1) What “unpaid goods” claims usually look like

In Philippine commercial practice, a “claim for unpaid goods” typically arises when:

A seller delivered goods to a buyer (often a business) under a sale or supply arrangement; and
The buyer failed to pay the price (in full or on time), or a payment instrument (e.g., check) was dishonored.

Most disputes are straightforward collection cases—but the legal strategy changes depending on (a) contract terms, (b) whether ownership/title passed, (c) whether the seller can still control the goods, and (d) whether the seller wants purely civil recovery or also considers criminal remedies (e.g., bouncing checks).

2) Core legal framework

A. Civil Code (Obligations & Contracts; Sales)

Unpaid goods claims are anchored on:

Obligations and Contracts (binding force of contracts; breach; damages)
Sales (delivery, transfer of ownership, remedies of seller/buyer)
Rules on interest, damages, attorney’s fees (when recoverable)

B. Civil Procedure (how you sue)

Claims are enforced through:

Small Claims (if within the ceiling and purely for money)
Ordinary civil actions (collection of sum of money / breach of contract)
Provisional remedies (e.g., attachment) in appropriate cases

C. Special commercial laws (sometimes relevant)

Depending on how the transaction was structured:

Batas Pambansa Blg. 22 (BP 22) for bouncing checks
Revised Penal Code (Estafa) in narrow circumstances (more demanding elements than BP 22)
Trust Receipts Law (P.D. 115) where goods are released under a trust receipt arrangement
Negotiable Instruments Law (if notes/checks are central)
Insolvency/rehabilitation/liquidation rules if the buyer is financially distressed

3) Identify your transaction first (this drives the remedy)

A. Was it a simple sale?

Typical paperwork: quotation, purchase order (PO), invoice, delivery receipt (DR), acknowledgment receipt, statement of account.

Key questions:

Was there a valid contract of sale (or supply agreement)?
Were goods delivered and accepted?
Did ownership/title pass already?

B. Is it a supply agreement with multiple deliveries?

Common in FMCG, construction supplies, manufacturing inputs. Often includes:

Credit terms (e.g., “30/60/90 days”)
Interest clauses
Penalties/liquidated damages
Return/replacement rules
Dispute resolution, venue

C. Consignment?

In true consignment, ownership often stays with the consignor until sold; non-payment issues may look like accounting/remittance failures rather than a simple sale.

D. COD vs. credit

COD: non-payment is usually a delivery refusal issue, not a credit collection issue.
Credit: collection suit is common; seller may add interest and damages if proven/allowed.

E. Title-retention / “reservation of ownership” (often seen in installment-type deals)

If the contract clearly reserves ownership until full payment, your remedies may include recovery of the goods (subject to the exact arrangement and compliance with legal/contractual requirements).

4) Evidence: what wins (or loses) unpaid goods cases

Courts decide collection cases on proof of:

Obligation (there was a contract / purchase orders accepted), and
Breach (non-payment despite delivery), and
Amount due (principal + allowable add-ons)

Best evidence checklist (practical)

Signed Purchase Orders or buyer’s written acceptance of quotations
Sales invoices aligned with PO terms
Delivery Receipts signed by authorized personnel (name, position, date)
Proof of authority of the signatory (IDs, authorization letters, past practice, company stamp)
Statements of account and aging
Demand letter(s) and proof of receipt (courier, email trail)
Partial payment proofs (bank records, ORs) to show acknowledgment of the debt
If checks were issued: copies of checks, dishonor memo, and statutory notice of dishonor for BP 22

Common defense you must anticipate: “We did not receive the goods” / “Wrong quantity” / “Defective goods” / “Unauthorized signatory.” You counter with clean documentation and consistent business records.

5) Substantive remedies of the seller under Philippine sales law

Even before filing suit, sales law recognizes seller protections—especially if the seller is “unpaid.”

A. Demand payment (primary civil remedy)

The most common route is a collection claim: compel payment of the price plus damages/interest as allowed.

