A demand letter is not yet a lawsuit—but it is often the last step before one. How you respond can affect your legal exposure, your negotiating position, and even whether a case can be filed or succeeds.

This article explains what a demand letter is under Philippine practice, what it legally changes (and what it doesn’t), the smart steps to take immediately, how to draft a careful reply, and special considerations for common scenarios (debts, leases/ejectment, bounced checks, employment, business disputes, and more).

1) What a Demand Letter Is (and Why It Matters)

A demand letter is a written notice asserting that you have a legal obligation—usually to pay, deliver, perform, stop doing something, or account for funds—and asking you to comply within a stated period. In the Philippines, it’s common in disputes involving:

unpaid loans, receivables, rentals, and contract balances
breach of contract (supply, construction, services)
property disputes and ejectment/unlawful detainer
bounced checks (B.P. Blg. 22) and alleged estafa
employment money claims (company property, liquidation)
intellectual property, defamation, and online content disputes

A demand letter can have real legal effects

Even before a case is filed, a demand letter can:

Put you in “delay” (mora) for obligations to pay or perform, which can affect interest and damages (Civil Code concepts on delay and damages).
Interrupt prescription (limitations periods) when it qualifies as an extrajudicial demand—a big reason why some demand letters are sent “near the deadline.”
Serve as a required precondition in certain actions. Example: in ejectment/unlawful detainer, a proper demand to pay/vacate is typically essential before filing.

But it’s not a court order

A demand letter is still one party’s claim. You do not lose automatically by receiving it. You lose by ignoring deadlines later (summons/answer periods), making damaging admissions, or mishandling the response.

2) First Hour Checklist: What to Do Immediately

A. Do not ignore it

Silence is often used against you as implied admission or bad faith (even if not legally conclusive). More importantly: the sender may proceed to file a case, and you may miss chances to resolve early.

B. Preserve evidence and communications

Create a folder (digital and/or physical) and save:

the envelope, courier details, registry receipt, email headers
the demand letter and attachments
relevant contracts, invoices, purchase orders, delivery receipts
proofs of payment, bank records, remittance slips
chats/emails (export threads), screenshots (with dates), call logs
timelines you write while fresh

Preservation matters because disputes often turn on documentation and dates.

C. Identify what exactly is being demanded

Write down, in plain terms:

Who is demanding (individual, company, lawyer)?
What are they demanding (money amount, action, stop doing something)?
What is the deadline and how was it computed?
What is their legal basis (contract clause, law, alleged wrongdoing)?
What happens if you don’t comply (case filing, criminal complaint, barangay, etc.)?

D. Pause direct contact until you have a strategy

Do not argue by text or call. Off-the-cuff statements can become exhibits.

If you must reply quickly: send a short acknowledgment, ask for time to review, and request documents—without admitting liability.

3) Verify the Letter: Legitimacy, Authority, and Red Flags

Check the sender’s authority

If signed by a lawyer, check if they identify the client and the matter.
If signed by a company officer/agent, verify they have authority (board resolution/SPA is not always attached, but you may request proof if needed).

Watch for red flags

Be extra careful if the letter includes:

threats of immediate arrest for purely civil debt (collection pressure tactic)
demands for payment to personal accounts with urgency and secrecy
vague claims without supporting documents
defamatory allegations or public-shaming threats
excessive deadlines designed to force panic

A demand letter may be aggressive, but your response should remain calm and professional.

4) Understand the Legal Issues Before You Respond

A good reply starts with a quick legal triage. You are looking for:

A. Is this a civil claim, a criminal angle, or both?

Some disputes are civil (collection, damages). Others are framed to add criminal pressure, e.g.:

B.P. Blg. 22 (bounced checks): often starts with a written demand/notice of dishonor.
Estafa: demand is frequently used to show misappropriation and refusal to return funds (though demand is not always a strict legal requirement for all estafa theories).

If a criminal complaint is threatened, word choice matters even more—avoid admissions.

B. Is a demand required to file the case?

Examples where demand is commonly crucial:

Unlawful detainer/ejectment: demand to pay and vacate is typically necessary before filing.
Certain contract claims where the contract itself requires notice before enforcement or termination.

If the other side’s demand is defective, you may have leverage (procedural and negotiating).

C. Are the amounts and interest defensible?

Check:

principal vs interest vs penalties vs attorney’s fees
whether interest rates/penalties appear unconscionable
whether attorney’s fees are contractual and reasonable
whether liquidated damages are triggered and properly computed

Courts can reduce unconscionable interest/penalties in appropriate cases, but you should still respond strategically—do not assume everything is invalid.

