Name: Alyssa Chantelle Deb P.

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

Insight Paper on :
Personal Property Security Act (R.A. 11057) Part 2: Priority (Preference) of Security
Interests by Atty. Javier

Under the PPSA on priority of security interests, the implementing rules and regulations of the
PPSA define priority as the right of a person in an encumbered asset in preference to the right of a
competing claimant. The rules on concurrence and preference of credit with regard only to movable
property as found in the Civil Code specifically the PPSA under its section 66 amends articles 2241,
2243 to 2246 and 2247 of the Civil Code insofar as the Preferences stated in those articles are
inconsistent with the priority rights of the secured creditor which are perfected under the PPSA or
its implementing rules and nations.

The general rule as stated in the implementing rules and regulations is that the priority of our
security interests security interests or liens on the same collateral is determined according to the
time of the registration of the notice in the registry of the Land Registration Authority or perfection
by other means without regard to the order of creation or to the mode of perfection

The first preference is the right to set up compensation. Like in cases deposit taking institutes such
as Banks. Any rights which the deposit taking institute or the bank may have to set off okay set of or
compensate against the grantor's right to payment of funds credited to the deposit account shall
have priority over any security interest in the deposit account. A bank has the right to set off or
compensate a deposit in its hands for payment of any indebtedness to it by the debtor because of
the creditor debtor relationship between the depositor and bank. Second is in case of a security
interest in favor of the deposit taking institute or intermediary and third is investment property
which is perfected by a control agreement. However, if there are several security interests that are
conflicting or competing, all perfected by control agreements, we determine the priority as of the
time of the conclusion of the control agreement.

There are two scenarios in cases of electronic securities. First, electronic securities which are not
held by an intermediary and second, electronic securities which are held by an intermediary. When
the security interest over the electronic security is not held by intermediary, first preference are to
those which are perfected by notation in the books okay the books of the NDB. Second preference
are to those perfected by a control agreement; followed by those through registration of notice.

On purchase money security is a security interest that attaches to the goods which is taken by the
seller to secure the payment of the price or it is secured by a person who gives value to enable the
grantor to acquire goods to the extent that the credit is used for that purpose okay so this is this
enables the buyer or the grantor to obtain goods okay or in case of the seller, it secures the
payment of the price. The rules as to PMSI is if the equipment and its proceeds or the PMS itself is
on consumer goods then they will have priority over other conflicting security interests over the
same subject matter. If the notice is registered within three business days, then it is before or from
the moment that the grantor acquires the goods.

If a third person is present, who acquires a right over the goods such as a buyer a lessee or some
other lien holder, the rule is the PMS is perfected in accordance with the rule that if it's perfected
timely then the secured creditor shall have priority over the rights of a buyer a lessee or a lien
holder which may arise in the time between the delivery of the goods or equipment to the grantor
and the time of registration of notice okay so the secured creditor may still get a better right.

If the PMSI is over inventory intellectual property or livestock, priority for the PMSI in these cases
will exist if the pms is perfected when the grantor either receives possession of the inventory or the
livestock or from the or the rights of the in rights to rather rights to the intellectual property. PMSI
on inventory intellectual property and livestock would be perfected if first the the grantor receives
the goods or a personal rights over the intellectual property and second the secured creditor must
give a written notice of his security interest to the conflicting holder of the same security interest
over the inventory intellectual property or livestock, before the grantor acquires the possession or
rights of over the inventory intellectual property or livestock.

If the secured creditor is not able to give the notice then of course the priority is lost, the rule now
in case of livestock is that if the life's if the secured creditor fails to give the written notice to the
conflicting holder of the security interest over the same livestock, priority is now given to the
security interest in the livestock which secures an obligation that is incurred to enable the grantor
to obtain food or medicine for that livestock.