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Loan Lease Agreement for Philippines

Loan Lease Agreement Template for Philippines

A comprehensive legal document governed by Philippine law that combines elements of both a loan agreement and a lease agreement, enabling the financing and leasing of assets in a single transaction. This document is structured to comply with Philippine financial regulations, including the Truth in Lending Act and Lending Company Regulation Act, while incorporating necessary lease provisions under the Civil Code of the Philippines. It establishes the terms for both the financing arrangement and the operational use of the asset, including payment schedules, maintenance requirements, insurance obligations, and eventual disposition of the asset.

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Loan Lease Agreement

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What is a Loan Lease Agreement?

The Loan Lease Agreement serves as a crucial financing instrument in the Philippine business environment, particularly useful for companies seeking to acquire assets while managing cash flow effectively. This hybrid document type combines the benefits of asset financing with operational leasing, allowing businesses to obtain and use necessary equipment or assets without immediate full payment. The agreement must comply with Philippine financial regulations, including the Truth in Lending Act, Lending Company Regulation Act, and relevant Central Bank (Bangko Sentral ng Pilipinas) guidelines. The document is commonly used in situations where businesses need to acquire high-value assets but prefer to spread the cost over time while maintaining operational control of the asset. It includes detailed provisions for both the financial arrangement and the practical aspects of asset usage, making it particularly suitable for industrial, commercial, and infrastructure projects in the Philippines.

What sections should be included in a Loan Lease Agreement?

1. Parties: Identification of the Lender-Lessor and Borrower-Lessee, including complete legal names, addresses, and registration details

2. Background: Context of the agreement, including the purpose of the loan-lease arrangement and brief description of the asset

3. Definitions: Definitions of key terms used throughout the agreement, including financial terms, technical terms, and Philippine law-specific terminology

4. Loan Terms: Details of the loan including principal amount, interest rate, payment schedule, and computation method as required by the Truth in Lending Act

5. Lease Terms: Specifics of the lease arrangement including duration, rental payments, and permitted use of the asset

6. Delivery and Acceptance: Terms regarding the delivery, inspection, and acceptance of the leased asset

7. Payment Terms: Combined payment obligations for both loan and lease components, including payment methods and schedules

8. Security Deposit: Details of any security deposit required, its maintenance, and conditions for return

9. Insurance and Maintenance: Requirements for insurance coverage and maintenance responsibilities for the leased asset

10. Representations and Warranties: Standard representations and warranties from both parties

11. Events of Default: Definition of default events and consequences under both loan and lease aspects

12. Remedies: Available remedies for both parties in case of default or breach

13. Termination: Conditions and procedures for early termination or completion of the agreement

14. Governing Law and Jurisdiction: Specification of Philippine law as governing law and jurisdiction for disputes

15. Miscellaneous: Standard boilerplate provisions including notices, amendments, and severability

What sections are optional to include in a Loan Lease Agreement?

1. Purchase Option: Terms for the option to purchase the leased asset, included when the agreement offers a purchase option at the end of the lease term

2. Assignment and Subletting: Terms regarding the ability to assign or sublet, included when these rights are to be granted or specifically prohibited

3. Guarantor Provisions: Terms relating to guarantors, included when a guarantee is required for the loan-lease

4. Special Purpose: Specific terms related to the purpose of the asset, included when the asset has restricted or specific use requirements

5. Environmental Compliance: Environmental requirements and compliance terms, included for assets that may have environmental impacts

6. Tax Provisions: Detailed tax considerations, included when specific tax arrangements or implications need to be addressed

7. Force Majeure: Terms addressing unforeseeable circumstances, included when specific force majeure provisions are needed beyond standard terms

What schedules should be included in a Loan Lease Agreement?

1. Schedule A - Asset Description: Detailed description of the leased asset including specifications, condition, and value

2. Schedule B - Payment Schedule: Detailed breakdown of payment obligations including loan amortization and lease payments

3. Schedule C - Delivery and Acceptance Form: Form to be completed upon delivery and acceptance of the asset

4. Schedule D - Insurance Requirements: Detailed insurance requirements including types of coverage and minimum amounts

5. Schedule E - Maintenance Requirements: Detailed maintenance schedule and requirements for the asset

6. Appendix 1 - Required Permits and Licenses: List of required permits and licenses for the asset's operation

7. Appendix 2 - Authorized Users: List of persons authorized to use or operate the leased asset

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

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions


















































Clauses






































Relevant Industries

Manufacturing

Construction

Agriculture

Transportation

Healthcare

Mining

Telecommunications

Real Estate

Retail

Technology

Energy

Maritime

Aviation

Relevant Teams

Legal

Finance

Treasury

Risk Management

Operations

Procurement

Compliance

Credit

Asset Management

Contract Administration

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Legal Counsel

Corporate Lawyer

Risk Manager

Credit Manager

Asset Manager

Operations Director

Procurement Manager

Financial Controller

Compliance Officer

Business Development Manager

Contract Administrator

Fleet 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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