Yes—as a general rule, failure to pay an amount due under a promissory note is a breach of contract in the Philippines. A promissory note is typically treated as a written contract and evidence of a loan or credit obligation, so nonpayment when due creates civil liability (collection of the amount, plus agreed interest/penalties if valid, and possibly damages/fees depending on the terms and proof).

That said, whether nonpayment is legally a “breach,” when breach occurs, what remedies are available, and how much can be collected depend on the note’s wording (due date, demand clauses, interest, acceleration, security, parties’ capacity), the Civil Code rules on obligations and contracts, and procedural rules on collection suits.

Below is a Philippine-context legal article covering the practical and legal dimensions.

1) What a Promissory Note Is (Philippine Civil Law View)

A promissory note is a written undertaking by one party (the maker/debtor) to pay a definite sum to another (the payee/creditor) at a fixed or determinable time, or on demand. In practice in the Philippines:

Many promissory notes are simple loan documents (contract + proof of debt).
Some promissory notes are drafted to qualify as negotiable instruments (used in financing/discounting contexts).
Even if a note is not negotiable, it is still generally enforceable as a contract, assuming consent, object, and cause are present.

Key idea: Whether framed as a “loan” or as a “note,” the obligation is still an obligation to give (deliver money), governed largely by the Civil Code’s rules on obligations and contracts.

2) Is Nonpayment a Breach of Contract?

The baseline rule

If the promissory note says the debtor must pay ₱X on a certain date, then failing to pay on that date is typically nonperformance of a contractual obligation—i.e., breach.

The legal term you’ll often see: “default” or “delay” (mora)

Philippine civil law commonly analyzes breach of payment obligations through delay (mora):

Obligation with a due date (“term”): payment becomes demandable on the due date.
Obligation payable “on demand”: payment becomes demandable upon demand.
Obligation with installments: each missed installment is its own nonpayment event; the note may also include an acceleration clause.

Nonpayment can be a breach even without the creditor proving “damage” beyond the unpaid amount—because the primary remedy is payment itself (plus valid accessories like interest/penalties if properly established).

3) When Does Breach “Happen”? Due Date vs. Demand

A crucial Philippine law nuance is whether demand is required to place the debtor in legal delay (mora), which affects interest, damages, and sometimes attorney’s fees.

A) Notes with a fixed maturity date

If the note clearly states a due date (e.g., “Payable on 30 June 2026”), then:

The obligation becomes due and demandable on that date.
Nonpayment on due date is breach/nonperformance.
For legal delay and related consequences, demand may still matter—but there are exceptions where demand is not necessary (for example, when the obligation or the law treats the date as controlling, or when the parties stipulate that no demand is necessary).

Practical point: Many promissory notes expressly state:

“No notice or demand shall be necessary to make the maker liable…”

That clause is meant to remove arguments about the need for demand.

B) Notes “payable on demand”

If the note says “on demand,” then:

The debt is generally not yet due until the creditor demands payment.
After a proper demand, nonpayment becomes breach and places the debtor in default.

C) Notes with ambiguous terms

If the note is unclear about when payment becomes due, courts may look at:

the parties’ intent,
surrounding circumstances,
customary banking/credit practices,
partial payments, admissions, and correspondence.

4) What the Creditor Can Sue For (Civil Remedies)

Failure to pay under a promissory note is ordinarily enforced through civil actions. Common remedies include:

A) Collection of sum of money (the main remedy)

The creditor may file a case to collect:

Principal (unpaid amount)
Interest (if stipulated and valid; if none, potentially legal interest in appropriate situations)
Penalties/liquidated damages (if stipulated and not unconscionable)
Attorney’s fees and costs (only if stipulated and/or justified under applicable rules, and still subject to court scrutiny)

B) Specific performance (in effect, “pay what you promised”)

In money obligations, “specific performance” usually looks like a judgment ordering the debtor to pay.

C) Damages (when properly proved)

Depending on the circumstances and what’s claimed and proven, a creditor may pursue:

Actual/compensatory damages (often overlaps with interest)
Liquidated damages (penalty clause)
Moral/exemplary damages are not automatic in debt cases and generally require special circumstances (bad faith, fraud, wanton conduct), and courts are cautious about awarding them in ordinary collection disputes.

