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Purchase Money Security Agreement for Philippines

Purchase Money Security Agreement Template for Philippines

A Purchase Money Security Agreement under Philippine law is a crucial document that establishes a security interest in personal property being purchased with financing provided by the secured party. Governed by the Personal Property Security Act (PPSA) of the Philippines, this agreement creates a special type of security interest that gives the secured party priority over other creditors with respect to the purchased property. The document details the terms of purchase, describes the collateral, sets out payment obligations, and establishes the secured party's rights in case of default, all while ensuring compliance with Philippine secured transactions law and related regulations.

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What is a Purchase Money Security Agreement?

A Purchase Money Security Agreement is essential when financing the purchase of personal property in the Philippines, where the seller or lender wants to maintain a security interest in the property until full payment is received. This document, governed by Philippine law, particularly the Personal Property Security Act (RA 11057), creates a special type of security interest that provides priority over other creditors. It's commonly used in business asset purchases, equipment financing, and vehicle purchases. The agreement includes detailed descriptions of the collateral, purchase terms, payment schedules, maintenance requirements, and enforcement rights. Critical components include proper registration with the appropriate Philippine authorities to perfect the security interest and ensure priority rights. The document must comply with both the PPSA and other relevant Philippine laws, including the Civil Code and, where applicable, consumer protection legislation.

What sections should be included in a Purchase Money Security Agreement?

1. Parties: Identifies and provides full details of the Secured Party (creditor) and Debtor

2. Background: Establishes the context of the purchase and the basis for the security interest

3. Definitions: Defines key terms used throughout the agreement

4. Grant of Security Interest: Formal creation of the security interest in the collateral

5. Description of Collateral: Detailed description of the property serving as collateral

6. Purchase Money Security Interest: Specific provisions establishing the PMSI nature of the security interest

7. Purchase Price and Payment Terms: Details of the purchase price, payment schedule, and related terms

8. Representations and Warranties: Statements of fact and guarantees by the Debtor regarding the collateral and their authority

9. Debtor's Obligations: Ongoing obligations to maintain, insure, and protect the collateral

10. Default Provisions: Definition of events of default and consequences

11. Enforcement Rights: Secured Party's rights and remedies upon default

12. Notices: Requirements for formal communications between parties

13. Governing Law: Specification of Philippine law as governing law and jurisdiction

14. General Provisions: Standard boilerplate provisions including amendments, waiver, and severability

What sections are optional to include in a Purchase Money Security Agreement?

1. Insurance Requirements: Detailed insurance obligations when the collateral requires specific insurance coverage

2. Third Party Consents: Required when third party approvals are needed for the security interest

3. Tax Provisions: Specific tax-related provisions when tax implications need to be addressed

4. Registration and Filing: Special provisions for registration requirements when dealing with specific types of collateral

5. Subordination Provisions: Required when there are multiple security interests or lenders involved

6. Cross-Collateralization: Used when the security interest extends to other obligations

7. Consumer Protection Provisions: Required when the debtor is a consumer rather than a business

8. Foreign Currency Provisions: Needed when the purchase price is in a currency other than Philippine Peso

What schedules should be included in a Purchase Money Security Agreement?

1. Schedule A - Collateral Description: Detailed technical description of the collateral including serial numbers, locations, and specifications

2. Schedule B - Payment Schedule: Detailed breakdown of payment amounts, dates, and terms

3. Schedule C - Permitted Locations: List of locations where the collateral may be kept or used

4. Schedule D - Existing Liens: List of any pre-existing liens or encumbrances on the collateral

5. Appendix 1 - Registration Forms: Forms required for registering the security interest with appropriate authorities

6. Appendix 2 - Insurance Requirements: Detailed insurance specifications and requirements

7. Appendix 3 - Maintenance Requirements: Specific maintenance and upkeep requirements for the collateral

8. Appendix 4 - Form of Notices: Standard forms for various notices required under the agreement

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Philippines

Publisher

Ƶ

Document Type

Security Agreement

Cost

Free to use
Relevant legal definitions
































Clauses






























Relevant Industries

Banking and Financial Services

Manufacturing

Automotive

Heavy Equipment

Construction

Agriculture

Industrial Equipment

Retail

Technology and Electronics

Transportation and Logistics

Real Estate

Mining and Resources

Small and Medium Enterprises

Consumer Goods

Relevant Teams

Legal

Finance

Treasury

Credit and Collections

Risk Management

Procurement

Operations

Compliance

Corporate Secretarial

Business Development

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Corporate Lawyer

Credit Manager

Risk Manager

Treasury Manager

Procurement Manager

Operations Director

Contract Administrator

Compliance Officer

Financial Controller

Business Development Manager

Asset Manager

Collections Manager

Industries






Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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