The new Personal Property

Security Act and its impact on

secured financing

The Philippines Investment Forum

(October 19, 2018)

Disclaimer: This slide presentation, which contains a very high level discussion of the new Personal Property Security Act (Republic Act No.
11057), was prepared solely for purposes of a lecture on the same topic given at Euromoney’s Philippines Investment Forum held on October
19, 2018. It may not be relied upon by any person, and neither the speaker nor SyCip Salazar Hernandez & Gatmaitan assumes any liability,
warranty or obligation for any information, statement, or conclusion contained in this presentation to any person. By making a copy of this
presentation available, we do not enter into any attorney-client relationship with Euromoney or with any other person.
 Secured Transactions: A Historical
Perspective
• Chattel Mortgage Law (1906)

• Civil Code of the Philippines (1950)

• Pledge
• Antichresis

Disclaimer: This slide presentation, which contains a very high level discussion of the new Personal Property Security Act (Republic Act No.
11057), was prepared solely for purposes of a lecture on the same topic given at Euromoney’s Philippines Investment Forum held on October
19, 2018. It may not be relied upon by any person, and neither the speaker nor SyCip Salazar Hernandez & Gatmaitan assumes any liability,
warranty or obligation for any information, statement, or conclusion contained in this presentation to any person. By making a copy of this
presentation available, we do not enter into any attorney-client relationship with Euromoney or with any other person.
 Documentation and
Legal Issues
• Chattel Mortgage
• Pledge
• Assignment
• Receivables
• Contract rights
• Accounts

Disclaimer: This slide presentation, which contains a very high level discussion of the new Personal Property Security Act (Republic Act No.
11057), was prepared solely for purposes of a lecture on the same topic given at Euromoney’s Philippines Investment Forum held on October
19, 2018. It may not be relied upon by any person, and neither the speaker nor SyCip Salazar Hernandez & Gatmaitan assumes any liability,
warranty or obligation for any information, statement, or conclusion contained in this presentation to any person. By making a copy of this
presentation available, we do not enter into any attorney-client relationship with Euromoney or with any other person.
 Commercial Issues
• MSMEs usually do not own real property.

• Financial institutions prefer real property over

chattels as collateral.

Disclaimer: This slide presentation, which contains a very high level discussion of the new Personal Property Security Act (Republic Act No.
11057), was prepared solely for purposes of a lecture on the same topic given at Euromoney’s Philippines Investment Forum held on October
19, 2018. It may not be relied upon by any person, and neither the speaker nor SyCip Salazar Hernandez & Gatmaitan assumes any liability,
warranty or obligation for any information, statement, or conclusion contained in this presentation to any person. By making a copy of this
presentation available, we do not enter into any attorney-client relationship with Euromoney or with any other person.
 Efforts at reform
• Memorandum of Understanding between
Department of Finance and World Bank Group’s
International Finance Corporation
• Regulation of movable assets as collateral
• Centralized electronic notice registry

Disclaimer: This slide presentation, which contains a very high level discussion of the new Personal Property Security Act (Republic Act No.
11057), was prepared solely for purposes of a lecture on the same topic given at Euromoney’s Philippines Investment Forum held on October
19, 2018. It may not be relied upon by any person, and neither the speaker nor SyCip Salazar Hernandez & Gatmaitan assumes any liability,
warranty or obligation for any information, statement, or conclusion contained in this presentation to any person. By making a copy of this
presentation available, we do not enter into any attorney-client relationship with Euromoney or with any other person.
 Enter the PPSA
• Promote economic activity by increasing access to
least cost credit, particularly for micro, small, and
medium enterprises (“MSMEs”)
• Repealing clause
• Coverage: all movables, except:

Disclaimer: This slide presentation, which contains a very high level discussion of the new Personal Property Security Act (Republic Act No.
11057), was prepared solely for purposes of a lecture on the same topic given at Euromoney’s Philippines Investment Forum held on October
19, 2018. It may not be relied upon by any person, and neither the speaker nor SyCip Salazar Hernandez & Gatmaitan assumes any liability,
warranty or obligation for any information, statement, or conclusion contained in this presentation to any person. By making a copy of this
presentation available, we do not enter into any attorney-client relationship with Euromoney or with any other person.
 Key Features of the PPSA
• Single type of security arrangement: “security
interest”

• Central concept: Registration

• Unified, publicly-searchable registry

Disclaimer: This slide presentation, which contains a very high level discussion of the new Personal Property Security Act (Republic Act No.
11057), was prepared solely for purposes of a lecture on the same topic given at Euromoney’s Philippines Investment Forum held on October
19, 2018. It may not be relied upon by any person, and neither the speaker nor SyCip Salazar Hernandez & Gatmaitan assumes any liability,
warranty or obligation for any information, statement, or conclusion contained in this presentation to any person. By making a copy of this
presentation available, we do not enter into any attorney-client relationship with Euromoney or with any other person.
 Object

A security agreement may

provide for the creation of a
security interest in future
property.

