This article is for general information and education. It is not legal advice. For advice specific to your facts (especially amounts, venue, deadlines, and strategy), consult a Philippine lawyer.

Unpaid client payments are usually collected through a predictable escalation path:

Document the debt and attempt an amicable settlement (often required or strongly encouraged)
Send a well-built demand letter (to trigger payment, preserve evidence, and support interest/fees)
File a Small Claims case (fast, simplified, no lawyers, judgment is immediately final)
Enforce the judgment (writ of execution, garnishment/levy)

This article walks through each step in depth, with Philippine rules and practical checklists.

1) Understand What You’re Collecting: Debt vs. Dispute

Before sending anything, identify the legal nature of the unpaid amount:

A. Straight debt (easiest)

Client received the service/product
Invoice is due
No serious quality dispute, just delay or refusal to pay

B. Disputed performance (still collectible, but prepare evidence)

Client claims defects, delay, incomplete delivery, scope issues
You must prove what was agreed, what was delivered, and that payment is due

C. “Ghosting” after partial work (common in freelance/agency work)

You must prove engagement + milestones + acceptance/usage (emails, chats, signed proposals, PO, screenshots, delivery logs)

D. High-risk scenario: client alleges fraud/misrepresentation

Avoid aggressive accusations and threats; stay factual and evidence-driven

2) The Legal Foundations You’ll Use (Philippines)

Most unpaid invoices are collected under:

Civil Code (Obligations and Contracts): contracts have the force of law between parties; nonpayment is breach.
Damages/interest for delay: when a debtor is in delay (in default), the creditor can claim interest/damages under Civil Code principles.
E-Commerce Act (RA 8792): electronic data messages and electronic documents can be admissible—useful for email/chat-based deals.
Rules of Procedure for Small Claims Cases (Supreme Court): streamlined process for money claims within the threshold.

Prescription (time limits) matters

Common Civil Code guideposts:

Written contract: typically 10 years
Oral contract: typically 6 years
Other claims vary depending on the cause of action

Because prescription can get technical (and facts can change the classification), treat these as general anchors and assess early.

3) Pre-Collection Preparation: Build Your “Evidence Packet”

Even before a demand letter, assemble a file that could win in court.

Core documents

Contract, proposal, quotation, engagement letter, PO, or signed scope
Invoices and SOA (statement of account)
Proof of delivery/acceptance:
- Email confirmations
- Chat logs (Messenger/Viber/WhatsApp/Slack)
- Delivery receipts, trackers, screenshots, access logs
- Meeting minutes or approvals
Proof of partial payments (bank statements, e-wallet receipts)
Proof of follow-ups and acknowledgments

Practical tips for electronic proof

Export chats where possible
Screenshot with visible dates, names, and message context
Keep original files, metadata, and email headers if available
Printouts are often used in court; bring the originals/devices if needed to authenticate

Compute your claim cleanly

Prepare a one-page computation:

Principal (unpaid amount)
Interest (if contractual; if legal interest is claimed, compute from demand/default)
Penalties (only if in the contract)
Costs (filing fees, service costs—some may be recoverable in practice via execution)

4) Demand Letters: The Most Important Step

A demand letter is not just a “scare letter.” It does four strategic jobs:

Triggers default (delay) and supports claims for interest/damages
Shows good faith and reasonableness (important if the client later claims you were unfair)
Creates admissions if the client replies acknowledging the debt
Sets up Small Claims with a clear story and attachments

A. When to send a demand letter

Immediately after payment is overdue and a reminder cycle fails (e.g., 7–30 days past due)
After a final invoice following project completion
After failed settlement talks

B. Structure of an effective demand letter

A strong letter is factual, specific, and organized:

Heading and parties
- Your name/business name, address, contact details
- Client’s name/business, address
- Date
Reference
- Contract/proposal date
- Invoice numbers and dates
- Project name/milestones
Factual timeline
- What was agreed
- What was delivered
- What was billed
- What was paid (if any)
- What remains unpaid and since when
Demand
- Exact amount demanded
- Deadline (commonly 5–10 business days, depending on context)
- Payment instructions (bank details, reference number)
Interest/penalties/fees (only if valid)
- If your contract has an interest/penalty clause: cite it
- If not: you may state you will seek legal interest and costs as allowed
Opportunity to settle
- Offer payment plan or short meeting window (optional but often effective)
Notice of next step
- If unpaid by deadline, you will file a Small Claims case (or appropriate action)
Attachments list
- Contract/proposal, invoices, delivery/acceptance proof, SOA

C. Tone and content: what to avoid

Avoid content that can backfire:

Threatening criminal cases as leverage (can be seen as coercive; also many unpaid debts are civil)
Public shaming, posting online, or contacting relatives/employer (can expose you to liability)
Defamation, insults, speculative accusations
Misstating the law or overstating guaranteed outcomes

Keep it: calm, exact, provable.

