Compiled from an official source version. Later amendments or repeals may not be reflected; the official text prevails.・Read the official text ↗
Priority Rules.
SEC. 17. Priority Rules. - The priority of security interests and liens in the same collateral shall be determined according to time of registration of a notice or perfection fay other means, without regard to the order of creation of the security interests and liens.
Priority for Perfection by Control.
SEC. 18. Priority for Perfection by Control. - (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. (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. (c) The order of priority among competing security interests in a deposit account or investment property that were perfected by the conclusion of control agreements shall be determined on the basis of the time of conclusion of the control agreements. (d) Any rights to set-off that the deposit-taking institution may have against a grantor's right to payment of funds credited to a deposit account shall have priority over a security interest in the deposit account. (e) A security interest in a security certificate perfected, by the secured creditor's possession of the certificate shall have priority over a competing security interest perfected by registration of a notice in the Registry. (f) A security interest in electronic securities not held with an intermediary perfected by a notation of the security interests in the books maintained for that purpose by or on behalf of the issuer shall have priority over a security interest in the same securities perfected by any other method. (g) A security interest in electronic securities not held with an intermediary perfected by the conclusion of a control agreement shall have priority over a security interest in the same securities perfected by registration of a notice in the Registry. (h) The order of priority among competing security interests in electronic securities not held with an intermediary perfected by the conclusion of control agreements is determined on the basis of the time of conclusion of the control agreements.
Priority for Instruments and Negotiable Documents.
SEC. 19. Priority for Instruments and Negotiable Documents. - A security interest in an instrument or negotiable document that is perfected by possession of the instrument or the negotiable document shall have priority over a security interest in the instrument or negotiable document that is perfected by registration of a notice in the Registry.
Priority and Right of Retention by Operation of Law.
SEC. 20. Priority and Right of Retention by Operation of Law. - A person who provides services or materials with respect to the goods, in the ordinary course of business, and retains possession of the goods shall have priority over a perfected security interest in the goods until payment thereof.
Transferee Exceptions.
SEC. 21. Transferee Exceptions. — Any party who obtains, in the ordinary course of business, any movable property containing a security interest shall take the same free of such security interest provided he was in. good faith. No such good faith shall exist if the security interest in the movable property was registered prior to his obtaining the property.
Effect of the Grantor's Insolvency on the Priority of a Security Interest.
SEC. 22. Effect of the Grantor's Insolvency on the Priority of a Security Interest. - Subject to the applicable insolvency law, a security interest perfected prior to the commencement of insolvency proceedings in respect of the grantor shall remain perfected and retain the priority it. had before the commencement of the insolvency proceedings.
Purchase Money Security Interest.
SEC. 23. Purchase Money Security Interest. - (a) A purchase money security interest in equipment and its proceeds shall have priority over a conflicting security interest, if a notice relating to the purchase money security interest is registered within three (3) business days after the grantor receives possession of the equipment. (b) A purchase money security interest in consumer goods that is perfected by registration of notice not later than three (3) business days after the grantor obtains possession of the consumer goods shall have priority over a conflicting security interest. (c) A purchase money security interest in inventory, intellectual property or livestock shall have priority over a conflicting perfected security interest in the same inventory, intellectual property or livestock if: (1) The purchase money security interest is perfected when the grantor receives possession of the inventory or livestock, or acquires rights to intellectual property; and (2) Before the grantor receives possession of the inventory or livestock, or acquires rights in intellectual property, the purchase money secured creditor gives written notification to the holder of the conflicting perfected security interest in the same types of inventory, livestock, or intellectual property. The notification sent to the holder of the conflicting security interest may cover multiple transactions between the purchase money secured creditor and the grantor without the need to identify each transaction. (d) The purchase money security interest in equipment or consumer goods perfected timely in accordance with subsections (a) and (.b), shall have priority over the rights of a buyer, lessee, or lien holder which arise between delivery of the equipment or consumer goods to the grantor and the time the notice is registered.
Livestock.
SEC. 24. Livestock. - A perfected security interest in livestock securing an obligation incurred to enable the grantor to obtain food or medicine for the livestock shall have priority over any other security interest, in the livestock, except for a perfected purchase money security interest in the livestock, if the secured creditor providing credit for food or medicine gives written notification to the holder of the conflicting perfected security interest in the same livestock before the grantor receives possession of the food or medicine.
Fixtures, Accessions, and Commingled Goods.
SEC. 25. Fixtures, Accessions, and Commingled Goods. - A perfected security interest in a movable property which has become a fixture, or has undergone accession or commingling shall continue provided the movable property involved can still be reasonably traced. In determining ownership over fixtures, accessions, and commingled goods, the provisions of Book II of Republic Act No. 386 or the "Civil Code of the Philippines" shall apply.
Provisions on this page are reproduced verbatim from official open data. See the attribution line.
Source: Supreme Court E-Library, Republic of the Philippines. Philippine laws are public documents (works of the government).