The Promissory Note Assumption Agreement is a crucial document in Philippine commercial transactions where one party seeks to transfer its debt obligations to another. This document is commonly used in business acquisitions, corporate restructuring, or when a third party agrees to take over existing debt obligations. It must comply with the Philippine Civil Code provisions on novation and the Negotiable Instruments Law requirements. The agreement typically details the original note's terms, outstanding balance, payment schedule, and any security arrangements. It's particularly important in ensuring clear documentation of the parties' rights and obligations, the original debtor's release terms, and the assuming party's acceptance of liability. The document requires careful drafting to address tax implications, including documentary stamp tax requirements, and may need additional provisions for corporate authorizations or regulatory compliance.
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1. Parties: Identifies all parties to the agreement: the Original Promissor (current debtor), the Assuming Party (new debtor), and the Promissee (creditor)
2. Background: Recitals explaining the existing promissory note details, outstanding obligations, and the parties' intention to transfer the debt obligations
3. Definitions: Defines key terms used throughout the agreement, including 'Original Note', 'Assumption Date', 'Outstanding Balance', and other relevant terms
4. Assumption of Obligations: Core provision where the Assuming Party formally assumes all obligations under the Original Note
5. Representations and Warranties: Statements by both the Original Promissor and Assuming Party regarding their capacity, authority, and the status of the debt
6. Original Promissor's Release: Terms regarding the release of the Original Promissor from the obligations under the Original Note
7. Payment Terms: Confirmation of payment terms, including amount, interest rate, and payment schedule as per the Original Note
8. Governing Law and Jurisdiction: Specifies Philippine law as governing law and designates jurisdiction for disputes
9. Execution: Formal signing section with spaces for signatures, dates, and witnesses
1. Consent of Promissee: Additional section when explicit consent of the Promissee needs to be documented in the same agreement rather than separately
2. Security Arrangements: Required when the original note includes collateral or security that needs to be transferred or replaced
3. Joint and Several Liability: Used when the Original Promissor will remain partially liable or when multiple parties are assuming the debt
4. Tax Provisions: Include when there are specific tax implications or documentary stamp tax arrangements to be addressed
5. Notice Requirements: Added when specific notification procedures need to be established between parties
1. Schedule A - Original Promissory Note: Copy of the original promissory note being assumed
2. Schedule B - Payment Schedule: Detailed schedule of remaining payments, including principal and interest breakdowns
3. Schedule C - Security Details: If applicable, details of any security or collateral arrangements
4. Appendix 1 - Required Corporate Resolutions: Copies of corporate resolutions authorizing the assumption (if parties are corporations)
5. Appendix 2 - Consent Documents: Any required third-party consents or regulatory approvals
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