A practical legal guide in the Philippine context (Civil, procedural, and common pitfalls).

1) The starting point: a loan is a contract, friendship or not

In Philippine law, a loan of money creates an obligation to pay. The moment you handed over the money (and your friend accepted it), an enforceable obligation can exist—even if nothing was notarized—so long as you can prove:

Delivery of money (e.g., bank transfer, GCASH, receipt, witness testimony), and
Agreement to repay (e.g., promissory note, messages, emails, recorded acknowledgment, witnesses).

Why proof matters more than “fairness”

Courts decide collection cases based on evidence, not moral expectations. The single most important practical issue is whether you can show (1) the loan happened and (2) repayment was due.

2) Common documents and evidence that win (or lose) cases

Strong evidence

Promissory note / acknowledgment receipt (even handwritten, signed)
Chat messages where borrower acknowledges the debt and promises repayment
Bank/GCASH/PayMaya transfer records tied to the borrower
Partial payments (even small) with proof—this strongly supports existence of the debt
Demand letter and proof of receipt (registered mail, courier proof, email read receipt, screenshot of acknowledgment)

Weaker evidence (still usable, but harder)

Purely verbal agreement with no paper trail
Cash delivery with no receipt and no witnesses
“He knows he owes me” without admissions or records

Tip: collect and organize now

Download and print:

Conversation logs (showing the name/number and full thread context)
Transfer confirmations and account details
Any voice notes (save copies)
IDs, address, workplace info (useful for service of summons and later enforcement)

3) Before legal action: the best first moves (and why they work)

Step 1 — Make the debt terms clear in writing (even after the fact)

If there was no promissory note, you can still ask the borrower to sign an Acknowledgment of Debt stating:

Amount borrowed (principal)
Repayment date or schedule
Interest (if any)
What happens upon default
Signature, date, and preferably a witness

Even if they refuse to sign, the act of requesting helps show good faith.

Step 2 — Send a formal demand letter

A demand letter does three big things:

It gives the borrower a final chance to pay,
It clarifies default and the amount due, and
It becomes a key exhibit in court.

How to send it (best practice):

Send by registered mail to the borrower’s last known address, and/or
Send by courier with delivery proof, and/or
Send by email and messaging app (keep screenshots)

What to include:

Total principal
Interest (if applicable and agreed)
Deadline to pay (e.g., 5–15 days)
Payment instructions
Notice that you will file the appropriate case if unpaid

Simple demand letter template (adapt as needed)

DEMAND LETTER Date: ________

Dear [Name],

This is to formally demand payment of your outstanding loan obligation to me in the amount of ₱[principal], which you received on [date] via [mode of transfer/cash]. You agreed to repay on or before [due date] / under the schedule of [terms].

As of today, despite prior reminders, the amount remains unpaid. Please pay the total amount of ₱[amount] on or before [deadline date] through [payment method/details].

If you fail to pay within the stated period, I will be constrained to pursue the appropriate legal remedies, including filing the proper action to collect the sum of money, with claims for interest, damages, and costs of suit as allowed by law.

Sincerely, [Your Name] [Your contact details]

Step 3 — Try a settlement that is enforceable

If they’re willing to pay by installments, get a written compromise agreement stating:

Installment dates and amounts
A clause that missing an installment makes the entire balance due (acceleration)
Signatures; if possible, have it witnessed and/or notarized

4) Required step for many disputes: Barangay conciliation (Katarungang Pambarangay)

For many disputes between individuals who live in the same city/municipality, the law generally requires attempting settlement through the barangay first.

How it works (typical flow)

File a complaint at the barangay where the respondent resides (commonly)
Mediation/conciliation meetings
If no settlement, the barangay issues a Certificate to File Action (or similar certification), which you often need before filing in court

Practical benefits

It’s cheaper, faster, and often pressures payment
A barangay settlement can be written and signed; violating it can have consequences

Important caveats

There are exceptions (e.g., parties live in different cities/municipalities, urgent relief needed, or other statutory exceptions). When in doubt, assume barangay first is required for person-to-person local disputes.

5) The main court remedy: a civil case for collection of sum of money

If barangay settlement fails (or is not required), you typically file a civil action to collect a sum of money. Your best procedural route depends on the amount and circumstances.

A) Small Claims Case (often the best for unpaid personal loans)

Small claims is designed for money claims and is usually:

Faster than ordinary civil cases
Simplified procedure
Generally no lawyers allowed to appear for parties (you represent yourself), with limited exceptions

Typical claims covered:

Loans, unpaid debts, promissory notes, bounced checks-related money claims (civil aspect), and similar obligations—so long as they are within the allowed ceiling.

Why it’s ideal:

Reduced complexity
Court focuses on documents and straightforward proof

What you usually need:

Statement of claim and attachments
Evidence of the loan and demand
Proof of identity and addresses
Barangay certification, if required

B) Regular civil case (when amount/complexity is higher)

If the claim exceeds small claims limits or involves complicated issues, you may need a regular civil case. This is slower and more formal, often requiring a lawyer for effective handling.

6) Interest, penalties, and “how much can I legally add?”

The safest rule: interest must be agreed upon

If you want to claim contractual interest, you should be able to show it was expressly agreed (preferably in writing). Without proof of an agreed interest rate, courts are generally cautious about awarding contractual interest.

