A complete playbook—from soft collection and documentation, to ADR, court suits, provisional remedies, judgment enforcement, and compliance

I) Ground rules that shape every collection effort

Debt ≠ crime. Non-payment alone is not criminal. Criminal cases arise only when independent crimes are committed (e.g., estafa by deceit; B.P. 22 if a worthless check was issued and statutory elements are met). Never threaten criminal charges for mere default.
Interest & penalties: Must be in writing (Civil Code art. 1956). Courts reduce or strike unconscionable interest/penalties (arts. 1229 & 2227). If none is written, only legal interest (simple) may run from default.
Data privacy & anti-harassment: Collections must respect the Data Privacy Act (no phonebook-scraping or shaming) and avoid abusive practices (no threats, obscene language, off-hour harassment, or contacting uninvolved third parties).
Prescription: Know the time limits to sue. Filing a court case, written extrajudicial demand, or the debtor’s written acknowledgment/part payment can interrupt or reset prescriptive periods.
Proof wins cases: Keep contracts, invoices/SOAs, delivery receipts, ORs, chat/email admissions, and demand letters. Notarization helps prove due execution (it does not prove truth of contents by itself).

II) The collection ladder (from light-touch to heavy)

1) Preventive & documentation hygiene

Clear credit terms (price, due date, default interest, penalties, venue, ADR clause, attorney’s fees).
KYC debtor identity, trade name vs. legal entity, addresses, officers; secure guarantors where appropriate.
Use security: real estate mortgage, chattel mortgage, or a PPSA (Personal Property Security Act) security interest in receivables/equipment; register as required to perfect priority.

2) Soft collection

Statement of account → polite reminders → formal demand (email + registered mail/courier).
Propose restructuring: short settlement discount, extended schedule, Dación en pago (payment by asset transfer), or a consent judgment/recognized settlement (see §VI).

Demand letter essentials: amount due, basis, computation (principal/interest/penalty/less payments), deadline, bank details, and a reservation of rights. Attach the SOA/computation.

3) Alternative dispute resolution (ADR)

Mediation/conciliation (private centers, or contractually mandated).
Arbitration if your contract has an arbitration clause. Arbitral awards are enforceable by courts; interim relief (e.g., attachment) may be sought from courts in aid of arbitration.
Barangay conciliation (Katarungang Pambarangay) for purely civil, money disputes between natural persons residing in the same city/municipality, subject to exemptions (e.g., when one party is a corporation, or where urgent court relief is needed). Failure to undergo required barangay conciliation can be a bar to suit.

4) Targeted regulatory routes (special cases)

Checks: For dishonored checks, pursue civil collection; consider B.P. 22 only if statutory notice and elements are satisfied.
Employees’ wage loans: Use employer payroll arrangements only with written consent and in compliance with labor standards.

III) Going to court: choosing the right civil action

A) Small Claims

Fast, document-driven, lawyer-optional. Best for straightforward sums within the current jurisdictional ceiling. You file a verified claim with annexes; the court typically renders judgment on the day of hearing.

B) Ordinary civil action for sum of money (Regional/First-Level Courts)

Use when amount exceeds small-claims limit, facts are contested, or you need provisional remedies (below). Plead principal + interest + penalties + damages + attorney’s fees per contract and law.

C) Replevin (to recover specific personal property)

If the debt is secured by chattel mortgage or PPSA security interest and the collateral is identifiable (e.g., a vehicle or equipment), sue for replevin to obtain interim possession pending judgment.

D) Foreclosure

Real estate mortgage: judicial foreclosure (court action) or—if the mortgage allows—extrajudicial foreclosure via sheriff/notary. Debtor has a statutory redemption window after the sale (judicial vs. extrajudicial have different periods).
Chattel mortgage: extrajudicial foreclosure under the Chattel Mortgage Law; proceeds applied to the debt; deficiency may be pursued (subject to jurisprudential limits).

E) Unjust enrichment / rescission / annulment

If there are defects in consent or consideration, plead alternative causes to preserve recovery.

IV) Provisional remedies (to secure assets before judgment)

Preliminary attachment (Rule 57): Freeze defendant’s property at the start of the case upon showing statutory grounds (e.g., fraud, absconding, disposing property to defraud creditors). Requires bond.
Preliminary injunction/TRO (Rule 58): Stop asset dissipation or enforce negative covenants.
Replevin (Rule 60): Immediate possession of specific chattels.
Receivership (Rule 59): Rare; for distressed businesses/subject properties needing neutral management.

Tip: Plead grounds and attach evidence in a verified complaint/affidavit; identify bank accounts, vehicles, TCTs, shares, and receivables for sharper writs.

V) Judgment enforcement (the “collect” in collection)

Once you win or settle with a court-approved compromise:

Writ of execution → sheriff levies personal property (bank accounts via garnishment, receivables, vehicles) and real property (levy & auction).
Garnishment of bank accounts & debts owed to the debtor by third parties (served on banks/obligors). Government funds are generally not garnishable absent appropriation.
Third-party claims & exemptions: Family home and certain essentials have statutory exemptions; sheriffs need to observe them.
Contempt/sheriff’s assistance for evasive debtors; seek examination of judgment debtor to discover assets.
Register the judgment lien on the debtor’s real property to secure priority.

