Demand Letter for Unpaid Debt in the Philippines

A comprehensive legal guide & template

1. What a Demand Letter Is—and Why It Matters

A demand letter (also called an extrajudicial demand) is a formal written notice from a creditor telling a debtor:

The exact amount owed (principal, interest, penalties, costs);
The legal/factual grounds for the obligation;
A clear deadline to pay or negotiate; and
The consequences of ignoring the demand (e.g., civil suit, small-claims action, or even criminal charges such as B.P. 22).

Although Philippine law does not require a demand letter before filing a civil complaint, sending one is almost always advisable because it:

Places the debtor in legal delay (mora) under Article 1169 of the Civil Code;
Interrupts prescription (running of the statute of limitations) under Article 1155;
Shows good faith and can reduce court congestion (mandatory under Barangay Justice and Small Claims rules);
Satisfies statutory prerequisites for certain cases (e.g., B.P. 22 “Bouncing Checks” and estafa under Art. 315 par. 2 of the Revised Penal Code); and
Serves as documentary evidence of efforts to settle.

2. Governing Laws & Doctrines

Area	Key Provisions & Cases	Take-aways
Civil Code	Arts. 1144-1150 (prescription), 1155 (interruption), 1169 (mora), 1305 (contracts)	Written demand stops prescription and makes debtor in delay, triggering interest & damages.
Interest	Nacar v. Gallery Frames (G.R. 189871, Aug 13 2013)	Legal interest if none is stipulated is 6 % p.a.
Small Claims	A.M. 08-8-7-SC, as amended (latest: OCA Cir. 45-2022)	For money claims ≤ ₱400,000, written demand is a required attachment.
B.P. 22 / Estafa	Sec. 1, B.P. 22; Abrigo v. Flores, G.R. 206617	Written notice of dishonor/demand within 90 days is jurisdictional.
Data Privacy	R.A. 10173, NPC Advisories	Creditor must handle personal data responsibly; disclose only what is necessary.

3. Formal Elements of an Effective Demand Letter

Header
- Letterhead or creditor’s full name, address, contact details
- Date (spell month to avoid ambiguity)
Inside Address
- Debtor’s full name (as it appears in the contract), address, e-mail/mobile
Subject Line (e.g., “Re: Final Demand for Payment – Loan dated 15 January 2024”)
Opening Salutation
- “Dear Mr./Ms. [Surname]:”
Narration of Facts
- Brief chronology—loan/grant of credit, due date(s), payments made (if any), default date
Statement of Obligation
- Amount due as of a specific date (show computation)
- Applicable interest rate (contractual or 6 % legal) and penalty clause
- Cite supporting documents (promissory note, invoices, checks)
Clear, Unequivocal Demand
- “We hereby demand that you pay the total amount of ₱‍___ within seven (7) calendar days of receipt of this letter.”
Consequences of Non-Compliance
- Civil remedies (suit, small-claims)
- Criminal remedies (B.P. 22, estafa) if applicable
- Accrual of further interest, costs, attorney’s fees
Settlement Options (optional but often strategic)
- Lump-sum discount, instalment plan, dation in payment, mediation referral
Demand for Reply
- “Kindly inform us in writing of your intentions before the deadline.”
Closing & Signature
- “Very truly yours,”
- Signature over printed name; title/position; Integrated Bar of the Philippines roll no. if counsel signs
Notary Block (optional but strengthens authenticity)
Enclosures & Attachments
- Copy of loan agreement, statement of account, dishonoured check, etc.
- Proof of previous reminders, if any

4. Service & Proof of Receipt

Method	Best Practice	Proof
Personal delivery	Hand letter to debtor; secure signature on duplicate copy	Signed “Received” copy or photograph of actual receipt
Registered mail (PhilPost)	Pay registry & secure registry receipt	Registry receipt + Return card (green card)
Private courier	LBC, J&T, etc. with tracking	Waybill + tracking print-out
E-mail / Messaging	Use debtor’s last known business e-mail or Viber/WhatsApp	Timestamped e-mail with read receipt or screenshot
Barangay notice	For residents in same barangay; satisfies Barangay Justice conciliation prerequisite	Certification to File Action (CFA) if settlement fails

Tip: Keep copies—scanned PDF plus the original. Courts often rely on these simple pieces of paper.

