b. Registration of Notice of Security Interest

Assignment of Security Interest

If a secured creditor assigns a perfected security interest, an amendment notice may be registered to reflect the assignment.

Registry

The centralized and nationwide electronic registry established in the Land Registration Authority (LRA) where notice of a security interest and a lien in personal property may be registered.

This Act requires that the notice should be sufficient at the time of registration. It provides that:

• An initial notice of security interest shall not be rejected:
• If it identifies the grantor by an identification number, as further prescribed in the regulations;
• If it identifies the secured creditor or an agent of the secured creditor by name;
• If it provides an address for the grantor and secured creditor or its agent;
• If it describes the collateral; and
• If the prescribed fee has been tendered, or an arrangement has been made for payment of fees by other means.
• If the Registry rejects to register a notice, it shall promptly communicate the fact of and reason for its rejection to the person who submitted the notice.
• Each grantor must authorize the registration of an initial notice by signing a security agreement or otherwise in writing.
• A notice may be registered before a security agreement is concluded. Once a security agreement is concluded, the date of registration of the notice shall be reckoned from the date the notice was registered.
• A notice of lien may be registered by lien holder without the consent of the person against whom the lien is sought to be enforced.
• Description of the collateral in a notice shall be entered in English.

NOTE: The registration of a single notice may relate to security interests created by the grantor under one (1) or more than one security agreement. (R.A. 11057, Section 29)

Effectiveness of Notice

A notice shall be effective at the time it is discoverable on the records of the Registry and for the duration of the term indicated in the notice unless a continuation notice is registered before the term lapses.

Substantial compliance of the requirements would still give effectiveness to the notice unless it is seriously misleading.

Amending of Notice

A notice may be amended by the registration of an amendment notice that:

• Identifies the initial notice by its registration number; and
• Provides the new information.

Termination of Effectiveness of a Notice

The effectiveness of a notice may be terminated by registering a termination notice that:

• Identifies the initial notice by its registration number; and
• Identifies each secured creditor who authorizes the registration of the termination notice.

A termination notice terminates effectiveness of the notice as to each authorizing secured creditor. (R.A. 11057, Section 34)

RIGHTS OF THE GRANTOR

The rights of the grantor are the following:

• Right to disclosure of information from secured creditor;
• Right to Demand amendment or termination of notice;
• Right to notification to dispose from the secured creditor; and
• Right of Redemption.

Right to Demand Amendment or Termination of Notice

A grantor may give a written demand to a secured creditor to amend or terminate the effectiveness of the notice if:

• All the obligations under the security agreement to which the registration relates have been performed and there is no commitment to make future advances;
• The secured creditor has agreed to release part of the collateral described in the notice:
• The collateral described in the notice includes an item or kind of property that is not a collateral under a security agreement between the secured creditor and the grantor;
• No security agreement exists between the parties; or
• The security interest is extinguished in accordance with this Act. (R.A. 11057, Section 39)

Upon receipt of the demand submitted in accordance with the above, the secured creditor must register, within fifteen (15) working days, an amendment or termination notice terminating the registration in a case within subsections (a), (d) or (e); or amending the registration to release some property that is no longer collateral or that was never collateral under a security agreement between the secured creditor and the grantor in a case within subsection (c). (R.A. 11057, Section 40) Owner check: Section 39(b) permits a demand when the secured creditor agrees to release part of the collateral, but Section 40(b) refers twice to Section 39(c); confirm the cross-reference for an agreed partial release. If the secured creditor fails to comply with the demand within fifteen (15) working days after its receipt, the grantor may ask the proper court to issue an order terminating or amending the notice as appropriate. (R.A. 11057, Section 41)