PPSA guidelines out in August even as centralized notice registry delayed
MANILA, Philippines–The government will issue the final guidelines for the Personal Property Security Act (PPSA) next month even as the law’s implementation had been suspended pending the establishment of a centralized notice registry.
Department of Finance (DOF) Assistant Secretary Secretary Danielle Marie S. Rieza-Culangen told reporters on the sidelines of a public hearing late Thursday that stakeholders can submit their comments on the draft implementing rules and regulations (IRR) of the PPSA or Republic Act (RA) No. 11057 until July 31.
However, Rieza-Culangen said the implementation of the PPSA remained “suspended until the registry is made live.”
The DOF official said the registry was still at the design stage at the Land Registration Authority (LRA).
“Their [the LRA’s] initial timeline [to finish the registry] given to us when we discussed with them was six months. I think it’s more of an enhancement of their existing system,” she said.
Rieza-Culangen said the Department of Budget and Management (DBM) was awaiting the issuance of the IRR so it can also release funds for the law’s implementation, including the budget for the registry.
The DOF earlier said the centralized notice registry to be established under the PPSA “shall provide electronic means for registration and searching of notices.”
“The electronic records shall be considered as public record. There shall be no fee for electronic searches of the registry records or for the registration of termination notices,” the DOF had said.
Rieza-Culangen said the government was also looking into issuing special specific guidelines for more complex transactions.
“The law covers a lot of different transactions or modes. For securities, you can have your accounts receivables, vehicles and intellectual property—all of those types of assets would have their own nuances, so we might have to address them through separate guidelines. But that’s still something that we’re considering,” she said.
The PPSA was aimed at granting small businesses greater access to financing by using personal property movable assets as collateral when they borrow money.
It was signed into law by President Duterte last year.
The draft IRR provided for allowing transactions which secure obligations through tangible or intangible assets deemed as personal property movable collateral.
“Contracting parties are free to enter into any form of security arrangements over movable property, as long as the security arrangement covering the same is not inconsistent with the PPSA or these rules,” the proposed guidelines read.
These security interests in personal property, as defined by Civil Code, included securities; commodity contracts; lease of goods including financial leases and operating leases for a period of not less than one year; equipment; inventory; deposit accounts; negotiable instruments; negotiable documents of title; consumer goods; intellectual property; livestock; fixtures, accessions, and commingled goods; future property or after-acquired assets; and other functional equivalents of security interest, including fiduciary transfers of title, financial lease, assignment or transfer of receivables, and sale with retention of title.
Under the proposed rules, “a security interest shall be created by either a security agreement, the sale of an account receivable, or the lease of an operating lease for not less than one year.”
To ensure continuity of security interest, those created under the PPSA “shall continue in the collateral notwithstanding sale, lease, license, exchange, or other disposition of the collateral, except as otherwise provided in these rules, or agreed upon by the parties,” the draft guidelines said.
The DOF had said the PPSA “aims to promote economic activity by increasing access to least-cost credit, particularly for micro, small, and medium enterprises (MSMEs), by establishing a unified and modern legal framework for securing obligations with personal property.”
“It also seeks to increase access to credit of MSMEs, as well as farmers and fisherfolk,” according to the DOF
Also, the DOF had said the PPSA “simplified the process as security interest may be perfected by registration of a notice with the registry, possession of the collateral by the secured creditor or by control of investment property and deposit account,” such that “on perfection, a security interest becomes effective against third parties.” /jpv
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