D. Are there defenses or counterclaims?

Common defenses:

payment, partial payment, set-off/compensation
non-delivery/defective performance by the claimant
improper computation, wrong party, lack of authority
prescription (time-bar), laches (equitable delay)
void/voidable contract issues (fraud, mistake, lack of consent)
failure to comply with contractual conditions precedent
force majeure clauses, impossibility, or agreed extensions

Common counterclaims:

damages from their breach
refund/return of deposits
warranty claims
reputational harm from false accusations

5) Your Response Options (Choose a Strategy)

You typically have 4 practical paths:

Option 1: Comply (pay/perform) with protections

If you do owe, compliance may still need careful handling:

require a detailed statement of account
ask for a release/quitclaim (properly worded)
specify “full and final settlement” only if true
pay through traceable means; get an official receipt
if partial payment: label it clearly as “partial” and reserve defenses

Option 2: Dispute (deny liability) and demand specifics

If the claim is weak or overstated:

deny clearly but professionally
request documents and itemization
state your version and attach key evidence
reserve all rights and remedies

Option 3: Negotiate / propose settlement (without prejudice)

If you want resolution but not admissions:

mark communications “WITHOUT PREJUDICE” (for settlement talks)
propose a payment plan, discount, exchange of releases
consider mediation (barangay/private)

Option 4: Do not respond substantively (rare, high-risk)

Sometimes used when:

the letter is clearly a scam
responding creates jurisdiction/venue issues
there is an ongoing case where counsel advises silence

But for most real disputes, a careful written response is better than none.

6) How to Write a Strong Demand Letter Reply (Philippine Practice)

Tone and framing

Factual, firm, non-emotional.
No admissions unless you are intentionally settling.
No threats. Let your rights speak through legal posture.
If negotiating: keep it separate from denials (or label it “without prejudice”).

Key drafting rules

Avoid:

“I admit…,” “I owe…,” “I issued the check knowing…,” “I can’t pay because…”
over-explaining; apologizing in a way that implies liability
accusing the other side of crimes without basis
sending original documents you cannot replace

Prefer:

“We deny liability as alleged.”
“Without admitting liability, we are open to discussing an amicable resolution.”
“Please provide the following documents to enable proper evaluation.”
“All rights and remedies are reserved.”

Recommended structure

Header (date, recipient, address, subject)
Acknowledgment of receipt (include date received)
Position (deny/partially admit/need clarification)
Factual background (short, chronological)
Document requests (itemized)
Your proposal (settlement/meeting/extension)
Reservation of rights and closing

Delivery and proof

Send via a method that creates proof of sending/receipt:

personal service with acknowledgment
registered mail/courier with tracking
email (keep headers, read receipts if possible)

Keep a signed copy of what you sent.

7) Practical Templates You Can Adapt

A) Neutral acknowledgment + request for details (safe first reply)

Subject: Response to Demand Letter dated ______

Dear ______:

We acknowledge receipt of your letter dated ______, which we received on ______.

At this time, we cannot meaningfully respond to your allegations without complete documentation. Please provide, within five (5) days from receipt hereof, copies of the following:

______ (contract/PO/lease/statement of account)
______ (invoices, delivery receipts, proof of disbursement)
Detailed computation of the amounts claimed (principal, interest, penalties, attorney’s fees), including the basis and period for each item.

Pending receipt and review of the foregoing, we expressly reserve all rights and remedies, and nothing herein shall be construed as an admission of liability.

Sincerely, Name / Position Contact details

B) Denial with brief facts + attachments

Subject: Reply to Demand Letter dated ______

Dear ______:

We acknowledge receipt of your demand letter dated ______, received on ______.

We deny the allegations and the amounts claimed for the following reasons:

______ (e.g., obligations already paid/partially paid; attach proof)
______ (e.g., claimant failed to deliver/defective performance; attach notices)
The computation of interest/penalties is disputed for lack of contractual/legal basis and supporting computation.

For transparency, we attach copies of ______.

Should your client wish to discuss an amicable resolution, we are open to meeting on ______, provided that settlement discussions are without prejudice and subject to documentation.

All rights and remedies are reserved.

Sincerely, Name / Position

C) Settlement offer (mark clearly “WITHOUT PREJUDICE”)

WITHOUT PREJUDICE – FOR SETTLEMENT PURPOSES ONLY

Dear ______:

Without admitting liability and strictly to explore an amicable resolution, we propose the following settlement terms:

Payment of ______ in ______ installments starting ______
Upon full payment, your client executes a release and waiver of claims arising from ______
Each party bears its own attorney’s fees and costs
Confidentiality of settlement terms

This offer is open until ______ and is subject to definitive written documentation.

Sincerely, Name / Position

(If you are dealing with checks or criminal threats, keep settlement language even more careful and consider counsel review.)

