1) Why promissory notes show up in hospital billing

In the Philippines, hospitals sometimes allow a patient (or a relative) to leave the facility even when the bill is not yet fully paid by requiring a promissory note (PN)—a written promise to pay a stated amount on a stated schedule. In practice, a hospital PN may be used to:

document an unpaid balance after partial payment, PhilHealth/HMO processing, or discounts;
support installment payments;
obtain a co-maker/guarantor commitment (often a family member);
replace or supplement post-dated checks (PDCs) or other payment undertakings.

Legally, a hospital PN is usually treated as (a) a contract and (b) evidence of a debt. Sometimes it may also qualify as a negotiable instrument under the Negotiable Instruments Law—an important distinction explained below.

2) Core legal framework (Philippine context)

Several bodies of law commonly matter when a PN is used for hospital bills:

A. Civil Code (Obligations and Contracts)

Key principles that govern PNs as contracts:

Consent, object, and cause/consideration are required for a valid contract.
Vitiated consent (e.g., intimidation/undue influence) can make an agreement voidable.
Stipulations (interest, penalties, attorney’s fees, acceleration clauses) are generally enforceable if lawful and not unconscionable, subject to judicial reduction in appropriate cases.
Interest is not demandable unless expressly stipulated in writing (Civil Code principle on interest).

B. Negotiable Instruments Law (Act No. 2031)

A PN that meets statutory requirements can become a negotiable instrument, which affects:

whether the note can be transferred easily (e.g., via endorsement);
whether a transferee can become a holder in due course and enforce payment with fewer defenses available to the signer.

Many hospital PNs are drafted not to be negotiable, but some are.

C. Health-related statutes impacting collection practices

Two statutes are especially relevant to the “discharge vs. payment” dynamic:

Republic Act No. 8344 (Anti-Hospital Deposit Law), as amended (commonly associated with later strengthening measures): requires hospitals to provide emergency care without demanding deposits as a precondition in covered emergency/serious cases.
Republic Act No. 9439: prohibits detention of patients in hospitals/clinics on the ground of nonpayment of hospital bills/medical expenses.

These laws shape what hospitals may lawfully do when a patient cannot pay immediately—and therefore shape the circumstances in which a PN is requested or signed.

D. Constitutional principle: no imprisonment for debt

The Constitution prohibits imprisonment for nonpayment of debt. A hospital bill (and a PN for it) is generally civil in nature. Important nuance: separate criminal laws may apply if a person issues a bouncing check (B.P. Blg. 22) or commits fraud/estafa—so the “civil debt” principle does not immunize misconduct involving checks or deceit.

E. Rules on court enforcement and procedure

Enforcement typically proceeds through collection suits, often under streamlined procedures (e.g., small claims where applicable, subject to jurisdictional limits and current rules).

F. Data Privacy Act of 2012 (R.A. 10173)

Hospitals and collection agents handling patient and billing information must observe lawful processing, proportionality, security safeguards, and proper disclosure practices.

3) Promissory note basics: contract vs. negotiable instrument

A. As a contract (most common)

A hospital PN is enforceable like any written agreement if:

the parties have capacity and valid consent;
the obligation is lawful and sufficiently certain (amount, due date/schedule);
the terms are not contrary to law, morals, good customs, public order, or public policy.

B. As a negotiable promissory note (special consequences)

A PN becomes negotiable only if it satisfies statutory requirements (in simplified terms):

in writing and signed by the maker;
unconditional promise to pay;
sum certain in money;
payable on demand or at a fixed/determinable future time; and
payable to order or bearer (language matters).

Why this matters: If negotiable and transferred to a holder in due course, the signer may lose certain defenses that would otherwise be available against the original hospital (e.g., some disputes about underlying charges). Real defenses (e.g., forgery, certain illegality, lack of capacity) may still apply, but many “personal defenses” may be cut off.