Legal interest (when no rate was agreed)

Even if no interest was stated, courts may award legal interest in appropriate situations (especially after demand and upon default), but how it is applied depends on the nature of the obligation and court rulings.

Unfair rates can be reduced

Even if interest was agreed, courts may reduce rates that are unconscionable.

Other add-ons sometimes claimed

Costs of suit (filing fees, service costs)
Attorney’s fees (typically when justified by stipulation or circumstances)
Damages (requires proper basis and proof)

7) Can you file a criminal case for nonpayment?

General rule: nonpayment of debt is not a crime

The Constitution prohibits imprisonment for debt in ordinary situations. A simple failure to pay a loan is usually civil, not criminal.

But criminal liability can arise if there’s fraud or checks involved

A) Estafa (fraud-related scenarios)

A criminal case may be possible if, at the time of obtaining the money, the borrower used deceit or fraudulent acts that induced you to lend (not merely later failing to pay). Estafa is fact-specific and requires proof of deceit and damage.

B) Bouncing checks (BP 22) + civil collection

If the borrower issued a check that later bounced, there may be:

A criminal complaint under BP 22, and
A civil action to collect the amount (often pursued alongside/within the process)

BP 22 cases have technical notice requirements (notably written notice of dishonor and opportunity to pay) and timelines matter—document everything carefully.

Caution: Using criminal processes purely as leverage can backfire if legal requirements aren’t met. Treat it as a legal remedy, not a threat tool.

8) What you should NOT do (it can expose you to liability)

Even if you’re the victim of nonpayment, certain pressure tactics can create legal problems:

Harassment, threats, or repeated abusive messages
Public shaming posts that risk defamation/libel
Doxxing (posting addresses, IDs, workplace details) which can implicate privacy laws
Impersonating authorities or sending fake “warrants”
Calling employers to humiliate (careful—stick to lawful contact and avoid defamatory statements)

Best practice: keep communications factual, polite, and documented.

9) Enforcement: winning is one thing, collecting is another

A judgment is powerful, but collection depends on the debtor’s assets and income.

Common ways a judgment is satisfied

Voluntary payment (often after judgment)
Writ of execution leading to:
- Levy on bank accounts (garnishment, subject to rules)
- Levy on personal property
- Levy on real property (if any)

Reality check

If the debtor is truly insolvent or has no traceable assets/income, collection may be difficult even with a favorable judgment. Still, many debtors pay once court pressure and execution risk becomes real.

10) Time limits: prescription (don’t wait too long)

Claims can prescribe (expire) depending on the nature of the obligation and evidence.

As a practical guide under the Civil Code:

Written contract claims generally have a longer prescriptive period than
Oral contract claims

Because prescription analysis can be technical (and facts matter), act early—send a demand letter and pursue barangay/court remedies promptly.

11) Practical playbook: from friendly reminder to legal collection

Phase 1 — Documentation and final chance (1–2 weeks)

Gather proof of loan and communications
Send demand letter with a clear deadline
Offer settlement terms you can enforce in writing

Phase 2 — Barangay conciliation (if applicable)

File complaint, attend hearings
If settlement: get a signed written agreement
If no settlement: obtain certification to file action

Phase 3 — File the proper court case

If eligible: small claims is typically the most efficient
Attach all documents in chronological order
Be precise about amounts, dates, and what you are claiming

Phase 4 — After judgment

If unpaid, move for execution
Identify assets/income sources (lawfully)
Enforce through court processes

12) Checklist of what to prepare

Identity & address

Your ID, borrower’s full name, last known address, contact numbers

Proof of loan

Transfer receipts / deposit slips / remittance confirmations
Promissory note or acknowledgment, if any
Messages showing admission and repayment promise
Witness details (if any)

Proof of default

Due date or repayment schedule
Demand letter + proof of sending/receipt
Updated computation of the amount due

Settlement attempts

Barangay records/certification, if required
Any proposed installment agreements

13) A note on strategy: choosing the approach that actually works

If your proof is strong and amount fits: small claims is usually the best balance of speed and cost.
If there’s a check that bounced: consider BP 22 only if you can comply with notice requirements and you want to pursue that route responsibly.
If the borrower is cooperative but cash-strapped: a written installment compromise with clear default clauses can outperform litigation.

14) When professional help is worth it

Even if you can do parts yourself, consider consulting a lawyer if:

The borrower disputes the loan entirely
The amount is large or crosses small claims limits
There are allegations of fraud/estafa or a bounced check situation
You need help with execution against assets
There are multiple lenders/complex arrangements

15) Quick FAQ

Can I sue without a written contract? Yes, but you must prove the loan and the obligation to repay through credible evidence (messages, transfers, admissions, witnesses).

Can I charge interest even if we never agreed on it? You may not be able to impose your own rate after the fact. Courts may award legal interest in certain circumstances, but contractual interest is best supported by an express agreement.

Can I post on Facebook to pressure them? High risk. It can expose you to defamation/privacy liability. Stick to lawful demand and legal remedies.

Can I report them to the police? Nonpayment alone is typically not a police matter. Criminal remedies exist only under specific conditions (e.g., fraud/estafa or bounced checks with proper requirements).

If you want, paste (1) the amount, (2) how you sent the money, (3) what proof you have (messages/receipts), and (4) whether you and your friend live in the same city/municipality—then I can map the most efficient step-by-step route and draft a demand letter tailored to your facts.