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All Jurisprudence based

0 tracked cards Civil Law and Land Titles and Deeds

Facts: A debtor borrows PHP 4,000,000 from Bank A and PHP 2,200,000 from Bank B, secured by a single movable collateral, a hydraulic crane. Bank B files a Financing Statement under RA 11057 on January 6 but does not take possession. Bank A takes actual possession on January 10 and stores the crane in its yard. The debtor defaults on February 15. Who has priority over the crane and why? Provide the governing rule and apply it to these facts.

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Both banks have equal priority and must share the collateral’s proceeds pro rata. Bank A has priority because perfection by possession outranks perfection by filing. Bank B has priority because filing alone is always superior to possession when both parties claim the same collateral. The debtor has priority because neither bank perfected a secured interest in the crane.

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