Personal Property Security Act Overview

Defines key terms such as "security interest," "secured creditor," "grantor," "registry," "proceeds," and "purchase money security interest."
The Act applies to transactions securing obligations with movable collateral, excluding aircraft and ships covered by separate laws.

A security interest is created by a written security agreement signed by the parties.
The agreement can cover future property but the security interest arises only when the grantor obtains rights.
The description of collateral can be specific or general but must reasonably identify the collateral.
Security interest extends to identifiable or traceable proceeds, including commingled funds under certain conditions.
Security interest continues despite disposition (sale, lease, exchange) of collateral, unless agreed otherwise.
Stipulations limiting the grantor's right to create a security interest in accounts receivable are void.

Perfection is effective when a security interest is created and the secured creditor takes actions such as registry notice filing, possession, or control.
Perfection methods include registration in the centralized Registry, possession of collateral, or control of investment property and deposit accounts.
Proceeds automatically stay perfected if in money or similar form; otherwise, perfection for proceeds must be timely perfected by appropriate means.
Perfection remains valid despite changes in methods used.
Security interests can be assigned, with registrations amended accordingly.

Priority is generally based on the time of registry or perfection, not creation.
Special rules prioritize security interests perfected by control in deposit accounts or investment property.
Possession-based perfection in instruments or negotiable documents has priority over registry-based perfection.
Persons providing services/materials may retain goods until paid, having priority over perfected security interests.
Purchasers in ordinary course take collateral free of security interests unless notice was registered prior.
Purchase money security interests have priority if timely perfected and proper notifications are provided.
Security interests in fixtures, accessions, and commingled goods continue if the movable property can still be traced.

Establishes a centralized, electronic, nationwide Registry managed by the Land Registration Authority (LRA) for registering and searching security interests.
Registered notices are public records, searchable by anyone; electronic records are official.
Notices must identify grantors, secured creditors, collateral sufficiently, and include fees to be accepted.
A single notice can cover multiple security agreements.
Notices take effect upon discoverability in the Registry and remain effective unless terminated or expired.
Amendments, continuations, and terminations of notices are governed by specific procedures, often requiring the grantor's authorization.
Registry strictly performs administrative functions; does not verify the validity or sufficiency of information.
Certified search reports can be issued and admitted as evidence in court.
Secured creditors must, upon request, disclose unpaid obligations and collateral listings to grantors, with limited fees applicable.
Fees for registration and reports are regulated to avoid undue burdens; no fee for electronic search or termination registration.
Grantors can demand amendments or termination of notices under specified conditions, with court remedies available for non-compliance.
Malicious or frivolous registry use or searches may lead to civil and criminal penalties.

Persons entitled to notification of disposition may redeem collateral by paying secured obligations plus enforcement costs.
Higher-ranked secured creditors may take over enforcement proceedings from others.
Secured creditors may repossess collateral without court process if allowed in the security agreement and without breaching the peace.
If peaceful possession is not possible, expedited judicial hearing is available for obtaining possession.
Special recovery rights include payable instructions to account debtors, possession-based enforcement of negotiable documents, and application of deposit account balances.
Collateral may be sold or disposed of in a commercially reasonable manner, with secured creditors allowed to bid in public sales and certain private sales.
Ten-day prior notice of disposition must be given to relevant parties, except when collateral is perishable or rapidly declining in value.
Disposition proceeds cover expenses, secured obligations, subordinate interests, and surplus is returned to grantor; deficit remains with debtor.
Buyers and subsequent third parties acquire free title if disposition was by secured creditor in compliance with law.
Secured creditors may retain collateral in lieu of satisfaction of secured obligations with proper notice and consent when required.

Definitions clarify terms related to existing secured creditors, prior law, prior interests, and the transitional period.
Security interests validly created and perfected under prior laws continue during transition.
Prior interests retain their priority if not altered post-effectivity.
Enforcement steps begun before the law's effectivity may continue under prior law or proceed under this Act.

A Congressional Oversight Committee will periodically review the implementation every five years.
This Act supersedes conflicting laws unless otherwise specified.
DOF, LRA, and DOJ will promulgate implementing rules within six months.
Enforcement hearings are summary and consistent with the Act's goals.
Funding is provided from special LRA revenues, no additional government approval needed.
Separability clause ensures remaining provisions stand even if some are ruled unconstitutional.
The Act repeals and modifies specified existing laws conflicting with its provisions.
The law takes effect 15 days after publication but enforcement is conditioned upon the Registry being operational.