B. Unpaid seller remedies relating to the goods

Depending on whether the seller still has possession/control or the goods are in transit:

Seller’s lien (retain the goods while unpaid, in certain situations)
Stoppage in transitu (stop goods in transit upon buyer’s insolvency, subject to conditions)
Resale (under conditions; often requires notice)
Rescission (in some cases; subject to the contract and law)

These are fact-sensitive. In practice, many sellers lose leverage once goods are delivered and mixed into the buyer’s inventory or used in production. Contract drafting (title-retention, security, clear credit terms) matters.

C. Suspend further deliveries

Commercially important: if your contract allows it (or if the buyer is in default), you can typically withhold future deliveries to mitigate loss and avoid increasing exposure.

6) Pre-suit steps that materially affect outcomes

A. Send a proper demand letter

A demand letter is not always legally required to file a case, but it is often crucial for:

Establishing delay (mora) and triggering potential interest
Supporting claims for damages
Creating a clean paper trail and settlement opportunity

A good demand letter includes:

Transaction summary (POs, DRs, invoices)
Total amount due and due dates
Final deadline to pay
Payment instructions
Notice that legal action will be filed if unpaid
If checks bounced: include dishonor details and a clear demand to pay within the statutory period for BP 22 compliance

B. Check for mandatory barangay conciliation (Katarungang Pambarangay)

Some disputes between individuals living in the same locality may require barangay conciliation first. However, many commercial disputes involve juridical entities (corporations) or parties in different locations, and numerous categories are exempt. Because applicability is highly fact-based, parties typically verify this early—filing in court without required conciliation can cause dismissal.

C. Review venue, jurisdiction, and arbitration clauses

Venue clauses (e.g., “exclusive venue in Makati”) are common and often enforced if properly drafted.
Some supply contracts include arbitration; filing in court despite a valid arbitration agreement can lead to dismissal/stay.

7) Choosing the correct forum: Small Claims vs. Regular Court

A. Small Claims (fastest for pure money claims)

If your claim is:

A sum of money,
Based on contract/credit, and
Within the small claims ceiling (which can change over time),

Small Claims is usually the most efficient:

No lawyers typically appear for parties (with limited exceptions)
Summary process
Focused on documentation

Limitations: Small Claims is not ideal if you need complex relief (e.g., rescission with complicated issues, extensive evidence disputes, corporate authority conflicts requiring full trial).

B. Ordinary civil action (collection / breach of contract)

If above the ceiling or complex:

File an action for collection of sum of money / damages / breach of contract
This proceeds through pleadings, possible mediation/JDR, then trial if needed

Key practical point: Many collection cases settle during court-annexed mediation if the documentation is strong and the debtor has capacity.

8) What you can recover (and what you usually can’t)

A. Principal (purchase price)

This is the core: unpaid invoices/POs/DRs.

B. Interest

Two main types:

Stipulated interest (if the contract clearly provides it and it is not illegal/unconscionable)
Legal interest (if no valid stipulation, courts may impose legal interest as damages for delay once properly demanded)

Philippine jurisprudence has evolved on interest computation; modern rulings generally apply a 6% per annum legal interest framework for many monetary judgments (subject to the timeline of the obligation and court guidance). Computation can depend on when the obligation became due and when demand was made.

C. Penalties / liquidated damages

Recoverable if:

Clearly written in the contract, and
Not unconscionable; courts may reduce excessive penalties

D. Attorney’s fees and litigation expenses

Not automatically recoverable. Courts award attorney’s fees only when justified by law/contract and supported by facts (e.g., bad faith, compelled litigation, or a valid contractual stipulation).

E. Consequential damages / lost profits

Possible but harder—requires proof, causation, and that damages were within the parties’ contemplation.

9) Provisional remedies: securing your claim before judgment

If you have reason to fear the debtor will hide assets or abscond, you may consider preliminary attachment in a proper case. Attachment is powerful but requires:

A legally recognized ground,
Verified allegations, and
Posting of a bond

It can pressure settlement, but misuse can backfire due to damages for wrongful attachment.

Other tools can include:

Replevin (if the action involves recovery of specific personal property—more relevant when title-retention or ownership remains with the seller and the goods are identifiable)
Post-judgment remedies like execution and garnishment once you win

10) If payment was by check: civil + possible criminal options

A. BP 22 (Bouncing Checks)

If the buyer issued a check that was dishonored, BP 22 may apply if procedural requirements are met (notably the notice of dishonor and the chance to pay within the statutory period). BP 22 is often used because it focuses on the act of issuing a bouncing check.