Common drafting pivot: A note payable simply to “ABC Hospital” (without “to the order of” and without bearer language) is often non-negotiable. But it may still be assignable as a credit/receivable.

C. “Not negotiable” labels

Writing “NOT NEGOTIABLE” may help show intent, but negotiability is primarily determined by statutory elements and the instrument’s text. Even non-negotiable notes can be assigned; assignment does not create a holder in due course, but it can still shift who collects.

4) Relationship between the hospital bill and the promissory note

A hospital bill arises from a service relationship (express or implied contract for medical services and related facility charges). A PN is often executed later to document the unpaid balance and set payment terms.

A. Does the PN “replace” the hospital bill?

Sometimes a PN is treated as:

additional evidence of the same obligation (the bill remains relevant); or
a new agreement that may modify terms (installments, interest, penalties).

Under Civil Code principles, novation is not presumed. A PN does not automatically extinguish the original obligation unless the parties clearly intended a novation (expressly or by incompatibility of obligations).

Practical effect:

Even with a PN, disputes about billing accuracy or prohibited charges may still be raised unless the PN was meant to be a full settlement/compromise with clear waiver language—though even waivers can be challenged if contrary to law or public policy.

B. A PN executed under pressure

If a PN is signed under circumstances that undermine free consent (e.g., intimidation, undue influence), it may be voidable. This is fact-sensitive and depends on evidence. The legal environment created by R.A. 9439 (no detention) is relevant to evaluating whether “pressure” crossed into unlawful coercion.

5) Patient discharge, “detention,” and promissory notes

A. No detention for nonpayment (R.A. 9439)

Hospitals generally cannot detain patients solely because of unpaid bills. In practice, “detention” concerns may arise not only from physical restraint but also from actions that effectively prevent a patient from leaving.

A PN is sometimes presented as the hospital’s “middle ground”: the hospital releases the patient while preserving a written claim.

B. Emergency care and deposits (R.A. 8344 and related amendments)

Hospitals must provide emergency treatment in covered situations without requiring deposit as a precondition. A PN should not be used as a workaround to deny or delay emergency care.

C. What hospitals can still do

Even if detention is prohibited, hospitals generally may:

bill and collect through lawful means;
require reasonable internal billing steps before release of certain administrative clearances (this area is often contentious in practice);
pursue civil remedies after discharge.

The safest compliance posture is for hospitals to avoid using a PN as leverage that resembles detention, and instead treat it as a voluntary credit arrangement.

6) Who signs the promissory note—and why it matters

Hospital PNs often involve more than one signer:

A. Patient as maker

If competent, the patient may sign as the principal debtor.

B. Relative as co-maker (solidary debtor)

Hospitals commonly ask a relative to sign as co-maker. This often creates solidary liability—meaning the hospital can demand full payment from either debtor, not merely a proportional share.

High-impact point: Many signers assume co-maker means “witness” or “backup.” Legally, it can mean primary, direct liability.

C. Guarantor vs. surety vs. accommodation party

Guarantor: liable only if the principal debtor fails and often after exhaustion of remedies, depending on terms and law.
Surety: typically bound solidarily with the principal; the creditor may proceed directly against the surety.
Accommodation party (Negotiable Instruments Law concept): someone who signs to lend their credit without receiving value; still liable to a holder for value.

Hospital forms often use “co-maker” language that functions like suretyship/solidary obligation.

D. Spousal consent and property implications

If a married person signs, liability may implicate:

the signer’s separate property; and possibly
the community/conjugal property depending on the property regime and whether the obligation benefited the family.

This is legally nuanced and fact-specific (marriage date, regime, who incurred the obligation, and for whose benefit).

E. Capacity issues (minors, incapacitated patients)

A minor or legally incapacitated person generally cannot bind themselves fully; a parent/guardian may need to sign, and enforceability can vary depending on authority and circumstances.

