How to Write a Promissory Note for School Fees in the Philippines: A Comprehensive Guide

Introduction

In the Philippine educational system, particularly in private schools, colleges, and universities, promissory notes serve as a vital financial tool for families facing temporary cash flow issues. These documents allow students to enroll or continue their studies while committing to pay outstanding tuition and other school fees at a later date or in installments. Under Philippine law, a promissory note is considered a written contract that evidences a debt and a promise to pay, governed primarily by the Civil Code of the Philippines (Republic Act No. 386), specifically Articles 1156 to 1422 on obligations and contracts, and supplemented by relevant provisions in the Negotiable Instruments Law (Act No. 2031) if the note qualifies as negotiable.

This article provides an exhaustive overview of promissory notes for school fees in the Philippine context, including their legal foundation, requirements, step-by-step drafting process, a customizable template, potential enforceability issues, and best practices. While promissory notes are straightforward, they must comply with legal standards to avoid disputes or invalidation. Note that this is not legal advice; consulting a lawyer or notary public is recommended for personalized situations.

Legal Basis and Purpose

A promissory note (often abbreviated as PN) is defined under Article 184 of the Negotiable Instruments Law as "an unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand, or at a fixed or determinable future time, a sum certain in money to order or to bearer." In the context of school fees, it is typically non-negotiable, meaning it's a simple bilateral agreement between the parent/guardian (maker) and the educational institution (payee).

The purpose of a PN for school fees is to formalize a deferred payment arrangement, ensuring the school receives assurance of payment while allowing the student uninterrupted access to education. This practice is common in institutions regulated by the Department of Education (DepEd), Commission on Higher Education (CHED), or Technical Education and Skills Development Authority (TESDA). For instance, during enrollment periods, schools may require a PN if full payment isn't made upfront, especially for families qualifying under financial assistance programs or those affected by economic hardships.

Legally, such notes must adhere to the principles of contracts under the Civil Code: consent, object (the debt), and cause (the educational services). They are enforceable as obligations arising from contracts (Article 1305, Civil Code). Failure to pay can lead to civil actions for collection, but schools must follow due process, including demand letters, before resorting to remedies like withholding transcripts or diplomas, as per CHED Memorandum Order No. 40, series of 2008, and similar DepEd guidelines.

Requirements for a Valid Promissory Note

To ensure validity and enforceability, a promissory note for school fees must meet several essential requirements under Philippine law:

Written Form: The note must be in writing to be enforceable beyond a certain amount (Article 1403, Civil Code, on the Statute of Frauds). Oral agreements are generally not sufficient for debts exceeding PHP 500, but written form is always advisable.
Parties Involved:
- Maker: The person promising to pay, typically the parent, guardian, or student (if of legal age, 18 years or older under Republic Act No. 6809).
- Payee: The school or its authorized representative, such as the finance office or registrar.
- If the maker is a minor, a parent or guardian must co-sign to bind the contract.
Sum Certain: The exact amount owed must be specified, including breakdowns for tuition, miscellaneous fees, laboratory fees, etc. It should be in Philippine Pesos (PHP) to avoid currency issues.
Promise to Pay: An unconditional commitment to pay, without contingencies like "if funds are available."
Determinable Time or Demand: Payment terms must be clear—e.g., on a specific date, in installments, or upon demand. Installment plans should detail amounts and due dates.
Signatures: The maker must sign; witnesses (at least two) are recommended but not mandatory. The payee or school representative should acknowledge receipt.
Date and Place: Include the date of execution and place (city/municipality) for jurisdictional purposes.
Interest and Penalties: If applicable, specify interest rates (not exceeding the legal rate of 6% per annum under Central Bank Circular No. 905, unless otherwise agreed) and penalties for late payment. Usurious rates (exceeding reasonable limits) are void under the Usury Law (Act No. 2655, as amended).
Notarization: Not required for validity but highly recommended for evidentiary value. A notarized PN becomes a public document, admissible in court without further proof of authenticity (Rule 132, Section 19, Rules of Court). Notarial fees are typically PHP 200–500, plus 1% documentary stamp tax on the principal amount.
Documentary Stamp Tax (DST): Under Section 179 of the Tax Code (Republic Act No. 8424, as amended), promissory notes are subject to DST at PHP 1.50 for every PHP 200 or fraction thereof of the face value. The school usually handles this, but the maker may be liable.
Compliance with School Policies: The PN must align with the institution's guidelines, such as maximum deferred amounts or required collateral (e.g., post-dated checks).

Additional considerations include capacity (maker must be of sound mind and legal age) and absence of vitiated consent (no fraud, intimidation, etc., per Articles 1330–1344, Civil Code).

