Sev

ent
eent
hCongr
ess

SecondRegul
arSessi
on

Begunandhel
dinMet
roMani
l
a,onMonday
,thet
went
y-f
our
thdayofJul
y,t
wot
housand
sevent
een.

REPUBLI
CACTNo.11057

AnActSt r
engtheningtheSecuredTransacti
onsLegalFr
amewor kinthePhil
ippi
nes,WhichShal
l
Providef
ortheCr eat
ion,Perf
ecti
on,Deter
minati
onofPrior
it
y,Establ
i
shmentofaCent ral
ized
NoticeRegi
str
y ,
andEnf orcementofSecuri
tyInt
erest
sinPersonalProper
ty,
andf orOt
her
Purposes

Beitenact
edbyt
heSenat
eandHouseofRepr
esent
ati
vesoft
hePhi
l
ippi
neCongr
ess
Assembled:

Sect
ion1.Ti
tl
e.-
Thi
sActshal
lbeknownast
he"
Per
sonal
Proper
tySecur
it
yAct
".

Secti
on2.Decl ar
ati
onofPolicy.-I
tisthepoli
cyoftheStat
etopromoteeconomicactivi
tyby
i
ncreasingaccesstoleastcostcredit
,part
icul
arl
yformicr
o,small
,andmedium enter
pri
ses
(MSMEs) ,byestabl
i
shingaunifiedandmoder nlegalf
rameworkforsecur
ingobl
igati
onswit
h
personalpropert
y.

CHAPTER1

DEFI
NITI
ONSANDSCOPE

Sect
ion3.Def
ini
ti
onofTer
ms.-
Asusedi
nthi
sAct
,thef
oll
owi
ngt
ermsshal
lmean:
(a)Commodit
ycont
ract–acommodityfut
urescont
ract
,anopti
ononacommodi
tyf
utur
es
contr
act
,acommodityopt
ion,
oranot
hercontr
acti
fthecont
ractoropt
ioni
s:

(
1)Tradedonorsubj
ecttother
ulesofaboar
doft
radet
hathasbeendesi
gnat
edasacont
ract
mar
ketforsuchacontr
act;
or

(2)Tr
adedonafor
eigncommodi
tyboar
doftr
ade,
exchange,
ormar
ket
,andi
scar
ri
edont
he
booksofacommodityi
nter
medi
aryf
oracommodit
ycustomer;

(
b)Cont
rol
agr
eement–

(
1)Withrespecttosecuri
ti
es,
meansanagr eementinwr i
ti
ngamongtheissuerorthe
i
nter
mediary,t
hegrantorandthesecuredcr
edi
tor,accor
dingt
owhichtheissuerorthe
i
nter
mediaryagreestofol
lowinst
ructi
onsfr
om thesecuredcr
edi
torwit
hrespecttothesecur
it
y,
wi
thoutf
urtherconsentfr
om thegrant
or;

(2)Wi t
hrespecttori
ghtstodepositaccount,meansanagr eementi
nwr i
ti
ngamongt hedeposi
t
-
takinginsti
tut
ion,t
hegrantorandt hesecur
edcredi
tor,accordi
ngtowhichthedeposi
t-
taki
ng
i
nstitut
ionagreestofoll
owinstruct
ionsfrom t
hesecuredcredit
orwit
hrespecttothepayment
offundscreditedtothedepositaccountwit
houtfur
therconsentfr
om thegrant
or;

(3)Wi t
hrespecttocommodi t
ycontracts,meansanagreementinwri
ti
ngamongthegrantor
,
securedcredit
or,andint
ermediar
y,accordingt
owhichthecommodi t
yint
ermedi
arywil
lappl
y
anyv al
uedistr
ibutedonaccountofthecommodi tycont
ractasdir
ect
edbythesecur
edcredi
tor
withoutfur
therconsentbythecommodi t
ycustomerorgrant
or;

(
c)Gr
ant
or–

(1)Thepersonwhogr
ant
sasecur
it
yint
eresti
ncol
l
ater
alt
osecur
eit
sownobl
i
gat
ionort
hatof
anotherper
son;
(
2)Abuy
erorot
hert
ransf
ereeofacol
l
ater
alt
hatacqui
resi
tsr
ightsubj
ectt
oasecur
it
yint
erest
;

(
3)At
ransf
erori
nanout
ri
ghtt
ransf
erofanaccount
srecei
vabl
e;or

(
4)Al
esseeofgoods;

(d)Non-i
ntermediat
edsecuri
ti
es–securi
ti
esothert
hansecuri
ti
escredi
tedt
oasecurit
ies
accountandright
sinsecur
it
iesresul
ti
ngf
rom t
hecredi
tofsecuri
ti
estoasecur
it
iesaccount
;

(
e)Noti
ce–ast at
ementofi
nfor
mati
onthatisregi
ster
edi
ntheRegist
ryrel
ati
ngtoasecur
ity
i
nter
estorl
i
en.Theter
mincl
udesanini
ti
alnoti
ce.,
amendmentnot
ice,andter
minat
ionnot
ice;

(f
)Proceeds–anypr oper t
yrecei
veduponsale,l
easeorotherdi
sposit
ionofcol
lat
eral
,or
whateveri
scollect
edonordi stri
but
edwi t
hrespecttocol
lat
eral
,cl
aimsarisi
ngoutofthelossor
damaget othecoll
ateral,
aswellasarighttoi
nsurancepaymentorothercompensati
onforloss
ordamageoft hecollater
al;

(
g)Purchasemoneysecur
ityint
erest–asecuri
tyi
nter
estingoodstakenbyt
hesell
ert
osecure
t
hepri
ceorbyaper sonwhogi v
esv al
uetoenabl
ethegrantort
oacquiret
hegoodstot
heextent
t
hatt
hecr edi
tisusedf
orthatpurpose;

(h)Registry–thecentral
izedandnat
ionwi
deelect
roni
cregi
str
yestabl
i
shedint
heLand
Regist
rationAut hor
it
y(LRA)wherenoti
ceofasecuri
tyi
nter
estandali
eninper
sonal
proper
ty
mayber egist
ered;

(i
)Securedcredi
tor–apersonthathasasecuri
tyinter
est
.Forthepurposesofr
egist
rat
ionand
pri
ori
tyonly
,iti
ncludesabuyerofaccountr
ecei
vableandalessorofgoodsunderanoperat
ing
l
easefornotlessthanone(1)year;

(
j)Secur
it
yint
erest–apr
oper
tyr
ighti
ncol
l
ater
alt
hatsecur
espay
mentorot
herper
for
manceof
anobl i
gat
ion,r
egardlessofwhet hert
heparti
eshav edenominateditasasecurit
yinter
est,and
regardl
essofthetypeofasset ,
thest
atusofthegrantororsecuredcredi
tor
,orthenatureofthe
securedobli
gati
on;includingtheri
ghtofabuyerofaccountsreceivabl
eandal essorunderan
operati
ngleasefornotl essthanone(1)year
;and

(
k)Wr
it
ing–f
ort
hepur
poseoft
hisActi
ncl
udesel
ect
roni
crecor
ds.

Secti
on4.Scopeoft heAct
.—ThisActshallapplytoall
transacti
onsofanyfor
mt hatsecurean
obl
igati
onwit
hmov abl
ecoll
ater
al,
excepti
nterestsinai
rcraft
ssubjectt
oRepubli
cActNo.9497,
orthe"Ci
vi
lAviat
ionAuthor
ityActof2008"
,andi nt
erest
si nshipssubj
ectt
oPresi
dentialDecr
ee
No.1521,ort
he"Shi pMort
gageDecreeof1978" .

CHAPTER2

CREATI
ONOFSECURI
TYI
NTEREST

Sect
ion5.Cr
eat
ionofaSecur
it
yInt
erest
.—

(
a)Asecur
it
yint
erestshal
lbecr
eat
edbyasecur
it
yagr
eement
,

(b)Asecuri
tyagr
eementmaypr ovidefort
hecreat
ionofasecuri
tyi
nteresti
naf ut
ureproperty
,
butthesecuri
tyi
nter
esti
nthatpropert
yiscreat
edonlywhenthegrantoracqui
resri
ghtsinitor
thepowertoencumberit
.

Secti
on6.Secur
it
yAgreement.
—Asecurit
yagreementmustbecontai
nedinawri
tt
encontr
act
si
gnedbytheparti
es.I
tmayconsi
stofoneormor ewri
ti
ngst
hat,
takentoget
her
,est
abl
ishthe
i
ntentoft
heparti
estocreat
easecur
it
yinter
est.

