Right of Redemption.
SEC. 45. Right of Redemption. -
(a) Any person who is entitled to receive a notification of disposition in accordance with this Chapter is entitled to redeem the collateral by paying or otherwise performing the secured obligation in full, including the reasonable cost of enforcement.
(b) The right of redemption may be exercised, unless:
(1) The person entitled to redeem has not, after the default, waived in writing the right to redeem;
(2) The collateral is sold or otherwise disposed of acquired or collected by the secured creditor or until the conclusion of an agreement by the secured creditor for that purpose: and
(3) The secured creditor has retained the collateral.
Right of Higher-Ranking Secured Creditor to Take Over Enforcement.
SEC. 46. Right of Higher-Ranking Secured Creditor to Take Over Enforcement. -
(a) Even if another secured creditor or a lien holder has commenced enforcement, a secured creditor whose security interest has priority over that of the enforcing secured creditor or lien holder shall be entitled to take over the enforcement process.
(b) The right referred to in subsection (a) of this section may be invoked at any time before the collateral is sold or otherwise disposed of, or retained by the secured creditor or until the conclusion of an agreement by the secured creditor for that purpose.
(c) The right of the higher-ranking secured creditor to take over the enforcement process shall include the right to enforce the rights by any method available to a secured creditor under this Act.
Expedited Repossession, of the. Collateral.
SEC. 47. Expedited Repossession, of the. Collateral. -
(a) The secured creditor may take possession of the collateral without judicial process if the security agreement so stipulates: Provided, That possession can be taken without a breach of the peace.
(b) If the collateral is a fixture, the secured creditor, if it has priority over all owners and. mortgagees, may remove the fixture from the real property to which it is affixed without judicial process. The secured creditor shall exercise due care in removing the fixture.
(c) If, upon default, the secured creditor cannot take possession of collateral without breach of the peace, the secured creditor may proceed as follows:
(1) The secured creditor shall be entitled to an expedited hearing upon application for an order granting the secured creditor possession of the collateral. Such application shall include a statement by the secured creditor, under oath, verifying the existence of the security agreement attached to the application and identifying at least one event, of default by the debtor under the security agreement;
(2) The secured creditor shall provide the debtor, grantor, and, if the collateral is a fixture, any real estate mortgagee, a copy of the application, including all supporting documents and evidence for the order granting the secured creditor possession of the collateral: and
(3) The secured creditor is entitled to an order granting possession of the collateral upon the court finding that a default has occurred under the security agreement and that the secured creditor has a right to take possession of the collateral. The court may direct the grantor to take such action as the court deems necessary and appropriate so that the secured creditor may take possession of the collateral: Provided. That breach of the peace shall include entering the private residence of the grantor without permission, resorting to physical violence or intimidation, or being accompanied by a law enforcement officer when taking possession or confronting the grantor.
Recovery in Special Cases.
SEC. 48. Recovery in Special Cases. - Upon default, the secured creditor may without judicial process:
(a) Instruct the account, debtor to make payment to the secured creditor, and apply such payment to the satisfaction of the obligation secured by the security interest after deducting the secured creditor's reasonable collection expenses. On request of the account debtor, the secured creditor shall provide evidence of its security interest to the account debtor when it delivers the instruction to the account debtor:
(b) In a negotiable document that is perfected by possession, proceed as to the negotiable document or goods covered by the negotiable document;
(c) In a deposit account maintained by the secured creditor, apply the balance of the deposit account to the obligation secured by the deposit account; and
(d) In other cases of security interest in a deposit account perfected by control, instruct the deposit-taking institution to pay the balance of the deposit account to the secured creditor's account.
Right to Dispose of Collateral.
SEC. 49. Right to Dispose of Collateral. -
(a) After default, a secured creditor may sell or otherwise dispose of the collateral, publicly or privately, in its present condition or following any commercially reasonable preparation or processing.
(b) The secured creditor may buy the collateral at any public disposition, or at a private disposition but only if the collateral is of a kind that is customarily sold on a recognized market or the subject of widely distributed standard price quotations.
