The Philippines Investment Forum(October 19, 2018)

The new Personal Property Security Act and its impact on

secured financing

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 overchattels 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 betweenDepartment of Finance and World Bank Group’sInternational 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, andmedium 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 mayprovide for the creation of asecurity interest in futureproperty.

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.

• Security Agreement must be

Creation

In writing Signed bythe Parties

English orFilipino

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

Possession

Control

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

Purchase MoneySecurity Interest

DepositAccount

ElectronicSecurities

SecurityCertificate

Negotiable DocumentGoods by Providers ofServices and Materials

General Rule: Priority is determined according to time of perfection (without regard to mode of perfection).

Exception: Mode of perfection determinespriority in respect of the certain 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.

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:August 17, 2018

Published:August 23, 2018

Took effect:September 7, 2018

• Implementation: Conditioned upon establishment andoperation 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 the IRR

Preparation of Model Agreements

Setting Up and 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.

Transitional Period

Effectivity Implementation

Security interest

What Lenders and Borrowers Need to Do

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.

Transitional Period

Effectivity Implementation

Security interest

What Lenders and Borrowers Need to Do

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.

Transitional Period

Effectivity Implementation

Security interest

What Lenders and Borrowers Need to Do

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. PamfiloPartner

SyCip Salazar Hernandez & Gatmaitanjfmpamfilo@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.