B. Estafa (fraud)

Estafa is more difficult than BP 22 because it generally requires proof of deceit and damage under specific modes. Not every unpaid invoice becomes estafa; using criminal process as a collection shortcut is risky if elements are absent.

C. Civil action remains available

Even if you pursue BP 22, you still often need a civil collection strategy to actually recover money—criminal conviction does not automatically guarantee recovery without enforceable civil awards and assets.

11) When the buyer is insolvent, in rehabilitation, or liquidation

If the buyer is in a court-supervised financial proceeding:

Individual collection suits may be stayed (depending on the proceeding and court orders)
You may need to file your claim with the rehabilitation receiver/liquidator
Priority, set-off, and security interests become critical

This is where advance structuring matters: credit insurance, security, title-retention (where enforceable), bank guarantees, letters of credit, or trust receipts.

12) Prescription (deadlines): don’t sleep on your claim

Civil actions prescribe. Common guideposts under the Civil Code include:

10 years for actions upon a written contract
6 years for actions upon an oral contract
Different periods may apply depending on the specific cause of action (and how the obligation is evidenced)

In practice, each invoice/delivery may have its own due date; prescription analysis can be technical, especially if there were partial payments, acknowledgments, novations, or restructuring.

13) Typical defenses—and how sellers prepare

No delivery / incomplete delivery
- Counter: signed DRs, receiving reports, courier proof, inventory logs
Defects / breach of warranty
- Counter: inspection/acceptance records, return policies, timeliness of complaints, technical reports
Set-off / counterclaims (e.g., alleged damages from late delivery)
- Counter: contract terms, proof of performance, mitigation, correspondence
Unauthorized signatory
- Counter: prior dealings, authority documents, company stamps, course of conduct, email confirmations
Payment already made
- Counter: bank records, ORs, reconciliation schedules

14) Practical playbook: from unpaid invoice to recovery

Step 1: Internal reconciliation

Match PO → invoice → DR → due date → payments
Confirm the exact amount and attach supporting documents

Step 2: Formal demand

Send demand with a ledger and copies of key documents
Set a clear deadline and payment options

Step 3: Escalate leverage (commercial + legal)

Suspend further deliveries (if allowed)
Negotiate structured settlement with security (post-dated checks, personal guarantee, collateral)

Step 4: Choose forum

Small Claims if eligible and purely for money
Otherwise collection suit in regular court (and consider attachment if warranted)

Step 5: Execute once you win

Garnish bank accounts, attach receivables, levy property—execution is where many “paper wins” become real money

15) Prevention: contract and credit controls that reduce unpaid goods disputes

Written credit application with verified signatories
Clear credit terms, default interest, penalties, and suspension rights
Personal guarantees (where commercially appropriate)
Security: chattel mortgage, pledge, surety bond, bank guarantee, L/C, trust receipt structure (when applicable)
Tight delivery documentation: printed names, signatures, IDs, photos, geo-tagging (if used), receiving stamps
Clear returns/warranty process with deadlines
Regular aging review and credit limit enforcement

16) Summary: the “all you need to know” in one view

Unpaid goods claims are primarily civil collection actions grounded on contracts and sales.
Your outcome depends heavily on documentation (PO/DR/invoice/demand).
The seller may have additional unpaid seller remedies tied to possession/transit and contract structure, but these weaken after delivery and commingling.
Small Claims can be efficient for qualifying monetary claims; otherwise use ordinary collection suits.
Interest, penalties, and attorney’s fees are not automatic—they depend on valid stipulation and proof.
If checks bounced, BP 22 may be available if procedural steps are correct.
If the buyer is insolvent or under court proceedings, you may need to file claims in that process rather than pursue separate suits.
Prevention is cheaper than litigation: strong terms, disciplined credit control, and airtight receiving documentation.

If you want, paste (a) your payment terms clause and (b) a sample PO/DR/invoice set (redact names and amounts if needed), and I’ll map the strongest filing strategy and the likely defenses for that fact pattern.