Writing a formal demand letter is often the first—and sometimes most effective—step in recovering a debt or enforcing an agreement in the Philippines. Under Philippine law, a demand is generally a prerequisite before a debtor can be considered in "legal delay."

1. Why a Demand Letter is Necessary

In the Philippines, Article 1169 of the Civil Code states that "those obliged to deliver or to do something incur in delay from the time the obligee (creditor) judicially or extrajudicially demands from them the fulfillment of their obligation."

Without a formal demand, a debtor can argue they weren't aware the payment was due or that you were still willing to wait. A demand letter serves three primary purposes:

Establishment of Default: It officially puts the debtor in legal delay.
Evidence: It serves as a crucial exhibit if the case reaches the Small Claims Court or a regular trial court.
Cost-Efficiency: It signals that you are serious, often prompting payment without the need for expensive litigation.

2. Essential Elements of a Demand Letter

To be legally effective and professional, your letter should include the following:

Date and Details: The date the letter is sent and the complete name and address of the debtor.
The Basis of the Debt: State how the debt arose (e.g., a loan agreement, a Promissory Note, an unpaid invoice for goods delivered, or a bounced check).
The Exact Amount: Specify the principal amount and any agreed-upon interest or late fees. Be precise.
A Clear Deadline: Give a specific period (e.g., 5 to 10 business days) from receipt of the letter to settle the obligation.
The "Demand" Statement: Explicitly state that you are demanding payment.
Consequences of Non-Compliance: A statement that you will resort to legal action (civil or criminal) if the amount is not paid.

3. The Process: Step-by-Step

Step 1: Review your Evidence

Before writing, gather your documents. If the debt is based on a bounced check, you must also comply with the Bouncing Checks Law (B.P. 22), which requires a written notice of dishonor.

Step 2: Drafting the Letter

You can write the letter yourself, but having a lawyer sign it on their letterhead often carries more weight.

Step 3: Serving the Letter

In the Philippines, proof of receipt is everything. There are three common ways to send it:

Personal Service: Hand the letter to the debtor. Ask them to sign a "received" copy with the date and their printed name.
Registered Mail (Post Office): This is the standard for legal purposes. Keep the Registry Receipt and the Return Card once it’s mailed back to you.
Courier (LBC/JRS): Faster, but ensure you get a tracking receipt and a delivery confirmation.

4. Legal Implications of Bounced Checks

If the debt involves a check that was "Drawn Against Insufficient Funds" (DAIF) or "Account Closed," your demand letter must specifically mention that the check was dishonored. Under B.P. 22, the debtor has five (5) banking days from the receipt of the notice of dishonor to pay the amount or make arrangements. Failure to do so creates a legal presumption of "knowledge of insufficiency of funds," which is necessary for criminal prosecution.

5. What Happens After the Deadline?

If the debtor ignores the letter:

Small Claims Court: If the debt is P1,000,000 or less (as per current OCA Circulars), you can file a case in the Metropolitan or Municipal Trial Courts. You do not need a lawyer for the hearing itself.
Barangay Conciliation: If both parties live in the same city or municipality, you are generally required to undergo Barangay mediation before filing in court (Article 412, Local Government Code).
Civil/Criminal Suit: For larger amounts or cases involving fraud (Estafa), you may proceed with a formal complaint through a lawyer.

Sample Outline of a Demand Letter

[Date] [Debtor's Name] [Debtor's Address] FINAL DEMAND TO PAY Dear Mr./Ms. [Last Name], This letter is in reference to the [Loan/Agreement/Contract] entered into on [Date], where you acknowledged an obligation to pay the amount of PHP [Amount]. To date, despite various verbal reminders, the said amount remains unpaid. DEMAND IS HEREBY MADE upon you to settle the full amount of PHP [Amount] within seven (7) days from receipt of this letter. Please remit payment to [Your Payment Details/Address]. Failure to settle this obligation within the period provided will leave me with no other choice but to initiate the appropriate legal actions, including but not limited to a suit for collection of sum of money, to protect my interests. Please give this matter your immediate attention to avoid the inconvenience and expense of litigation. Sincerely, [Your Name & Signature]

Would you like me to draft a more specific version of this letter based on your particular situation (e.g., for a bounced check or an unpaid service)?