In the Philippines, the relationship between a creditor and a debtor is governed primarily by the Civil Code, the Rules of Court, and specialized procedural rules designed to expedite the recovery of credit. When a debtor fails to fulfill their obligation, the law provides the creditor with a hierarchy of remedies, ranging from amicable settlements to judicial enforcement.

I. Extrajudicial Remedies: The Preliminary Phase

Before rushing to court, creditors usually exhaust extrajudicial means to minimize costs and preserve business relationships.

Demand Letter: This is a critical first step. Under Philippine law, "mora" or legal delay generally sets in only after a demand (judicial or extrajudicial) is made. A formal demand letter serves as proof that the debt is due and demandable.
Restructuring Agreements: Parties may enter into a novation, where the terms of the debt (interest, maturity, or collateral) are modified to allow the debtor more breathing room while ensuring eventual payment.
Katarungang Pambarangay (Barangay Conciliation): If both parties are natural persons and reside in the same city or municipality, the law requires the case to undergo mediation at the Barangay level. A "Certificate to File Action" is mandatory before filing most collection suits in court.

II. Judicial Remedies: Filing the Lawsuit

If extrajudicial efforts fail, the creditor may seek judicial intervention. The nature of the suit depends on the amount involved and the existence of security.

1. Small Claims Cases

For purely money claims where the principal amount does not exceed P1,000,000.00 (excluding interests and costs), the Revised Rules on Small Claims apply.

Nature: It is an informal, inexpensive, and summary procedure.
No Lawyers: Lawyers are not allowed to represent parties during the hearing.
Finality: The decision is final, non-appealable, and immediately executory.

2. Action for Sum of Money (Ordinary Civil Action)

If the claim exceeds the Small Claims threshold, an ordinary civil action for "Sum of Money and Damages" is filed.

Jurisdiction: Depending on the amount, jurisdiction falls under the Metropolitan/Municipal Trial Courts (MTC) or the Regional Trial Courts (RTC).
Procedure: Governed by the 2019 Proposed Amendments to the 1997 Rules of Civil Procedure, which aim to expedite trials through mandatory pre-trial and stricter filing requirements.

3. Foreclosure of Mortgage

If the debt is secured by a mortgage (Real Estate or Chattel), the creditor has two choices:

Personal Action: File a collection suit for the sum of money (waiving the mortgage).
Real Action: Foreclose the mortgage to satisfy the debt from the proceeds of the sale of the property.
Judicial Foreclosure: Filed in court under Rule 68.
Extrajudicial Foreclosure: Conducted under Act No. 3135 if the contract grants the mortgagee a "Power of Attorney" to sell the property outside of court.

III. Provisional Remedies: Securing the Claim

While the case is pending, a creditor may ask the court for "Provisional Remedies" to ensure that the debtor does not dissipate assets before a judgment is rendered.

Preliminary Attachment (Rule 57): The court issues a writ to levy upon the debtor's properties at the start of the case. This is common if there is evidence that the debtor is about to abscond or has committed fraud in contracting the debt.

IV. Execution of Judgment

Winning the case is only half the battle; the "fruit" of the litigation is the Writ of Execution.

Execution as a Matter of Right: Once the decision becomes final and executory, the court issues a writ.
Levy on Property: A sheriff will identify the debtor's properties (bank accounts, real estate, vehicles).
Garnishment: A specific type of attachment where the sheriff directs a third party (usually a bank) to hold the debtor's funds to satisfy the judgment.
Auction Sale: Levied properties are sold at a public auction, and the proceeds are given to the creditor.

V. Important Legal Constraints and Defenses

Prescription: Under the Civil Code, actions based on a written contract must be filed within 10 years from the time the right of action accrues. For oral contracts, the period is 6 years.
Interests: While parties are free to stipulate interest rates, Philippine courts have the power to reduce "usurious" or "unconscionable" interest rates (often those exceeding 12% to 24% per annum, depending on the circumstances) based on equity.
No Imprisonment for Debt: The Philippine Constitution explicitly states that "No person shall be imprisoned for debt." However, a debtor can still face imprisonment if the non-payment involves a crime, such as Estafa (fraud) or a violation of B.P. 22 (Bouncing Checks Law).

VI. Summary Table of Remedies

Remedy	Threshold / Condition	Key Characteristic
Small Claims	Up to P1,000,000.00	No lawyers; quick resolution.
Sum of Money	Above P1,000,000.00	Formal trial; lawyer required.
Foreclosure	Secured by Collateral	Recovery through sale of asset.
B.P. 22 Case	Payment via dishonored check	Criminal liability involved.