Commercial Reasonableness Required.
SEC. 50. Commercial Reasonableness Required. -
(a) In disposing of collateral, the secured creditor shall act in a commercially reasonable manner.
(b) A disposition is commercially reasonable if the secured creditor disposes of the collateral in conformity with commercial practices among dealers in that type of property.
(c) A disposition is not commercially unreasonable merely because a better price could have been obtained by disposition at a different time or by a different method from the time and method selected by the secured creditor.
(d) If a method of disposition of collateral has been approved in any legal proceeding, it is conclusively commercially reasonable.
Notification of Disposition.
SEC. 51. Notification of Disposition. -
(a) Not later than ten (10) days before disposition of the collateral, the secured creditor shall notify:
(1) The grantor;
(2) Any other secured creditor or lien, holder who, five (5) days before the date notification is sent to the grantor, held a security interest or lien, in the collateral that was perfected by registration; and
(3) Any other person from whom the secured creditor received notification of a claim of an interest in the collateral if the notification was received before the secured creditor gave notification of the proposed disposition to the grantor.
(b) The grantor may waive the right to be notified.
(c) A notification of disposition is sufficient if it identifies the grantor and the secured creditor; describes the collateral; states the method of intended disposition; and states the time and place of a public disposition or the time after which other disposition is to be made.
(d) The requirement to send a notification under this section shall not apply if the collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market.
Application of Proceeds.
SEC. 52. Application of Proceeds. -
(a) The proceeds of disposition shall be applied in the following order:
(1) The reasonable expenses of taking, holding, preparing for disposition, and disposing of the collateral, including reasonable attorneys' fees and legal expenses incurred by the secured creditor;
(2) The satisfaction of the obligation secured by the security interest of the enforcing secured creditor; and
(3) The satisfaction of obligations secured by any subordinate security interest or lien in the collateral if a written demand and proof of the interest are received before distribution of the proceeds is completed.
(b) The secured creditor shall account to the grantor for any surplus, and. unless otherwise agreed., the debtor is liable for any deficiency.
Rights of Buyers and Other Third Parties.
SEC. 53. Rights of Buyers and Other Third Parties. -
(a) If a secured creditor sells the collateral under this Chapter, the buyer shall acquire the grantor's right in the asset free of the rights of any secured creditor or lien holder.
(b) If a secured creditor leases or licenses the collateral under this Chapter, the lessee or licensee shall be entitled to the benefit of the lease or license during its term.
(c) If a secured creditor sells, leases or licenses the collateral not in compliance with this Chapter, the buyer, lessee or licensee of the collateral shall acquire the rights or benefits described in subsections (a) and (b) of this section: Provided, That it had no knowledge of a violation of this Chapter that materially prejudiced the rights of the grantor or another person.
Retention of Collateral by Secured Creditor.
SEC. 54. Retention of Collateral by Secured Creditor. -
(a) After default, the secured creditor may propose to the debtor and grantor to take all or part of the collateral in total or partial satisfaction of the secured obligation, and shall send a proposal to:
(1) The debtor and the grantor;
(2) Any other secured creditor or lien holder who, five (5) days before the proposal is sent to the debtor and the grantor, perfected its security interest or lien by registration; and
(3) Any other person with an interest in the collateral who has given a written notification to the secured creditor before the proposal is sent to the debtor and the grantor.
(b) The secured creditor may retain the collateral in the case of:
(1) A proposal for the acquisition of the collateral in full satisfaction of the secured obligation, unless the secured creditor receives an objection in writing from any person entitled to receive such a proposal within twenty (20) days after the proposal is sent to that person; or
(2) A proposal for the acquisition of the collateral in partial satisfaction of the secured obligation, only if the secured creditor receives the affirmative consent of each addressee of the proposal in writing within twenty (20) days after the proposal is sent to that person.
Source: Supreme Court E-Library, Republic of the Philippines. Philippine laws are public documents (works of the government).