Thesecuri
tyagreementshalll
ikewi
seprovi
defort
helanguaget
obeusedinagreementsand
not
ices.Thegrantorshal
lbegiventheopt
iont
ohav etheagr
eementandnoti
cesi
nFil
ipi
no.The
Depart
mentofFi nance(DOF)shall
prepar
emodelagreementsi
nplai
nEngli
shandFi
li
pino.
Section7.Descript
ionofCol l
ater
al.
—Adescr i
pti
onofcollat
eralshal
lbeconsideredsuf
fici
ent,
whetheritisspecif
icorgeneral,i
fitr
easonabl
yident
if
iesthecollat
eral
.Adescripti
onsuchas
"al
lpersonalproperty
","al
lequipment",
"al
li
nvent
ory"
,or"all
personalproper
tywithi
nagener i
c
category"ofthegrantorshall
besuf f
ici
ent
.

Sect
ion8.Ri
ghtt
oPr
oceedsandCommi
ngl
edFundsandMoney
.—

(
a)Asecur
it
yint
eresti
nper
sonal
proper
tyshal
lext
endt
oit
sident
if
iabl
eort
raceabl
epr
oceeds.

(b)Wher
eproceedsintheform off
undscr
edi
tedt
oadeposi
taccountormoneyar
e
commingl
edwithotherfundsormoney:

(
1)Thesecuri
tyi
nter
estshall
ext
endtothecommingl
edmoneyorf
unds,not
wit
hst
andi
ngt
hat
t
heproceedshav
eceasedt obei
dent
ifi
abl
etotheext
entt
heyr
emaint
raceabl
e:

(2)Thesecur
it
yinteresti
nthecommingl
edfundsormoneyshal
lbel
i
mit
edt
otheamountoft
he
proceedsi
mmedi atel
ybefor
etheywerecommingl
ed:and

(3)Ifatanyti
meaftert hecommingling,thebal
ancecr edit
edtothedepositaccountorthe
amountoft hecommi ngledmoneyi slessthantheamountoft hepr oceedsimmediatel
ybefor
e
theywer ecommingl
ed, t
hesecur
ityinter
estagainstthecommi ngledfundsormoneyshallbe
l
imitedtothelowestamountoft hecommi ngl
edf undsormoneybet weentheti
mewhent he
proceedswerecommi ngledandthet i
met hesecuri
tyinter
esti
nt heproceedsi
sclaimed.

Secti
on9.Cont
inui
tyofSecurit
yInterest
.—Asecur it
yinterestshal
lcontinuei
ncoll
ater
al
notwi
thst
andi
ngsale,l
ease,l
icense,exchange,orotherdisposit
ionofthecoll
ater
al,
exceptas
other
wisepr
ovi
dedinSection21oft hisAct,oragreeduponbyt hepar
ties.

Sect
ion10.Cont
ract
ual
Limi
tat
ionont
heCr
eat
ionofaSecur
it
yInt
erest
.—
(a)Asecurit
yinter
esti
nanaccountreceiv
abl
eshallbeef
fect
ivenotwit
hstandi
nganyagreement
betweenthegrantorandt
heaccountdebtororanysecur
edcredi
torli
miti
nginanywaythe
grant
or’
srighttocreat
easecur
it
yinterest
.

(b)Nothi
ngi
nthi
ssectionshal
laf
fectanyobl
i
gat
ionorl
i
abi
l
ityoft
hegr
ant
orf
orbr
eachoft
he
agreementi
nsubsect
ion(a)
.

(
c)Anyst
ipul
ati
onl
i
mit
ingt
hegr
ant
or’
sri
ghtt
ocr
eat
easecur
it
yint
erestshal
lbev
oid.

(
d)Thi
ssect
ionshal
lappl
yonl
ytoaccount
srecei
vabl
ear
isi
ngf
rom:

(
1)Acont
ractf
ort
hesuppl
yorl
easeofgoodsorser
vicesot
hert
hanf
inanci
alser
vices;

(
2)Aconst
ruct
ioncont
ractoracont
ractf
ort
hesal
eorl
easeofr
eal
proper
ty;
and

(
3)Acont
ractf
ort
hesal
e,l
easeorl
i
censeofi
ntel
l
ect
ual
proper
ty.

CHAPTER3

PERFECTI
ONOFSECURI
TYI
NTEREST

Sect
ion11.Per
fect
ionofSecur
it
yInt
erest
.—

(
a)Asecur
it
yinter
estshal
lbeperfect
edwheni
thasbeencr
eat
edandt
hesecur
edcr
edi
torhas
t
akenoneoftheacti
onsinaccor
dancewit
hSect
ion12.

(
b)Onper
fect
ion,
asecur
it
yint
erestbecomesef
fect
iveagai
nstt
hir
dpar
ti
es.
Sect
ion12.MeansofPer
fect
ion.
—Asecur
it
yint
erestmaybeper
fect
edby
:

(
a)Regi
str
ati
onofanot
icewi
tht
heRegi
str
y;

(
b)Possessi
onoft
hecol
l
ater
albyt
hesecur
edcr
edi
tor
;and

(
c)Cont
rol
ofi
nvest
mentpr
oper
tyanddeposi
taccount
.

Asecurit
yint
eresti
nanytangi
bleassetmaybeperfect
edbyregi
str
ati
onorpossession.A
secur
ityi
nter
estini
nvest
mentpropertyanddeposi
taccountmaybeperf
ect
edbyr egist
rat
ionor
contr
ol.

Sect
ion13.Per
fect
ionbyCont
rol
.
—

(
a)Asecuri
tyi
nter
esti
nadeposi
taccountori
nvest
mentpr
oper
tymaybeper
fect
edbycont
rol
t
hrough:

(
1)Thecr
eati
onoft
hesecur
it
yint
eresti
nfav
oroft
hedeposi
t-
taki
ngi
nst
it
uti
onort
he
i
nter
medi
ary
;

(
2)Theconcl
usi
onofacont
rol
agr
eement
;or

(3)Foraninvestmentpr opert
ythatisanel ectr
onicsecurit
ynothel dwi thanint
ermedi ar
y,the
notati
onofthesecur i
tyinter
estinthebooksmai ntai
nedbyoronbehal foftheissuerforthe
purposeofrecordingthenameoft hehol derofthesecuri
ties.(b)Nothinginthi
sActshal l
requi
readeposi t
-t
akingi nst
it
uti
onorani nter
medi ar
ytoent erintoacont r
olagreement ,
evenif
thegrant
orsor equests.Adeposi t
-takinginst
itut
ionoranint ermediarythathasenteredinto
suchanagr eementshall notberequiredt oconfi
rmt heexi
st enceoftheagr eementtoanot her
per
sonunl
essr
equest
edt
odosobyt
hegr
ant
or.

Sect
ion14.Per
fect
ioni
nPr
oceeds.
—

(a)Upondisposit
ionofcoll
ater
al,asecuri
tyint
erestshallextendtopr
oceedsofthecol
l
ater
al
withoutf
urtheractandbecontinuouslyper
fected,i
fthepr oceedsar
einthefor
m ofmoney,
accountsrecei
vable,negot
iabl
einstr
umentsordeposi taccounts.

(b)Upondisposit
ionofthecol l
ateral
, i
ftheproceedsar einaform dif
ferentfr
om money ,
accountsrecei
vable,
negotiableinstrumentsordeposi taccount
s,thesecur i
tyint
eresti
nsuch
proceedsmustbeper fect
edbyoneoft hemeansappl i
cabletotherelevanttypeofcoll
ater
al
withi
nfif
teen(15)daysafterthegr antorreceivessuchproceeds;otherwise,
thesecurit
yint
erest
i
nsuchpr oceedsshallnotbeef fecti
v eagainstthi
rdparti
es.

Secti
on15.ChangeinMeansofPerf
ect
ion.
—Asecurit
yinter
estshall
remai
nperf
ect
eddespi
te
achangeinthemeansforachi
evi
ngper
fect
ion:
Prov
ided,Thatther
ewasnot i
mewhenthe
secur
ityi
nter
estwasnotper
fect
ed.

Sect
ion16.Assi
gnmentofSecur
it
yInt
erest.
—Ifasecuredcredi
torassi
gnsaper
fect
edsecur
it
y
i
nter
est,
anamendmentnoticemayberegister
edt
or ef
lectt
heassignment.

