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Promissory Note With Collateral for Philippines

Promissory Note With Collateral Template for Philippines

A Promissory Note with Collateral is a legally binding financial instrument used in the Philippines that combines a promise to pay with security provisions. The document is governed by Philippine law, particularly the Negotiable Instruments Law (Act No. 2031) and the Personal Property Security Act (Republic Act No. 11057). It serves as both a debt acknowledgment and a security agreement, where the borrower (Maker) promises to repay a specific sum to the lender (Payee) and pledges specific assets as collateral to secure the obligation. The document includes detailed payment terms, collateral descriptions, and enforcement provisions compliant with Philippine securities and commercial laws.

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What is a Promissory Note With Collateral?

The Promissory Note with Collateral is extensively used in Philippine business and lending transactions where creditors require security for their loans. This document type combines the simplicity of a promissory note with the protection of a security agreement, making it particularly valuable for both institutional and private lending arrangements. It must comply with Philippine legal requirements, including the Civil Code, Negotiable Instruments Law, and Personal Property Security Act. The document is commonly used when businesses or individuals need to borrow money while offering specific assets as security, providing lenders with a clear right to claim the pledged collateral in case of default. The note typically includes detailed descriptions of the collateral, payment terms, interest rates, and enforcement mechanisms, all structured to be enforceable under Philippine law.

What sections should be included in a Promissory Note With Collateral?

1. Parties: Identification of the Maker (debtor) and Payee (creditor) with complete names and addresses

2. Promise to Pay: Unconditional promise to pay a specific sum of money, including the principal amount in both numbers and words

3. Payment Terms: Details of payment schedule, interest rate, maturity date, and method of payment

4. Collateral Description: Specific description of the property being pledged as collateral, including identifying details and location

5. Security Interest: Creation and terms of the security interest in the collateral

6. Default Provisions: Definition of events of default and consequences, including collateral seizure rights

7. Representations and Warranties: Maker's declarations regarding ownership and condition of collateral

8. Notice Requirements: How and where notices between parties must be delivered

9. Signature Block: Space for signatures, dates, and witnesses as required

What sections are optional to include in a Promissory Note With Collateral?

1. Prepayment Provisions: Terms allowing early payment and any associated penalties or benefits - include if early payment is permitted

2. Insurance Requirements: Obligations to maintain insurance on collateral - include if collateral is valuable property requiring protection

3. Co-Makers: Additional parties jointly liable for the debt - include if there are co-signers

4. Collection Costs: Provisions for recovery of legal fees and collection costs - include if desired by creditor

5. Collateral Maintenance: Requirements for maintaining and preserving collateral - include for complex or valuable collateral

6. Security Registration: Requirements for registering the security interest - include if registration is required by law for the type of collateral

What schedules should be included in a Promissory Note With Collateral?

1. Schedule A - Collateral Details: Detailed inventory and description of all collateral items including serial numbers, locations, and conditions

2. Schedule B - Payment Schedule: Amortization table or detailed payment schedule if installment payments are involved

3. Schedule C - Collateral Valuation: Current valuation of collateral items and appraisal details if required

4. Appendix 1 - Photos of Collateral: Photographic evidence of collateral condition at time of agreement

5. Appendix 2 - Title Documents: Copies of relevant ownership documents for the collateral

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

Promissory Note

Sector

Banking

Cost

Free to use
Relevant legal definitions






























Clauses

























Relevant Industries

Banking and Financial Services

Real Estate

Agriculture

Manufacturing

Small and Medium Enterprises

Retail

Construction

Technology

Professional Services

Automotive

Relevant Teams

Legal

Finance

Credit Risk

Compliance

Treasury

Collections

Business Development

Documentation

Security Administration

Loan Operations

Relevant Roles

Finance Manager

Credit Officer

Legal Counsel

Loan Officer

Risk Manager

Compliance Officer

Business Development Manager

Corporate Secretary

Treasury Manager

Collections Manager

Security Registration Officer

Credit Risk Analyst

Documentation Specialist

Account Manager

Chief Financial Officer

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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