PROMISSORY NOTE

CHATTEL MORTGAGE

PREPARED BY:
RAQUEL PALISOC PARBA
GLYNEZ MILLET MANAOIS
CHRISTIAN IMMANUEL REY
ROLAND MICHAEL P. REY
FELIP BRYAN D. MATIENZO
Concept of
Promissory Note
Definition

 A Promissory Note is a legal instrument in which one party promises

in writing to pay a determinate sum of money to the other, either at
a fixed or determinable future time or on demand of the payee,
under specific terms.
Purpose

 The purpose of a Promissory Note is to serve as written evidence of

the amount loaned, the interest rate, if any, and the terms under
which the loan is to be repaid.
Elements of a Promissory Note

 A standard promissory note contains six main elements:

 The date that the loan was made;
 Name and address of the borrower;
 A description of the purpose of the loan;
 Repayment terms (including interest rate, if applicable);
 A description of consequences if the borrower reneges on the
agreement; and
 A signature area for both the borrower and the lender.
Terms and
Conditions
Secured Obligations. The Secured Obligations(“Obligation”) refer to the obligation arising
from the Loan extended by the Mortgagee to the Borrower Mortgagor under this promissory
note with Chattel Mortgage (“PN-CM”)

Applicability of the Terms and Conditions of the Promissory Note with Chattel Mortgage.
Whenever this PN-CM refers to the Borrower/Mortgagor, the same shall also refer to the Co-
Borrower/Co-Mortgagor. Therefore, all obligations of the Borrower/Mortgagor shall also be
deemed the obligations of the Co-Borrower/Co-Mortgagor.

Representations and Warranties of the Borrower/Mortgagor. The Borrower/Mortgagor

represents and warrants
Borrower/Mortgagor’s Covenants and Undertakings.
Insurance. The Borrower/Mortgagor shall cause the Mortgaged Property to be sufficiently insured against loss or damage
arising from accident, theft, or fire, and Acts of God, during the term of the PN-CM and until the Obligation is fully paid, in an
amount not less than the outstanding balance of the Loan, with an insurance company acceptable to the Mortgagee. The
insurance policy shall contain a loss payable clause, satisfactory in form and substance to the Mortgagee, whereby all sums
payable under such policy shall be payable directly to the Mortgagee. The proceeds of the insurance shall, at the option of
the Mortgagee, be applied toward the payment of the Obligation to the extent of amount applied, without prejudice to the
Mortgagee’s claim against the Borrower/Mortgagor for deficiency of difference of the insurance proceeds and the
Borrower/Mortgagor’s outstanding obligation. But when there is excess in the difference of the insurance proceeds and the
Borrower/Mortgagor’s outstanding obligation shall be collected by the Borrower/Mortgagor. The Borrower/Mortgagor hereby
appoints the Mortgagee as his attorney-in-fact to claim, collect, prosecute claims related to, and receive the insurance
proceeds.
The Borrower/Mortgagor shall deliver to the Mortgagee the original insurance policy for the first year of this PN-CM, together
with the receipt of premium payment, upon the signing of this PN-CM and deliver to the Mortgagee the yearly renewal
insurance policy/ies, together with the receipt of premium payment, at least thirty (30) days prior to the expiration of any
current insurance policy covering the Mortgaged Property. If the Borrower/Mortgagor fails to provide the required insurance
policy, to pay all the premiums thereon when due, or submit the insurance policy and receipt of the payment of the
premium to the Mortgagee at least thirty (30) days before the expiration of the current insurance policy, the Mortgagee
may, [at its own option and without obligation to do so,]effect or obtain for the account of the Borrower/Mortgagor with due
notices the yearly renewal insurance with the loss payable clause in an amount not less than the outstanding balance of the
Loan and add any money so disbursed by the Mortgagee to the Loan and the same shall be due and payable on the date
of the immediately following installment after the date of such insurance renewal and, if unpaid on the due date, shall bear
a monthly penalty charge equal to three (3) times the unpaid premium advanced by the Mortgagee, with a fraction of a
month to be considered as one (1) whole month, without the need of any notice or demand upon the Borrower/Mortgagor ,
which the Borrower/Mortgagor hereby expressly waives. If the Mortgagee pay such premiums, the Borrower/Mortgagor shall
pay the Mortgagee the amount of the premiums so paid by the Mortgagee, and the obligation of the Borrower/Mortgagor
to pay such premiums advanced by the Mortgagee shall be secured by this Chattel Mortgage.
 Additional or Substitute Collateral. The Borrower/Mortgagor shall provide additional or substitute
collateral acceptable to the Mortgagee to fully secure the Obligation in the event the
Mortgaged Property may be lost, destroyed, damaged, or otherwise seized or depreciates in
value;