7) Key terms found in hospital promissory notes (and the legal issues they raise)

A. Principal amount (the “sum certain”)

The PN should clearly state:

total unpaid balance;
what it covers (room, professional fees, medicines, supplies, diagnostics);
whether it is final or subject to adjustment (e.g., pending PhilHealth/HMO).

Risk point: Signing a PN for an amount “to be determined” or leaving blanks can create disputes and potential abuse.

B. Payment schedule and due dates

Installment terms should specify:

installment amounts;
due dates;
mode of payment and where to pay;
how partial payments are applied (principal vs. interest/penalties).

C. Interest

Civil law principle: interest must be expressly stipulated in writing to be demandable as interest (not merely implied).

Common clauses:

“Interest of X% per month until fully paid.”

Enforceability issues:

If the rate is unconscionable, courts may reduce it.
If no interest is validly stipulated, courts may impose legal interest in appropriate situations (often tied to delay and demand).

D. Penalty charges and liquidated damages

Penalty clauses (“X% penalty per month for late payments”) may be enforced but can be equitably reduced if iniquitous or unconscionable.

E. Acceleration clause

A common clause: “Failure to pay any installment makes the entire balance due immediately.”

Generally enforceable, but application may be scrutinized for fairness, notice, and consistency with consumer/public policy considerations.

F. Attorney’s fees and collection costs

Clauses often state a fixed percentage (e.g., 10%–25%) as attorney’s fees.

Courts typically require attorney’s fees to be reasonable and may reduce excessive amounts. In litigation, attorney’s fees are not automatically granted even if demanded; they must be justified and fall within legal bases.

G. Venue and jurisdiction clauses

Some forms dictate where suit must be filed. Courts may enforce venue stipulations in certain civil cases, but consumer/public policy and procedural rules can affect enforceability.

H. Waivers and “hold harmless” language

Some PNs include broad waivers (e.g., waiving defenses, waiving confidentiality, consenting to disclosure to collection agents). Waivers that conflict with law (including data privacy norms or prohibitions on unlawful practices) may be challenged.

8) Documentary Stamp Tax (DST): often overlooked

Promissory notes and similar debt instruments are commonly within the scope of documentary stamp tax rules under the National Internal Revenue Code. Practical points:

Liability for DST can be allocated by agreement (payer vs. creditor), but tax law determines who is legally responsible in particular cases.
Lack of proper stamping does not necessarily void the note, but it can create admissibility and compliance complications until tax is paid.

Because DST rates and implementing details can change, the safest treatment is to recognize DST as a potential compliance issue for formal enforcement.

9) Collection and enforcement: what happens if the PN is not paid

A. Demand and default

Many PNs require written demand before default consequences apply. Even when not required by the text, a demand letter helps establish:

date of delay (mora);
basis for interest/penalties tied to default;
evidence of good-faith collection.

B. Civil action for collection of sum of money

Hospitals typically pursue:

small claims procedure when the claim falls within current limits and qualifies; or
regular civil action when larger, more complex, or involving additional relief.

Small claims is designed to be faster and usually limits lawyer participation, but exact coverage depends on the prevailing rules.

C. Evidence typically used in court

signed PN (original);
itemized billing statement and final statement of account;
proof of services (admission forms, charge slips, delivery receipts for supplies/meds, etc.);
proof of demands and nonpayment;
proof of authority if signed by representative.

D. Assignment to collection agencies

Hospitals may outsource collection or assign receivables. Assignment generally transfers the right to collect, subject to defenses available against the assignor (unlike holder-in-due-course protection for negotiable instruments).

E. Credit reporting considerations

Credit reporting and sharing of debt information may implicate:

Data Privacy Act requirements; and
the Credit Information System framework (where applicable).

Disclosure should be lawful, proportionate, and properly secured.

10) Criminal law “threats” sometimes raised in collections—and the real boundary

A. Nonpayment of a hospital bill is generally not a crime

A PN is usually a civil obligation. Threats of jail purely for unpaid debt are legally problematic given the constitutional ban on imprisonment for debt.

