Demand Letters & Small Claims Suits for an Unpaid Loan and a Borrowed Laptop
(Philippine law, updated to May 2025)
Scope. This article focuses on a private, non-commercial loan of money and the temporary loan of personal property—a laptop—between natural persons. It explains (1) how and why to serve a demand letter, and (2) how to prosecute a case under the Revised Rules of Procedure for Small Claims Cases (“RR-SCC,” A.M. No. 08-8-7-SC, latest revision 11 April 2022). Where the laptop’s value or the loan exceeds the small-claims ceiling, the same substantive rules apply but the suit must be filed as an ordinary civil action.
1. Governing Law at a Glance
| Topic | Primary Statutes & Rules | Key Provisions |
|---|---|---|
| Loan of money (mutuum) | Civil Code, Arts. 1933–1953 | Ownership of money transfers; debtor must pay the same amount plus agreed or legal interest. |
| Borrowed laptop (commodatum) | Civil Code, Arts. 1935, 1939-1941; 1946 | Ownership remains with lender; borrower must return the identical thing in the condition received, plus fruits if agreed. |
| Default & demand | Civil Code, Art. 1169 | Debtor in delay only after judicial or extrajudicial demand unless demand is unnecessary. |
| Barangay (“KP”) conciliation | LGC 1991, §§399-422; DOJ Opin. No. 091-2016 | Required when parties reside in the same city/municipality and the claim ≤ P400 000 (same as SCC cap). |
| Small claims | Revised RR-SCC (2022); A.M. No. 11-10-21-SC (docket fees) | Money claims ≤ P400 000 excl. interest/costs; no lawyers in hearing. |
| Interest | Bangko Sentral (Monetary Board) Cir. 799 (01 Jul 2013) | Legal interest: 6 % p.a. whether loan or judgment award unless stipulated. |
| Prescription | Civil Code, Arts. 1144 (10 yrs: written contracts), 1145 (6 yrs: oral), 1149 (quasi-delict 4 yrs) | Countdown suspends while a written demand is being honored but not merely by negotiations. |
2. Before You Sue: The Demand Letter
Purpose.
- Put the debtor in default under Art. 1169.
- Create documentary proof of the claim for court filing.
- Preserve relationships by encouraging voluntary settlement.
Minimum contents.
Legal names and addresses of parties.
Statement of facts—amount loaned, date due, laptop turned over, current possession.
Specific demands:
- Pay ₱ ___ plus accrued interest of ___ % from ___.
- Return the Lenovo IdeaPad 3 laptop (Serial No. ABC-123) or pay its fair market value ₱ ___.
Clear deadline (e.g., “within 10 calendar days from receipt”).
Consequence of non-compliance (filing a small-claims action and/or criminal complaint for estafa).
Signature, printed name, date, and lawyer’s name if sent through counsel (not required but adds weight).
Service & proof.
- Registered Mail with registry return card (RRR).
- Accredited courier with official tracking.
- Personal service: secure signed acknowledgment or video/photo of refusal.
- E-mail/Viber: print-out showing transmission plus screen capture that the address belongs to debtor.
- Keep the envelope, RRR, or courier receipt—attach these to the Statement of Claim (SOC).
3. Barangay (“KP”) Conciliation
| Step | What Happens | Time Frame |
|---|---|---|
| File Complaint with Punong Barangay | Fill in KP Form 7; free of charge | Within 60 days from last demand if both parties reside in same LGU. |
| Mediation | PB summonses parties; tries settlement | ≤ 15 days |
| Pangkat (Panel) hearing | If mediation fails | ≤ 15 days |
| Outcome | Amicable settlement → compromise agreement (like a judgment) or Certification to File Action (CFTA) if unresolved. | CFTA issued on 16th day |
When KP is not required • Parties reside in different cities/municipalities. • One party is a juridical person (corporation, single proprietorship with DTI name). • Urgent legal action (e.g., replevin before laptop is spirited away).
Attach the CFTA or an Explanatory Affidavit to the SOC; otherwise the court will dismiss the case outright.
4. The Small Claims Route (P400 000 & Below)
4.1 Jurisdiction & Coverage
Amount. Principal of ≤ ₱400 000; interest, penalties, and costs are disregarded for jurisdictional limit but recoverable in the judgment.
Subject matter.
- Purely money claims arising from loan, services, or contract of lease.
- Demand for return of laptop itself is outside SCC; sue instead for sum of money equal to its value (supported by receipt or valuation).
Court. First-level courts: MTC, MTCC, MCTC and MeTC (Metro Manila).
Venue. Where plaintiff or defendant resides, at plaintiff’s option.
4.2 Filing Checklist
| Requirement | Form or Doc | Tips |
|---|---|---|
| Verified Statement of Claim | Form 1-SCC | Tick “loan” and “sum of money” for laptop value. |
| Certified Statement of Account / Promissory Note | Attach original or photocopy | If only oral loan: attach screenshots of chats, bank transfers, sworn narrative. |
| Demand Letter & Proof of Service | Staple RRR or courier receipt | Necessary to show default. |
| Barangay CFTA / Affidavit of Exemption | — | Mandatory unless exempt. |
| Government-issued IDs of parties | Clear photocopy | Needed because no lawyers may appear. |
| Filing & Docket Fees | Cashier official receipt | Sliding scale: ≈ ₱2 000 (≤ ₱100 000) to ≈ ₱5 000 (₱400 000); additional ₱500 mediation fee. |
No lawyer’s appearance is allowed in the hearing, but a lawyer may prepare the papers.
