grounds which the grantor may demand amendment or the termination of the
effectiveness of the notice

Section 39 (a)(d)(e)- termination of notice

Section 39 (b)(c)- amendment notice

Registered notices are cancelled or amended if:

1. no security agreement exists or is contemplated
2. the security right has been extinguished by full and final satisfaction of the secured obligation
3. the registered notice contains information not authorized by the grantor

Section 39(a)- The grantor may demand the filing of a termination notice if all the obligations have been
performed and there is no commitment to make future advances

Section 39(b)- the grantor may demand the filing of a termination notice if no security agreement exists
between the parties

Section 39(e)- the grantor may demand the filing of a termination notice if the security interest is
extinguished in accordance with PPSA

the grantor may demand the filing of an amendment notice if:

1. the secured creditor has agreed to release part of the collateral described in the notice
2. the collateral described in the notice includes an item or kind of property that is not a collateral under
a security agreement between the secured creditor and the grantor

Section 40. Matters That May be Required by Demand. -Upon receipt of the demand submitted under
Section 39, the secured creditor must register, within fifteen (15) working days, an amendment or
termination notice:

(a) Terminating the registration in a case within subsections (a), (d) or (e) of Section 39;

(b) Amending the registration to release some property that is no longer collateral in a case within
subsection (c) of Section 39 or that was never collateral under a security agreement between the
secured creditor and the grantor in a case within subsection (c) of Section 39.

- section 40 gives the secured creditor a period of 15 working days within which to register the
termination notice or amendment notice demanded by the grantor under section 39

Section 41. Procedure for Noncompliance with Demand. -If the secured creditor fails to comply with the
demand within fifteen (15) working days after its receipt, the person giving the demand under Section
39 may ask the proper court to issue an order terminating or amending the notice as appropriate.

-section 41 provides the grantor remedy if the secured creditor fails to comply with the grantor’s written
demand for the filing of a termination or amendment notice

Section 42. Compulsory Amendment or Termination by Court Order.—

(a) The court may, on application by the grantor, issue an order that the notice be terminated or
amended in accordance with the demand, which order shall be conclusive and binding-on the LRA:
Provided, That the secured creditor wrho disagrees with the order of the court may appeal the order.

(b) The court may make any other order it deems proper for the purpose of giving effect to an order
under subsection (a) of this section.

(c) The LRA shall amend or terminate a notice in accordance with a court order made under subsection
(a) of this section as soon as reasonably practicable after receiving the order.
-Section 42 gives the court the authority to issue and order that the notice be terminated or amended in
accordance with the grantor’s demand.
-the court's order binds the LRA. the secured creditor may appeal the court's order

-any person who, without negligence, sustains loss or damage, or is deprived of his priority right in
consequence of an erroneous or false description in the notice made by the filing party may bring an
action in any court of competent jurisdiction for the recovery of damages

Section 43. No Fee for Compliance of Demand. -A secured creditor shall not charge any fee for
compliance with a demand received under Section 39.

-under section 43, a secured creditor can not charge any fee for compliance with a demand received
under section 39

Section 44. When Registration and Search Constitutes Interference with Privacy of Individual. -A person
who submitted a notice for registration or carried out a search of the Registry with a frivolous, malicious
or criminal purpose or intent shall be subject to civil and criminal penalties according to the relevant
laws.

-under section 44, a person who submitted a notice for registration or carried out a search of the
registry with a malicious or criminal purpose or intent shall be subject to civil and criminal penalties
according to the relevant laws

CHAPTER 6
ENFORCEMENT OF SECURITY INTEREST SECURED CREDITOR’S RIGHTS

Section 45. Right of Redemption.—

(a) Any person who is entitled to receive a notification of disposition in accordance with this Chapter is
entitled to redeem the collateral by paying or otherwise performing the secured obligation in full,
including the reasonable cost of enforcement.

(b) The right of redemption may be exercised, unless:

(1) The person entitled to redeem has not, after the default, waived in writing the right to redeem;

(2) The collateral is sold or otherwise disposed of, acquired or collected by the secured creditor or until
the conclusion of an agreement by the secured creditor for that purpose; and

(3) The secured creditor has retained the collateral.

