Name: Alyssa Chantelle Deb P.

Soriano
Subject: Credit Transactions
Professor: Atty Christian A. Fernandez

Insight Paper on :
Special Commercial Law: Secured Transactions
by Assoc. Dean Ernesto Salao

Republic Act 11057 or the Personal Property Security Act (PPSA) provides for new means and
requirements for creating, perfecting, and registering security over personal property in the
Philippines. The PPSA amended or repealed certain laws that are inconsistent with the new law.
This includes those laws relating to the creation of pledges and chattel mortgages and the
registration procedures for security interests over personal property in the Philippines.

Under the PPSA, a security interest over personal property is created by a security agreement.
In creating a security interest, it would be sufficient that the collateral be reasonably identified,
whether in a general or specific manner. A security agreement may also provide for security
interests in future property, but the security interest in that property will be created only when
the grantor acquires rights in it or the power to encumber it.

The PPSA further provides that security interest over personal property may be perfected to
bind third parties through the following means: (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 accounts. For tangible assets, a security interest may be perfected by registration or
control.

The PPSA also sets out a new set of rules for determining priority of security interest. This
depends on the nature and kind of property involved, and is not entirely dependent on prior
registration at the registry. With regard to enforcement, a secured creditor may now sell or
otherwise dispose of the collateral, publicly or privately. The debtor is also required to satisfy
any deficiency. Previously, Philippine rules governing pledges provided that the foreclosure of a
pledge extinguished the debt, and the secured creditor was no longer entitled to recover any
deficiency.

The Philippine Land Registration Authority (LRA) has to establish a new registry that will enable
registration and the searching of notices on security interests, and to make it operational before
the PPSA is implemented. During the transitional period, which is the date when the PPSA
becomes effective until the date when the registry is established and operational, existing laws
will continue to apply.

The Philippine department of finance, in coordination with the Philippine department of justice,
through the LRA, is tasked to promulgate the rules and regulations to implement the PPSA.

So now, basically legislation has developed a uniform way on which security interests shall be
regulated especially favoring micro businesses which promotes the development of our country
in terms of legislation and economic activity.