This method is known named also as the "drag and drop" method
1. Open the template and go to the layer named "photo" and select it
2. Browse and open the image that you want to use
3. Drag the image on top of the template (you can simply click on the image and drag it or you can do the same thing using the image layer). When you see that the template document become active, drop the image (release the mouse)
4. Now the image is on top of the layer "photo". If it's not move the image layer on that position
5. Right click on the image layer and select "Create Clipping Mask"
6. Done! Do the final adjustements for size, position, etc.