Two ways two to enforce its security interest over the collateral:
1. The sale or disposition of the collateral through a public or private sale
2. the retention by the creditor of the collateral in total or partial satisfaction of the secured obligation

-The secured creditor may not avail remedies under PPSA. the secured creditor may file an action for
collection against the debtor and obtain judgment against the debtor.
judicial action may be filed with these reasons:
1. the grantor may be stubborn and the creditor may not be able to recover extrajudicially
2. the collateral value have diminished
3. creditors can eliminate their own liability risk

Redemption-Involves the satisfaction of the obligation and does not involve a transfer of the collateral
to the person who redeems; involves payment or performance of the obligation

Who may redeem: grantor, any other secured creditor or lien holder, any other person from whom the
secured creditor received information

the right of redemption may be exercised unless:

1. the person entitled to redeem has waived in writing the right to redeem
2. the collateral is sold or disposed
3. the secured creditor has retained the collateral pursuant to section 54.

Section 45(a)- the right of redemption may be exercised unless the person entitled to redeem has not,
after the default waved in writing the right to redeem.

45(b)- the right cannot be exercised if the collateral is sold or otherwise disposed of

45(c)- the right of redemption cannot be exercised if the secured creditor retained the collateral

PPSA does not expressly state the consequences of redemption

-if the grantor redeems, that particular security interest over the collateral is extinguished
-if a secured creditor redeems, this extinguishes the security interest over the obligation to whom the
principal obligation is redeemed.

-there is no legal subrogation when a creditor pays another credit who is preferred, even without the
debtors knowledge
-subrogation transfers to the person subrogated the credit with all the rights pertaining to

Section 46. Right of Higher-Ranking Secured. Creditor to Take Over Enforcement.—

(a) Even if another secured creditor or a lien holder has commenced enforcement, a secured creditor
whose security-interest has priority over that of the enforcing secured creditor or lien holder shall be
entitled to take over the enforcement process.

(b) The right referred to in subsection (a) of this section may be invoked at any time before the collateral
is sold or otherwise disposed of, or retained by the secured creditor or until the conclusion of an
agreement by the secured creditor for that purpose.

(c) The right of the higher-ranking secured creditor to take over the enforcement process shall include
the right to enforce the rights by any method available to a secured creditor under this Act.

Section 46(a)- deals with a situation where a lower ranking security or a lien holder has commenced
enforcement
46(b)- this right may be exercised at anytime before the earlier of the disposition of the collateral, the
retention of the collateral by the secured creditor, or the conclusion of an enforceable agreement to
dispose of the assets

46(c)- the right of the higher ranking secured creditor to take over the enforcement process shall include
the right to enforce the rights by any method available to a secured creditor under PPSA

-if the secured creditor does not take over, it may lose its security interest over the collateral

Section 47. Expedited Repossession of the Collateral.—

(a) The secured creditor may take possession of the collateral without judicial process if the security
agreement so stipulates: Provided, That possession can be taken without a breach of the peace.

(b) If the collateral is a fixture, the secured creditor, if it has priority over all owners and mortgagees,
may remove the fixture from the real property to which it is affixed without judicial process. The secured
creditor shall exercise due care in removing the fixture.

(c) If, upon default, the secured creditor cannot take possession of collateral without breach of the
peace, the secured creditor may proceed as follows:

(1) The secured creditor shall be entitled to an expedited hearing upon application for an order granting
the secured creditor possession of the collateral. Such application shall include a statement by the
secured creditor, under oath, verifying the existence of the security agreement attached to the
application and identifying at least one event of default by the debtor under the security agreement;

(2) The secured creditor shall provide the debtor, grantor, and, if the collateral is a fixture, any real
estate mortgagee, a copy of the application, including all supporting documents and evidence for the
order granting the secured creditor possession of the collateral; and

(3) The secured creditor is entitled to an order granting possession of the collateral upon the court
finding that a default has occurred under the security agreement and that the secured creditor has a
right to take possession of the collateral. The court may direct the grantor to take such action as the
court deems necessary and appropriate so that the secured creditor may take possession of the
collateral: Provided, That breach of the peace shall include entering the private residence of the grantor
without permission, resorting to physical violence or intimidation, or being accompanied by a law
enforcement officer when taking possession or confronting the grantor.