Step-by-Step Guide to Writing a Promissory Note

Drafting a PN is a methodical process. Follow these steps to create a legally sound document:

Gather Information: Collect details on the outstanding fees from the school's billing statement. Identify parties, amounts, and preferred payment terms.
Choose Format: Use a simple letter format or a pre-printed school form if available. Ensure it's typed or legibly handwritten.
Header: Start with "PROMISSORY NOTE" centered at the top, followed by the date and place.
Identify Parties: State the maker's full name, address, and relationship to the student; then the payee's name and address.
Recital Clause: Explain the purpose, e.g., "For value received in the form of educational services provided to [Student's Name], I promise to pay..."
Specify Amount and Terms: Detail the principal amount, payment schedule, interest (if any), and penalties.
Add Clauses for Security: If required, include provisions for collateral, co-makers, or acceleration clauses (full amount due upon default).
Signatures and Witnesses: End with signature lines for the maker, witnesses, and payee's acknowledgment.
Notarize if Desired: Visit a notary public with valid IDs (e.g., passport, driver's license).
File Copies: Provide originals to the school; retain a signed copy for the maker.

Common pitfalls to avoid: Vague terms, which can lead to disputes; failure to specify currency; or omitting penalties, which may weaken enforcement.

Sample Template

Below is a customizable template for a promissory note for school fees. Adapt it to your specifics, ensuring all blanks are filled accurately.

PROMISSORY NOTE

Date: [Insert Date, e.g., October 2, 2025]
Place: [Insert City/Municipality, Province, e.g., Quezon City, Metro Manila]

FOR VALUE RECEIVED, I/We, [Full Name of Maker/s], of legal age, Filipino citizen/s, single/married, with postal address at [Maker's Address], hereinafter referred to as the Maker/s, promise to pay to the order of [Name of School/Educational Institution], with principal office at [School's Address], hereinafter referred to as the Payee, the sum of [Amount in Words] (PHP [Amount in Figures]), representing unpaid school fees for [Student's Full Name], [Student ID/Grade/Year Level], for the [Semester/School Year, e.g., First Semester, SY 2025-2026].

This amount shall be paid as follows:

[Detail Payment Schedule, e.g., In three (3) equal installments of PHP [Amount] each, due on [Date1], [Date2], and [Date3].]

In case of default, the entire unpaid balance shall become immediately due and demandable, with interest at the rate of [Interest Rate, e.g., 1% per month] on the outstanding amount, plus a penalty of [Penalty Amount/Percentage, e.g., 5% of the principal].

The Maker/s waive/s presentment for payment, demand, protest, and notice of dishonor.

This Note shall be governed by the laws of the Republic of the Philippines.

IN WITNESS WHEREOF, I/We have hereunto set my/our hand/s this [Date] at [Place].

Maker/s:

[Full Name and Signature]
[If Co-Maker: Full Name and Signature]

Witnesses:

[Name and Signature] [Name and Signature]

ACKNOWLEDGMENT BY PAYEE:
Received and Accepted by:

[Authorized Representative's Name and Signature]
[Position, e.g., Finance Officer]
[Name of School]

[Notary Public Section, if notarized]
REPUBLIC OF THE PHILIPPINES)
[City/Municipality] ) S.S.

Before me, a Notary Public for and in [City/Municipality], personally appeared [Maker's Name] with [ID Type and Number, e.g., Passport No. XXXXXX], known to me to be the same person who executed the foregoing instrument and acknowledged that the same is his/her free and voluntary act and deed.

WITNESS MY HAND AND SEAL this [Date] at [Place].

Notary Public:
Doc. No. ____;
Page No. ____;
Book No. ____;
Series of [Year].

Affix Documentary Stamp Tax here as required.

Enforceability and Remedies

A properly executed PN is enforceable through civil action in the appropriate court (Municipal Trial Court for amounts up to PHP 400,000 in Metro Manila, or Regional Trial Court for higher). The school can file a complaint for sum of money, attaching the PN as evidence. Defenses for the maker might include payment, prescription (6 years for written contracts under Article 1145, Civil Code), or invalidity due to lack of consent.

Schools cannot arbitrarily withhold diplomas or transcripts without due process, as per Supreme Court rulings (e.g., University of the Philippines v. Ayson, G.R. No. 88386). However, they may impose administrative holds until settlement.

In cases of non-payment, alternatives include negotiation, mediation via the Barangay Justice System (for amounts up to PHP 200,000 under Republic Act No. 7160), or small claims court for expedited resolution (up to PHP 400,000).

Special Considerations

For Public Schools: Promissory notes are less common in free public education but may apply to miscellaneous fees or voluntary contributions under DepEd Order No. 41, s. 2012.
During Crises: In events like pandemics or calamities, flexible terms may be mandated (e.g., Bayanihan Acts during COVID-19 allowed moratoriums).
Data Privacy: Handling personal information complies with the Data Privacy Act (Republic Act No. 10173).
Tax Implications: Interest income from PNs is taxable for the school; makers may deduct penalties if business-related.
Electronic PNs: Under the Electronic Commerce Act (Republic Act No. 8792), digital signatures are valid if authenticated.

Best Practices and Common Issues

To maximize effectiveness:

Use clear, simple language to avoid ambiguity.
Attach supporting documents like fee breakdowns.
Keep records of payments to prevent disputes.
Review school-specific rules, as some require board approval for large amounts.

Common issues include disputes over amounts, late payments leading to accrued interest, or schools demanding excessive penalties. If contested, seek assistance from legal aid organizations like the Integrated Bar of the Philippines or PAO (Public Attorney's Office).

In summary, a well-drafted promissory note bridges financial gaps in education, ensuring compliance with Philippine laws for mutual protection. Always prioritize transparency and fairness in these agreements.