Promissory Note Sample for Loan Philippines

PROMISSORY NOTE (SECURED/UNSECURED)

Document ID: PN-PH-2024-001
Effective Date: [Date]
Version: 1.0
Governing Jurisdiction: Republic of the Philippines

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LEGAL DISCLAIMER

This document is provided for informational and drafting purposes only and does not constitute formal legal advice. While drafted to align with the Civil Code of the Philippines and relevant commercial practices, this Promissory Note may require modification to comply with specific tax regulations (e.g., Documentary Stamp Tax under the National Internal Revenue Code), registration requirements with the Bangko Sentral ng Pilipinas (BSP) if applicable, or specific security/collateral registration requirements. Parties are strongly advised to consult with Philippine legal counsel prior to execution.

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1. PARTIES

This Promissory Note (the “Note”) is executed by and between:

THE BORROWER: [Full Legal Name of Borrower], an individual/corporation organized and existing under the laws of the Philippines, with principal office/residence at [Full Address] (hereinafter referred to as the “Borrower”).

THE LENDER: [Full Legal Name of Lender], an individual/corporation organized and existing under the laws of the Philippines, with principal office/residence at [Full Address] (hereinafter referred to as the “Lender”).

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2. PRINCIPAL SUM AND INTEREST

2.1 Principal Amount. For value received, the Borrower unconditionally promises to pay to the order of the Lender the principal sum of Philippine Pesos [Amount in Words] (PHP [Amount in Figures]) (the “Principal”).

2.2 Interest Rate. The Principal shall bear interest at the rate of [Percentage]% per annum, computed on the basis of a 360-day year, from the Effective Date until the Principal is paid in full.

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3. REPAYMENT TERMS

3.1 Schedule of Payments. The Borrower shall pay the Principal and accrued interest in [Number] monthly installments of PHP [Amount] commencing on [Start Date] and continuing on the same day of each succeeding month until [Maturity Date] (the “Maturity Date”), at which time all remaining unpaid principal and interest shall be due and payable.

3.2 Application of Payments. All payments shall be applied first to the payment of accrued interest, and the balance, if any, shall be applied to the reduction of the Principal.

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4. DEFAULT AND ACCELERATION

4.1 Events of Default. The occurrence of any of the following shall constitute an “Event of Default”: (a) Failure to pay any installment within [Number] days of the due date; (b) Insolvency or bankruptcy of the Borrower; (c) Breach of any representation or warranty herein.

4.2 Acceleration. Upon the occurrence of an Event of Default, the Lender may, at its sole option, declare the entire unpaid Principal and all accrued interest immediately due and payable without further demand or notice.

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5. PREPAYMENT AND LATE CHARGES

5.1 Prepayment. The Borrower may prepay the Principal in whole or in part at any time without penalty. 5.2 Late Fees. If any payment is not made within [Number] days of its due date, the Borrower shall pay a late charge of [Percentage]% of the overdue amount to cover administrative costs.

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6. COLLECTION COSTS AND ATTORNEY’S FEES

In the event of default, the Borrower agrees to pay all costs of collection, including reasonable attorney’s fees in an amount equal to [Percentage]% of the total amount due, but in no case less than PHP [Amount], plus the costs of suit.

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7. GOVERNING LAW AND DISPUTE RESOLUTION

7.1 Governing Law. This Note shall be governed by and construed in accordance with the laws of the Republic of the Philippines. 7.2 Venue. Any dispute arising out of or in connection with this Note shall be submitted to the exclusive jurisdiction of the competent courts of [City/Municipality], Philippines.

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8. MISCELLANEOUS

8.1 Severability. If any provision of this Note is held to be invalid or unenforceable, the remaining provisions shall continue in full force and effect. 8.2 Entire Agreement. This Note constitutes the entire agreement between the parties regarding the subject matter hereof and supersedes all prior agreements. 8.3 Waivers. No failure or delay by the Lender in exercising any right under this Note shall operate as a waiver thereof.

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EXECUTION AND SIGNATURE BLOCKS

FOR [LENDER NAME]: Signature: _____________________________________ Printed Name: [Authorized Signatory Name] Title: [Title / Role] Date: [Date]

FOR [BORROWER NAME]: Signature: _____________________________________ Printed Name: [Authorized Signatory Name] Title: [Title / Role] Date: [Date]

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STEP-BY-STEP EXECUTION AND FILING GUIDE

1. Drafting: Use a word processor to fill in all [Bracketed Fields]. Ensure the amounts in figures and words match perfectly to avoid ambiguity.
2. Documentary Stamp Tax (DST): Under the Philippine Tax Code, Promissory Notes are generally subject to DST. Ensure the tax is paid at the Bureau of Internal Revenue (BIR) and the appropriate stamps are affixed to the document to ensure enforceability in court.
3. Notarization: While not strictly required for validity between parties, notarization is mandatory if you intend to register the document (e.g., for real estate collateral) or provide the Note as evidence in court proceedings. Ensure the signatories present valid government-issued IDs to the Notary Public.
4. Digital Execution: If using DocuSign/Adobe Sign, ensure the platform is set to "Qualified Electronic Signature" mode if the loan amount is significant, providing an audit trail of the signing process.
5. Record Retention: The Lender must maintain the original signed/notarized hard copy in a fireproof, secure environment. A scanned digital copy should be stored in a cloud-based document management system with encrypted access.