-the creditor will usually need to take possession of the collateral held by the grantor for enforcement
purposes

-the secured creditor must secure a court order to obtain possession of the collateral. exception is when
the security agreement provides that the secured creditor may take possession without judicial process

-PPSA does not define breach of peace (found in US Uniform Commercial Code)
-if the grantor is present and consents to the possession, there is no breach of peace and the security
creditor may obtain possession by self help…
-if the grantor is present and the secured creditor is repossessing the collateral from a public location,
there is no breach of peace
-following the debtors default, the debtor should surrender possession of the collateral to the secured
creditor
-a secured creditor is usually entitled to obtain possession of the collateral for enforcement purposes

Section 48. Recovery in Special Cases.— Upon default, the secured creditor may without judicial
process:

(a) Instruct the account debtor to make payment to the secured creditor, and apply such payment to the
satisfaction of the obligation secured by the security interest after deducting the secured creditor’s
reasonable collection expenses. On request of the account debtor, the secured creditor shall provide
evidence of its security interest to the account debtor when it delivers the instruction to the account
debtor;

(b) In a negotiable document that is perfected by possession, proceed as to the negotiable document or
goods covered by the negotiable document;

(c) In a deposit account maintained by the secured creditor, apply the balance of the deposit account to
the obligation secured by the deposit account; and

(d) I n other cases of security interest in a deposit account perfected by control, instruct the deposit-
taking institution to pay the balance of the deposit account to the secured creditor’s account.

-section 48 authorizes the secured creditor to obtain payment without judicial process

Section 49. Right to Dispose of Collateral.—

(a) After default, a secured creditor may sell or otherwise dispose of the collateral, publicly or privately,
in its present condition or following any commercially reasonable preparation or processing.

(b) The secured creditor may buy the collateral at any public disposition, or at a private disposition but
only if the collateral is of a kind that is customarily sold on a recognized market or the subject of widely
distributed standard price quotations.

-section 49 gives the secured creditor, after default by the debtor, the right to sell or otherwise dispose
of the collateral
-section 49 authorizes the creditor to sell or dispose of the property without applying to the court

Public disposition- disposition by auction sale while a private disposition is any type of disposition

Recognized market- is an organized market in which large volumes of similar assets are bought and sold
between many different sellers and buyers

Section 50. Commercial Reasonableness Required.—

(a) In disposing of collateral, the secured creditor shall act in a commercially reasonable manner.

(b) A disposition is commercially reasonable if the secerned creditor disposes of the collateral in
conformity with commercial practices among dealers in that type of property.

(c) A disposition is not commercially unreasonable merely because a better price could have been
obtained by disposition at a different time or by a different method from the time and method selected
by the secured creditor.

(d) If a method of disposition of collateral has been approved in any legal proceeding, it is conclusively
commercially reasonable.

Section 50(a)- requires that in disposing of collateral, the secured creditor shall act in a commercially
reasonable manner

Advantage: it encourages secured creditors to adopt procedures designed to bring a fair price for the
collateral
Disadvantage: it allows courts to use 20/20 hindsight to second guess virtually every step that a creditor
has taken in disposing the collateral

Section 50(b)- a disposition is commercially reasonable if the secured creditor disposes of the collateral
in conformity with commercial practices among dealers in that type of property

factors to be considered by court if secured credit are acted in a commercially reasonable manner:
a. whether the secured creditor chose an adequate method of disposition given the nature of the
collateral
b. whether the secured credit are properly advertised the disposition
c. whether the secured credit are conducted the disposition at a reasonable timed.
d. whether the terms of the disposition where reasonable

duty to publicize the sale is important. this requires the secured creditor to:
1. ensure that the advertising is sufficient
2. provide sufficient time following the advertising for potential buyers
3. disclose in the advertising adequate and accurate information about the collateral
4. make the collateral available for inspection by potential buyers

-PPSA does not specify the period within which the secured creditor must dispose of collateral after
default

Guidelines of disposition:
1. The secured creditor may dispose of the collateral through a sale open to participation by the general
public
2. if extra judicial disposition, the secured creditor may include whether to sell or otherwise dispose of
lease or license encumbered assets individually in groups or altogether
3. the secured creditor shall no later than 10 days post with the registry a notice that describes the
collateral
4. all collateral shall be disposed through auction…
-The highest bidder is awarded the collateral
-the winning bidder must fully pay the bid price at the conclusion of the auction. the collateral may be
awarded to the next highest bidder

