Introduction

A demand letter is a formal written document that notifies a party of a claim or grievance and demands specific action to resolve the issue without resorting to litigation. In the Philippine legal system, demand letters serve as a crucial preliminary step in many civil disputes, such as debt collection, breach of contract, property disputes, and personal injury claims. They are rooted in the principle of exhausting extrajudicial remedies, which aligns with the Philippine judiciary's emphasis on alternative dispute resolution to decongest courts.

Under Philippine law, particularly the Civil Code of the Philippines (Republic Act No. 386), a demand letter is often required to establish the obligor's default in obligations, as provided in Article 1169, which states that demand is necessary for delay (mora) to set in, unless excused by law. Failure to send a proper demand letter can lead to the dismissal of a subsequent complaint for lack of cause of action or prematurity. This article provides a comprehensive guide on drafting an effective demand letter, including its format, essential contents, and practical legal tips, all tailored to the Philippine context.

Purpose and Importance of Demand Letters

Demand letters are versatile tools used in various scenarios:

Debt Recovery: To collect unpaid loans, rentals, or services rendered, invoking provisions under the Civil Code on obligations and contracts (Articles 1156–1422).
Cease and Desist: To stop unlawful activities, such as intellectual property infringement under the Intellectual Property Code (Republic Act No. 8293) or harassment under the Anti-Violence Against Women and Their Children Act (Republic Act No. 9262).
Performance of Obligation: Demanding compliance with contracts, like delivery of goods or services.
Damages and Compensation: Seeking reparation for torts or quasi-delicts under Articles 2176–2194 of the Civil Code.
Ejectment or Property Disputes: As a precursor to unlawful detainer cases under the Rules of Court.
Labor Disputes: In employment matters, though often handled through the Department of Labor and Employment (DOLE) processes under the Labor Code (Presidential Decree No. 442).

The importance of a demand letter cannot be overstated. It serves as evidence of good faith efforts to settle amicably, which is a requirement under Rule 16 of the Revised Rules of Court for motions to dismiss based on failure to comply with barangay conciliation (for disputes covered by the Katarungang Pambarangay Law, Republic Act No. 7160). It also interrupts the prescriptive period for actions under Article 1150 of the Civil Code, preventing the claim from being time-barred. Moreover, a well-drafted demand letter can prompt voluntary compliance, saving time and costs associated with court proceedings.

Legal Basis in Philippine Law

The foundation for demand letters lies in several key statutes and rules:

Civil Code (RA 386): Articles 1168–1169 require judicial or extrajudicial demand for obligations due. Extrajudicial demand, via a letter, is sufficient in most cases.
Rules of Court: Rule 6, Section 1 defines pleadings, but demand letters are pre-litigation documents. They are referenced in small claims (A.M. No. 08-8-7-SC) and summary procedures.
Special Laws: For specific claims, such as bouncing checks under Batas Pambansa Blg. 22, a demand letter is mandatory within five banking days from dishonor notice.
Jurisprudence: Supreme Court decisions, like in Pag-Ibig Realty Services, Inc. v. Court of Appeals (G.R. No. 119369, 1997), emphasize that demand letters must be clear and unequivocal to constitute proper demand.

Not all disputes require a demand letter; exceptions include obligations where demand is unnecessary (e.g., when the law or contract so provides, or in reciprocal obligations under Article 1169).

Format of a Demand Letter

A demand letter should adhere to a professional, formal format to convey seriousness and credibility. Use standard business letter conventions, printed on bond paper with a clean font (e.g., Times New Roman, 12-point size). Here's the standard structure:

Letterhead or Sender's Information:
- Include the sender's full name, address, contact number, and email.
- If representing a client (e.g., as a lawyer), use firm letterhead with PTR and IBP numbers for authenticity.
- Example:
```
[Your Name or Law Firm Name]
[Address]
[City, Province, ZIP Code]
[Contact Number]
[Email Address]
[Date]
```
Recipient's Information:
- Full name and address of the addressee.
- If a company, include the designated officer (e.g., President or Manager).
- Example:
```
[Recipient's Name]
[Recipient's Position, if applicable]
[Recipient's Address]
[City, Province, ZIP Code]
```
Reference Line (Re:):
- A brief subject line summarizing the purpose, e.g., "Re: Demand for Payment of Unpaid Loan Amounting to PHP 500,000.00".
Salutation:
- Formal greeting, such as "Dear Mr./Ms. [Last Name]:" or "To Whom It May Concern:" if the name is unknown.
Body:
- Divided into paragraphs (detailed in the next section).
Closing:
- Polite but firm sign-off, e.g., "Sincerely," or "Respectfully yours,".
- Signature block with printed name, position, and notarization if needed.
Enclosures and Copies:
- List attachments (e.g., "Encl: Promissory Note").
- Carbon copies (cc:) to relevant parties, like co-debtors.
Proof of Service:
- Note the mode of delivery (e.g., registered mail, personal service) to prove receipt, as required under Rule 13 of the Rules of Court for service of papers.

