How to Write a Demand Letter for Unpaid Loan and Return of Post-Dated Checks (Philippines)

A well-crafted demand letter can nudge a delinquent borrower to pay, preserve your rights in court, and help avoid criminal exposure for everyone involved with post-dated checks (PDCs). Below is a comprehensive, practice-oriented guide tailored to Philippine law.

1) Why send a demand letter?

Triggers default and interest: If your loan contract is silent on when default begins, a written demand generally places the debtor in delay (mora), from which legal interest and penalties may accrue.
Supports future cases: Courts often look for proof of prior demand in civil collection suits (e.g., “sum of money,” small claims).
Creates paper trail: Establishes who owes what, why, and since when.
Helps with check issues: When PDCs are involved, a demand letter can (a) seek payment and (b) require the return or cancellation of the undeposited PDCs to prevent misuse or inadvertent deposit after settlement.

2) Core legal concepts to keep in mind

Loan/Forbearance: Governed by the Civil Code and the parties’ contract. Written loans generally prescribe in 10 years; oral loans in 6 years.
Interest: If not stipulated, legal interest is generally 6% per annum on loans/forbearance counted from default (often the date of your extrajudicial demand), and 6% on adjudged amounts from finality of judgment.
Post-Dated Checks (PDCs): Checks are negotiable instruments. Depositing a PDC before its date is improper, but once it hits its date it may be presented for payment. If the loan is settled, the proper practice is to retrieve/cancel those checks.
Criminal exposure:
- B.P. Blg. 22 (Bouncing Checks Law) penalizes making or issuing a check that is dishonored for insufficiency or closed account. A notice of dishonor and failure to pay within five (5) banking days creates a presumption of knowledge of insufficiency.
- Estafa (Art. 315(2)(d), RPC) may apply when a check is used with deceit to obtain money and later bounces.
- A demand letter does not automatically make a case criminal or civil; it simply preserves rights and clarifies intent.
Katarungang Pambarangay (Barangay Conciliation): Many money claims between natural persons residing in the same city/municipality require barangay conciliation before filing in court (with several exceptions). If your lender is a corporation, barangay conciliation typically does not apply.

⚖️ This article is informational and not a substitute for tailored legal advice.

3) When to send it (timing strategies)

Upon first missed due date: Send within 3–7 days after maturity to keep leverage and reduce disputes.
Before any PDC matures: If you intend to stop relying on PDCs and instead collect in a different manner (e.g., lump-sum), send a letter before the earliest PDC date demanding return/cancellation to avoid unintended deposit.
Before escalation: If you plan to file small claims or a regular civil case, send a final demand giving a clear, reasonable deadline (often 7–15 calendar days).

4) What to include (essential elements)

Heading and parties
- Your full name/registered business name, address, and contact details.
- Debtor’s full name, address, and contact details.
Clear subject
- “Demand for Payment of Unpaid Loan and Return of Post-Dated Checks.”
Loan details
- Date of loan, principal amount, interest rate (if any), penalties, due date(s), reference to the contract, promissory note, or acknowledgment receipt.
- Outstanding balance: show computation (principal less payments, accrued interest, penalties, and any other agreed charges). Attach a Statement of Account (SOA).
PDC particulars
- List check number, bank, branch, amount, date for each PDC you hold.
- State whether the checks are undeposited or if any were dishonored (attach bank return memos if applicable).
Specific demands
- Payment: exact amount due as of a date, mode(s) of payment (bank transfer details, office cashiers, etc.).
- Return/Cancellation of PDCs: demand the physical return of undeposited PDCs and/or execution of a cancellation/waiver receipt upon settlement.
- If any check bounced: demand replacement in cash or manager’s check within five (5) banking days from receipt of notice to reduce B.P. 22 risk.
Deadline
- A definite cut-off (e.g., “on or before [Day, DD Month YYYY]”). Avoid “ASAP.”
Legal footing
- Cite the contract and the Civil Code on obligations and delay; mention that failure to comply will compel you to pursue civil remedies (small claims/ordinary action) and other available remedies under law (without threatening criminal prosecution as leverage, which may be construed as harassment; keep it factual and professional).
Mediation option
- Offer a good-faith window for settlement/mediation (including barangay conciliation where applicable).
Delivery and proof
- State how it is sent: personal service with acknowledgment, registered mail with return card, courier with tracking, and/or email (request read confirmation). Retain photos/scans of envelopes, waybills, and signed receipts.
Signature block

Name and designation; if for a company, attach board/partner authorization where necessary.

5) Tone and style

Firm but professional: Avoid insults, veiled threats, or shaming on social media (could trigger privacy or anti-harassment issues).
Precise numbers: State amounts in both figures and words.
Neutral language on criminal statutes: You may reference the legal consequences of dishonored checks factually, but do not use threats.

6) Sample computation paragraph (plug-and-play)

As of [DD Month YYYY], your total obligation is ₱450,000.00 (Four Hundred Fifty Thousand Pesos) computed as follows: ₱400,000.00 principal balance + ₱24,000.00 accrued interest at 1% per month from [date] to [date] + ₱26,000.00 penalties/late charges per contract. Interest will continue to accrue at the same rate until full payment. Please see Annex A (Statement of Account) for details.