 Adjustment. If there is any extraordinary increase or decrease in the effective purchasing power
of the Philippine Currency, the Mortgagee shall have the right to make a corresponding
adjustment in the interest rate under this PN-CM, which, except for manifest error in the
computation thereof, shall be conclusive upon the Borrower/Mortgagor if there is a notice. A
change of at least fifteen percent (15%) in the Consumer Price Index for Manila from the date
of this PN-CM as set forth in the figures released by the Bangko Sentral ng Pilipinas (“BSP”), [or
other agencies of the Philippine Government should the figures of the BSP be unavailable,] shall
be regarded as an extraordinary increase or decrease in the effective purchasing power of the
Philippine Currency. If the Borrower/Mortgagor disagrees with the adjustment, the
Borrower/Mortgagor shall have the right to pre-pay or pre-terminate this PN-CM within thirty (30)
days from receipt of the notice of adjustment from the Mortgagee. If the Borrower/Mortgagor
does not pre-pay or pre-terminate this PN-CM within the said thirty (30) day period, the
Borrower/Mortgagor shall be deemed to have agreed with to the adjustment.
 Additional Taxes and Statutory Fees. Any additional taxes, fee, and charges that may be
imposed on the Obligation evidenced by this PN-CM, pursuant to law, executive issuances, or
other rules and regulations enacted and issued by the Philippine Government, its agencies and
other instrumentalities during the effective term of this PN-CM, shall be automatically upon
notice included herein and the Borrower/Mortgagor shall be liable for these additional charges
without necessity of executing any notice, new agreement or other document. The Mortgagee
shall have the right but has no obligation to apply any installment payment for the payment of
these additional taxes, fees or charges.

