Legal Demand Letter for an Unpaid Personal Loan in the Philippines

A comprehensive practitioner-style explainer (2025 edition)

1. Why a demand letter matters

Purpose	Governing Authority	Practical Effect
Place the debtor in legal default (mora)	Civil Code Art. 1169 (debtor incurs delay only after judicial or extrajudicial demand, unless the obligation or law provides otherwise)	Begins running of default interest, penalty charges, and liability for damages.
Interrupt the prescriptive period	Civil Code Art. 1155	Resets the 6-year prescription for oral loans or 10-year prescription for written loans.
Prerequisite to suit / evidence of good faith	Rules of Court, Small-Claims Rule (A.M. 08-8-7-SC, as amended), BP 22 jurisprudence	Proves that amicable settlement was attempted and fixes a definite cause of action date.
Statutory notice for bounced checks	Batas Pambansa 22 (bouncing checks law)	A written notice of dishonor is indispensable before criminal liability attaches.
Compliance with fair-collection regulations	BSP Memorandum Cir. 1133 (2023) on third-party collections; RA 10365 AMLA amendments	Demonstrates lawful, non-harassing collection efforts.

Bottom line: A well-crafted demand letter is not mere formality—it is the switch that turns civil remedies on and opens (or sometimes closes) potential criminal doors.

2. Core legal framework

Obligations and Contracts (Civil Code) – Arts. 1155, 1169, 1306, 1953-1961 (simple loan or mutuum).
Rules of Court – Rule 6 (pleadings) & Rule 45 (appeal), plus A.M. 08-8-7-SC (small claims ≤ ₱400,000 as of April 11 2022).
BP 22 – Written notice of dishonor within 90 days from check date.
Estafa under Art. 315(2)(a) RPC – Fraudulent misrepresentation to borrow; extra caution—requires clear proof of deceit ab initio.
Interest rules – Old Usury Law (RA 2655) ceiling suspended by BSP Circ. 799 (2013), but unconscionable rates may be voided (Supreme Court in Castro v. Tan, G.R. 228720, June 19 2019).
Barangay conciliation – RA 7160 §§399-422: Mandatory if parties live in the same city/municipality (except where one is a corporation or the amount exceeds jurisdictional limits for small claims).

3. Form & substance checklist

Element	Good practice	Pitfalls
Heading	Lawyer’s letterhead or your full name & address; mark “WITHOUT PREJUDICE” if you want settlement talks protected.	Omitting return address (court cannot summons).
Statement of facts	Date & mode of loan, amount, interest, due date, any partial payments.	Mixing in unproven accusations (could be libelous).
Unequivocal demand	“Please pay ₱___ within ___ calendar days from receipt.”	Vague phrases like “ASAP” or “at your convenience”.
Legal basis	Cite Civil Code Art. 1169; for BP 22 mention “written notice of dishonor pursuant to BP 22 §2”.	Threatening imprisonment for purely civil debt (violates Art. III §20 Constitution).
Consequences on non-payment	“Otherwise, we shall be constrained to file a civil action and/or avail of provisional remedies at your cost.”	Harassing language, public shaming, or disclosure to third parties (Data Privacy Act, Fair Debt Collection rules).
Deadline	Common practice: 5-15 days. For BP 22, courts accept as short as 5 days; safe window 10 days.	No deadline → debtor still not in default.
Mode of service	Personal service with signed acknowledgment; registered mail (Rule 13 §7); reputable courier; e-mail with read-receipt (E-Commerce Act RA 8792).	Ordinary mail alone (hard to prove receipt).
Attachments	Copy of promissory note, check(s), ledger of unpaid amounts.	Attaching documents containing sensitive personal data without redaction.
Signature & notarization	Lawyer’s e-signature or private individual’s signature. Notarization is optional but bolsters authenticity.	Notarizing without personal appearance (void notarization; possible admin liability).

4. How to serve—and prove it

Personal delivery – Best proof: debtor signs “Received” with date on duplicate original.
Registered mail – Keep registry receipt and Return Card (PS Form 387-A) or USPS-style “green card.”
Courier – Get official tracking manifest + screenshot of “delivered” status.
Email – Printout of sent items + server-generated delivery/read receipt; affidavit of IT custodian if needed.
Barangay referral – Lupon secretary’s certification of non-settlement (if required).

Practice tip: File a sworn affidavit of service when you later sue; courts routinely ask for it even in small-claims proceedings.

5. Timelines: when and how long

Scenario	Prescriptive period (Art. 1149-1150)	Effect of demand letter
Written loan (with promissory note or check)	10 years from default date	Extrajudicial demand interrupts and restarts the entire 10-year clock.
Oral loan	6 years	Same interrupting effect.
BP 22 filing	Within 4 years from check date and within 2 years from written notice of dishonor	Demand letter containing notice of dishonor satisfies BP 22 requirement if made within 90 days of check date.