Disclaimer: This slide presentation, which contains a very high level discussion of the new Personal Property Security Act (Republic Act No.
11057), was prepared solely for purposes of a lecture on the same topic given at Euromoney’s Philippines Investment Forum held on October
19, 2018. It may not be relied upon by any person, and neither the speaker nor SyCip Salazar Hernandez & Gatmaitan assumes any liability,
warranty or obligation for any information, statement, or conclusion contained in this presentation to any person. By making a copy of this
presentation available, we do not enter into any attorney-client relationship with Euromoney or with any other person.
 Creation
• Security Agreement must be

In writing Signed by English or

the Parties Filipino

Disclaimer: This slide presentation, which contains a very high level discussion of the new Personal Property Security Act (Republic Act No.
11057), was prepared solely for purposes of a lecture on the same topic given at Euromoney’s Philippines Investment Forum held on October
19, 2018. It may not be relied upon by any person, and neither the speaker nor SyCip Salazar Hernandez & Gatmaitan assumes any liability,
warranty or obligation for any information, statement, or conclusion contained in this presentation to any person. By making a copy of this
presentation available, we do not enter into any attorney-client relationship with Euromoney or with any other person.
 Perfection
Perfected by any of the following:

Registration Control
Possession

Disclaimer: This slide presentation, which contains a very high level discussion of the new Personal Property Security Act (Republic Act No.
11057), was prepared solely for purposes of a lecture on the same topic given at Euromoney’s Philippines Investment Forum held on October
19, 2018. It may not be relied upon by any person, and neither the speaker nor SyCip Salazar Hernandez & Gatmaitan assumes any liability,
warranty or obligation for any information, statement, or conclusion contained in this presentation to any person. By making a copy of this
presentation available, we do not enter into any attorney-client relationship with Euromoney or with any other person.
 Priority
General Rule: Priority is determined according to time of
perfection (without regard to mode of perfection).
Exception: Mode of perfection determines
priority in respect of the certain assets.
Deposit Negotiable
Account Document
Security Goods by Providers of
Certificate Services and Materials
Electronic Purchase Money
Securities Security Interest

Disclaimer: This slide presentation, which contains a very high level discussion of the new Personal Property Security Act (Republic Act No.
11057), was prepared solely for purposes of a lecture on the same topic given at Euromoney’s Philippines Investment Forum held on October
19, 2018. It may not be relied upon by any person, and neither the speaker nor SyCip Salazar Hernandez & Gatmaitan assumes any liability,
warranty or obligation for any information, statement, or conclusion contained in this presentation to any person. By making a copy of this
presentation available, we do not enter into any attorney-client relationship with Euromoney or with any other person.
 The Registry

• Administered by the LRA

• Notice-based (not document-based) registry
• Electronic registration
• Public record; any person may search
• Pre-registration
• Effectivity of notices

Disclaimer: This slide presentation, which contains a very high level discussion of the new Personal Property Security Act (Republic Act No.
11057), was prepared solely for purposes of a lecture on the same topic given at Euromoney’s Philippines Investment Forum held on October
19, 2018. It may not be relied upon by any person, and neither the speaker nor SyCip Salazar Hernandez & Gatmaitan assumes any liability,
warranty or obligation for any information, statement, or conclusion contained in this presentation to any person. By making a copy of this
presentation available, we do not enter into any attorney-client relationship with Euromoney or with any other person.
 Enforcement – Key Changes

• Key concept under old law: Pactum Commissorium

• Public or private sale
• “Commercial reasonableness”
• Proposal to acquire
• Special type of assets

Disclaimer: This slide presentation, which contains a very high level discussion of the new Personal Property Security Act (Republic Act No.
11057), was prepared solely for purposes of a lecture on the same topic given at Euromoney’s Philippines Investment Forum held on October
19, 2018. It may not be relied upon by any person, and neither the speaker nor SyCip Salazar Hernandez & Gatmaitan assumes any liability,
warranty or obligation for any information, statement, or conclusion contained in this presentation to any person. By making a copy of this
presentation available, we do not enter into any attorney-client relationship with Euromoney or with any other person.
 Some observations

