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Question

XII. CREDIT TRANSACTIONS

E. Personal Property Security Act (R.A. No. 11057)

1. John, a businessman, enters into a security agreement with ABC Bank to secure a loan for his business expansion. As collateral, John pledges his newly purchased delivery vans. The security agreement clearly states that the bank has a security interest in the delivery vans. However, John fails to register the security interest with the Personal Property Security Registry within the prescribed period.

ABC Bank then discovers that John has sold one of the delivery vans to XYZ Company, a third-party buyer. XYZ Company was unaware of the security interest that the bank had in the van. ABC Bank seeks to recover the van from XYZ Company.

Discuss the rights and remedies of ABC Bank as provided under the Personal Property Security Act (R.A. No. 11057).

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Answer