How to File a Small Claims Case for Unpaid Loans in the Philippines

Small claims cases are designed to help individuals and small businesses recover sums of money quickly and inexpensively—perfect for unpaid loans, bounced checks, unpaid goods or services, and similar claims. Below is a practical, end-to-end guide tailored to Philippine procedure.

What this is: General legal information, not legal advice. For advice on your specific facts, consult a lawyer or the Public Attorney’s Office (PAO).

1) What Counts as a “Small Claim”?

Subject matter: A purely money claim (e.g., unpaid personal or business loan, loan on a promissory note, unpaid price of goods/services, money collected by mistake). Claims for delivery of specific property or declarations of rights are not small claims.
Amount cap: Up to ₱1,000,000 exclusive of interest, damages, attorney’s fees, and costs. (Contractual interest and liquidated damages are claimed on top of the principal, but the principal itself must fit under the cap.)
Courts: File in the First Level Courts—Metropolitan Trial Courts (MeTC), Municipal Trial Courts in Cities (MTCC), Municipal Trial Courts (MTC), or Municipal Circuit Trial Courts (MCTC).

2) Should You Try Barangay (Lupong Tagapamayapa) First?

The Katarungang Pambarangay law requires prior conciliation for many disputes between natural persons who live in the same city/municipality. If covered, you must attach the Certificate to File Action (CFA) to your small claims case.

Conciliation is not required when, for example:

Any party is a juridical entity (corporation, partnership, cooperative), or a government instrumentality.
Parties live in different cities/municipalities (and not adjacent barangays where special rules may apply).
There is an urgent legal action (e.g., about to abscond), or other statutory exceptions (e.g., offenses with penalties, real property disputes beyond the lupon’s authority, etc.).

Tip: When in doubt, visit or call the barangay to confirm coverage. If required, complete conciliation and secure the CFA before filing in court.

3) Deadlines (Prescription) for Unpaid Loans

Time limits generally run from default—the due date in the contract or, if none, upon demand when the debtor refuses to pay.

Written loan/contract: 10 years
Oral loan/contract: 6 years
Checks/negotiable instruments: may follow special rules; usually accrues from dishonor or due date.

Practical move: Send a written demand letter (keep proof of delivery). It clarifies default and can start the clock for interest.

4) Where to File (Venue)

File in any one of the following, at the plaintiff’s option:

The First Level Court where you (plaintiff) reside,
The First Level Court where the defendant resides, or
The court where the cause of action arose (e.g., where the loan was executed or to be paid).

If the contract has a venue stipulation, courts usually honor it if valid and not contrary to public policy. But in small claims, convenience and access to justice are favored—choose a proper venue supported by your facts.

5) Parties and Representation

Individuals may appear personally. Lawyers are not allowed to appear for parties in the hearing except when the lawyer is a party.
A party may be represented by a non-lawyer with a Special Power of Attorney (SPA).
Corporations/partnerships/cooperatives appear through an authorized officer/employee (attach board/partner/cooperative resolutions and Secretary’s Certificate or equivalent).

6) Required Court Forms & Attachments

Courts use standardized forms—ask the Clerk of Court or download from the judiciary’s official site:

Statement of Claim (Form 1-SCC) – verified (sworn).
Information for the Defendant (Form 1-A-SCC) – usually served with summons.
Response (Form 3-SCC) – defendant’s verified answer.

Attach legible copies of all supporting documents (bring originals on hearing day):

Loan contract/promissory note, IOUs, checks, receipts, ledgers, screenshots of digital transfers, chat/email acknowledgments.
Demand letter and proof of delivery (registered mail, courier proof, email with headers, etc.).
CFA from the barangay (if applicable).
Photo IDs of parties/representatives; SPA or corporate authorizations.
Computation sheet of the amount due (principal + contractual interest/penalties, if any, and the date ranges).

7) Filing Fees and Possible Exemption

You will pay docket and sheriff’s fees at filing; amounts scale with your claim.
If you are indigent (per Rule 141 and related issuances), request fee exemption by submitting a verified motion, Affidavit of Indigency, and supporting documents (e.g., income proofs, community tax certificate, certifications). The court may allow deferred or waived fees.

8) How to File: Step-by-Step

Gather evidence Contracts/notes, payment records, communications, demand letter + proof, ID, SPA/corporate papers, CFA (if required).
Compute your claim
- Principal (must not exceed ₱1,000,000).
- Contractual interest/penalties (show rate, basis, period; avoid unconscionable rates).
- Legal interest (generally 6% per annum) on amounts due—often from default/demand or from filing if the exact amount becomes ascertainable only then.
- Attorney’s fees only if stipulated or otherwise allowed by law; be reasonable.
Complete the Statement of Claim (Form 1-SCC) Concisely narrate facts: loan date, amount, agreed interest, due date(s), partial payments (if any), demand, non-payment. Attach the Computation Sheet.
File with the proper First Level Court Bring two or more sets (court copy + for each defendant). Pay fees or submit indigency papers.
Service of Summons The court handles service (personal service, mail, courier, or electronic means where allowed). Keep your contact details current for updates.
Defendant’s Response The defendant has 10 calendar days from receipt of summons to file the verified Response (Form 3-SCC) with supporting affidavits/documents and any counterclaim (also a small claim).
Hearing/Appearance The court sets a single-day appearance. Arrive early with:
- Originals of documents,
- A concise presentation (timeline + computation),
- Your witnesses (if any) with sworn statements. The judge will first encourage settlement. If no settlement, the court proceeds with a summary, informal hearing. Rules of evidence are relaxed but be truthful, consistent, and organized.
Judgment Courts aim to decide on the same day or within a very short period. The decision is final, executory, and unappealable. Motions for reconsideration and many technical motions are not allowed.
Execution (if you win and the debtor still doesn’t pay) File a Motion for Execution; the court may issue a Writ of Execution for:
- Garnishment of bank accounts/receivables,
- Levy on personal or real property,
- Other sheriff-implemented measures. You may need to identify the debtor’s bank/employer/assets (bring account names, employer info, plate/TIN if known).