6. After the deadline—available remedies

Renegotiation / restructuring – Often cheaper; agreement should be in writing & notarized.
Small-Claims Case – File Statement of Claim (Form 1-SC) at MTC/MeTC. No lawyer’s appearance fees. Decision within 30 days.
Ordinary civil action – Complaint for Sum of Money; can pray for (a) interest, (b) liquidated damages, (c) attorney’s fees (Art. 2208).
Provisional remedies – Writ of attachment (Rule 57) if debtor is about to abscond or dispose of assets fraudulently.
Special civil action for replevin – If debtor retains pledged movable collateral.
Criminal options
- BP 22 – For dishonored check used to pay the loan.
- Estafa – Only if deceit existed at the very inception of the loan (e.g., borrower pawns a fake title). Mere non-payment ≠ estafa.
Alternative dispute resolution – Parties may opt for mediation (JDR) or private arbitration; write this into any restructuring agreement.

7. Template (fill-in-the-blanks)

[Law Office / Sender Address]
[Date]

Via Personal & Registered Mail
[Borrower Name]
[Borrower Address]

Re: FINAL DEMAND – ₱ [Amount] Personal Loan Dated [Date]

Dear [Mr./Ms. Borrower]:

On [date of loan], you borrowed ₱ [principal] from [lender], payable on [maturity date], with interest at [rate]% per annum. You have failed to pay despite previous reminders.

As of today, your outstanding obligation is ₱ [principal + accrued interest], itemized in the attached Statement of Account.

Pursuant to Article 1169 of the Civil Code, this letter serves as our final extrajudicial demand. Kindly pay ₱ [total] within ten (10) calendar days from receipt hereof, on or before [specific date], either in cash or via bank transfer to [account details].

Failure to comply will leave us no alternative but to file the appropriate civil and/or criminal actions, including—but not limited to—(a) a collection suit with application for attachment and (b) prosecution under Batas Pambansa 22 for any dishonored checks, without further notice.

This demand is made without prejudice to any other rights and remedies under the law.

Very truly yours,
[Signature]
[Name of Counsel / Lender]

cc: File

8. Common pitfalls and how to avoid them

Pitfall	Consequence	Fix
Using threats like “You will go to jail for not paying” where no dishonored check exists.	Possible criminal charge for grave threats / unfair collection.	State consequences factually (“we shall file suit”).
Charging interest > 6% per month without written consent.	Court may void interest, apply legal rate (6% p.a. as of Nacar v. Gallery Frames, G.R. 189871, Aug 13 2013).	Put interest in writing; ensure rate is reasonable.
No proof of delivery.	Case dismissed for failure to prove default; BP 22 case quashed.	Always send by registered mail and keep the registry receipt.
Skipping barangay conciliation when required.	Complaint dismissed for lack of cause of action; clock keeps ticking.	Secure Certificate to File Action (§418 LGC).

9. Frequently-asked questions

Question	Short answer
Must the letter be notarized?	Not required, but notarization eliminates authenticity disputes.
Can I email the letter instead?	Yes; RA 8792 recognizes e-documents. Preserve proof of transmittal/receipt.
What if the debtor is abroad?	Send by courier/email; you may sue where you reside if venue clause exists; otherwise, sue where loan was perfected. Reach assets via attachment or enforcement under Rule 39 across jurisdictions.
How long should I wait after the deadline?	You may file suit the next day; courts favor swift action showing diligence.
Can I report the debt to a credit bureau?	If transaction is covered by the Credit Information System Act (RA 9510) and you are an accredited entity; otherwise, obtain debtor’s written consent (Data Privacy Act).

10. Practical drafting tips

Keep tone professional. Courts find overly aggressive letters indicative of bad faith.
Attach computation sheet. Transparency forestalls “contested amount” defenses.
Mind data privacy. Do not CC employers or social-media tag the debtor.
Use “final demand”. Earlier soft follow-ups are okay, but the final demand triggers default.
Review collection agency rules if you outsource—BSP-registered, no “shaming” tactics.

Conclusion

A Philippine legal demand letter for unpaid personal loans is more than a courtesy notice—it is a strategic document anchored in the Civil Code, procedural rules, and special laws like BP 22. Draft it precisely, serve it properly, and you lay solid groundwork for either amicable settlement or decisive litigation. Poorly handled, you risk prescription, dismissal, or even liability for unfair collection. Follow the checklist above, and you convert a simple piece of paper into your strongest first weapon—or olive branch—in debt recovery.

This article is for educational purposes only and does not create an attorney-client relationship. For advice on your specific situation, consult a Philippine lawyer.