CHAPTER4

PRI
ORI
TYOFSECURI
TYI
NTEREST

Sect
ion17.Pri
ori
tyRul
es.—Thepri
ori
tyofsecuri
tyi
nterestsandli
ensinthesamecol
l
ater
al
shal
lbedeter
minedaccordi
ngtoti
meofr egi
str
ati
onofanot iceorperf
ecti
onbyot
hermeans,
wit
houtregar
dtotheorderofcr
eat
ionofthesecuri
tyinter
estsandli
ens.

Sect
ion18.Pr
ior
it
yforPer
fect
ionbyCont
rol
.
—
(a)Asecur i
tyinter
estinadepositaccountwit
hrespectt
owhi cht
hesecur
edcredi
tori
sthe
deposit
-taki
ngi nst
itut
ionort
heintermediar
yshallhav
eprior
it
yoveracompet
ingsecuri
ty
i
nterestperfectedbyanymet hod.

(b)Asecuri
tyi
nter
estinadepositaccountori
nvest
mentpr opert
ythatisperf
ectedbyacont r
ol
agreementshal
lhaveprior
it
yoveracompet i
ngsecuri
tyi
nterestexceptasecuri
tyint
erestoft
he
deposit
-t
aki
nginsti
tut
ionorthei
ntermediar
y.

(c)Theorderofpri
ori
tyamongcompeti
ngsecuri
tyinterestsinadeposi
taccountori
nvest
ment
proper
tyt
hatwer eperfect
edbyt
heconcl
usi
onofcont r
ol agreement
sshal
lbedetermi
nedon
thebasi
soft heti
meofconclusi
onoft
hecontrolagreement s.

(d)Anyri
ghtstoset
-offthatthedeposit
-t
akinginst
it
uti
onmayhaveagai
nstagrantor’
sri
ghtt
o
paymentoffundscredit
edt oadepositaccountshall
havepr
ior
it
yoverasecur
it
yinter
estint
he
deposi
taccount.

(
e)Asecurit
yinter
estinasecuri
tycer
ti
fi
cat
eperf
ectedbythesecur
edcredi
tor
’spossessi
onof
t
hecert
if
icateshal
l havepr
ior
it
yoveracompet
ingsecuri
tyi
nter
estper
fect
edbyregist
rati
onof
anot
icei
nt heRegistry
.

(f
)Asecur i
tyint
erestinelectroni
csecuri
ti
esnothel
dwi t
haninter
mediaryper
fect
edbya
notati
onofthesecur i
tyinterest
sinthebooksmaint
ainedfort
hatpurposebyoronbehal
foft
he
i
ssuershallhaveprior
ityov erasecuri
tyi
nter
esti
nthesamesecuriti
esperf
ectedbyanyot
her
met hod.

(g)Asecuri
tyi
nteresti
nel ectr
onicsecuri
ti
esnotheldwit
haninter
mediaryperf
ectedbyt
he
concl
usionofacont r
olagr eementshall
haveprior
it
yoverasecuri
tyi
nter
estinthesame
secur
it
iesperf
ectedbyr egistr
ati
onofanot i
ceintheRegi
str
y.

(h)Theorderofpri
ori
tyamongcompeti
ngsecurityi
nter
estsinel
ect
roni
csecuri
ti
esnothel
d
withaninter
mediar
yperfect
edbyt
heconclusionofcontrol
agreement
sisdeter
minedonthe
basisoftheti
meofconclusi
onofthecont
rolagreements.
Secti
on19.Pri
ori
tyforInst
rumentsandNegoti
abl
eDocument s.-
Asecur i
tyint
eresti
nan
i
nstrumentornegot
iabledocumentthati
sperf
ectedbypossessionoft heinst
rumentort
he
negoti
abl
edocumentshal lhav
eprior
it
yoverasecuri
tyinter
estintheinst
rumentornegoti
abl
e
documentthati
sperfectedbyregi
str
ati
onofanoticeintheRegist
r y
.

Secti
on20.Pri
ori
tyandPl
ightofRet enti
onbyOperat
ionofLaw.- Aper sonwhoprovi
des
serv
icesormater
ial
swit
hr especttothegoods,i
ntheor dinar
ycourseofbusiness,
andret
ains
possessi
onofthegoodsshallhavepr i
ori
tyov
eraperfectedsecuri
tyinter
esti
nthegoodsunti
l
paymentther
eof.

Sect
ion21.Transfer
eeExcepti
ons.-Anypartywhoobt ai
ns,int
heor di
narycour
seofbusiness,
anymovablepropert
ycontaini
ngasecur i
tyint
erestshal
ltaket
hesamef r
eeofsuchsecurit
y
i
nter
estprovi
dedhewasi ngoodf ait
h.Nosuchgoodf ai
thshal
lexisti
fthesecuri
tyi
nter
estin
themovablepropert
ywasr egi
ster
edpriortohisobtaini
ngthepropert
y.

Secti
on22.Ef f
ectoftheGrantor
’sI
nsolvencyont hePr i
orit
yofaSecurit
yInt
erest
.-Subj
ectt
o
theappli
cableinsol
vencyl
aw,asecurityint
erestperfectedpri
ortothecommencementof
i
nsolvencyproceedi
ngsinrespectofthegrantorshallremainperf
ectedandretai
nthepri
ori
tyi
t
hadbeforethecommencementoft heinsol
vencypr oceedings.

Sect
ion23.Pur
chaseMoneySecur
it
yInt
erest
.—

(a)Apurchasemoneysecurit
yint
eresti
nequipmentanditsproceedsshallhavepriori
tyovera
confl
ict
ingsecuri
tyi
nter
est,
ifanoti
cerel
ati
ngtothepurchasemoneysecur ityi
nterestis
regi
ster
edwi t
hinthr
ee(3)busi
nessdaysaft
erthegrant
orreceivespossessionofthe
equi
pment .

(b)Apurchasemoneysecuri
tyint
eresti
nconsumergoodsthati
sperfect
edbyregi
str
ati
onof
noti
cenotlatert
hant
hree(3)businessday
saftert
hegrant
orobtai
nspossessi
onofthe
consumergoodsshal
lhavepriori
tyoveraconf
li
cti
ngsecur
it
yint
erest
.
(c)Apurchasemoneysecur
it
yinter
estini
nventory,i
ntell
ect
ual
propert
yorliv
estockshal
lhave
pri
ori
tyoveraconf
li
cti
ngperf
ectedsecuri
tyi
nteresti
nt hesameinvent
ory
,intel
l
ectualpr
oper
ty
orli
vest
ockif:

(
1)Thepurchasemoneysecuri
tyi
nter
esti
sper
fect
edwhenthegrantorrecei
vespossessi
onof
t
heinv
entoryorl
iv
est
ock,oracqui
resri
ght
stoi
ntel
lect
ual
proper
ty;and

(2)Beforethegrantorreceiv
espossessi onoftheinventoryorli
vestock,oracquiresri
ghtsin
i
ntell
ectualpropert
y,thepurchasemoneysecur edcredit
orgiveswrittennotifi
cati
ontothe
holderoftheconf l
i
ctingperfectedsecuri
tyi
nteresti
nt hesamet ypesofi nventory
,li
vest
ock,or
i
ntell
ectualpropert
y.Thenot if
icati
onsenttotheholderoft heconfl
ictingsecurit
yint
erestmay
covermul t
ipl
et r
ansactionsbetweent hepurchasemoneysecur edcr editorandthegrantor
withouttheneedt oidenti
fyeacht r
ansacti
on.

(d)Thepurchasemoneysecur i
tyint
erestinequi
pmentorconsumergoodsper
fectedtimelyi
n
accordancewithsubsect
ions(a)and(b),shal
lhavepr
ior
it
yoverther
ight
sofabuy er
,lessee,or
l
ienholderwhichari
sebetweendel i
veryoftheequi
pmentorconsumergoodst
ot hegrantorand
theti
met henoticei
sregi
stered.

Section24.Livest ock.- Aperfect

edsecur it
yi nter
estinlivestocksecuri
nganobl i
gati
oni ncur
red
toenablethegr ant ort oobtai
nf oodormedi cineforthel i
vestockshallhavepri
ori
tyoverany
othersecuri
tyint erestint hel
ivestock,exceptf oraper f
ectedpur chasemoneysecur i
tyinter
est
i
nt heliv
estock, i
ft hesecur edcreditorprovi
di ngcreditforfoodormedi cinegiv
eswr i
tten
notif
icat
iontot hehol deroftheconf l
ict
ingper fectedsecur i
tyint
eresti
nt hesamelivestock
beforethegrant orr eceivespossessionoft hef oodormedi cine.