D. How to send (and prove receipt)

Use at least two channels:

Personal delivery with acknowledgment/received copy, or
Registered mail (keep registry receipt, return card if available), plus
Courier with tracking, plus
Email (request read receipt, keep sent copy)

The goal is not perfection—it’s credible proof of sending and notice.

Demand Letter Template (Philippine collection)

DEMAND LETTER Date: ___________

To: [Client Name / Company] Address: ___________

From: [Your Name / Business] Address: ___________ Contact: ___________

Re: Demand for Payment – [Project/Service], Invoice No(s). [____]

Dear [Name],

This is to formally demand payment for services/products provided under [Contract/Proposal/PO] dated [date].

Background

On [date], you engaged [your business] to [brief scope] for the agreed amount of PHP [amount].
We delivered/performed [deliverables] on [dates], as evidenced by [acceptance emails/messages/receipts].
We issued Invoice No(s). [____] dated [____], with due date [____].
As of [today], the unpaid balance is PHP [principal], despite prior reminders on [dates].

Amount Demanded

Unpaid principal: PHP [____]
[Contractual interest/penalty if applicable]: PHP [____]
Total amount due as of [date]: PHP [____]

Demand

Please pay PHP [____] on or before [deadline date] through: Bank/Wallet: _______ Account Name/No.: _______ Reference: _______

If full payment is not made by the deadline, we will be constrained to pursue the appropriate legal action, including filing a Small Claims case to recover the amount due, interest, and allowable costs.

We remain open to an amicable settlement. If you wish to propose a payment arrangement, please respond in writing on or before [date].

Sincerely, [Name] [Title / Business]

Attachments:

[Contract/Proposal/PO]
Invoices/SOA
Proof of delivery/acceptance
Prior reminders/communications

5) Before Court: Barangay Conciliation (Katarungang Pambarangay)

For many disputes between individuals residing in the same city/municipality, Philippine law may require barangay conciliation first (Lupon proceedings), unless an exception applies (e.g., parties live in different cities/municipalities, government is a party, urgent legal action, etc.).

Why it matters: Courts may dismiss cases filed without required barangay conciliation.

Practical approach: If you and the client are individuals in the same locality (or other conditions apply), check whether a Certificate to File Action is needed from the barangay before filing.

6) Small Claims Court in the Philippines: The Fastest Legal Path for Collection

Small Claims is designed for straightforward money claims—fast, simplified, and typically no lawyers in hearings.

A. What kinds of claims fit

Unpaid invoices for services/products
Loans (promissory notes, IOUs)
Reimbursement obligations
Other sums of money where the issue is mostly “pay what is due”

B. Amount limit (threshold)

Small Claims only applies up to a maximum amount set by Supreme Court rules. This threshold has been adjusted over time. Verify the current limit at the court or its posted guidelines before filing—especially if your claim is near the boundary.

If your claim exceeds the threshold, options include:

Filing a regular civil case for collection of sum of money, or
In some situations, reducing the claim (with caution) if it makes sense strategically (but be careful about waiving rights)

C. Venue: where to file

Common rule of thumb:

File where you (plaintiff) reside or where defendant resides, depending on the rule and your facts.
For corporations, residence often ties to principal office.

Because venue mistakes waste time, verify the correct branch (MeTC/MTC/MCTC) for the address involved.

D. Parties and representation

Individuals appear personally.
Businesses/corporations typically must be represented by an authorized officer/representative with proper authority (often shown via board resolution/secretary’s certificate or SPA, depending on the entity).

E. Lawyers

In Small Claims, parties generally cannot be represented by lawyers at the hearing (the process is meant to be direct and simplified). You can still consult a lawyer behind the scenes for drafting and strategy.

F. The basic process (typical flow)

Prepare and file the Small Claims forms (Statement of Claim), verified
Attach evidence (contracts, invoices, demand letter proof, computation)
Pay filing fees
Court issues summons
Defendant files a Response
Hearing (often includes settlement efforts)
Decision/Judgment
If defendant still doesn’t pay: Execution

Small Claims judgments are typically final and executory—meaning no ordinary appeal, which is why preparation matters.

7) How to File a Strong Small Claims Case

A. The “one-page story” approach

Your case should read like a simple timeline:

Agreement (what, when, how much)
Delivery/performance (what you did; proof)
Billing (invoice dates; due dates)
Demand (when you demanded; proof of receipt/sending)
Nonpayment (amount outstanding)

Judges appreciate clarity and organization.

B. Evidence checklist (bring originals)

Contract/proposal/PO
Invoices and SOA
Proof of delivery and acceptance
Demand letter + proof of sending/receipt
Identity documents (and business registration documents if applicable)
Authority documents for representatives (if business/corporation)
Computation sheet

C. Interest and fees: how to claim responsibly

1) Contractual interest/penalties

If your contract states:

Interest rate
Penalty for late payment
Attorney’s fees/liquidated damages

…then claim them exactly as written, and show the clause.

