Sample Loan Agreement for the Philippines

1. Introduction

A loan agreement is a legally binding contract that outlines the terms and conditions between a lender and a borrower. In the Philippines, such agreements must comply with the Civil Code and other relevant laws to ensure enforceability and protection for both parties. This sample loan agreement provides a comprehensive template for creating a loan contract in the Philippine context.

2. Parties Involved

This agreement is made between:

• Lender: [Name], with a principal address at [Address].
• Borrower: [Name], with a principal address at [Address].

3. Loan Amount

The Lender agrees to loan the Borrower the sum of [Loan Amount in Words] (PHP [Loan Amount in Figures]), subject to the terms and conditions outlined in this agreement.

4. Purpose of the Loan

The Borrower agrees to use the loan amount for the purpose of [State Purpose of Loan], and not for any other purpose unless otherwise agreed upon in writing by both parties.

5. Interest Rate

The loan shall bear an interest rate of [Interest Rate]% per annum. Interest shall be calculated on a [simple/compound] basis and shall accrue daily/monthly.

6. Repayment Terms

• Repayment Schedule: The Borrower shall repay the loan in [Number] equal installments of PHP [Installment Amount] each, commencing on [Start Date] and ending on [End Date].
• Payment Due Date: Payments shall be due on the [Day] of each month.
• Method of Payment: Payments shall be made via [Payment Method], to the following account: [Bank Account Details].

7. Late Fees

If the Borrower fails to make a payment by the due date, a late fee of [Late Fee Amount] shall be charged. If payments are delayed by more than [Number] days, additional penalties may apply.

8. Prepayment

The Borrower may prepay the loan in full or in part at any time without penalty. Any prepayment shall first be applied to accrued interest and then to the principal balance.

9. Default

In the event of default, including but not limited to failure to make payments, bankruptcy, or insolvency, the Lender has the right to declare the entire loan amount immediately due and payable. The Lender may also pursue legal remedies as provided by law.

10. Representations and Warranties

• Lender's Representations: The Lender represents that they have the authority to enter into this agreement and that the loan is not subject to any other agreement that would impair its enforceability.
• Borrower's Representations: The Borrower represents that they have the capacity to repay the loan and that no information provided to the Lender is false or misleading.

11. Governing Law

This agreement shall be governed by and construed in accordance with the laws of the Philippines. Any disputes arising from this agreement shall be resolved in the courts of [City/Province], Philippines.

12. Amendments

Any amendments or modifications to this agreement must be made in writing and signed by both parties.

13. Miscellaneous

• Entire Agreement: This document constitutes the entire agreement between the parties and supersedes all prior agreements and understandings.
• Severability: If any provision of this agreement is held to be invalid or unenforceable, the remaining provisions shall remain in full force and effect.
• Waiver: Failure to enforce any provision of this agreement shall not constitute a waiver of that provision or any other provision.

14. Signatures

This agreement is signed by the parties as follows:

• Lender: [Signature]
  Date: [Date]

• Borrower: [Signature]
  Date: [Date]

15. Annexes

The following documents are attached and form part of this agreement:

• Annex A: Proof of Identity of the Borrower
• Annex B: Proof of Address of the Borrower
• Annex C: Proof of Loan Purpose

16. Conclusion

This sample loan agreement provides a detailed template for loan transactions in the Philippines. It is advisable for both lenders and borrowers to seek legal advice to ensure that all terms are fair and legally enforceable.