Section25.Fi xt
ures,Accessi
ons,andCommi ngl
edGoods.-Aper f
ectedsecuri
tyint
eresti
na
mov ablepr oper
tywhi chhasbecomeaf ixture,orhasunder
goneaccessi onorcommi ngli
ng
shallcontinueprovidedthemov abl
eproper t
yi nv
olvedcansti
llbereasonablyt
raced.In
determiningowner shipoverf
ixt
ures,accessions,andcommi ngledgoods, t
heprovi
sionsof
BookI IofRepubl i
cActNo.386ort he"CivilCodeoft hePhi
li
ppines"shallappl
y.

CHAPTER5
REGI
STRATI
ON–REGI
STRY

Sect
ion26.Est
abl
i
shmentofEl
ect
roni
cRegi
str
y.—

(
a)TheRegi
str
yshal
lbeest
abl
i
shedi
nandadmi
nist
eredbyt
heLRA.

(
b)TheRegi
str
yshal
lpr
ovi
deel
ect
roni
cmeansf
orr
egi
str
ati
onandsear
chi
ngofnot
ices.

Sect
ion27.Publ
i
cRecor
d.—

(
a)I
nfor
mat
ioncont
ainedi
nar
egi
ster
ednot
iceshal
lbeconsi
der
edasapubl
i
crecor
d.

(
b)Anyper
sonmaysear
chnot
icesr
egi
ster
edi
ntheRegi
str
y.

(
c)Theel
ect
roni
crecor
dsoft
heRegi
str
yshal
lbet
heof
fi
cial
recor
ds.

Sect
ion28.Suf
fi
ciencyofNot
ice.
—

(
a)Ani
nit
ial
not
iceofsecur
it
yint
erestshal
lnotber
eject
ed:

(
1)I
fiti
dent
if
iest
hegr
ant
orbyani
dent
if
icat
ionnumber
,asf
urt
herpr
escr
ibedi
nther
egul
ati
ons;

(
2)I
fiti
dent
if
iest
hesecur
edcr
edi
tororanagentoft
hesecur
edcr
edi
torbyname;

(
3)I
fitpr
ovi
desanaddr
essf
ort
hegr
ant
orandsecur
edcr
edi
torori
tsagent
;
(
4)I
fitdescr
ibest
hecol
l
ater
al:
and

(
5)I
ftheprescr
ibedf
eehasbeent
ender
ed,
oranar
rangementhasbeenmadef
orpay
mentof
f
eesbyothermeans.

(
b)Ift
heRegistr
yrej
ect
storegi
steranot
ice,
itshal
lprompt
lycommuni
cat
ethef
actofand
r
easonfori
tsrej
ecti
ontot
hepersonwhosubmi tt
edthenot
ice.

(c)Eachgrant
ormustauthor
izether
egi
str
ati
onofani
nit
ial
not
icebysi
gni
ngasecur
it
y
agreementorother
wisei
nwr i
ti
ng.

(d)Anoti
cemayber egist
eredbef
oreasecuri
tyagr
eementisconcl
uded.Onceasecur
ity
agreementi
sconcl
uded, t
hedateofregi
str
ati
onofthenot
iceshal
lbereckonedf
rom t
hedat
e
thenoti
cewasregi
stered.

(
e)Anoticeofl
ienmayberegi
steredbyali
enhol
derwi
thoutt
heconsentoft
heper
sonagai
nst
whom t
helieni
ssoughtt
obeenf orced.

(
f)Descr
ipt
ionoft
hecol
l
ater
ali
nanot
iceshal
lbeent
eredi
nEngl
i
sh.

Sect
ion29.OneNoti
ceSuffi
cientf
orSecuri
tyI
nter
est
sUnderMulti
pleSecur
it
yAgreement
s.-
Theregi
str
ati
onofasingl
enot i
cemayrelat
etosecur
it
yint
erest
screat
edbyt hegr
ant
orunder
one(1)ormoret
hanonesecur i
tyagr
eement.

Sect
ion30.Ef
fect
ivenessofNot
ice.
—

(
a)Anot
iceshal
lbeef
fect
iveatt
het
imei
tisdi
scov
erabl
eont
her
ecor
dsoft
heRegi
str
y.
(b)Anoti
ceshal
lbeeff
ect
ivefort
hedurat
ionoft
hetermindi
cat
edi
nthenot
iceunl
essa
conti
nuat
ionnot
icei
sregi
ster
edbefor
etheter
mlapses.

(c)Anoti
cesubstant
ial
l
ycompl y
ingwi
tht
her
equi
rement
soft
hisChapt
ershal
lbeef
fect
ive
unlessi
tisser
iousl
ymisleadi
ng.

(
d)Anot
icet
hatmaynotberet
ri
evedi
nasear choftheRegi
str
yagai
nstt
hecor
recti
dent
if
ierof
t
hegr
ant
orshal
lbei
neff
ecti
vewit
hrespectt
ot hatgr
ant
or.

Sect
ion31.Ser
iousl
yMisleccdi
ngNot i
ce.-
Anot i
cet
hatdoesnotpr
ovi
det
hei
dent
if
icat
ion
numberofthegrant
orshallbeser
iousl
ymisleadi
ng.

Sect
ion32.AmendmentofNot
ice.
—

(
a)Anot
icemaybeamendedbyt
her
egi
str
ati
onofanamendmentnot
icet
hat
:

(
1)I
dent
if
iest
hei
nit
ial
not
icebyi
tsr
egi
str
ati
onnumber
;and

(
2)Pr
ovi
dest
henewi
nfor
mat
ion.

(b)Anamendmentnot
icet
hataddscol
l
ater
alt
hati
snotpr
oceedsmustbeaut
hor
izedbyt
he
grant
ori
nwrit
ing.

(
c)Anamendmentnot
icet
hataddsagr
ant
ormustbeaut
hor
izedbyt
headdedgr
ant
ori
nwr
it
ing.

(
d)Anamendmentnot
iceshal
lbeef
fect
iveonl
yast
oeachsecur
edcr
edi
torwhoaut
hor
izesi
t.
(e)Anamendmentnoti
cet
hataddscol
later
aloragrant
orshal
lbeef
fect
iveast
otheadded
coll
ater
alorgr
ant
orf
rom t
hedateofi
tsregist
rat
ion.

Sect
ion33.Cont
inuat
ionofNot
ice.
—

(a)Theperi
odofeff
ecti
venessofanoti
cemaybeconti
nuedbyregi
ster
inganamendment
noti
cethati
dent
if
iestheini
ti
alnot
icebyi
tsr
egi
str
ati
onnumber.

(
b)Conti
nuat
ionofnot
icemayber egi
ster
edonl
ywi
thi
nsi
x(6)mont
hsbef
oret
heexpi
rat
ionof
t
heeff
ecti
veperi
odofthenot
ice.

Sect
ion34.Ter
minat
ionofEf
fect
ivenessofaNot
ice.
—

(
a)Theef
fect
ivenessofanot
icemaybet
ermi
nat
edbyr
egi
ster
ingat
ermi
nat
ionnot
icet
hat
:

(
1)I
dent
if
iest
hei
nit
ial
not
icebyi
tsr
egi
str
ati
onnumber
;and

(
2)I
dent
if
ieseachsecur
edcr
edi
torwhoaut
hor
izest
her
egi
str
ati
onoft
het
ermi
nat
ionnot
ice.

(b)Atermi
nat
ionnot
icet
ermi
nat
esef
fect
ivenessoft
henot
iceast
oeachaut
hor
izi
ngsecur
ed
credi
tor
.

Sect
ion35.Regi
str
yDut
ies.
—

(
a)Foreachr
egi
ster
ednot
ice,
theRegi
str
yshal
l
:

(
1)Assi
gnauni
quer
egi
str
ati
onnumber
;
(
2)Creat
ear ecor
dthatbear
sthenumberassi
gnedt
othei
nit
ial
not
iceandt
hedat
eandt
imeof
r
egi
strat
ion;
and

(
3)Mai
ntai
nther
ecor
dforpubl
i
cinspect
ion.

(b)TheRegist
ryshal
li
ndexnoti
cesbyt
hei
dentif
icat
ionnumberoft
hegr
ant
orand,
fornot
ices
contai
ningaseri
alnumberofamotorv
ehi
cle,
byserialnumber
.

