Lending Money in the Philippines: How to Write a Promissory Note That Holds Up

Why put it in writing: chat logs versus a promissory note

Chat messages can show that a loan happened. A promissory note shows that the borrower acknowledged a specific amount and agreed to repay by a specific date. If you ever need mediation or a small claims case, that difference saves a great deal of explaining.

Most personal loan disputes are not outright denials. They are disagreements over details: was it a loan or a gift, how much exactly, when was it due, was there interest, and do the small amounts already paid count. Scattered messages and verbal promises leave those questions open, and the matter drags on. A clear note settles them at the start, while both sides still agree.

Among friends the usual hesitation is that asking for a note looks like distrust. Frame it differently: the note protects both people. The borrower knows you cannot later claim more than was lent, and if something happens to either of you, family members know exactly what the arrangement was. If someone refuses to sign even a simple page stating the amount and repayment date, that refusal is useful information in itself, and you can decide whether to lend at all.

When the borrower is an employee, a household helper or a colleague, the situation changes, including whether repayments can come out of wages. See lending to a Filipino colleague or employee.

Whatever the relationship, decide the amount you can afford to lose before you agree. A well-written note improves your position, but it does not guarantee that the borrower will be able to pay.

Eight things every promissory note should contain

A useful note lets a stranger answer, after one reading: who borrowed, who lent, how much, when, how it is repaid, and what happens if it is not.

The eight elements. One, both parties' full names, nationality, ID type and number, and address, matching their identity documents. Two, the principal, written in figures and in words, with the currency. Three, the date and method of release, for example a transfer from a named bank to the borrower's account on a given day. Four, repayment: a single due date, or a schedule listing each installment date and amount. Five, interest: if you intend to charge it, state the rate and how it is computed, because under Philippine rules interest that is not agreed in writing is generally not collectible; if there is none, write that the loan is interest-free so nobody argues later. Six, early repayment and default, such as whether late payments attract a charge or the whole balance falls due; keep these reasonable, since excessive penalty terms may be struck down. Seven, how disputes will be handled, for example discussion first and then barangay mediation where both of you live. Eight, both signatures and the date, ideally on every page.

English is the practical choice if the note may ever be used locally. Where both parties read Chinese, a bilingual version works, provided it states which language prevails if the two differ.

Before signing, read the finished note aloud together. It sounds formal, but it is the fastest way to catch a missing date, a figure that does not match the words, or an installment schedule that does not add up to the principal.

Signing, witnesses and notarisation: how far to go

A note signed by both parties is valid on its own. Witnesses and notarisation make it easier to prove later, and they are worth the effort for larger amounts.

When signing, keep three habits. Sign face to face, with signatures that match those on each person's ID. Attach photocopies of both IDs and have the borrower sign the copies. Make two originals so each party keeps one. If one or two adults with no stake in the loan can sign as witnesses, adding their ID numbers, the note becomes more persuasive.

Notarisation means both parties confirm their signatures in front of a commissioned notary public. A notarised document is treated as a public document in the Philippines, which makes it much harder for a borrower to claim later that the signature is not theirs. Both parties usually appear in person with valid ID; the notary sets the fee and requirements. For how sworn and notarised documents work generally, see how affidavits work in the Philippines. Bear in mind that a notary confirms signatures, not whether the terms are sensible, so the content still has to be right.

For a large loan, or one secured by property or a vehicle, or guaranteed by a third person, have a licensed lawyer review the document before anyone signs.

Store your original somewhere safe and keep a scanned copy as well. Notes get lost in house moves more often than people expect, and a missing original makes every later step harder.

Keep a note of who attended the signing and where it happened, in case you ever need a witness to confirm the details.

Paying out and receiving back: leave a trail for every peso

Even a well-drafted note invites argument if the money went out in cash and came back in cash. Use bank or e-wallet transfers for both the loan and the repayments wherever you can.

When lending, transfer from an account in your own name to an account in the borrower's own name, and put the word loan or the note's reference in the transfer description. File the transfer slip with the note. Do not send the money to a relative or third party at the borrower's request, because the borrower can later say the funds never reached them. If cash is unavoidable, have the borrower write on the note that the cash was received on a given date, or sign a separate receipt.

When collecting, issue a receipt for every repayment, or keep a ledger page attached to the note recording the date, amount paid and remaining balance, signed by both of you. It feels tedious, but it prevents arguments about how much has been paid, and each signed entry shows the borrower acknowledging the debt again.

Some borrowers offer post-dated cheques as extra assurance. They can serve as additional evidence, but a bounced cheque triggers a separate set of procedures, so do not treat cheques as a substitute for the note. For the issuer's side of that problem, see bounced cheque and demand letters.

If the borrower asks to change the schedule part-way through, write the new arrangement down as a short signed addendum rather than agreeing by chat. That keeps one consistent paper trail from the first transfer to the last payment.

Should you ask for a co-maker, and what it means for them

If you are not confident about the borrower's ability to repay, you can ask for a co-maker to sign as well. The clause must make clear what kind of liability the co-maker is taking on.

Spell out three points: which debt is guaranteed, the maximum amount covered, and whether the co-maker pays only if the borrower defaults or is liable together with the borrower from the start. The second form is stronger for the lender, because you can pursue the co-maker directly; under the first you usually go after the borrower first. The co-maker should sign, attach ID copies and, for larger sums, join the notarisation.

If you are the person being asked to act as co-maker, understand that once you sign, the lender may come after you when the borrower does not pay, and it may show on your local credit record. How to handle that situation is covered in being chased as a co-maker.

Between friends, a more realistic protection than a co-maker is often keeping each loan to an amount you could afford to lose, and sending a written reminder at the first missed payment rather than letting several months build up.

Whatever you decide, record the co-maker arrangement in the same document as the loan, not in a separate side letter that can be misplaced or later disputed.

Make sure the co-maker reads the full note, not just the signature page, and keep evidence that they received a copy. A guarantor who later claims they did not understand what they signed is a common source of extra argument.

Note in hand and still no payment: next steps, and how YIXING helps

With a note, the route to recovery is the same, but every step moves faster: a written demand, then barangay mediation, and if that fails, small claims court may be an option.

When the due date passes, send a written demand that cites the note's date, the principal, amounts paid and the balance, and gives a reasonable deadline. Keep proof that it was sent. Where both parties live in the same city or municipality, many civil disputes must first go through barangay mediation, and a settlement reached there is binding. If mediation fails and the amount falls within the small claims range, you can use the simplified small claims procedure without a lawyer; limits and steps are explained in using small claims court in the Philippines. The note, transfer slips, repayment receipts and your demand letter form the core of your evidence in any of these steps.

YIXING can prepare a bilingual version of your note, accompany you to a notary, help draft the written demand and organise your evidence, and refer you to a licensed lawyer for secured loans, large amounts or anything already in litigation. YIXING is a consultancy registered with the Philippine Securities and Exchange Commission (SEC Reg. No. CS202009551) and holds Bureau of Immigration accreditation (BI Accreditation No. CA-202624381-1, valid until 2027-06-30). We are not a law firm, we do not draft documents that amount to legal advice, and we do not promise any recovery outcome. See settling-in support. Every case is different: consult a licensed lawyer. This article is not legal advice.