-private entities such as auction houses may adopt rules and regulations subject to the approval of the
Department of Finance
-public auction of movable collateral conducted by any government agency or private entity under rules
duly approved by the Department of Finance shall be conclusively presumed to be commercially
reasonable

Section 51. Notification of Disposition.—

(a) Not later than ten (10) days before disposition of the collateral, the secured creditor shall notify:

(1) The grantor;

(2) Any other secured creditor or lien holder who, five (5) days before the date notification is sent to the
grantor, held a security interest or lien in the collateral that was perfected by registration; and

(3) Any other person from whom the secured creditor received notification of a claim of an interest in
the collateral if the notification was received before the secured creditor gave notification of the
proposed disposition to the grantor.

(b) The grantor may waive the right to be notified.

(c) A notification of disposition is sufficient if it identifies the grantor and the secured creditor; describes
the collateral; states the method of intended disposition; and states the time and place of a public
disposition or the time after which other disposition is to be made.

(d) The requirement to send a notification under this section shall not apply if the collateral is perishable
or threatens to decline speedily in value or is of a type customarily sold on a recognized market.

-Section 51 requires notice of disposition to certain persons

-The purpose of the notice is to enable the grantor or other competing claimants to verify that the sale
will take place under commercially reasonable conditions
-section 51 does not include the debtor but this does not prevent the debtor from paying or performing
its obligations
-only secured creditors who perfected by registration or lien holders who registered the lien are entitled
to redeem

Section 52. Application of Proceeds.—

(a) The proceeds of disposition shall be applied in the following order:

(1) The reasonable expenses of taking, holding, preparing for disposition, and disposing of the collateral,
including reasonable attorneys’ fees and legal expenses incurred by the secured creditor;

(2) The satisfaction of the obligation secured by the security interest of the enforcing secured creditor;
and

(3) The satisfaction of obligations secured by any subordinate security interest or hen in the collateral if
a written demand and proof of the interest are received before distribution of the proceeds is
completed.

(b) The secured creditor shall account to the grantor for any surplus, and, unless otherwise agreed, the
debtor is liable for any deficiency.

-section 52 addresses the distribution of proceeds of a sale or other disposition of the collateral

-The proceeds will first be applied to the payment of reasonable expenses of the secured credit are in
the taking and holding for this position and disposing of the collateral
-the secured creditor can be random burst for reasonable expenses incurred for the care and
preservation of the storage of the thing
-after payment of the expenses, the proceeds will be applied to the satisfaction of the obligation secured
by the security interest

Section 52(a)(3)- any surplus must be paid to any holder of any subordinate security interest or lien
holder that have notified the inforcing secured creditor of their claims

-section 52 does not provide for the payment of obligations to a higher ranking secured creditor

Section 53(b)- the secured creditor shall account to the grantor for any surplus unless otherwise agreed
the debtor is liable for any deficiency
1. in case of surplus, the secured creditor must account to the grantor for any surplus
2. in case of a deficiency, the debtor will still be liable for the deficiency unless there is an agreement to
the contrary

- PPSA Does not address whether the debtor's obligation may be reduced or extinguished if the secured
creditor failed to comply with the provisions of the chapter governing dispositions

Section 53. Rights of Buyers and Other Third Parties.—

(a) If a secured creditor sells the collateral under this Chapter, the buyer shall acquire the grantor’s right
in the asset free of the rights of any secured creditor or lien holder.

(b) If a secured creditor leases or licenses the collateral under this Chapter, the lessee or licensee shall
be entitled to the benefit of the lease or license during its term.

(c) If a secured creditor sells, leases or licenses the collateral not in compliance with this Chapter, the
buyer, lessee or licensee of the collateral shall acquire the rights or benefits described in subsections (a)
and (b) of this section: Provided, That it had no knowledge of a violation of this Chapter that materially
prejudiced the rights of the grantor or another person.