(
c)TheRegi
str
yshal
lpr
ov i
deacopyoftheel
ectr
oni
crecor
dofthenot
ice,
incl
udi
ngthe
r
egi
str
ati
onnumberandthedat
eandtimeofregi
str
ati
ontotheper
sonwhosubmitt
edit
.

(
d)TheRegi
str
yshal
lmaintai
nthecapabi
l
ityt
oret
r i
evear
ecor
dbyt
hei
dent
if
icat
ionnumberof
t
hegrant
or,
andbyseri
alnumberofamotorvehi
cle.

(
e)TheRegi
str
yshal
lmai
ntai
nrecor
dsofl
apsednot
icesf
oraper
iodoft
en(
10)y
ear
saf
tert
he
l
apse.

(f)ThedutiesoftheRegi
stryshall
bemerelyadmini
strati
vei
nnature.Byregi
ster
inganoti
ceor
refusi
ngtor egi
steranot
ice,t
heRegist
rydoesnotdeterminethesuff
ici
ency,
correct
ness,
authenti
cit
y ,
orvali
dit
yofanyinfor
mati
oncontai
nedint henot
ice.

Sect
ion36.Sear
chofRegi
str
yRecor
dsandCer
ti
fi
edRepor
t.
—

(
a)TheRegi
str
yshal
lcommuni
cat
ethef
oll
owi
ngi
nfor
mat
iont
oanyper
sonwhor
equest
sit
:

(1)Whetherther
eareint
heRegistr
yanyunl
apsednoticesthatindi
catet
hegrant
or'
s
i
denti
ficat
ionnumberorvehi
cleser
ial
numberthatexactl
ymat chesther
elev
antcri
ter
ion
provi
dedbyt hesear
cher
;
(
2)Ther
egi
str
ati
onnumber
,andt
hedat
eandt
imeofr
egi
str
ati
onofeachnot
ice;
and

(
3)Al
loft
hei
nfor
mat
ioncont
ainedi
neachnot
ice.

(b)Ifrequest
ed,theRegistr
yshalli
ssueacer t
if
iedrepor
toft
heresul
tsofasearchthati
san
offi
cialrecor
doft heRegist
ryandshallbeadmissibl
eint
oevi
denceinjudi
cial
proceedi
ngs
withoutextri
nsi
cev i
denceofitsauthenti
cit
y.

Sect
ion37.Di
scl
osur
eofI
nfor
mat
ion.
—

(
a)Thesecur
edcr
edi
tormustpr
ovi
det
othegr
ant
orati
tsr
equest
:

(
1)Thecur
rentamountoft
heunpai
dsecur
edobl
i
gat
ion;
and

(
2)Al
i
stofasset
scur
rent
lysubj
ectt
oasecur
it
yint
erest
.

(b)Thesecuredcr
edit
ormayr equi
repaymentofafeeforeachr
equestmadebythegrantori
n
subsect
ion(a)int
hissect
ion,
butthegrant
orisent
it
ledtoarepl
ywithoutchar
geonceeverysi
x
(6)months.

(
c)Asecur
it
yint
eresti
nadeposi
taccountshal
lnot
:

(
1)Af
fectt
her
ight
sandobl
i
gat
ionsoft
hedeposi
t-
taki
ngi
nst
it
uti
onwi
thouti
tsconsent
;or

(
2)Requi
rethedeposi
t-
taki
ngi
nst
it
uti
ont
opr
ovi
deanyi
nfor
mat
ionaboutt
hedeposi
taccount
t
othi
rdpart
ies.
Sect
ion38.FeesSetbyRegul
ati
on.
—

(
a)Thefeesforr
egi
ster
inganoti
ceandforrequesti
ngacerti
fi
edsearchreportshal
lbesetby
r
egul
ati
onissuedbyt
heDOFf ort
herecover
yofr easonabl
ecostsofest
ablishi
ngandoperati
ng
t
heRegist
ry.

(b)Thef
eestr
uct
ureoranychangether
eofundersubsect
ion(
a)shal
lfur
therconsi
dert
hatt
he
sameshall
notbebur
densomet oei
therl
enderorgrant
or.

(
c)Ther
eshal
lbenof eef
orel
ect
roni
csear
chesoft
heRegi
str
yrecor
dsorf
ort
her
egi
str
ati
onof
t
ermi
nati
onnot
ices.

(
d)TheRegi
str
ymaychar
gef
eesf
orser
vicesnotment
ionedabov
e.

Secti
on39.WhentheGrant
orMayDemandAmendmentorTer
mi nat
ionofNoti
ce.-
Agr ant
or
maygiveawrit
tendemandtot
hesecur
edcr
edi
tort
oamendort erminat
etheeff
ect
ivenessof
thenoti
cei
f:

(a)Al
ltheobl
i
gati
onsundert
hesecur
it
yagreementtowhichtheregi
str
ati
onr
elat
eshav
ebeen
perf
ormedandtherei
snocommitmenttomakefutureadvances;

(
b)Thesecur
edcr
edi
torhasagr
eedt
orel
easepar
toft
hecol
l
ater
aldescr
ibedi
nthenot
ice;

(c)Thecoll
ater
aldescr
ibedinthenoti
cei
ncl
udesanitem orkindofproper
tyt
hatisnota
coll
ater
alunderasecuri
tyagreementbet
weenthesecur
edcr edi
torandthegr
antor;

(
d)Nosecur
it
yagr
eementexi
stsbet
weent
hepar
ti
es;
or
(
e)Thesecur
it
yint
eresti
sext
ingui
shedi
naccor
dancewi
tht
hisAct
.

Secti
on40.Matter
sThatMaybeRequi redbyDemand.-
Uponrecei
ptofthedemandsubmi
tt
ed
underSect
ion39,t
hesecuredcredi
tormustregi
ster
,wi
thi
nfi
ft
een(15)worki
ngdays,
an
amendmentorterminat
ionnot
ice:

(
a)Ter
minat
ingt
her
egi
str
ati
oni
nacasewi
thi
nsubsect
ions(
a),
(d)or(
e)ofSect
ion39;

(b)Amendingther
egistr
ati
ontorel
easesomepropertyt
hatisnol ongercol
l
ateral
inacase
withi
nsubsect
ion(c)ofSect
ion39orthatwasnevercol
later
alunderasecurit
yagreement
betweenthesecur
edcredit
orandthegrant
ori
nacasewi t
hinsubsecti
on(c)ofSecti
on39.

Secti
on41.ProcedureforNoncompliancewithDemand.-I
fthesecuredcredi
torf
ail
stocomply
wit
hthedemandwi t
hinfi
ft
een(15)wor ki
ngdaysaft
erit
sreceipt
,thepersongivi
ngthedemand
underSect
ion39mayaskt hepropercourtt
oissueanorderter
minatingoramendingthenot
ice
asappropr
iat
e.

Sect
ion42.Compul
sor
yAmendmentorTer
minat
ionbyCour
tOr
der
.—

(a)Thecourtmay,onappl
i
cationbythegrant
or,issueanorderthatthenot
icebetermi
nat
edor
amendedinaccordancewit
ht hedemand,whichor dershal
lbeconclusi
veandbi
nding-
onthe
LRA:Provi
ded,Thatt
hesecuredcredi
torwrhodisagreeswiththeorderoft
hecourtmayappeal
theorder
.

(b)Thecourtmaymakeanyotherorderitdeemspr
operf
ort
hepur
poseofgi
vi
ngef
fectt
oan
orderundersubsect
ion(
a)oft
hissect
ion.

(c)TheLRAshal
lamendortermi
nateanoti
ceinaccor
dancewi t
hacourtor
dermadeunder
subsect
ion(
a)ofthi
ssect
ionassoonasreasonabl
ypract
icabl
eaft
err
eceiv
ingt
heorder
.
Sect
ion43.NoFeef
orCompli
anceofDemand.-Asecuredcr
edi
torshal
lnotchar
geanyf
eef
or
compli
ancewit
hademandrecei
vedunderSect
ion39.

Secti
on44.WhenRegi st
rati
onandSear chConst i
tut
esInt
erf
erencewit
hPr i
vacyofIndi
vi
dual
.-A
personwhosubmittedanot i
ceforregi
str
ationorcarri
edoutasearchoftheRegist
rywitha
fr
ivol
ous,mal
i
ciousorcriminalpurposeorintentshal
lbesubj
ecttociv
ilandcri
minalpenal
ti
es
accordi
ngtot
herelevantlaws.