9) Practical Tips to Strengthen Your Case

Paper trail wins cases. Keep clear copies of the loan agreement, receipts or digital proofs (with reference numbers), and conversations acknowledging the debt.
Demand formally. A dated demand letter via registered mail/courier/email (with proof) helps establish default and supports interest accrual.
Be precise with interest. Show how you computed it (rate, base amount, start and end dates). Avoid usurious/unconscionable rates; courts can reduce them.
Organize a one-page timeline (dates of loan, due date, demand, filing) and a one-page computation—judges appreciate clarity.
Anticipate defenses: payment/partial payments, novation (restructured terms), lack of consideration, forged signature, wrong party, prescription, improper venue, or unconscionable penalties. Prepare rebuttals with documents.
Consider settlement. If the debtor offers a reasonable compromise (e.g., lump sum + waiver of penalties), weigh speed vs. full recovery. A court-approved compromise becomes a judgment enforceable by execution.

10) Commonly Prohibited Filings/Motions in Small Claims

To keep cases fast and affordable, the Rules disallow many technical motions, such as:

Motion to dismiss (except on very limited grounds like lack of subject-matter jurisdiction or failure to comply with a condition precedent),
Motion for bill of particulars,
Motion for new trial or reconsideration,
Motion to declare in default,
Dilatory discovery requests (the process is largely documentary and summary).

Always check the court’s desk for the latest small claims checklist to avoid rejected filings.

11) Interest, Damages, and Attorney’s Fees—How Courts Commonly Treat Them

Contractual interest/penalties are generally enforced if clearly agreed and not unconscionable; courts may reduce excessive rates/penalties.
Legal interest (6% p.a.) often applies from default (or from filing for unliquidated amounts) until full payment.
Attorney’s fees: Courts are conservative—typically awarded only when stipulated or if the debtor’s acts compelled litigation; usually a reasonable percentage, not windfalls.
Costs of suit (filing/sheriff’s fees) are usually awarded to the prevailing party.

12) After Judgment: Execution Playbook

File Motion for Execution promptly if unpaid.
Provide asset leads: bank names/branches, employer details (for wage garnishment), known vehicles or properties, business customers who owe the debtor (receivables).
Coordinate with the sheriff: respond quickly to requirements; execution often succeeds with precise, actionable info.
Post-judgment interest continues to run until satisfaction.

13) Special Notes for Lenders/Businesses

Use written, plain-language loan contracts with:
- Clear due dates and payment schedules,
- Reasonable interest and penalties,
- Venue stipulation,
- Debtor’s full details (TIN, employer, bank, known addresses),
- Consent to electronic notices (where lawful).
Know your opponent: If debtor is an entity, barangay conciliation is not a precondition. If an individual in same LGU, consider barangay first.
Keep KYC and AMLA-friendly records—clean documentation helps both in court and compliance.

14) Frequently Asked Quick Answers

Can I bring a lawyer? You may consult a lawyer, but lawyers cannot appear for you in the small claims hearing unless they are the party. You may appoint a non-lawyer with an SPA.
Can I appeal? No appeal. Judgment is final and executory. Very rarely, a Rule 65 petition (certiorari) may be available for grave abuse of discretion, but it’s exceptional and outside the small claims court.
What if the debtor doesn’t show up? The court may proceed and render judgment based on your evidence if service of summons was proper.
What if I discover the claim is over ₱1,000,000? You cannot use small claims. File an ordinary civil action in the proper court.

15) Simple Templates (Essentials Only)

A. Demand Letter (skeleton)

Date
Debtor’s name and address
Loan details (amount, date, document reference)
Due date and unpaid balance
Contractual interest/penalties (if any) and computation to date
Demand: Pay ₱___ within 7 or 10 calendar days from receipt
Mode/place of payment and where to contact you
Notice of possible small claims filing upon failure to pay
Your name and signature; attach a copy of the loan document

B. Computation Sheet (attach to Form 1-SCC)

Principal: ₱___
Contractual interest: % per annum from __ to __ = ₱_
Penalties (if any): % per month from __ to __ = ₱
Less: payments/credits (dates + amounts) = (₱___)
Subtotal as of (date): ₱___
Plus: Legal interest 6% p.a. from (default/filing date) until full payment

16) Filing Day Checklist

✔️ Completed and verified Statement of Claim (Form 1-SCC)
✔️ CFA (if barangay conciliation required)
✔️ All exhibits (copies + originals)
✔️ ID; SPA or corporate resolutions if applicable
✔️ Computation sheet and timeline
✔️ Filing fees (or indigency documents)

17) After You File

Monitor your phone/email for court notices.
Prepare for a single, speedy hearing aiming at same-day judgment.
If you win and there’s non-payment, move for execution early and help the sheriff with asset information.

If you want, I can draft a polished demand letter and a one-page computation sheet tailored to your facts (names, dates, amounts, interest).