Published — April 25, 2021
The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
Read also: CREATION OF A SECURITY INTEREST UNDER PERSONAL PROPERTY SECURITY ACT
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A security interest in personal property shall extend to its identifiable or traceable proceeds.
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The security interest shall extend to the commingled money or funds, notwithstanding that the proceeds have ceased to be identifiable to the extent they remain traceable.
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A security interest in tangible assets that is commingled in a mass extends to the mass.
Under Republic Act No. 11057 or Personal Property Security Act a security interest may extend to the commingled money or funds.
Under Republic Act No. 11057 or Personal Property Security Act:
Right to Proceeds and Commingled Funds and Money.
(a) A security interest in personal property shall extend to its identifiable or traceable proceeds.
(b) Where proceeds in the form of funds credited to a deposit account or money are commingled with other funds or money:
- The security interest shall extend to the commingled money or funds, notwithstanding that the proceeds have ceased to be identifiable to the extent they remain traceable:
- The security interest in the commingled funds or money shall be limited to the amount of the proceeds immediately before they were commingled: and
- If at any time after the commingling, the balance credited to the deposit account or the amount of the commingled money is less than the amount of the proceeds immediately before they were commingled, the security interest against the commingled funds or money shall be limited to the lowest amount of the commingled funds or money between the time when the proceeds were commingled and the time the security interest in the proceeds is claimed.
Further, a security interest in tangible assets that is commingled in a mass extends to the mass. A security interest that extends to a mass is limited to the same proportion of the mass as the quality of the encumbered asset bore to the quantity of the entire mass immediately after commingling.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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