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Secured Promissory Note for Philippines

Secured Promissory Note Template for Philippines

A Secured Promissory Note under Philippine law is a formal financial instrument that combines a promise to pay with security interests in specific collateral. The document establishes the terms of borrowing, including principal amount, interest rates, and repayment schedule, while also creating a security interest in favor of the lender over specified assets. It complies with the Philippine Civil Code, Personal Property Security Act, and relevant banking regulations, providing lenders with enhanced protection through collateral backing. This document is particularly important in commercial lending transactions where creditors seek additional security beyond a simple promise to repay.

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What is a Secured Promissory Note?

The Secured Promissory Note is a crucial legal instrument in Philippine commercial practice, used when a lender requires collateral to secure a loan obligation. This document type combines the features of a standard promissory note with security arrangements, providing lenders with rights over specific assets in case of default. It must comply with Philippine civil law requirements, the Personal Property Security Act, and relevant financial regulations. The Secured Promissory Note typically includes detailed terms about the loan amount, interest rates, repayment schedule, description of collateral, and enforcement mechanisms. It's commonly used in business financing, asset acquisition, and other commercial transactions where the lender seeks tangible security for the extended credit.

What sections should be included in a Secured Promissory Note?

1. Parties: Identification of the Lender (Promisee) and Borrower (Promisor), including complete legal names and addresses

2. Background: Brief context of the loan transaction and security arrangement

3. Definitions: Key terms used throughout the document, including 'Security,' 'Collateral,' 'Event of Default,' etc.

4. Promise to Pay: Core promise specifying the principal amount, interest rate, and payment terms

5. Security Interest: Description of the security interest being granted and the collateral

6. Interest and Fees: Detailed terms regarding interest calculation, payment frequency, and any applicable fees

7. Repayment Terms: Schedule and method of repayment, including installment amounts and due dates

8. Events of Default: Circumstances constituting default and consequences thereof

9. Rights and Remedies: Lender's rights upon default, including enforcement of security interest

10. Representations and Warranties: Borrower's declarations regarding their legal capacity and the collateral

11. Governing Law: Specification of Philippine law as governing law and jurisdiction

What sections are optional to include in a Secured Promissory Note?

1. Guarantor Provisions: Include when a third party is guaranteeing the loan

2. Insurance Requirements: Include when specific insurance must be maintained on the collateral

3. Prepayment Terms: Include when early repayment is allowed or restricted

4. Assignment and Transfer: Include when the note may be transferred or assigned to other parties

5. Additional Security: Include when multiple assets are being used as security

6. Cross-Default Provisions: Include when default on other obligations should trigger default under this note

7. Subordination: Include when this note needs to be subordinated to other debts

What schedules should be included in a Secured Promissory Note?

1. Schedule A - Collateral Description: Detailed description of the assets serving as security, including identification numbers, location, and condition

2. Schedule B - Payment Schedule: Amortization table showing payment dates, principal and interest breakdown

3. Schedule C - Interest Calculation: Details of interest calculation methodology if complex

4. Appendix 1 - Security Registration: Forms and information required for registering the security interest

5. Appendix 2 - Collateral Valuation: Independent valuation of the collateral if applicable

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

Manufacturing

Agriculture

Construction

Small and Medium Enterprises

Retail

Technology

Transportation and Logistics

Energy and Resources

Relevant Teams

Legal

Finance

Treasury

Credit and Risk

Compliance

Corporate Banking

Commercial Lending

Business Development

Operations

Documentation

Relevant Roles

Chief Financial Officer

Finance Manager

Credit Officer

Legal Counsel

Compliance Officer

Risk Manager

Treasury Manager

Commercial Lending Officer

Corporate Secretary

Business Development Manager

Account Manager

Financial Controller

Credit Risk Analyst

Legal Manager

Corporate Banker

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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