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All Jurisprudence based

0 tracked cards Civil Law and Land Titles and Deeds

Facts: A debtor Maria borrows PHP 4,800,000 from Bank North and PHP 1,800,000 from Bank East, secured by a single movable collateral, a forklift. Bank East files a Financing Statement under RA 11057 on January 3 but does not take possession. Bank North takes actual possession on January 5 and stores the forklift in its yard. The debtor defaults on January 15. Who has priority over the forklift and why? Provide the governing rule and apply it to these facts.

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Bank East has priority because its Financing Statement was filed earlier (January 3) than Bank North's possession (January 5). Both banks have equal priority; the forklift will be sold and the proceeds allocated pro rata to the debts. If there is any dispute, the matter is decided by a court-appointed receiver who will determine priority. Bank North has priority because possession constitutes perfection and outranks a security interest perfected by filing.

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