CHAPTER6

ENFORCEMENTOFSECURI
TYI
NTERESTSECUREDCREDI
TOR’
SRI
GHTS

Sect
ion45.Ri
ghtofRedempt
ion.
—

(a)Anypersonwhoi senti
tl
edtoreceiv
eanot i
fi
cati
onofdisposit
ioni
naccor
dancewiththi
s
Chapteri
sentit
ledtoredeem t
hecollat
eralbypayi
ngorotherwiseper
for
mingthesecured
obli
gati
oninful
l,i
ncludi
ngthereasonablecostofenf
orcement.

(
b)Ther
ightofr
edempt
ionmaybeexer
cised,
unl
ess:

(
1)Theper
sonent
it
ledt
oredeem hasnot
,af
tert
hedef
aul
t,wai
vedi
nwr
it
ingt
her
ightt
oredeem;

(2)Thecoll
ater
ali
ssol
dorotherwi
sedisposedof,
acquir
edorcol
lect
edbythesecur
edcr
edi
tor
orunti
ltheconcl
usi
onofanagreementbythesecuredcr
edi
torf
orthatpur
pose;
and

(
3)Thesecur
edcr
edi
torhasr
etai
nedt
hecol
l
ater
al.

Sect
ion46.Ri
ghtofHi
gher
-Ranki
ngSecur
ed.Cr
edi
tort
oTakeOv
erEnf
orcement
.—
(a)Evenifanot
hersecur
edcr edi
tororali
enholderhascommencedenf or
cement,asecur
ed
credit
orwhosesecuri
ty-
int
eresthaspri
ori
tyoverthatoftheenf
orci
ngsecuredcr
edit
ororl
ien
holdershal
lbeenti
tl
edtotakeov ert
heenforcementprocess.

(b)Ther ightr
efer
redt
oinsubsecti
on(a)ofthissect
ionmaybei nvokedatanyti
mebefor
ethe
coll
ateral i
ssol
dorother
wisedi
sposedof ,
orretai
nedbyt hesecur
edcredit
ororunt
ilt
he
conclusionofanagreementbythesecuredcredi
torfort
hatpurpose.

(c)Ther
ightofthehi
gher-
ranki
ngsecur
edcr
edi
tort
otakeov
ertheenf
orcementprocessshal
l
i
ncludet
her i
ghttoenf
orcetheri
ght
sbyanymethodavai
l
abl
etoasecuredcr
edit
orunderthis
Act.

Sect
ion47.Expedi
tedRepossessi
onoft
heCol
l
ater
al.
—

(a)Thesecuredcr
edi
tormaytakepossessi
onofthecoll
ater
alwi
thoutjudi
cialpr
ocessifthe
securi
tyagr
eementsosti
pul
ates:Pr
ovided,
Thatpossessi
oncanbet akenwithoutabreachof
thepeace.

(b)Ifthecoll
ater
alisaf
ixture,thesecuredcredit
or,i
fithaspri
ori
tyoverallownersand
mor tgagees,
mayr emovet hefixt
urefrom t
her ealpr
opertyt
owhi chi
tisaffixedwit
houtj
udi
cial
process.Thesecuredcreditorshall
exerci
seduecar einremovingthefixt
ure.

(
c)I
f,upondef
ault
,thesecur
edcredi
torcannott
akepossessi
onofcol
l
ater
alwi
thoutbr
eachof
t
hepeace,t
hesecuredcredi
tormayproceedasfol
l
ows:

(1)Thesecur edcredit
orshallbeenti
tledtoanexpedi tedhearinguponappl icat
ionf oranorder
grantingthesecuredcredit
orpossessionoft hecollater
al.Suchapplicati
onshallincludea
statementbyt hesecuredcredit
or,underoath, ver
if
yingtheexistenceofthesecur it
yagreement
attachedtot heappl
icati
onandi dent
ifyi
ngatl eastoneev entofdefaultbythedebt orunderthe
securityagreement;
(2)Thesecuredcredi
torshal
lpr
ov i
dethedebtor
,grantor,and,i
fthecoll
aterali
safixt
ure,any
realestat
emor t
gagee,acopyoftheappli
cat
ion,i
ncludingallsupport
ingdocument sand
evidencefort
heordergranti
ngt
hesecuredcredit
orpossessi onofthecollat
eral
;and

(3)Thesecur edcr editorisent i

tl
edt oanordergr anti
ngpossessi onofthecol lat
eraluponthe
courtfi
ndingt hatadef aul
thasoccur r
edundert hesecur i
tyagreementandt hatthesecured
credit
orhasar i
ghtt ot akepossessi onofthecol l
ateral
.Thecour tmaydi r
ectt hegrantortot
ake
suchactionast hecour tdeemsnecessar yandappr opri
atesot hatt
hesecur edcr edi
tormay
takepossessionoft hecol lat
eral:Provi
ded,Thatbr eachoft hepeaceshallincludeenteri
ngthe
priv
ateresidenceoft hegr antorwithoutpermission,resort
ingtophy si
calvi
ol enceor
i
ntimidati
on,orbei ngaccompani edbyal awenf orcementof fi
cerwhent aki
ngpossessi onor
confront
ingthegr ant or.

Secti
on48.Recov
eryi
nSpeci
alCases.
—Upondef
aul
t,t
hesecur
edcr
edi
tormaywi
thoutj
udi
cial
process:

(a)I
nstructt
heaccountdebtortomakepay mentt othesecuredcredi
tor
,andapplysuch
paymentt othesati
sfact
ionoft
heobl igat
ionsecuredbyt hesecur
ityi
nter
estaft
erdeducti
ngthe
securedcredit
or’
sreasonabl
ecollect
ionexpenses.Onr equestoftheaccountdebtor
,the
securedcredit
orshallpr
ovi
deevidenceofi tssecuri
tyi
nterestt
otheaccountdebtorwhenit
deli
verstheinst
ruct
iontotheaccountdebt or;

(b)I
nanegoti
abledocumentt
hati
sperfect
edbypossessi
on,
proceedast
othenegot
iabl
e
documentorgoodscover
edbythenegoti
abl
edocument;

(c)I
nadepositaccountmaintainedbyt
hesecuredcredi
tor,appl
ythebal
anceoft
hedeposi
t
accountt
otheobligat
ionsecuredbythedeposi
taccount;and

(d)Inothercasesofsecur
it
yint
eresti
nadepositaccountperf
ectedbycont
rol
,i
nst
ructthe
deposit
-t
akinginst
it
uti
ontopaythebal
anceofthedepositaccounttot
hesecur
edcredi
tor’
s
account.

Sect
ion49.Ri
ghtt
oDi
sposeofCol
l
ater
al.
—
(a)Afterdefaul
t,asecuredcredi
tormaysellorot
her
wisedi
sposeofthecoll
ater
al,publ
i
clyor
pri
vately,i
nitspresentcondi
ti
onorfol
lowinganycommerci
all
yreasonabl
epreparati
onor
processing.

(b)Thesecuredcredit
ormaybuyt hecoll
ateral
atanypubli
cdisposi
ti
on,
oratapri
vat
e
disposi
ti
onbutonlyifthecol
lat
erali
sofaki ndthati
scustomaril
ysol
donarecogni
zedmar
ket
orthesubjectofwidel
ydist
ri
butedstandardpri
cequotat
ions.

Sect
ion50.Commer
cial
Reasonabl
enessRequi
red.
—

(
a)Indi
sposi
ngofcol
l
ater
al,
thesecur
edcr
edi
torshal
lacti
nacommer
cial
l
yreasonabl
e
manner
.

(
b)Adisposi
ti
oniscommercial
lyreasonabl
eift
hesecernedcr
edit
ordi
sposesofthecol
l
ater
al
i
nconf
ormitywit
hcommercialpracti
cesamongdealer
si nt
hatty
peofproper
ty.

(c)Adi
spositi
oni
snotcommer ci
all
yunreasonabl
emer
elybecauseabet
terpri
cecoul
dhav
e
beenobt
ainedbydisposi
ti
onatadiff
erentti
meorbyadif
fer
entmethodfrom t
heti
meand
methodselect
edbythesecur
edcredit
or.

(d)I
famethodofdi
sposit
ionofcollater
alhasbeenappr
ovedi
nanyl
egal
proceedi
ng,
iti
s
concl
usi
vel
ycommercial
l
yr easonable.

