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The Non Interest Bearing Loan Agreement is commonly used in the Philippines for documenting interest-free loans between related parties, family members, or business associates. This type of agreement is particularly relevant when parties wish to establish a formal lending arrangement without charging interest, while ensuring compliance with Philippine tax laws, banking regulations, and anti-money laundering requirements. The document is essential for protecting both lender and borrower interests, clearly stating the loan amount, repayment terms, and conditions, while explicitly documenting the interest-free nature of the transaction. It's frequently used in family business contexts, corporate group lending, and situations where charging interest might have unfavorable tax implications or conflict with religious or personal preferences.

1. Parties: Identifies and provides full details of the Lender and Borrower, including their legal names, addresses, and any registration numbers if applicable

2. Background: Sets out the context of the loan agreement and confirms the parties' intention to enter into an interest-free loan arrangement

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes rules for interpreting the document

4. Loan Amount and Purpose: Specifies the principal amount of the loan and its intended use, explicitly stating that no interest will be charged

5. Disbursement: Details the conditions precedent and mechanism for disbursing the loan

6. Repayment Terms: Specifies the repayment schedule, method of payment, and confirms that only the principal amount is to be repaid

7. Representations and Warranties: Contains statements of fact and assurances from both parties, including confirmation of understanding that no interest is payable

8. Borrower's Covenants: Lists the Borrower's ongoing obligations and promises throughout the loan term

9. Events of Default: Defines circumstances that constitute default and the consequences thereof

10. Remedies: Outlines the Lender's rights and remedies in case of default

11. Governing Law and Jurisdiction: Specifies that Philippine law governs the agreement and establishes jurisdiction for dispute resolution

12. Notices: Sets out how formal communications between parties should be made and delivered

13. General Provisions: Contains standard boilerplate clauses including severability, entire agreement, and amendments