Demand Letter Services in the Philippines — A 360-Degree Legal Guide
1. What is a Demand Letter?
A demand letter is a formal, written, extra-judicial notice by which a creditor (or would-be plaintiff/complainant) asks a person or entity to comply with a legal obligation—typically to pay a sum of money, deliver property, perform or cease an act—within a specified period, and warns of legal consequences upon default. Under Philippine civil law, such a written demand is called an “extrajudicial demand.” When properly served it (a) places the debtor in delay (mora) (Article 1169, Civil Code) and (b) interrupts prescription (Article 1155, Civil Code). (anethlawstudent.blogspot.com, Labor Law Philippines)
2. Why send one? — Core Purposes
| Purpose | Practical effect |
|---|---|
| Compliance trigger | Gives the debtor a final chance to comply and avoid suit, showing the court you acted in good faith. |
| Prescriptive-period safeguard | Resets or tolls the running of the statute of limitations. |
| Element of an offense / condition precedent | A legal requirement in B.P. 22 (bouncing-check law), small-claims cases, certain insurance and labor claims, & barangay conciliation. |
| Evidence of willful breach | Helps justify awards of interest, damages, or attorney’s fees later. |
In B.P. 22, for example, a written notice of dishonor/demand served within five (5) banking days is an essential element of the crime. (Atty. Robert Divinagracia)
3. Legal Foundations & Sector-Specific Rules
| Area | Key Authority | Effect of Demand Letter |
|---|---|---|
| Civil obligations | Arts. 1155 & 1169, Civil Code | Debtor’s delay begins; prescription interrupted. |
| Small Claims (≤ ₱500k) | A.M. 08-8-7-SC, latest 2022 amendments | Mandatory written demand within 30 days before filing; attach copy to the Statement of Claim. (RESPICIO & CO.) |
| Barangay (Katarungang Pambarangay) | RA 7160, §§399-422 | Demand letter often precedes the complaint filed with the Punong Barangay; periods here suspend the prescriptive period for both civil and criminal actions. (DILG Region 5) |
| Bouncing Checks (BP 22) | BP 22 §2; SC caselaw | Written notice + 5-day grace; non-compliance negates criminal liability. (Atty. Robert Divinagracia) |
| Estafa (Art. 315 RPC) | Not an element, but demand helps prove intent to defraud. | |
| Labor money claims | Art. 1155 via jurisprudence; DOLE SEnA rules | Demand letters interrupt prescription; may trigger SEnA mediation. |
| Insurance | Policy clauses & Sec. 439, Insurance Code | Written proof-of-loss / demand within stated period is condition precedent to filing suit. |
4. Drafting Standards: Form & Substance
- Heading & parties — full names, addresses, reference nos.
- Factual narrative — clear timeline, contracts or checks referenced.
- Legal basis — cite contract clauses, statutes, or case law.
- Specific demands — sum due (with computation), act to perform, or cessation of act.
- Deadline — reasonable: 5 – 15 days is common; statute-driven where applicable (e.g., 5 banking days under BP 22).
- Mode of payment/ performance.
- Consequences of default — suit, damages, interests, costs, criminal action if warranted.
- Signature — creditor or counsel; indicate IBP #, PTR #, Roll #, MCLE compliance if lawyer-signed.
- Attachments — photocopy of contract, dishonored check, statement of account, etc.
Tone & Ethics
Under the 2023 Code of Professional Responsibility and Accountability (CPRA), a lawyer “shall not, in demand letters or similar correspondence, make false representations or impute liability without factual or legal basis.” Violations expose counsel to discipline. (Supreme Court of the Philippines)
5. Who May Issue & Must It Be Notarized?
- Individual creditors may sign their own demand letters; notarization is optional (except where notarized proof is contractually required).
- Corporations act through authorized officers; attach board resolution or Secretary’s Certificate when demanded.
- Lawyers lend formality and ensure compliance with CPRA.