Sect
ion51.Not
if
icat
ionofDi
sposi
ti
on.
—

(a)Notlat
ert
hant
en(
10)day
sbef
oredi
sposi
ti
onoft
hecol
l
ater
al,
thesecur
edcr
edi
torshal
l
noti
fy:
(
1)Thegr
ant
or;

(2)Anyot hersecuredcr
edi
tororl
ienholderwho,f
ive(5)daysbeforethedat
enoti
fi
cat
ioni
s
senttothegr antor
,hel
dasecuri
tyint
erestorl
ieni
nt hecoll
ater
althatwasperf
ect
edby
regi
str
ation;and

(3)Anyot herper
sonfrom whom thesecuredcredit
orr ecei
vednot
if
icat
ionofacl
aim ofan
i
nterestinthecoll
ater
ali
fthenotif
icati
onwasr ecei
v edbeforet
hesecuredcr
edi
torgave
noti
ficat
ionoftheproposeddisposit
iontothegrantor.

(
b)Thegr
ant
ormaywai
vet
her
ightt
obenot
if
ied.

(c)Anoti
fi
cati
onofdisposit
ioni
ssuff
ici
entifi
tidenti
fi
est hegrant
orandthesecur
edcr
edi
tor
;
descri
besthecoll
ater
al;
stat
esthemethodofintendeddi sposi
ti
on;andstat
esthet
imeand
placeofapubli
cdisposi
ti
onortheti
meaf t
erwhi chotherdisposi
ti
onistobemade.

(d)Therequi
rementt osendanoti
fi
cati
onunderthi
ssect
ionshal
lnotappl
yifthecol
l
ater
ali
s
peri
shableorthreat
enstodecl
inespeedi
lyi
nvalueori
sofatypecustomari
lysol
dona
recogni
zedmar ket.

Sect
ion52.Appl
i
cat
ionofPr
oceeds.
—

(
a)Thepr
oceedsofdi
sposi
ti
onshal
lbeappl
i
edi
nthef
oll
owi
ngor
der
:

(1)Thereasonableexpensesoft
aking,
holdi
ng,pr
epari
ngf ordi
sposi
ti
on,anddi
sposi
ngofthe
coll
ater
al,
incl
udingreasonabl
eatt
orneys’
feesandlegalexpensesi
ncurr
edbythesecur
ed
credi
tor
;

(2)Thesati
sfact
ionoft
heobl
i
gat
ionsecur
edbyt
hesecur
it
yint
erestoft
heenf
orci
ngsecur
ed
credi
tor
;and
(3)Thesat
isf
act
ionofobli
gat
ionssecur
edbyanysubordinat
esecuri
tyinter
estorheni
nthe
coll
ater
ali
fawri
ttendemandandproofoft
heint
erestarerecei
vedbeforedist
ri
buti
onoft
he
proceedsi
scompleted.

(b)Thesecur
edcredi
torshallaccounttothegrant
orf
oranysur
plus,
and,
unl
essot
her
wise
agreed,
thedebt
orisl
iabl
ef oranydefici
ency.

Sect
ion53.Ri
ght
sofBuy
ersandOt
herThi
rdPar
ti
es.
—

(a)Ifasecuredcr
edi
torsel
l
st hecol
l
ater
alundert
hisChapt
er,t
hebuyershal
lacqui
ret
he
grantor
’sri
ghtint
heassetfr
eeoftheri
ghtsofanysecur
edcredi
tororl
i
enholder.

(
b)I
fasecuredcr
edi
torleasesorl
icensesthecoll
ater
alundert
hisChapt
er,t
hel
esseeor
l
i
censeeshal
lbeent
it
ledtothebenefi
toftheleaseorli
censeduri
ngit
sterm.

(c)I
fasecuredcredit
orsell
s,l
easesorli
censesthecoll
ateralnotincompliancewiththi
s
Chapter,
thebuyer,
lesseeorli
censeeofthecoll
ater
alshallacquir
etherightsorbenefi
ts
descri
bedinsubsecti
ons(a)and(b)ofthi
ssection:Pr
ovided,Thatithadnoknowl edgeofa
viol
ati
onofthi
sChapt ert
hatmaterial
l
yprej
udicedtheri
ghtsoft hegrant
ororanot herper
son.

Sect
ion54.Ret
ent
ionofCol
l
ater
albySecur
edCr
edi
tor
.—

(a)Aft
erdefaul
t,t
hesecuredcredit
ormayproposetothedebt
orandgrant
ort
otakeall
orpar
t
ofthecoll
ater
ali
nt ot
alorpar
ti
al sat
isf
act
ionofthesecur
edobli
gat
ion,
andshal
lsenda
proposal
to:

(
1)Thedebt
orandt
hegr
ant
or;
(2)Anyothersecuredcredi
tororl
i
enholderwho,fi
ve(5)day
sbeforethepr
oposal
issentt
othe
debtorandthegrantor
,perf
ectedit
ssecuri
tyi
nter
estorli
enbyr
egistr
ati
on;and

(3)Anyotherpersonwithani
nter
esti
nthecoll
ater
alwhohasgiv
enawrit
tennot
if
icat
iont
othe
securedcredi
torbefor
ethepr
oposali
ssenttothedebt
orandthegr
ant
or.

(
b)Thesecur
edcr
edi
tormayr
etai
nthecol
l
ater
ali
nthecaseof
:

(1)Aproposal
fortheacquisi
tionofthecol
lat
eral
infull
sati
sfact
ionofthesecur
edobli
gati
on,
unlesst
hesecuredcredi
torreceivesanobj
ecti
oninwrit
ingfr
om anypersonenti
tl
edtorecei
ve
suchaproposalwit
hintwenty( 20)day
saft
ertheproposali
ssenttothatper
son;or

(2)Aproposalf
ort heacquisi
ti
onoft hecol
laterali
npart
ial
sati
sfact
ionofthesecur
ed
obli
gati
on,onl
yifthesecuredcreditorr
ecei
v estheaff
ir
mativeconsentofeachaddr
esseeoft
he
proposali
nwrit
ingwi t
hintwenty(20)daysaf t
erthepr
oposalissenttothatper
son.

CHAPTER7

TRANSI
TIONALPROVI
SIONS

Secti
on55.I
nter
pret
ati
onofTr
ansi
ti
onal
Prov
isi
ons.
—Fort
hisChapt
er,
unl
esst
hecont
ext
other
wiser
equir
es:

(
a)Exi
sti
ngsecur
edcr
edi
tor–meansasecur
edcr
edi
torwi
thapr
iorsecur
it
yint
erest
;

(
b)Pr
iorl
aw–meansanyl
awt
hatexi
stedori
nfor
cebef
oret
heef
fect
ivi
tyoft
hisAct
;

(c)Priorint
erest–meansasecuri
tyint
erestcreatedorprovi
dedforbyanagreementorother
transacti
ont hatwasmadeorent
eredintobeforetheeffect
ivi
tyoft
hisActandthathadnot
beent erminatedbef
oret
heeff
ecti
vit
yoft hi
sAct ,
butexcludesasecuri
tyi
nter
estthati
s
renewedorext
endedbyasecuri
tyagr
eementorot
hert
ransact
ionmadeorent
eredi
ntoonor
aftert
heef
fect
ivi
tyoft
hisAct
;and

(
d)Transi
ti
onalperi
od-meanstheperi
odfr
om thedateofef
fect
ivi
tyoft
hisActunt
ilt
hedat
e
whentheRegist
ryhasbeenest
abli
shedandoperat
ional
.

Sect
ion56.Cr
eat
ionofPr
iorI
nter
est
.—

(
a)Cr
eat
ionofpr
iori
nter
estshal
lbedet
ermi
nedbypr
iorl
aws.

(b)Apri
ori
nter
estremainseff
ecti
vebet
weenthepar
ti
esnot
wit
hst
andi
ngi
tscr
eat
iondi
dnot
complywit
hthecreat
ionrequi
rement
softhi
sAct.

Sect
ion57.Per
fect
ionofPr
iorI
nter
est
.—

(a)Apriori
nterestt
hatwasper
fect
edunderpr
iorl
awcont
inuest
obeper
fect
edundert
hisAct
unti
ltheearl
ierof:

(
1)Thet
imet
hepr
iori
nter
estwoul
dceaset
obeper
fect
edunderpr
iorl
aw;
and

(
2)Theexpi
rat
ionoft
het
ransi
ti
onal
per
iod.

(b)I
ftheper f
ect
ionrequir
ementsofthi
sActaresatisf
iedbeforet
heper
fect
ionofaprior
i
nterestceasesinaccordancewi
thsubsect
ion(a)ofthissect
ion,
thepr
iori
nter
estconti
nuest
o
beperfectedunderthi
sActf r
om t
hetimewheni twasperfect
edundert
hepriorl
aw.