Under Section 53(a)- if a secured creditor sells the collateral under this chapter, the buyer generally
acquires the grantor's right in the asset free of the rights of any secured creditor or lien holder

Section 53(c)- Right acquired by a buyer or other transferee, or a lessee or licensee, art affected by the
inforcing creditors failure to comply with the requirements of the chapter only if two conditions are
satisfied (two conditions- knowledge of violation, breach)

Section 54. Retention of Collateral by Secured Creditor.—

(a) After default, the secured creditor may propose to the debtor and grantor to take all or part of the
collateral in total or partial satisfaction of the secured obligation, and shall send a proposal to:

(1) The debtor and the grantor;

(2) Any other secured creditor or lien holder who, five (5) days before the proposal is sent to the debtor
and the grantor, perfected its security interest or lien by registration; and

(3) Any other person with an interest in the collateral who has given a written notification to the secured
creditor before the proposal is sent to the debtor and the grantor.

(b) The secured creditor may retain the collateral in the case of:

(1) A proposal for the acquisition of the collateral in full satisfaction of the secured obligation, unless the
secured creditor receives an objection in writing from any person entitled to receive such a proposal
within twenty (20) days after the proposal is sent to that person; or

(2) A proposal for the acquisition of the collateral in partial satisfaction of the secured obligation, only if
the secured creditor receives the affirmative consent of each addressee of the proposal in writing within
twenty (20) days after the proposal is sent to that person.

Section 54(a)- And titles the secured creditor after default by the debtor to propose to the debtor and
grantor to take all or part of the collateral in total or partial satisfaction of the secured obligation by
sending a proposal to the debtor

-there is a dacion en pago agreement Between the debtor and secured creditor
-the secured creditor may decide that a suit for collection or a disposal of that collateral may not be
feasible or productive

Persons entitled to receive proposal:

1. The debtor and the grantor
2. any other secured creditor or lien holder
3. any other person with an interest in the collateral

-PPSA does not specify the contents of the proposal. the proposal must include:
1. a statement of the amount required at the time of the proposal
2. a statement that the secured creditor proposes to acquire the encumbered asset
3. a statement that the grantor is entitled to terminate the enforcement
4. statement of the date after which the secured creditor will acquire the encumbered asset

Full satisfaction of obligation- The secured creditor retains the collateral unless the secured creditor
receives an objection in writing from any person entitled to receive such proposal within 20 days after
the proposal
Partial satisfaction- the secured creditor retains the collateral only if the secured creditor receives the
affirmative consent of each addressee of the proposal in writing within 20 days after the proposal is sent
to that person

- section 54 refers to the retention of the collateral by the secured creditor

remedies for secured party’s failure to comply:

-A court may order or restrain collection, enforcement, or disposition of collateral on appropriate terms
and conditions
-a party who fails to comply with the provisions of these rules shall be liable in the amount of any loss
resulting from such failure. this includes loss resulting from the debtors inability to obtain, or increase
cost of, alternative financing
-a person who is a debtor or grantor on the collateral may recover damages for its loss

CHAPTER 7
TRANSITIONAL PROVISIONS

Section 55. Interpretation of Transitional Provisions.— For this Chapter, unless the context otherwise
requires:

(a) Existing secured creditor – means a secured creditor with a prior security interest;

(b) Prior law – means any law that existed or in force before the effectivity of this Act;

(c) Prior interest – means a security interest created or provided for by an agreement or other
transaction that was made or entered into before the effectivity of this Act and that had not been
terminated before the effectivity of this Act, but excludes a security interest that is renewed or extended
by a security agreement or other transaction made or entered into on or after the effectivity of this Act;
and

(d) Transitional period - means the period from the date of effectivity of this Act until the date when the
Registry has been established and operational.

Section 56. Creation of Prior Interest.—

(a) Creation of prior interest shall be determined by prior laws.

(b) A prior interest remains effective between the parties notwithstanding its creation did not comply
with the creation requirements of this Act.

Section 57. Perfection of Prior Interest.—

(a) A prior interest that was perfected under prior law continues to be perfected under this Act until the
earlier of:

(1) The time the prior interest would cease to be perfected under prior law; and

(2) The expiration of the transitional period.

(b) If the perfection requirements of this Act are satisfied before the perfection of a prior interest ceases
in accordance with subsection (a) of this section, the prior interest continues to be perfected under this
Act from the time when it was perfected under the prior law.