 Payments.
 Check payments received after clearing cut-off time shall be value dated the next banking
day. Payments made by check or other negotiable instruments shall produce the effect of
payment only when the same shall have been cleared.
 Acceptance by the Mortgagee of payments made after the Borrower/Mortgagor has delayed
or defaulted in the performance of his obligations shall not prejudice the Mortgagee’s rights to
claim full payment and exercise its rights and remedies under the loan/mortgage agreements
or prejudice pending legal actions filed by the Mortgagee.
 Acceptance of late or partial payments shall not be construed as a waiver or estoppel on the
part of the Mortgagee.
 Payment/s may be made by third person/s which shall not constitute a novation of the original
loan/mortgage agreeements.
 Waiver of Notice or Demand of Any Kind. The Borrower/Mortgagor expressly waives any
presentment, demand, notice of dishonor, protest and notice of any kind, including but
not limited to collection-related correspondence, notices and demand letters. Thus, further
to Sections 13 and 14 and despite Section 24, the Borrower/Mortgagor is not deemed in
default if without demand was made by the Mortgagee upon him.
 Remedies. Upon the occurrence of any event of default, the Mortgagee shall have all the rights and
remedies available under the law, including but not limited to:
 Acceleration. The Mortgagee may, without due notice or demand to the Borrower/Mortgagor, accelerate
the payment or performance of any or all of the latter’s obligations hereunder;
 Repossession and Foreclosure. The Mortgagee shall be entitled to be and is hereby irrevocably appointed
the attorney-in-fact of the Borrower/Mortgagor with full power and authority to enter the premises where
the Mortgaged Property is located and to take actual possession and control thereof without need for any
court order or any written permission from the Borrower/Mortgagor, and with full power to sell the
Mortgaged Property by lot or in such parcels as the Mortgagee shall determine, at public auction and at
the municipality or city where the Mortgaged Property is located or where the principal office or branch of
the Mortgagee is located, at the option of the Mortgagee, unless specifically required by law to be held
elsewhere. The manner and procedure for the sale of all or any part of the Mortgaged Property, including
the giving of notices for such sale, if made extra-judicially, shall be governed by the applicable provisions
of Act No. 1508, as amended, and other pertinent Philippine law. The Mortgagee may be a bidder at the
sale of the Mortgaged Property under judicial or extrajudicial proceedings.
 Application of Proceeds. The Mortgagee shall have full power and authority to apply the proceeds of the
foreclosure sale of the Mortgaged Property in payment of the Obligation in such manner as it may deem
proper. If the proceeds of the foreclosure sale are insufficient to cover all of the Obligations, the
Borrower/Mortgagor shall pay the deficiency within fifteen (15) days after such sale.
 Appointment as Receiver. In case of judicial or extrajudicial proceedings for the foreclosure of this Chattel
Mortgage, the Mortgagee or its duly authorized representative shall be entitled to be appointed and to
act as receiver, without bond, of the Mortgaged Property.
 Implied Waiver. The exercise of the rights, privileges and remedies in this PN-CM shall be at the
discretion of the Mortgagee with due notices to the Borrower/Mortgagor. No failure, omission, or
delay on the part of the Mortgagee in exercising any of the said rights, privileges and remedies
shall operate as a waiver thereof with accordance to the law. No modification or waiver of any
provision or consent by the Mortgagee shall be effective unless the same shall be in writing.

 Venue of Actions. All actions, including the foreclosure of the Chattel Mortgage, for the
enforcement of the rights and obligations under this PN-CM shall be filed in the proper courts
where the Mortgagee has an office or branch, or in any court in Metro Manila which has
jurisdiction.

 Notices. All notices and correspondence relative to this PN-CM, including but not limited to
demand letters, which may be served at the exclusive option of the Mortgagee, summonses
and subpoenas shall be sent to any one (1) of the Borrower(s)/ Mortgagor(s) at any one (1) of
the addresses above stated or at any one (1) of the addresses that the Borrower/Mortgagor
say hereinafter give in writing to the Mortgagee. The mere act of sending any communication
by mail or personal delivery to said address shall be valid and effective notice to the
Borrower/Mortgagor for all legal purposes. The fact that such notice or communication is not
actually received by the Borrower/Mortgagor, [or has been returned unclaimed to the
Mortgagee, or that no person is found at said address or that said address is fictitious,] shall not
excuse the Borrower/Mortgagor from the effects of such notice or communication.
Penalty Charge. In the event any installment or advances made by the
Mortgagee is not paid when due or when this PN-CM is deemed in
default, the Borrower/Mortgagor is liable to pay a monthly penalty
charge equal to six percent (6%) times the unpaid gross monthly
installment or advances made by the Mortgagee, with a fraction of a
month to be considered as one (1) whole month, until such time as the
unpaid installment, the advances made by the Mortgagee, or the
whole sum remaining unpaid, as applicable, is repaid in full.
Proposed
amendments
Other miscellaneous
 To include provision on the full payment subject to rebate
 Termination fee of 3-5%
 Claim upon original copy of OR/CR for free as included in
the miscellaneous expense
 Due date with a grace period of 7 days without penalty,
and if the last day falls in a weekend or holiday, the next
working day shall be the last day.