Post-judgment interest accrues until full satisfaction.

VI) Settlements that stick (and how to structure them)

Court-approved compromise: file a joint motion enclosing the settlement; once approved, it becomes a judgment—enforceable by writ on default.
Confession of judgment/cognovit notes are generally disfavored; use a court-approved compromise instead.
Dación en pago: transfer of specific property to extinguish the debt, documented and delivered/registered properly.
Guaranty or surety joinder: secure a surety or guarantee as part of settlement; include solidary liability and explicit waiver of notice of default (consistent with the Civil Code).
Security documents: real estate/chattel mortgages or PPSA security agreements—register to perfect.

Clause hygiene: precise payment dates, bank details, acceleration on default, clear release language, venue/ADR, and attorney’s fees stipulation.

VII) Special tools for secured creditors

PPSA (personal property security): Perfect by registration/possession/control; on default, notice of disposition, private sale or public auction of collateral, application of proceeds, and accounting to debtor. Commercial reasonableness is key; strict compliance avoids liability.
Chattel mortgage: Register the mortgage; on default, extrajudicial foreclosure and sale by sheriff/notary after proper notice.

VIII) Corporate distress: rehabilitation & liquidation (FRIA)

If the debtor files court-supervised rehabilitation, a stay order suspends actions and executions against the debtor and its property (secured creditors have special treatment but still face stay mechanics). File a verified claim with supporting documents and participate in the plan.
In liquidation, sue no more; file your claim in the liquidation court and line up with other creditors under statutory priority (secured → preferred → unsecured).

IX) Negotiable instruments & checks

Promissory notes and checks can ease proof (sum certain, due date). For checks, preserve presentment and bank return; for B.P. 22, written notice of dishonor and the 5-banking-day window are central.
Even if you pursue or forgo B.P. 22/estafa, your civil action for sum of money remains the primary collection vehicle.

X) Ethical & lawful collection conduct

No threats of arrest/estafa where facts don’t support it; no public shaming (texts to contacts, posts); no misrepresentation as court/police.
Contact windows should be reasonable; respect written requests to channel communications to counsel; record consent where calls are recorded.
Secure data-processing transparency (privacy notices) and minimize collected data to what’s necessary to collect/perform the contract.

XI) Practical calculators & clauses

Interest computation: State rate, base (principal), from-when, simple vs. compounded, and penalty (one, not stacks). Keep rates reasonable to survive court scrutiny.
Attorney’s fees: Stipulate a reasonable percentage or sum, “in addition to costs,” payable upon default and referral to counsel or suit. Courts reduce excessive claims.
Venue & ADR: Make venue exclusive in your chosen city and add an arbitration or mediation clause (without waiving the right to seek provisional remedies in court).

XII) Evidence checklist (attach to your demand/complaint)

Contract/PO and terms;
Invoices/DRs (signed), SOAs, account ledger;
Proof of delivery/performance;
Demand letters + proof of receipt; debtor’s admissions (emails, chats, text);
For checks: the check, return slip, and notice of dishonor proof;
For secured debts: mortgage/security agreement, registry proof, and default notice;
Computation sheet (principal, interest, penalties, less payments).

XIII) Common pitfalls (with quick cures)

No written interest/penalty → you can’t collect them. Cure: claim legal interest from default; fix your templates going forward.
Venue not exclusive → debtor sues elsewhere. Cure: use “exclusive venue” wording.
Unperfected security → you lose priority. Cure: register on day one (PPSA/Chattel/Mortgage).
Ignoring barangay conciliation when required → case dismissed. Cure: secure a Certificate to File Action first.
Overreaching collection tactics → privacy/harassment liability. Cure: train teams; script calls; keep logs.
Waiting too long → prescription. Cure: timely written demand, then file.

XIV) One-page playbooks

A) Straight invoice debt (no security), cooperative debtor

SOA → 7-day demand → mediated payment plan (written) with default triggers.
If default: small claims (within threshold) or ordinary suit with attachment if risk of dissipation.

B) Vehicle/equipment on chattel/PPSA

Default notice → replevin or PPSA disposition on notice.
Sell collateral → apply proceeds → collect deficiency (if allowed).

C) Large account, risk of flight/asset transfers

Verified complaint + attachment (fraud/absconding ground) + bank/asset identifiers.
Push for early mediation; if no deal, prosecute to judgment and garnish.

D) Debtor files rehab

File verified claim, attend conciliation, negotiate treatment of your claim.
Seek court leave for adequate protection if you’re secured.

XV) Bottom line

Collecting debt lawfully in the Philippines is a ladder: start with clean documentation and respectful demands, escalate to ADR, and, when needed, deploy court actions with smart provisional remedies to secure assets. Win or settle on paper you can execute—then enforce via garnishment, levy, or foreclosure—all while honoring privacy and anti-harassment laws. Done right, you’ll maximize recovery, minimize counter-liability, and preserve relationships worth keeping.