(c) If the perfection requirements of this Act are not satisfied before the perfection of a prior interest
ceases in accordance with subsection (a) of this section, the prior interest is perfected only from the
time it is perfected under this Act.

(d) A written agreement between a grantor and a secured creditor creating a prior interest is sufficient
to constitute authorization by the grantor of the registration of a notice covering assets described in that
agreement under this Act.

(e) If a prior interest referred to in subsection (b) of this section was perfected by the registration of a
notice under prior law, the time of registration under the prior law shall be the time to be used for
purposes of applying the priority rules of this Act.

Section 58. Priority of Prior Interest.—

(a) The priority of a prior interest as against the rights of a competing claimant is determined by the
prior law if:

(1) The security interest and the rights of all competing claimant arose before the effectivity of this Act;
and

(2) The priority status of these rights has not changed since the effectivity of this Act.

(b) For purposes of subsection (a)(2) of this section, the priority status of a prior interest has changed
only if:

(1) It was perfected when this Act took effect, but ceased to be perfected; or

(2) It was not perfected under prior law when this Act took effect, and was only perfected under this
Act.

Section 59. Enforcement of Prior Interest.—

(a) If any step or action has been taken to enforce a prior interest before the effectivity of this Act,
enforcement may continue under prior law or may proceed under this Act.
(b) Subject to subsection (a) of this section, prior law shall apply to a matter that is the subject of
proceedings before a court before the effectivity of this Act.

-under section 56, the creation of prior interest shall be determined by prior law

CHAPTER 8
CONGRESSIONAL OVERSIGHT AND MISCELLANEOUS PROVISIONS

Section 60. Congressional Oversight and Periodic Review.— A Congressional Oversight Committee shall
be created that will conduct a periodic review every five (5) years commencing from the effectivity of
this Act. The Congressional Oversight Committee shall be composed of the Chairperson of the Senate
Committee on Banks, Financial Institutions and Currencies, the Chairperson of the House of
Representatives Committee on Banks and Financial Intermediaries, and representatives of other
relevant congressional committees.

Section 61. Interpretation.— If there is conflict between a provision of this Act and a provision of any
other law, this Act shall govern unless the other law specifically cites or amends the conflicting
provisions of this law.

Section 62. Implementing Rules and Regulations.— Within six (6) months from the passage of this Act,
the DOF in coordination with the Department of Justice, through the LRA, shall promulgate the
necessary rules and regulations for’ the effective implementation of this Act.

Section 63. Rules on Enforcement Procedure.— Subject to Section 47, the expedited
hearing/proceedings shall be conducted in a summary manner consistent with the declared policies of
this Act and in accordance with the rules of procedure that the Supreme Court may promulgate.

Section 64. Sourcing of Funds.— The funds needed for the implementation of this Act shall be taken
from the Special Account arising from revenues collected by the LRA under Section 111 of Presidential
Decree No. 1529, without need for any further government approval.

Section 65. Separability Clause.— Should any provision herein be declared unconstitutional, the same
shall not affect the validity of the other provisions of this Act.

Section 66. Repealing Clause.— The following laws, and all laws, decrees, orders, and issuances or
portions thereof, which are inconsistent with the provisions of this Act, are hereby repealed, amended,
or modified accordingly:

(a) Sections 1 to 16 of Act No. 1508, otherwise known as "The Chattel Mortgage Law";

(b) Articles 2085-2123, 2127, 2140-2141, 2241, 2243, and 2246-2247 of Republic Act No. 386, otherwise
known as the "Civil Code of the Philippines";

(c) Section 13 of Republic Act No. 5980, as amended by Republic Act No. 8556, otherwise known as the
"Financing Company Act of 1998";

(d) Sections 114-116 of Presidential Decree No. 1529, otherwise known as the "Property Registration
Decree";
(e) Section 10 of Presidential Decree No. 1529, insofar as the provision thereof is inconsistent with this
Act; and

(f) Section 5(e) of Republic Act No. 4136, otherwise known as the "Land Transportation and Traffic
Code".

Section 67. Effectivity.— This Act shall take effect fifteen (15) days after publication in at least two (2)
newspapers of general circulation.

Section 68. Implementation.— Notwithstanding the entry into force of this Act under Section 67, the
implementation of the Act shall be conditioned upon the Registry being established and operational
under

Approved,