2) Legal interest

If no contract rate exists, courts may award legal interest under Philippine jurisprudence, often computed from the time of demand or default, depending on circumstances. Use conservative, well-supported computations and clearly state the basis.

3) Attorney’s fees

You may claim attorney’s fees if stipulated or if allowed under exceptional circumstances, but in Small Claims the process is designed without lawyers appearing in hearings. Treat attorney’s fees claims cautiously and support them with contract language or clear legal grounds.

8) Winning Is Not the End: How to Collect After Judgment (Execution)

If the defendant still refuses to pay after a judgment, you enforce it through execution, usually involving the sheriff.

A. Common enforcement tools

Writ of execution
Garnishment (bank accounts, receivables, sometimes wages subject to rules)
Levy (personal property, vehicles, equipment, real property)
Auction sale of levied assets (subject to procedure)

B. Make execution easier by planning early

Before filing, gather actionable info:

Correct legal name of defendant and address
Business permits, DTI/SEC details if applicable
Known banks, payment channels used before
Client’s customers (if receivables might be garnished)
Assets observed (office location, equipment)

Execution is where many cases succeed or stall.

9) Strategy: Settlement vs. Court

When settlement is usually best

Client is cash-strapped but cooperative
You want speed and certainty
You want to preserve a business relationship

Use written settlement agreements:

Amount, schedule, default clause
Post-dated checks (with caution and documentation)
Acknowledgment of debt
Stipulated interest upon default

When litigation is usually best

Client is evasive, denies obvious obligations, or repeatedly breaks promises
You need formal enforcement powers (garnishment/levy)
You want a final, enforceable judgment

10) Common Mistakes That Lose Collection Cases

No clear proof of agreement (scope + price + acceptance)
Messy computations (inconsistent totals, unclear interest basis)
Weak proof of delivery/acceptance
Demand letter with threats or defamatory language
Filing in the wrong venue
Ignoring mandatory barangay conciliation when required
Not bringing originals (or not being able to authenticate electronic evidence)
Not preparing for execution (winning a judgment but unable to locate assets)

11) Special Situations

A. Client is a corporation

Identify the correct legal entity (exact corporate name)
Serve at principal office/registered address where possible
Prepare proof of authority for your representative
Expect formal defenses (e.g., “wrong party,” “not authorized,” “not delivered”)

B. Cross-border / overseas client

Small Claims is a Philippine court remedy; enforcing against someone abroad is much harder. Consider:

Payment platforms with dispute mechanisms
Contract clauses with governing law/venue
Upfront deposits and milestone billing for future projects

C. Government clients

Government collection can involve special rules, COA-related requirements, and administrative processes. Seek tailored legal guidance.

12) Prevention: Build Contracts That Make Collection Easy

If you want fewer collection battles, build your process around enforceability:

Contract essentials

Detailed scope and acceptance criteria
Milestone billing + “stop work” clause for nonpayment
Interest/penalty clause (reasonable and clear)
Clear due dates and payment methods
Ownership/IP transfer conditioned on full payment
Dispute resolution clause (mediation, then court)
Clear notices clause (email + physical address)

Operational safeguards

Collect a deposit
Invoice early; remind on a schedule
Use signed acceptance or “deemed accepted after X days”
Keep delivery logs and approval trails
Maintain a single source of truth (SOA)

13) Quick Checklists

Demand Letter Checklist

Correct party names and addresses
Contract reference + invoice numbers
Timeline + delivery proof
Exact amount demanded + computation
Clear deadline + payment instructions
Proof of sending (registered mail/courier/email)
Attachments listed

Small Claims Filing Checklist

Verified Statement of Claim (court form)
Copies of contract, invoices, SOA
Proof of delivery/acceptance
Demand letter + proof of sending
Computation sheet
IDs / business registration documents
Authority documents (if representing a business)
Barangay certificate (if required)
Filing fees ready

Execution Checklist

Defendant’s correct legal name and address
Known bank/payment channels
Known assets/locations
Motion/application for writ of execution after judgment
Coordination with sheriff for levy/garnishment

Practical Bottom Line

If you want the highest chance of getting paid, the most effective pattern is:

Organize your evidence (agreement → delivery → invoice → follow-ups)
Send a professional demand letter with a clear deadline and proof of sending
Use Small Claims for qualifying amounts and straightforward debts
Prepare for execution from day one—because enforcement is where payment happens

If you share (a) the type of work, (b) whether there’s a written contract, (c) the unpaid amount, and (d) whether the client is an individual or company, a tailored demand letter and Small Claims-ready timeline/computation can be drafted in a form you can adapt immediately.