D) If the note is secured: enforce the security

If the note is backed by collateral:

Real estate mortgage → judicial or extrajudicial foreclosure (if properly documented and registered)
Chattel mortgage → foreclosure under chattel mortgage rules
Pledge → enforcement via proper procedures
Suretyship/guaranty → proceed against surety/guarantor depending on terms and nature (surety often directly liable)

Important: If there is security, the creditor may have to choose or sequence remedies depending on the documents and applicable rules (and avoid double recovery).

5) Interest, Penalties, and “Unconscionable” Charges

A) Stipulated interest

If the promissory note states an interest rate, it is generally enforceable if:

it is clearly agreed upon, and
it is not unconscionable (grossly excessive under the circumstances).

Philippine courts may reduce unconscionable interest or penalty rates, even if the debtor signed the note, especially where the terms are oppressive.

B) Penalty clauses

Promissory notes often include:

late payment penalty,
liquidated damages,
collection fee,
attorney’s fees (e.g., “25% of the amount due”).

Courts can also moderate penalty clauses if they are iniquitous or unconscionable.

C) Legal interest (when no valid stipulation applies)

If there is no valid stipulated interest, courts may impose legal interest in proper cases (for example, on sums due that are withheld). The applicable legal interest rate and the rules on when it runs can change over time through regulation and jurisprudence, so parties should not assume a single constant rate forever.

6) Acceleration Clauses and Installment Notes

Many promissory notes provide:

“Upon default in any installment, the entire outstanding balance shall become immediately due and demandable.”

This is an acceleration clause. In the Philippines:

Courts generally enforce acceleration clauses if clearly stipulated.
Some acceleration clauses require a triggering act (e.g., notice or demand).
Debtors sometimes defend by arguing waiver (creditor repeatedly accepted late payments) or that acceleration wasn’t validly invoked.

Practice tip: If a creditor has a history of accepting late payments without reservation, the debtor may argue waiver or estoppel against sudden acceleration—though outcomes depend heavily on evidence and the exact terms.

7) Defenses Debtors Commonly Raise (and When They Work)

A promissory note makes collection easier for a creditor, but debtors can still raise defenses, such as:

A) Payment, partial payment, or dation in payment

Receipts, bank proofs, acknowledgments, and ledgers matter.
Partial payment typically reduces the claim but doesn’t erase it.

B) Lack of consideration / no loan actually released

A debtor may claim the money was never delivered (no “cause”), or the note was signed for accommodation or as a mere formality. The strength of this defense depends on evidence, including disbursement records.

C) Fraud, intimidation, mistake, undue influence

These attack consent. They’re fact-heavy and require convincing proof.

D) Novation (the obligation was replaced)

If the parties later executed a new agreement intended to extinguish/replace the old one, the debtor may claim novation. Courts require clear intent to novate; not every restructuring is novation.

E) Prescription (statute of limitations)

Debts prescribe after certain periods depending on the nature of the action and instrument. Determining the correct prescriptive period can be technical (written contract vs. other bases; when the cause of action accrued; interruptions by demand or acknowledgment).

F) Unconscionable interest/penalties

Even if the principal is due, the debtor may ask the court to reduce excessive charges.

G) Defenses unique to negotiable instruments (if applicable)

If the note is negotiable and transferred, defenses may differ depending on whether the holder is a “holder in due course.” This can limit certain personal defenses.

8) Civil Liability vs. Criminal Liability: Important Philippine Distinctions

A) “No imprisonment for debt”

The Philippine Constitution provides that no person shall be imprisoned for nonpayment of a debt. So, mere failure to pay a promissory note is not a crime.

B) When can criminal issues arise?

Criminal liability may arise only if there is a separate criminal act, not simply nonpayment—examples:

Bouncing checks (B.P. Blg. 22): If the debtor issued a check that bounced and the legal requirements are met, that is a separate offense from the loan itself.
Estafa (fraud): If the debt arose from deceit or misappropriation meeting the elements of estafa, criminal liability may attach. But simple loan default is generally treated as a civil matter.