7) Template: Demand for Unpaid Loan & Return of PDCs

[Your Letterhead / Name] [Address] • [Mobile/Telephone] • [Email]

[Date]

Via: ☐ Personal Service (with acknowledgment) ☐ Registered Mail (with registry & return card) ☐ Courier (with tracking) ☐ Email: [debtor@email.com]

[Borrower’s Name] [Address]

Subject: Demand for Payment of Unpaid Loan and Return/Cancellation of Post-Dated Checks

Dear [Mr./Ms. Surname]:

On [date], you obtained a loan from [Lender] in the amount of ₱[amount], under [Contract/PN Title & Date], payable on [due date/s] with interest at [rate] per [month/year], and penalties for delay as stipulated therein.

Despite repeated reminders, the above obligation remains unpaid. As of [cut-off date], your total outstanding is ₱[amount in figures] ([amount in words]), per Annex A—Statement of Account.

In relation to the loan, you issued the following post-dated checks in our favor: [enumerate by check no., bank/branch, date, and amount] (see Annex B). These checks remain in our possession [or note any dishonor and attach bank memo as Annex C].

DEMANDS

A. Payment: Settle the amount of ₱[amount] on or before [Day, DD Month YYYY], by [cash/manager’s check/bank transfer to: Bank, Account Name, Number]. B. Return/Cancellation of PDCs: Upon full settlement, you shall retrieve the undeposited PDCs listed in Annex B and execute a Cancellation Receipt (Annex D). If any check has been dishonored, you shall pay/replace the amount in cash or manager’s check within five (5) banking days from receipt of this letter. C. Costs/Interest: Interest, penalties, and reasonable attorney’s fees (if provided in the contract) shall continue to accrue until full payment.

Should you fail to comply within the stated period, we will be constrained to initiate the appropriate civil action (small claims or ordinary suit) and pursue all remedies available under law, without further notice.

We remain open to settlement or mediation; please contact [name, position] at [mobile/email] within the period above to arrange payment and PDC retrieval.

Sincerely, [Signature over Printed Name] [Position/Authority, if any]

Attachments: Annex A—SOA; Annex B—List of PDCs; Annex C—Bank Return Memo(s), if any; Annex D—Cancellation Receipt (template)

8) Optional annexes (ready-to-use mini-templates)

A) Annex A – Statement of Account (SOA)

Borrower: [Name]
Contract Ref: [Number/Date]
Computation period: [From–To]
Principal: ₱___
Payments to date: (₱___)
Balance: ₱___
Accrued interest (rate & dates): ₱___
Penalties/late charges: ₱___
Total Due as of [date]: ₱___

B) Annex B – PDC Schedule

No.	Check No.	Bank/Branch	Date	Amount	Status
1				₱	In custody / Dishonored (attach memo)

C) Annex D – PDC Cancellation Receipt

Received from [Lender] the following checks [list], which are hereby cancelled/voided and returned to [Borrower] upon settlement of the obligation under [Contract/PN]. Date/Place: ________ | Borrower Signature: __________

9) Service and proof (how to deliver correctly)

Best practice is two modes: (1) registered mail with return card or reputable courier with tracking, and (2) email copy.
For personal service, have the recipient sign “Received by [name, date, time, ID number].” If they refuse, note the refusal in the presence of a witness and keep photos.
Keep a file with: signed letter, SOA, PDC list, waybill/registry receipts, return cards, delivery photos, and email headers/read receipts.

10) If the borrower pays—how to close out properly

Issue an Official Receipt or Acknowledgment Receipt.
Return/cancel all PDCs; mark each “CANCELLED,” punch-hole, and return originals. Keep copies.
Execute a Release and Quitclaim/Settlement Agreement stating the account is fully settled, PDCs cancelled, and no further claims remain (except for any explicitly reserved).

11) If the borrower does not pay—next steps

Small Claims (no lawyers required): For qualified money claims up to the prevailing small claims jurisdictional threshold (verify the current amount and rules), file in the proper First Level Court where you or the defendant resides.
Ordinary civil action: For larger or more complex claims, file a Complaint for Sum of Money (attach your demand letter, contract, SOA, and proof of delivery).
Barangay conciliation: If applicable, secure a Certificate to File Action.
Provisional remedies: Consider pre-trial mediation and, where appropriate, negotiated settlements or structured payment plans.

12) Common pitfalls to avoid

Vague deadlines (“ASAP”). Use a specific date.
Arithmetic errors in SOA (courts scrutinize figures).
Threatening tone or public shaming—could backfire legally.
Failing to address PDCs: Always include a clear return/cancellation protocol.
Mismatched names or IDs (e.g., nickname in the letter vs. formal name in the contract).
No proof of service—without it, establishing default is harder.

13) Quick checklist (printable)

Contract/PN copied and reviewed
Accurate SOA as of cut-off date
Detailed PDC list (numbers, dates, bank, amounts)
Clear amount due (figures & words)
Specific payment deadline and modes
Demand for return/cancellation of PDCs
Neutral legal basis and remedies
Delivery method(s) chosen + proof plan
Folder for all evidence kept and organized

Final word

A demand letter that is clear, factual, and properly served often resolves delinquency without litigation. Treat PDCs with care: retrieve or cancel them upon settlement, and document everything. If the stakes are high or facts are unusual (e.g., multiple dishonors, cross-deposits, or assignments of checks), consult counsel to tailor the strategy and wording.