4.3 Timeline After Filing
Clerk of Court examines completeness → issues Summons and sets single-day hearing within 30 days.
Service of Summons by sheriff, process server, or accredited courier within 5 days.
Hearing Day:
- Court-annexed mediation first; if no compromise in 2 hours, summary adjudication follows.
- Judge may render a decision on the spot; otherwise within 24 hours.
Decision is final, executory, and unappealable 10 days after receipt.
Execution: file Motion for Execution; court issues writ within 5 days.
5. What About Criminal Liability?
If the borrower converted or sold the laptop or obtained the loan through false pretenses, consider Estafa (Art. 315 ¶ 1(b) RPC) or Qualified Theft (Art. 310) if the offender is a domestic helper/employee. However:
- You cannot recover money and the laptop in the same small-claims case plus criminal liability.
- You may file a criminal complaint with the prosecutor’s office while pursuing civil collection; just disclose the pendency to avoid forum-shopping issues.
6. Interest, Penalties & Attorney’s Fees
| Item | Rule | Note |
|---|---|---|
| Stipulated interest | Enforced if (a) expressed in writing and (b) reasonable (not usurious under BSP Circular 935-2021, which merely reminds lenders to observe 6% rule unless BSP-licensed). | |
| No interest stipulated | Legal interest 6 % p.a. from date of extrajudicial demand. | |
| Attorney’s fees | Not awardable in small claims (parties represent themselves). | |
| Liquidated damages or penalties | Allowed if written; court may reduce if unconscionable (Art. 1229 Civil Code). |
7. Prescription/Statute of Limitations
| Nature of obligation | Prescriptive period | When it starts |
|---|---|---|
| Written loan | 10 years | Date of default (i.e., after maturity and demand). |
| Oral loan or borrowed goods | 6 years | Same rule. |
| Quasi-delict (e.g., negligence damaging laptop) | 4 years | Date of injury. |
Filing a barangay complaint, demand letter, or SCC action interrupts prescription.
8. Execution & Collection
Writ of Execution → sheriff may:
- Garnish bank accounts (BSP Memorandum M-2012-021).
- Levy non-exempt personal or real property (Rule 39, §13).
Third-Party Claim objections resolved by judge within 10 days.
Sheriff’s fees advanced by judgment creditor but recoverable as costs.
9. Practical Litigation Tips
| Tip | Why it matters |
|---|---|
| Document everything: receipts, chats, serial numbers, photos. | Small claims rely heavily on paper evidence; no testimonies of other witnesses unless judge allows. |
| Compute interest clearly (principal × rate × years / 12). | Avoid dismissal for uncertain amount. |
| Insist on KP mediation minutes—not just the CFTA but the failed settlement form. | Judges often check diligence at barangay level. |
| Have the laptop appraised (official receipt, OLX listing print-out, computer-shop quotation). | To justify the money equivalent you’re claiming. |
| Serve demand letter twice (e-mail & registered mail). | Debtor sometimes rejects mail to evade default. |
| Attend the SCC hearing personally; bring two IDs. | Failure to appear = dismissal with prejudice (if plaintiff) or decision in absentia (if defendant). |
10. Simple Demand Letter Template
[Your Name] [Address] [Date]
[Debtor’s Name] [Address]
Re: Demand for Payment of ₱ 75 000 and Return of Lenovo Laptop (SN ABC-123)
Dear [Name]:
- On 15 January 2025, you borrowed ₱ 75 000 payable on 15 March 2025, as evidenced by the attached promissory note.
- On the same date, you borrowed my Lenovo IdeaPad 3 laptop (SN ABC-123) for your online-class use until 01 May 2025.
- Despite repeated verbal reminders, you have neither paid the loan nor returned the laptop.
Demand. Within ten (10) calendar days from receipt of this letter, (a) pay ₱ 75 000 plus 6 % annual interest from 16 March 2025 until fully paid, and (b) return the laptop in good working condition or pay its fair market value of ₱ 25 000.
Failure to comply will compel me to file a small-claims suit and consider criminal charges for estafa under Art. 315 ¶ 1(b) of the Revised Penal Code, at your cost.
Sincerely,
[Your Printed Name]
(Attach promissory note, photocopy of laptop receipt, and any chat screenshots.)
11. Beyond ₱ 400 000 or Seeking Return of the Actual Laptop
Ordinary Civil Action for Sum of Money (loan + value) or Replevin (Rule 60) to recover the specific laptop.
Representation by counsel is allowed; you may request preliminary attachment if debtor is absconding.
Jurisdiction now depends on Regional Trial Court thresholds (amended by R.A. 11576):
- RTC has exclusive original jurisdiction if money claim > ₱2 million.
- Claims ≤ ₱2 million go to first-level courts, but not under SCC.
Conclusion
Drafting a solid demand letter is more than courtesy—it is a legal prerequisite that triggers default, interrupts prescription, and supplies key exhibits for court. For debts up to ₱400 000, the Small Claims system offers a fast, lawyer-free recovery path, provided you observe barangay conciliation, attach airtight documentation, and frame the laptop issue as a money claim if you choose SCC. Should the amount or remedy exceed the SCC envelope, the same factual groundwork supports an ordinary civil or even a criminal case.
Handled correctly, an unpaid personal loan and an unreturned laptop need not stay unresolved beyond a few months. The creditor’s diligence—timely demand, meticulous paper trail, and strategic choice of forum—turns the law’s streamlined mechanisms into prompt, practical relief.