What Is a Promissory Note?
A Promissory Note is a written, unconditional promise by one party — the Maker — to pay a fixed sum of money to another party — the Payee or Lender — either on demand or at a specified future date. In the Philippines, it is governed by the Negotiable Instruments Law (Act No. 2031) together with the relevant provisions of the Civil Code on obligations and contracts. It is the most common instrument used for personal loans, business advances, and installment arrangements between private parties.
Borrowers and lenders often search for this document as an IOU, a loan agreement, or a promissory note with collateral, and in everyday Filipino lending it is the paper that formalizes a pautang. Note, however, that a loan agreement is technically a fuller two-party contract, while a promissory note is the borrower's one-sided promise to pay.
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Unlock & Generate — ₱199 or get All-Access — ₱999/30 daysEssential Clauses in a Philippine Promissory Note
- Identification of the parties — Maker (Borrower) and Payee (Lender), with full legal names, civil status, and addresses
- Unconditional promise to pay — clear language that the Maker promises to pay, not merely acknowledges a debt
- Principal amount — sum certain in money, stated in both words and figures, in Philippine currency
- Date and place of execution — when and where the note is signed
- Payment schedule — lump-sum maturity date, or number of installments with due day and start date
- Interest rate — annual rate (or "non-interest-bearing"), within reasonable limits to avoid being struck down as unconscionable
- Late payment penalty — optional monthly penalty on overdue installments
- Default and acceleration — Lender's right to declare the entire balance immediately due upon default
- Attorney's fees and collection costs — Maker's liability for legal expenses if collection is required
- Application of partial payments — order in which payments apply (costs → penalties → interest → principal)
- Co-Maker — optional; jointly and solidarily liable with the Maker
- Signature and notarial acknowledgment — Maker's signature, witnesses, and (recommended) notarization with a Competent Evidence of Identity table
Free Promissory Note Template
PN No. 2026-001
Date: January 15, 2026
I, Juan Dela Cruz, Filipino, of legal age, married to Maria Dela Cruz, with address at 123 Rizal Street, Barangay San Antonio, Quezon City (hereinafter referred to as the "Maker"), for value received, hereby unconditionally promise to pay to the order of Maria Santos, Filipino, of legal age, single, with address at 456 Mabini Street, Barangay Poblacion, Makati City (hereinafter referred to as the "Lender"), the principal sum of Five Hundred Thousand Pesos (Php 500,000.00), Philippine currency.
The Maker shall pay the principal in Twelve (12) equal monthly installments, due and payable without need of notice or demand on the 15th day of each month beginning February 15, 2026, and the entire obligation shall be fully paid on or before January 15, 2027.
Payment shall be made to the Lender via Bank transfer to BPI Account No. 1234-5678-90 under Maria Santos, or through such other mode as the parties may agree in writing.
The unpaid principal shall earn interest at the rate of Twelve Percent (12%) per annum, computed from February 15, 2026 until fully paid, payable in arrears together with each installment.
In case any installment is not paid on its due date, the overdue amount shall be subject to a late payment penalty of Two Percent (2%) per month, computed from the due date until paid.
Failure of the Maker to pay any installment or amount due under this Note on its due date shall constitute default, without need of further notice or demand. Upon default, the Lender may declare the entire unpaid balance, together with accrued interest and any penalties already incurred, immediately due and demandable, and interest and the late payment penalty shall continue to accrue on the unpaid balance until the same is fully paid.
In case the Lender is compelled to engage counsel or institute collection proceedings to enforce this Note, the Maker shall be liable for attorney's fees, costs of suit, and other lawful expenses of collection.
Any partial payment shall first be applied to costs and charges, then to penalties, then to accrued interest, and thereafter to the principal, unless otherwise agreed in writing.
The Maker may prepay the whole or any part of the outstanding obligation at any time without penalty, unless otherwise agreed in writing. Any prepayment shall be applied first to accrued interest and thereafter to the principal.
This Note shall be governed by and construed in accordance with the laws of the Republic of the Philippines. The parties agree that the venue of any action arising from or in connection with this Note shall lie exclusively in the proper courts of Quezon City, to the exclusion of all other venues.
IN WITNESS WHEREOF, the Maker has hereunto set his/her hand this January 15, 2026 in Quezon City, Philippines.
BEFORE ME, a Notary Public, personally appeared the following:
| Name | Competent Evidence of Identity |
|---|---|
| JUAN DELA CRUZ | Philippine Passport No. P1234567A |
known to me and to me known to be the same person who executed the foregoing Promissory Note and acknowledged that the same is his/her free and voluntary act and deed.
WITNESS MY HAND AND SEAL on the date and at the place first above written.
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