The letter should be dated and signed. For added weight, have it notarized as an affidavit, transforming it into a sworn statement admissible in court.

Essential Contents of a Demand Letter

The content must be clear, concise, factual, and free of emotional language to maintain professionalism. Structure the body as follows:

Introduction Paragraph:
- State the purpose immediately: "This is a formal demand for [specific action, e.g., payment of debt]."
- Identify the parties and relationship (e.g., "I am the creditor under the loan agreement dated [date].").
Factual Background:
- Narrate the facts chronologically, supported by evidence references (e.g., "On [date], you borrowed PHP 100,000.00 as evidenced by the attached promissory note.").
- Include relevant details like amounts, dates, and contract terms without exaggeration.
Legal Basis and Violation:
- Cite applicable laws: "Your failure to pay constitutes a breach under Article 1191 of the Civil Code, entitling me to rescind the contract and claim damages."
- Explain the violation: "Despite repeated verbal reminders, the amount remains unpaid as of [date]."
Specific Demand:
- Clearly state what is required: "You are hereby demanded to pay the principal amount of PHP 100,000.00 plus 12% interest per annum within fifteen (15) days from receipt hereof."
- Include deadlines, modes of compliance (e.g., bank transfer details), and consequences of non-compliance: "Failure to comply will compel me to file a collection suit before the appropriate court, seeking additional damages, attorney's fees, and costs under Article 2208."
Reservation of Rights:
- Add: "This demand is without prejudice to other remedies available under the law."
Contact Information:
- Invite response: "Please contact me at [number] to discuss amicable settlement."

Avoid threats or inflammatory language, as this could constitute grave threats under Article 282 of the Revised Penal Code.

Legal Tips for Drafting and Sending

Tailor to the Dispute: Customize based on the claim type. For estafa cases (Article 315, Revised Penal Code), emphasize fraudulent intent if applicable.
Gather Evidence: Attach copies of contracts, receipts, or correspondence to strengthen the claim.
Set Realistic Deadlines: Typically 10–30 days; shorter for urgent matters like ejectment.
Mode of Delivery: Use registered mail with return receipt (via PhilPost) or personal service with acknowledgment receipt. Email is acceptable if the contract allows, but pair with physical delivery for proof.
Notarization: Optional but recommended for evidentiary value; costs around PHP 200–500.
Language: Use English or Filipino; ensure it's understandable to avoid misinterpretation.
Seek Legal Advice: If unsure, consult a lawyer to avoid waiver of rights or procedural errors.
Follow-Up: If no response, send a final demand before filing suit.
Barangay Conciliation: For disputes under PHP 200,000 (in Metro Manila) or PHP 300,000 (elsewhere), or those covered by RA 7160, attempt barangay mediation first; the demand letter can initiate this.
Prescription Periods: Be mindful of time limits, e.g., 10 years for written contracts (Article 1144), 4 years for oral (Article 1145).
Attorney's Involvement: Lawyers can sign on behalf of clients, adding authority, but individuals can draft their own.
Ethical Considerations: Comply with the Code of Professional Responsibility for lawyers; avoid harassment.

Common Mistakes to Avoid

Vague Demands: Be specific to avoid ambiguity.
Emotional Tone: Stick to facts to prevent defamation claims.
Missing Attachments: Always include supporting documents.
Incorrect Service: Improper delivery can invalidate the demand.
Premature Filing: Wait for the deadline to expire before suing.
Overstating Claims: This can lead to counterclaims for moral damages.

Sample Demand Letter

Below is a template for a debt collection demand letter:

[Your Letterhead]

[Date]

[Recipient's Name and Address]

Re: Demand for Payment of Unpaid Debt

Dear [Recipient's Name]:

This serves as a formal demand for the payment of your outstanding obligation to me in the amount of PHP [amount], arising from [brief description, e.g., a loan extended on [date] as per the attached promissory note].

Despite my previous reminders, the said amount remains unpaid, constituting a breach of our agreement and placing you in default under Article 1169 of the Civil Code.

You are hereby demanded to pay the full amount plus [interest/details] within [number] days from receipt of this letter. Payment may be made via [method].

Failure to comply will leave me no choice but to pursue legal action, including filing a complaint for collection of sum of money, with claims for damages, attorney's fees, and litigation expenses.

Please contact me immediately to arrange settlement.

Sincerely,

[Your Name]
[Signature]
[Contact Details]

Encl: [List]
cc: [If any]

Adapt this template to fit specific circumstances.

Conclusion

Drafting a demand letter in the Philippines requires precision, legal knowledge, and adherence to formalities to maximize its effectiveness as a tool for resolution. By following the outlined format, including all essential contents, and heeding legal tips, one can create a compelling document that encourages compliance and strengthens a potential court case. Remember, while demand letters promote peaceful settlements, persistent non-compliance may necessitate escalation to judicial remedies. Always prioritize fairness and legality in pursuit of justice.