5. Timelines & Deadlines

Simple loan/credit card: 5-15 days is customary.
Post-dated check: 5 days from notice of dishonor (B.P. 22).
Small claims: at least one written demand 30 days before filing is ideal.
Prescription (Art. 1144):
- Written contracts – 10 years, but interrupted by written demand.
- Running resumes only after service is complete.

6. Drafting Tips & Common Pitfalls

Do	Don’t
Use objective, factual language.	Avoid insults, threats of violence—may expose you to grave coercion or libel.
Itemize amounts with dates & interest formula.	Guess figures; courts will strike down vague or unconscionable penalties.
Cite specific articles of law or contract clauses.	Cite irrelevant statutes; keep it concise.
Leave reasonable room for amicable settlement.	Make impossible demands (e.g., “Pay in 24 hours or else”).
Keep communication short & consistent (one channel).	Bombard the debtor—may be construed as harassment.

7. Sample Demand Letter Template

[Creditor’s Letterhead]

Date: 18 June 2025

[Debtor’s Name] [Address]

SUBJECT: Final Demand for Payment – Loan dated 15 January 2024

Dear Mr./Ms. ___,

On 15 January 2024 you executed a Promissory Note in our favor for ₱ 300,000.00, payable on or before 15 January 2025 with 12 % p.a. interest and 2 % per month penalty on any unpaid balance.

As of today, ₱ 300,000.00 principal plus ₱ 36,000.00 contractual interest and ₱ 6,000.00 penalty, or a total of ₱ 342,000.00, remains unpaid despite our two previous reminders dated 20 March 2025 and 30 April 2025.

We hereby make a final, irrevocable demand that you remit the full amount of ₱ 342,000.00 within seven (7) calendar days from receipt of this letter, or not later than 25 June 2025, by cash, manager’s check, or online transfer to BPI Acct. No. ____.

Failing such payment, we will be constrained to:

File the appropriate civil action (or small-claims case) to collect the debt, plus attorney’s fees and costs; and/or

Pursue criminal prosecution under Batas Pambansa Blg. 22 should the dishonoured check issued on 15 January 2025 remain unpaid.

In the interest of settlement, we are willing to discuss a lump-sum discount or a realistic instalment plan, provided you contact us in writing before the above deadline.

Kindly treat this matter with utmost urgency. Please direct any correspondence to undersigned counsel.

Very truly yours,

[Signature] Atty. ___ IBP No. ___ / PTR No. ___ / Roll No. ___

CC: [Debtor’s e-mail], [Barangay Chairman] Enclosures: Promissory Note, Statement of Account, Dishonoured Check

(This template may be copied verbatim, but always adapt the figures, deadlines, and legal provisions to your specific case.)

8. After Sending the Letter—Next Steps

Monitor delivery: Track mail or courier; secure the registry return card.
Wait out the deadline while preparing pleadings.
Follow-up call or e-mail (optional but useful for settlement).
Barangay Conciliation (for sums ≤ ₱400,000 if parties reside in the same barangay).
Small Claims (no lawyer required) or Regular Civil Action once demand period lapses.
Criminal filing for B.P. 22/estafa if elements are present.
Document everything—screenshots, call logs, proof of mailing.

9. Frequently Asked Questions

Question	Quick Answer
Must the demand letter be notarized?	Not required, but notarization converts it into a public document, giving it greater evidentiary weight.
Can I e-mail the letter only?	Yes, but combine with traditional service (registered mail/courier) for best coverage.
What if the debtor refuses to receive the letter?	Service is complete upon tender; record the attempt or ask the barangay official to serve.
Is a demand letter needed to sue?	Not in all civil cases, but courts may award damages only from time of mora, so written demand is prudent.
How long should I wait before suing?	Whatever deadline you set (commonly 5-15 days). Beyond that, you appear reasonable and can file anytime.

10. Key Take-aways

Precision—state amounts and deadlines clearly.
Evidence—keep proof of service to establish delay and interrupt prescription.
Compliance—observe B.P. 22 and Small Claims rules if they apply.
Professional tone—firm yet respectful to avoid potential counter-claims.
Timeliness—act within limitation periods; every written demand resets the prescriptive clock.

Crafted properly, a demand letter is more than just a piece of paper—it is a legal tool that can unlock settlement, justify interest and damages, and pave the way for speedy adjudication if litigation becomes unavoidable.