REGISTRATION

You will register the NOTICE, not the agreement. For the notice to be sufficient the following are (See
Sec 5.05

Is possible to register a notice even before the agreement?

Yes. Sec 5.05 (d) A notice may be registered before a security agreement is concluded. Once a security
agreement is concluded, the date of registration of the notice shall be reckoned from the date the notice
was registered.

If the creditor does not want to terminate, what is the remedy?

- Not clear up to when can you initially (?????)

POSSESSION

- can be actual or constructive

If I am the bank (financing) and I have security interest over the car, you loaned to buy car.

The agreement says you will hold the property on the creditor’s behalf. Did not register my notice
of interest. Is the security interest still valid? Is it Perfected?

VALID.

SUB QUESTION: Is it possible for the grantor to be the depositary?

NO NOT POSSIBLE. If the grantor is the one possessing, he cannot be the depositary.
So it is not perfected by mere possession

CONTROL AGREEMENT

Control agreement — an agreement in writing between the grantor and the secured 40 creditor
which perfects the security interests over intangible asset.

For Tangible:

Perfection: by registration or possession

For Intangible:

Perfection: by registration or conclusion of a control agreement

Can the security agreement provide that if you have a SI over a collateral and that collateral becomes
a product, can the parties agree that the creditor have extend SI on ultimate product?

Yes. Limited to the value immediately before the conversion to the product. Section 3.05 provides
that the security agreement may provide that a security right in a tangible asset that is transformed
into a product extends to the product. A security right that extends to a product is limited to the
value of the encumbered asset immediately before it became part of the product.

Ex. Leather worth 100k converted to bag worth 500k. Only up to the extent of 100k

Can the parties agree that the SI over the encumbered product extends up to the replacement?

In a car, separate mortgage on engine, can parties stipulate to have SI extend to the
replacement?

Yes. Only up the value prior to the replacement. So, if 10k engine, if replacement is 100k, limited only to
10k.
What happens to prior security agreements PERFECTED before the effectivity of PPSA

2016 agreement involving the LRT, chattel

mortgage which is perfected. Is the agreement still
perfected? What happens now? Still perfected?
Automatic?

CREATION – OLD LAW

PERFECTION – OLD LAW

CONTINUATION OF PERFECTION - PPSA

Yes, it will continue to be effective until full implementation -- establishment of Registry. Section 8.03a (note
whichever comes first) .

What’s the consequence if there is a break? – priority will be compromised. Deemed that you have
perfected the agreement only at the time you have perfected it under the new law.

So How do you make it still perfected?

If the perfection requirements of these Rules are satisfied before the perfection of a prior interest
ceases in accordance with Rule 8.03, the prior interest continues to be perfected under these Rules
from the time when it was perfected under the prior law.

2016 agreement involving the LRT, chattel

mortgage which is perfected. Is the agreement still
perfected? What happens now? Still perfected?
Automatic?

CREATION – PPSA

PERFECTION - PPSA

Already governed by the PPSA. How do you perfect? Since wala pang registry, sa LRA under Chattel
Mortgage Law, and considered na as perfection under the PPSA.

2016 agreement involving the LRT, chattel mortgage

which is perfected. Is the agreement still perfected?
What happens now? Still perfected? Automatic?

CREATION – PPSA

PERFECTION – PPSA

No problem here.
PERFECTION OF DEPOSIT ACCOUNTS (Sec. 4.06b)

1. Registration
2. Control Agreement

Made by whom?

1. Grantor
2. Secured Creditor
3. Intermediary

RULES ON PRIORITY IN DEPOSIT ACCOUNTS

Barrower X, who has a deposit account with MetroBank, barrowed money from PNB on the year 2019,
security over the deposit, registered it with the Registry. 2020 barrowed money from BDO entered into a
control agreement. In 2021, X entered into a loan agreement with MBTC in which they have a registration
thereto. In 2022, X barrowed into a control agreement with Citi Bank. Which of these SI will have priority
over the deposit?

1. MBTC because it is the deposit-taking institution. – Section 6.02(a) A security interest in a deposit
account with respect to which the secured creditor is the deposit-taking institution or the
intermediary shall have priority over a competing security interest perfected by any method.

2. BDO – security perfected with control agreement. Section 6.02(b) A security interest in a deposit
account or investment property that is perfected by a control agreement shall have priority over a
competing security interest except a security interest of the deposit-taking institution or the
intermediary. (BDO muna before Citi Bank kasi 6.02(c) xxx determined on the basis of the time of
conclusion of the control 783 agreements.)

3. CitiBank – next in line because it is by a control agreement.

RULES ON PRIORITY IN ELECTRONIC INTERMEDIATED SECURITIES (Section 6.02 e-g)

Ex. Shares, bonds, PSE – shares uncertificated; entries in computer;

1. Security interest of the intermediary (brokerage, central depositary of shares)

2. Security interest in a control agreement