Disclaimer: This slide presentation, which contains a very high level discussion of the new Personal Property Security Act (Republic Act No.
11057), was prepared solely for purposes of a lecture on the same topic given at Euromoney’s Philippines Investment Forum held on October
19, 2018. It may not be relied upon by any person, and neither the speaker nor SyCip Salazar Hernandez & Gatmaitan assumes any liability,
warranty or obligation for any information, statement, or conclusion contained in this presentation to any person. By making a copy of this
presentation available, we do not enter into any attorney-client relationship with Euromoney or with any other person.
 Implementation Timeline

Approved: Published: Took effect:

August 17, 2018 August 23, 2018 September 7, 2018

• Implementation: Conditioned upon establishment and

operation of Registry

Disclaimer: This slide presentation, which contains a very high level discussion of the new Personal Property Security Act (Republic Act No.
11057), was prepared solely for purposes of a lecture on the same topic given at Euromoney’s Philippines Investment Forum held on October
19, 2018. It may not be relied upon by any person, and neither the speaker nor SyCip Salazar Hernandez & Gatmaitan assumes any liability,
warranty or obligation for any information, statement, or conclusion contained in this presentation to any person. By making a copy of this
presentation available, we do not enter into any attorney-client relationship with Euromoney or with any other person.
 Implementation Timeline

Promulgation of Preparation of Setting Up and

the IRR Model Agreements Operation of the
Registry

Disclaimer: This slide presentation, which contains a very high level discussion of the new Personal Property Security Act (Republic Act No.
11057), was prepared solely for purposes of a lecture on the same topic given at Euromoney’s Philippines Investment Forum held on October
19, 2018. It may not be relied upon by any person, and neither the speaker nor SyCip Salazar Hernandez & Gatmaitan assumes any liability,
warranty or obligation for any information, statement, or conclusion contained in this presentation to any person. By making a copy of this
presentation available, we do not enter into any attorney-client relationship with Euromoney or with any other person.
 What Lenders and
Borrowers Need to Do
Effectivity Implementation

Transitional Period

Security interest

Disclaimer: This slide presentation, which contains a very high level discussion of the new Personal Property Security Act (Republic Act No.
11057), was prepared solely for purposes of a lecture on the same topic given at Euromoney’s Philippines Investment Forum held on October
19, 2018. It may not be relied upon by any person, and neither the speaker nor SyCip Salazar Hernandez & Gatmaitan assumes any liability,
warranty or obligation for any information, statement, or conclusion contained in this presentation to any person. By making a copy of this
presentation available, we do not enter into any attorney-client relationship with Euromoney or with any other person.
 What Lenders and
Borrowers Need to Do
Effectivity Implementation

Transitional Period

Security interest

Disclaimer: This slide presentation, which contains a very high level discussion of the new Personal Property Security Act (Republic Act No.
11057), was prepared solely for purposes of a lecture on the same topic given at Euromoney’s Philippines Investment Forum held on October
19, 2018. It may not be relied upon by any person, and neither the speaker nor SyCip Salazar Hernandez & Gatmaitan assumes any liability,
warranty or obligation for any information, statement, or conclusion contained in this presentation to any person. By making a copy of this
presentation available, we do not enter into any attorney-client relationship with Euromoney or with any other person.
 What Lenders and
Borrowers Need to Do
Effectivity Implementation

Transitional Period

Security interest

Disclaimer: This slide presentation, which contains a very high level discussion of the new Personal Property Security Act (Republic Act No.
11057), was prepared solely for purposes of a lecture on the same topic given at Euromoney’s Philippines Investment Forum held on October
19, 2018. It may not be relied upon by any person, and neither the speaker nor SyCip Salazar Hernandez & Gatmaitan assumes any liability,
warranty or obligation for any information, statement, or conclusion contained in this presentation to any person. By making a copy of this
presentation available, we do not enter into any attorney-client relationship with Euromoney or with any other person.
 Thank you!

Jose Florante M. Pamfilo

Partner
SyCip Salazar Hernandez & Gatmaitan
jfmpamfilo@syciplaw.com

Disclaimer: This slide presentation, which contains a very high level discussion of the new Personal Property Security Act (Republic Act No.
11057), was prepared solely for purposes of a lecture on the same topic given at Euromoney’s Philippines Investment Forum held on October
19, 2018. It may not be relied upon by any person, and neither the speaker nor SyCip Salazar Hernandez & Gatmaitan assumes any liability,
warranty or obligation for any information, statement, or conclusion contained in this presentation to any person. By making a copy of this
presentation available, we do not enter into any attorney-client relationship with Euromoney or with any other person.