In August 2018, the Personal Property Security Act (PPSA) was enacted, based on the UNCITRAL Model Law. This act seeks to clarify priority rules, enforce security interests in personal intangible and tangible property. This includes everything from commodity contracts to livestock to intellectual property. It notably excludes security interests in aircraft and ships. The act also established a notice-based security interest registry. It repeals old Philippine law, so that creation of valid security interests is exhaustively governed by the PPSA. The Philippines additionally published the PPSA Rules, which became effective in December 2019. This set out the rules and regulations for the implementation of the new system, including, among others, that the register be established within 6 months. Despite this, the registry has not yet been launched. This is problematic given that in order to perfect security interest registration is one of the most important requirements, and perfection by possession and control may not always be practicable.
The PPSA takes a functional approach to characterising security rights, given that the PPSA rules may be applied by parties who enter into transactions that are functionally equivalent to security interests. These include transactions with retention of title clauses, fiduciary transfers of title, financial leases, and assignment or transfer receivables.
- Draft Act and Explanatory Notes in English: https://www.dof.gov.ph/advocacies/personal-property-security-act/
- Act in English (PDF Version): http://www.officialgazette.gov.ph/downloads/2018/08aug/20180817-RA-11057-RRD.pdf
- Further Reading: https://syciplaw.com/download/PPSA%20and%20PPSA%20Rules%20.pdf
Last Checked August 2020
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