B. The major exception: bouncing checks (B.P. Blg. 22)

If payment is made via check that bounces, liability can arise under B.P. Blg. 22, which is criminal. This is why hospitals sometimes prefer PNs over PDCs, and why signers should be cautious about issuing checks they cannot fund.

C. Estafa/fraud (Revised Penal Code)

Criminal fraud requires deceit and other elements; mere inability to pay is not automatically estafa. Still, misrepresentations tied to obtaining services can create risk in extreme scenarios.

D. Unlawful or abusive collection behavior

Harassment, threats, or public shaming can expose collectors to civil and/or criminal liabilities depending on conduct (and can implicate privacy obligations). Collection must remain lawful.

11) Common defenses and dispute points in hospital PN cases

Even with a signed PN, the following issues can matter:

A. Billing disputes and prohibited charges

duplicate charging;
charging for unused supplies;
professional fees inconsistent with disclosed arrangements;
charges prohibited or limited by PhilHealth policies (e.g., cases covered by “no balance billing” rules where applicable).

B. Lack of valid consent / vitiated consent

Evidence of intimidation or undue influence can render consent defective.

C. Unconscionable interest/penalties/fees

Courts may reduce excessive interest and penalty provisions.

D. Payments not credited / improper application of payments

Disputes often arise from how payments were applied (e.g., penalties first vs. principal first).

E. Prescription (statute of limitations)

Actions based on written contracts commonly prescribe after a period provided by law (often 10 years for written contracts under Civil Code principles). Timing issues can become critical, especially if the debt is old and collection resurfaces later.

12) Practical drafting and review checklist (hospital PN for bills)

A legally safer PN—especially for a setting as sensitive as medical discharge—typically has:

Complete party identification
- full names, addresses, IDs; relationship of co-maker to patient.
Clear principal amount and basis
- attach or reference an itemized bill;
- specify whether the amount is final or subject to PhilHealth/HMO adjustments.
Definite payment terms
- due dates, installment amounts, grace periods, payment channels.
Interest and penalties stated clearly
- interest only if truly intended; avoid compounding surprises;
- penalties proportionate and explainable.
Default and acceleration terms
- specify whether demand is needed and how it is served.
Co-maker/surety language stated plainly
- if the intent is solidary liability, say it explicitly—ambiguity breeds litigation.
Data privacy and disclosures
- limit disclosures to what is necessary for billing/collection; secure personal data.
No blanks, no handwritten add-ons without countersignature
- blanks invite disputes; changes should be initialed by all relevant signers.
Receipts and reconciliation
- require receipts for each payment and periodic statements of account.
Separate acknowledgment of patient rights

especially important where release/discharge is concerned under R.A. 9439.

13) Alternatives to a promissory note (often used in practice)

Depending on circumstance, hospitals and patients sometimes use:

installment agreement (non-negotiable, more like a standard contract);
guaranty/surety agreement separate from the billing statement;
post-dated checks (higher risk due to B.P. 22);
social service/charity assistance pathways (particularly in public hospitals);
government assistance channels (e.g., Malasakit Centers in covered facilities, and other medical assistance mechanisms where available).

The legal risk profile differs significantly across these options, especially regarding criminal exposure (checks) and negotiability (some PNs).

14) Bottom line: what a hospital promissory note is and is not in Philippine law

A hospital PN is primarily a written obligation to pay and a tool for structured settlement of unpaid medical bills.
It can be enforced through civil collection, and in some forms it can be treated as a negotiable instrument with stronger enforcement consequences if transferred.
It should not be used (or perceived) as a substitute for lawful discharge practices: patients generally may not be detained for nonpayment, and emergency care rules limit deposit demands in covered cases.
The most frequent legal flashpoints are co-maker liability, interest/penalty unconscionability, billing accuracy, consent under pressure, and privacy-compliant collections.