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Third Party Collateral Agreement for Philippines

Third Party Collateral Agreement Template for Philippines

A Third Party Collateral Agreement under Philippine law is a legal instrument where a third party provides security for another party's obligations by pledging their assets as collateral. This document, governed by Philippine civil law and financial regulations, establishes the terms and conditions under which the collateral is provided, including the nature of the secured obligations, the specific assets being used as collateral, and the rights and obligations of all parties involved. It incorporates provisions compliant with the Philippine Personal Property Security Act and relevant banking regulations, ensuring proper creation and enforcement of security interests.

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What is a Third Party Collateral Agreement?

The Third Party Collateral Agreement is a crucial document in Philippine financing arrangements where a party other than the primary debtor provides security for a loan or other obligations. This arrangement is commonly used when borrowers require additional security to obtain financing but cannot provide sufficient collateral themselves. The agreement must comply with Philippine law, particularly the Civil Code, Personal Property Security Act, and banking regulations. It details the collateral arrangement, including asset description, maintenance requirements, enforcement mechanisms, and the rights and obligations of the collateral provider, primary debtor, and beneficiary. The document is essential in various commercial contexts, from corporate financing to real estate transactions, and requires careful consideration of both security and property laws in the Philippines.

What sections should be included in a Third Party Collateral Agreement?

1. Parties: Identifies and defines all parties to the agreement: the Principal Debtor, the Collateral Provider (Third Party), and the Beneficiary/Secured Party

2. Background: Explains the context of the agreement, including reference to the primary obligation and the third party's willingness to provide collateral

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes interpretation rules

4. Grant of Security Interest: Details the creation and nature of the security interest over the collateral

5. Description of Collateral: Specific identification and description of the assets being provided as collateral

6. Secured Obligations: Defines the obligations being secured by the collateral

7. Representations and Warranties: Statements of fact and assurances from the Collateral Provider regarding ownership, authority, and status of the collateral

8. Covenants: Ongoing obligations of the Collateral Provider regarding maintenance and preservation of the collateral

9. Events of Default: Circumstances that constitute default and trigger enforcement rights

10. Enforcement Rights: Rights and remedies of the Beneficiary upon default

11. Duration and Release: Term of the agreement and conditions for release of the collateral

12. Notices: Communication procedures between parties

13. Governing Law and Jurisdiction: Specifies Philippine law as governing law and jurisdiction for disputes

What sections are optional to include in a Third Party Collateral Agreement?

1. Insurance: Required when the collateral needs to be insured, specifying insurance requirements and beneficiary rights

2. Registration and Perfection: Included when the collateral requires registration under the Personal Property Security Act or other registries

3. Income and Voting Rights: Necessary when the collateral consists of shares or income-generating assets

4. Further Assurance: Optional section requiring parties to execute additional documents if needed for perfection or enforcement

5. Costs and Expenses: Optional section allocating registration, maintenance, and enforcement costs

6. Assignment and Transfer: Include when parties want to specifically address transferability of rights under the agreement

7. Independent Security: Optional section clarifying that the security is independent of other security interests

What schedules should be included in a Third Party Collateral Agreement?

1. Schedule 1 - Collateral Description: Detailed technical or legal description of the collateral, including any registration numbers or identifying features

2. Schedule 2 - Primary Obligation Details: Details of the primary debt or obligation being secured, including amount, terms, and conditions

3. Schedule 3 - Perfection Requirements: List of required filings, registrations, and notices for perfecting the security interest

4. Schedule 4 - Form of Notice of Assignment: Template for notifying relevant parties of the security interest

5. Schedule 5 - Authorized Signatories: List of persons authorized to act on behalf of each party

6. Appendix A - Required Documents: List of documents required from the Collateral Provider to establish ownership and authority

7. Appendix B - Enforcement Procedures: Detailed procedures for enforcement in case of default, compliant with Philippine law

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

Real Estate

Manufacturing

Commercial Lending

Construction

Agriculture

Import/Export

Retail

Infrastructure Development

Small and Medium Enterprises

Relevant Teams

Legal

Finance

Risk Management

Compliance

Corporate Secretariat

Credit Administration

Loan Operations

Treasury

Commercial Banking

Documentation

Relevant Roles

Legal Counsel

Finance Manager

Credit Risk Officer

Compliance Officer

Corporate Secretary

Security Documentation Officer

Loan Officer

Relationship Manager

Credit Analyst

Chief Financial Officer

Treasury Manager

Collections Manager

Risk Management Officer

Corporate Banking Officer

Legal Documentation Specialist

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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