(c)Ift
heperfect
ionrequir
ement soft
hisActarenotsati
sfi
edbefor
etheper
fect
ionofapri
or
i
nterestceasesinaccordancewithsubsecti
on(a)oft
hissect
ion,t
hepri
ori
nter
esti
sperf
ected
onlyfr
om thetimeitisperfect
edunderthisAct
.
(d)Awritt
enagreementbet weenagrantorandasecur
edcredit
orcreat
ingapr
iori
nter
esti
s
suff
ici
enttoconsti
tuteauthori
zat
ionbythegrant
oroft
heregist
rat
ionofanoti
cecoveri
ng
assetsdescr
ibedinthatagreementunderthi
sAct.

(
e)I
fapriori
nter
estref
err
edtoinsubsection(b)ofthissectionwasperfect
edbyt
he
r
egi
str
ati
onofanot i
ceunderpri
orlaw,theti
meofr egistrat
ionunderthepri
orl
awshal
lbet
he
t
imetobeusedforpurposesofapplyi
ngtheprior
it
yr ulesofthisAct
.

Sect
ion58.Pr
ior
it
yofPr
iorI
nter
est
.—

(
a)Thepr
ior
it
yofapr
iori
nter
estasagai
nstt
her
ight
sofacompet
ingcl
aimanti
sdet
ermi
nedby
t
hepri
orl
awif:

(
1)Thesecur
it
yint
erestandt
her
ight
sofal
lcompet
ingcl
aimantar
osebef
oret
heef
fect
ivi
tyof
t
hisAct
;and

(
2)Thepr
ior
it
yst
atusoft
heser
ight
shasnotchangedsi
ncet
heef
fect
ivi
tyoft
hisAct
.

(b)Forpur
posesofsubsect
ion(
a)(
2)oft
hissect
ion,
thepr
ior
it
yst
atusofapr
iori
nter
esthas
changedonlyi
f:

(
1)I
twasper
fect
edwhent
hisActt
ookef
fect
,butceasedt
obeper
fect
ed;
or

(
2)Itwasnotper
fect
edunderpr
iorl
awwhent
hisActt
ookef
fect
,andwasonl
yper
fect
edunder
t
hisAct.

Sect
ion59.Enf
orcementofPr
iorI
nter
est
.—
(a)I
fanysteporact
ionhasbeentakent
oenfor
ceapri
orint
erestbef
oretheef
fect
ivi
tyoft
his
Act,
enfor
cementmaycont i
nueunderpr
iorl
awormayproceedunderthi
sAct.

(b)Subjecttosubsecti
on(a)ofthissect
ion,pr
iorlawshall
appl
ytoamat
tert
hati
sthesubj
ect
ofproceedingsbeforeacourtbeforetheeff
ectiv
ityoft
hisAct
.

CHAPTER8

CONGRESSI
ONALOVERSI
GHTANDMI
SCELLANEOUSPROVI
SIONS

Secti
on60.Congr essi
onalOversightandPer i
odicRev i
ew.—ACongr essionalOv ersight
Commi tt
eeshallbecreatedthatwillconductaperiodicrevi
ewev eryfive(5)year scommenci ng
from t
heef f
ecti
vi
tyofthi
sAct .TheCongr essi
onal Oversi
ghtCommi t
teeshal lbecomposedof
theChairper
sonoft heSenateCommi tt
eeonBanks, Financi
alInsti
tuti
onsandCur renci
es,t
he
Chair
personoftheHouseofRepr esentati
vesCommi t
teeonBanksandFi nancialIntermedi
ari
es,
andrepresentat
ivesofotherrel
evantcongressionalcommi t
tees.

Sect
ion61.Interpretat
ion.
—I ft
herei
sconfl
ictbetweenaprov
isi
onofthi
sActandaprov
isi
onof
anyotherlaw,thisActshallgover
nunlesst
heot herl
awspeci
fi
call
yci
tesoramendst
he
conf
li
ctingprovisionsofthi
slaw.

Secti
on62.Impl
ement i
ngRulesandRegulat
ions.
—Wi thi
nsix(6)mont hsf
rom thepassageof
thi
sAct,theDOFincoordinat
ionwi
ththeDepartmentofJusti
ce,t
hroughtheLRA, shal
l
promulgatet
henecessaryrul
esandregul
ati
onsfor’t
heeffect
ivei
mpl ementat
ionofthi
sAct.

Secti
on63.RulesonEnforcementProcedur
e.—Subj
ectt
oSecti
on47,theexpedi
ted
heari
ng/pr
oceedingsshal
lbeconductedinasummarymannerconsi
stentwi
ththedecl
ared
poli
ci
esofthi
sActandi naccordancewitht
herul
esofpr
ocedur
ethattheSupremeCourtmay
promulgat
e.

Secti
on64.Sourci
ngofFunds.
—Thef undsneededf ortheimplement
ati
onoft
hisActshal
lbe
takenfr
om t
heSpecial
Accountari
singfr
om revenuescollect
edbytheLRAunderSect
ion111
ofPresi
dent
ialDecr
eeNo.1529,wi
thoutneedforanyf urt
hergover
nmentappr
oval.
Sect
ion65.Separ
abili
tyCl
ause.
—Shoul
danyprovi
sionherei
nbedecl
aredunconst
it
uti
onal
,the
sameshallnotaf
fectthev
ali
dit
yoft
heotherpr
ovi
sionsofthi
sAct
.

Sect
ion66.Repeal
ingClause.
—Thef oll
owingl
aws,andal
l l
aws,decr
ees,
order
s,andissuances
orport
ionst
hereof
,whichareinconsi
stentwi
ththepr
ovi
sionsofthi
sAct,
areherebyr
epealed,
amended,ormodif
iedaccordi
ngly:

(
a)Sect
ions1t
o16ofActNo.1508,
other
wiseknownas"
TheChat
tel
Mor
tgageLaw"
;

(b)Art
icl
es2085-
2123,
2127,2140-
2141,2241,2243,and2246-
2247ofRepubl
i
cActNo.386,
other
wiseknownasthe"Ci
vi
lCodeofthePhili
ppines"
;

(c)Sect
ion13ofRepubli
cActNo.5980,
asamendedbyRepubl
i
cActNo.8556,
other
wise
knownast he"
Financi
ngCompanyActof1998"
;

(d)Secti
ons114-
116ofPr
esi
dent
ial
Decr
eeNo.1529,
other
wiseknownast
he"
Proper
ty
Regist
rati
onDecr
ee"
;

(
e)Sect
ion10ofPr
esi
dent
ial
Decr
eeNo.1529,
insof
arast
hepr
ovi
siont
her
eofi
sinconsi
stent
wi
ththi
sAct;
and

(f
)Secti
on5(
e)ofRepubl
i
cActNo.4136,
other
wiseknownast
he"
LandTr
anspor
tat
ionand
Traf
fi
cCode"
.

Sect
ion67.Eff
ecti
vi
ty.
—ThisActshall
takeef
fectf
if
teen(
15)day
saf
terpubl
i
cat
ioni
natl
east
two(2)newspaper
sofgeneral
cir
culat
ion.

Sect
ion68.I
mpl
ement
ati
on.
—Not
wit
hst
andi
ngt
heent
ryi
ntof
orceoft
hisActunderSect
ion67,
thei
mplementati
onoft
heActshal
lbecondi
ti
onedupont
heRegi
str
ybei
ngest
abl
i
shedand
oper
ati
onalunder

Appr
oved,

(
Sgd)
VICENTEC.SOTTOI
II

Pr
esi
dentoft
heSenat
e

(
Sgd)
PANTALEOND.ALVAREZ

Speakeroft
heHouseofRepr
esent
ati
ves

Thi
sActwhi
chisaconsol
i
dati
onofHouseBi
ll
No.6907andSenateBi
l
lNo.1459waspassed
byt
heHouseofRepr
esent
ati
vesandt
heSenateonMay30,2018.

(
Sgd)MYRAMARI
ED.VI
LLARI
CA

Secr
etar
yoft
heSenat
e

(
Sgd)CESARSTRAI
TPAREJA

Secr
etar
yGener
al

HouseofRepr
esent
ati
ves

(
Sgd)RODRI
GOROADUTERTE

Pr
esi
dentoft
hePhi
l
ippi
nes

Appr
oved:
August17,
2018.