- Electronic notarization (A.M. 24-10-14-SC, 2025) now allows remote e-notarization of demand letters executed as PDF/PDF-A, giving the document the same evidentiary weight as a paper-notarized original. (Lexology)
6. Modes of Service & Proof
| Mode | Proof you should keep |
|---|---|
| Personal delivery | Signed “Received” copy or affidavit of server. |
| Registered mail / P.O. | Registry receipt + return card (or Track & Trace print-out). |
| Accredited courier | Airway bill, delivery report. |
| E-mail / e-service | Print-outs with server time-stamp + “read receipt”; expressly authorized by A.M. 19-10-20-SC for pleadings and, by analogy, demand letters. (Supreme Court of the Philippines) |
| Messaging apps (e.g., Viber) | Screenshot + affidavit; courts admit under the Rules on Electronic Evidence if authenticity is shown. |
7. Legal Effects of a Properly-Served Demand
- Constitutes extrajudicial demand → debtor in delay; interests & damages may start accruing.
- Interrupts prescription → clock resets (a fresh full period begins). Caselaw holds that interruption is not merely a pause but a restart. (Lawphil)
- Fulfils statutory condition (BP 22, small claims, etc.).
- Evidence of good faith → may reduce resistance fees; aids in recovery of attorney’s fees under Art. 2208 Civil Code.
8. Demand Letters Across Common Disputes
- Loan & credit card collections — establish debt and interrupt prescription; attach SOA.
- Lease ejectment — 30-day demand to vacate often required before barangay filing.
- Construction & supply contracts — triggers arbitration clause timelines.
- IP & anti-counterfeiting — cease-and-desist letters may avert expensive litigation.
- Labor quitclaims — employer demand to return property, else wage deduction.
9. Typical Timeline (Collections Example)
| Day | Action |
|---|---|
| 0 | Obligation falls due (e.g., loan maturity). |
| 30 | First courtesy reminder; interest per contract already running. |
| 60 | Demand Letter #1 (registered mail + e-mail); gives 10 days to pay. |
| 75 | No payment → Demand Letter #2 / final notice; threaten suit. |
| 90 | File barangay complaint (if parties reside in same city/municipality). |
| 120 | Secure Certificate to File Action → file Small Claims case with demand letter attached. |
10. Costs & Professional Fees
| Item | Typical range (Metro Manila) |
|---|---|
| Lawyer’s demand-letter package | ₱ 5 000 – ₱ 20 000 depending on complexity/volume. |
| Courier / registry mail | ₱ 200 – ₱ 800 per addressee (with return card). |
| Notarization | ₱ 200 – ₱ 500 (traditional); e-notary fees vary (₱ 1 000 up). |
| Process-server affidavit | ₱ 1 000 – ₱ 2 000 (if outsourced). |
11. Common Pitfalls & How to Avoid Them
| Pitfall | Prevention tip |
|---|---|
| Wrong addressee | Use latest barangay clearance or SEC General Information Sheet to verify address/officers. |
| Overstated threats | Stick to factual liabilities; cite statutes accurately (CPRA compliance). |
| Unspecific computation | Attach detailed SOA or interest schedule. |
| Failure to show receipt | Always choose a traceable mode and keep documentary proof. |
12. Frequently Asked Questions
Q: Does non-payment after a demand letter automatically make me criminally liable? A: Only if the law makes the demand an element (e.g., BP 22). For ordinary debts, it merely opens the door to civil suit.
Q: Must I go to the barangay first? A: If both parties are natural persons residing in the same city/municipality and the dispute is for ≤ ₱ 400 000 (now ₱ 500 000 in many areas), yes—except where the case is among the enumerated exclusions (e.g., labor, corporate). (RESPICIO & CO.)
Q: Will an e-mail demand interrupt prescription? A: Yes, provided authenticity and proper service are proven (under the Rules on Electronic Evidence and A.M. 19-10-20-SC). (Supreme Court of the Philippines)
Q: How long is “reasonable time” to comply? A: Jurisprudence accepts 10–15 days in commercial dealings; shorter statutory periods override (e.g., 5 banking days, BP 22).
13. Takeaways
A well-crafted, properly-served demand letter is the cheapest, quickest, and often legally indispensable gateway to vindicating rights in the Philippines. It:
- Positions you favorably for settlement or litigation,
- Protects you against prescription, and
- Promotes judicial economy—courts expect parties to try amicable settlement first.
Leverage the updated rules on e-service and electronic notarization to cut delay and cost, but never sacrifice ethical accuracy: a demand letter is as much a legal instrument as it is a persuasive communication. When in doubt, consult counsel; a few pesos spent today may save you millions—and years—in court tomorrow.