Bottom line: Nonpayment under a promissory note is primarily civil breach, unless tied to conduct that independently satisfies criminal elements.

9) Demand Letters, Notices, and Why They Matter

Even if a note is already due, creditors commonly send a formal demand letter because it helps establish:

that the creditor demanded payment,
that the debtor refused/failed to pay,
the date from which default-related consequences may be claimed,
seriousness for settlement,
groundwork for attorney’s fees (where appropriate),
possible proof for B.P. 22 (if checks are involved).

A demand letter typically states:

amount due and breakdown (principal, interest, penalties),
basis (promissory note date/terms),
deadline to pay,
payment instructions,
reservation of rights to sue/foreclose.

10) Court Actions in the Philippines: Where and How Collection Happens

A) Small Claims (common for promissory-note cases)

Many promissory note disputes are filed as small claims (depending on the total amount and current rules). In small claims:

procedures are simplified,
lawyers may have limited roles (depending on the latest rules),
the goal is speedy resolution.

B) Regular civil action for collection

For larger or more complex claims (or where small claims isn’t available), creditors file a regular civil case for sum of money and damages.

C) Provisional remedies (in some cases)

If the creditor can show legal grounds, they might seek:

preliminary attachment (to secure assets),
injunction in limited contexts,
other remedies allowed by the Rules of Court.

D) Enforcement (execution, garnishment, levy)

Winning the case does not automatically produce payment. Enforcement may involve:

garnishment of bank accounts,
levy on properties,
sale at public auction,
collection from sureties, depending on documents.

11) Corporate, Partnership, and Individual Signatories: Who Is Liable?

Liability depends on who signed and how:

If an individual signs personally as maker → personal liability.
If a corporate officer signs clearly in a representative capacity and the company is the maker → corporate liability, generally not personal (unless the officer also signed as surety/co-maker).
If someone signs as co-maker → often treated as solidary (depending on wording).
If someone signs a suretyship → surety is usually directly and primarily liable (stronger than a guarantor in many setups).

Many Philippine promissory note packages include:

a promissory note + deed of suretyship,
co-maker language (“joint and several/solidary”),
authority board resolution (for corporate borrowing).

12) Common Drafting Clauses That Shape Breach and Remedies

If you’re reading or drafting a note, these clauses heavily affect outcomes:

Clear maturity date / payment schedule
Demand waiver (“no demand necessary”)
Interest rate and computation method
Penalty charges
Acceleration clause
Venue clause (where suit must be filed—subject to rules and public policy limits)
Attorney’s fees
Solidary liability / co-maker provisions
Governing law (Philippines)
Security documents cross-default
Confession of judgment style clauses (generally problematic in PH practice; courts still require due process)

13) Practical Takeaways

Nonpayment when due is generally a breach of contract under Philippine civil law, actionable through civil collection (and foreclosure if secured).
Demand can be crucial, especially for “on demand” notes and for establishing default-related consequences.
Courts may enforce interest and penalties, but can reduce those deemed unconscionable.
Mere nonpayment is not a crime, but issuing bouncing checks or committing fraud can be.
The strongest outcomes depend on document quality (clear terms) and evidence (disbursement, demand, accounting).

14) Quick “If–Then” Guide

If the promissory note has a fixed due date and the debtor didn’t pay on that date, then it’s generally a breach and the creditor may sue for collection (plus valid charges).
If it’s payable “on demand” and there was no demand, then the debtor may argue the obligation wasn’t yet demandable.
If the note has extreme interest/penalty rates, then the court may still order payment of principal but reduce excessive add-ons.
If a surety/co-maker signed, then the creditor may proceed against them depending on the undertaking.
If the creditor has security (mortgage/chattel mortgage), then foreclosure may be available alongside or instead of collection, depending on the setup.

Important Note

This is general legal information in the Philippine context, not legal advice. If you want, paste the exact promissory note terms (remove names/IDs) and I can explain—based on its wording—when default occurs, what charges are likely enforceable, and what remedies are typically pursued.