CREDIT TRANSACTION

PERSONAL PROPERTY SECURITY ACT

Understanding RA 11057 and its effect with NCC and prior laws
 What may be movable collaterals? Among
 Signed August 17 2018
others:
 PURPOSE
 Deposit accounts
 boost credit for micro , small and
 Account receivables
medium enterprises
 Negotiable instruments
 creation of a unified, modern and legal
 Security certificate/ electronic
framework
securities
Which means small store owners or
 Consumer goods
farmers who do not have immovable
 Livestock and other agricultural
property can now secure loan
products
obligation with movables or non-
 Vehicles
traditional collaterals (traditional being
 Intellectual property rights
real property)
 Exceptions
 Repeal, amend, or modify:
 Interest in aircraft which will be subject
 Sec 1to 16 of the Chattel Mortgage Law
to RA 497
 NCC articles:
 Interest in ships subject to PD 1521
 2085-2123 ( common provision to
NOTES:
pledge an mortgage; contract of
pledge) - The distinction between pledge and
chattel mortgage the right lender to
 2127 (provision under REM on recover deficiency has been removed
accession, improvement and fruits) - Implementation is conditioned upon
the registry in the Land Registration
 2140-2141 (Provisions on chattel
Authority being established
mortgage) - Implementing rules and regulations for
 2241 ( preference with reference to the effective implementation will be
promulgated by theft
unpaid movables) o Within 6 months of the passage
 2243 (preference as to specific - In case of default, borrowers may opt to
put movables for private sale
properties and Special preferred
credits with respect to movable)
 2246-2247 (provisions on
preference of credit)

ALGARME DIGEST
 CREDIT TRANSACTION

 Differences
PLEDGE MORTGAGE RA 11057
Creation Delivery of the thing is Delivery not necessary Harmonized where a
necessary signed written contract
is enough
Validity Must be in a public Must be registered to Perfection be it
instrument containing bind third persons movable/ immovable is
description of the thing harmonized under Sec
pledges and the date 12:
thereof to bind third - Registration of a
person notice with the
registry
- Possession of the
collateral by the
secured creditor
- Control of
investment
property or
deposit account
Foreclosure Liability is extinguished Liable to the mortgagee Secured creditor
deficiency/surplus wither there is a defiance for any deficiency (pledgee or mortgagee)
or not shall account to the
grantor (pledger/
mortgagor) any surplus,
unless otherwise
stipulated.
Hence grantor is liable
for deficiency

ALGARME DIGEST