8) Special Scenarios in the Philippines

A) Demand letters for unpaid rent / ejectment (unlawful detainer)

If the letter demands you pay and vacate, treat it seriously:

Verify if the demand clearly requires you to vacate and/or pay arrears.
Note dates—ejectment timelines and “one-year” considerations can depend on when and how demand is made.
If you have defenses (payments, landlord breach, uninhabitable conditions, improper increases), gather proof immediately.

Tip: Even if you plan to leave, negotiate documentation (turnover, deposit return, waiver of future claims).

B) Bounced checks (B.P. Blg. 22) demands

B.P. 22 disputes often turn on notice of dishonor and timing. If you receive a letter alleging a bounced check:

Preserve the letter/envelope/email and any bank dishonor memo.
Do not admit knowledge or intent.
If you plan to pay to avoid escalation, document the purpose of payment and request a written undertaking regarding withdrawal/non-filing when possible (some complainants still file; documentation helps in negotiations and later defenses).
If the check was issued as security, for accommodation, or under disputed obligations, state context carefully.

C) Estafa-threatening demand letters

Estafa allegations can be used as pressure in what is really a civil dispute. Your response should:

focus on documentation, accounting, and the civil nature of the dispute
avoid admissions that funds were received “in trust” unless true and intended
propose an accounting/reconciliation meeting

D) Debt collection (loans, credit, receivables)

Common pressure points:

inflated balances and unclear computations
high interest/penalties
harassment tactics

Your response can:

demand a complete statement of account and legal basis for charges
assert disputes over computation
propose structured settlement if appropriate
insist on communication in writing and professional conduct

If harassment escalates, document it. Remedies may exist under civil law, criminal law (threats/unjust vexation depending on facts), and privacy-related rules when personal data is mishandled.

E) Employment-related demand letters (accountability, company property, liquidation)

If an employer demands money or property:

check your clearance/turnover documents
respond with an inventory and proof of return
avoid signing quitclaims releasing claims unless you fully understand them
keep your response factual and attach proofs

If you have money claims (unpaid wages, final pay, benefits), you may raise them as part of a structured settlement discussion.

F) Business-to-business contract disputes

Common issues:

delivery/performance disputes
change orders and scope creep
acceptance vs rejection
liquidated damages and penalties

Your best defense is a clean paper trail:

accepted deliverables, punch lists, punch list completion
notices of delay/force majeure
minutes of meetings
email approvals for variations

A demand letter reply should anchor on the contract terms and your documented performance.

G) Online posts, defamation, and takedown demands

If a demand letter seeks retraction, takedown, or apology:

do not escalate publicly
preserve the post and context
consider whether the letter misstates facts
if you choose to correct, do so carefully and avoid language that admits unlawful conduct

When emotions run high, a lawyer-reviewed reply is often worth it.

9) Common Mistakes That Weaken Your Position

Ignoring the letter until a case is filed
Admitting liability casually (“I’ll pay soon,” “I know I owe you”)
Paying partially without labeling it, creating confusion whether it’s settlement
Over-sharing documents you don’t need to give (or that harm you)
Threatening counter-criminal cases without basis
Signing “acknowledgments” or “confessions of judgment” without advice
Letting deadlines lapse after summons (much worse than ignoring a demand letter)

10) What Happens If They File a Case After Your Reply?

A demand letter may be followed by:

Barangay conciliation (Katarungang Pambarangay) for certain disputes, with exceptions depending on parties, location, subject matter, and urgency.
Civil case (collection, damages, specific performance)
Ejectment case (if lease-related)
Small claims (if it qualifies)
Criminal complaint (B.P. 22, estafa, etc.)

Once you receive formal filings (summons/subpoena/complaint), procedural deadlines apply and missing them can cause default or waiver of defenses. If that stage is reached, get legal help quickly.

11) When You Should Consult Counsel Immediately

Consider urgent legal advice if:

the letter alleges B.P. 22, estafa, or any criminal offense
large sums, business-critical contracts, or property are involved
you suspect prescription issues or venue/jurisdiction strategies
the dispute involves public statements, IP, or regulatory exposure
the other side demands you sign documents immediately

Even a short consult can prevent irreversible admissions.

12) A Simple “Decision Tree” You Can Use Today

Do you basically agree you owe it and can pay? → Request statement of account + settle with a written release.
Do you dispute the amount or basis? → Deny liability + request itemization + attach key proofs.
Do you want to settle but avoid admissions? → Send a “without prejudice” settlement offer separate from denials.
Is there a criminal angle (checks/estafa) or eviction risk? → Respond carefully, preserve evidence, and consider counsel review.

Quick Final Notes

A demand letter is a signal: the other side is building a record. Your reply should also build yours.
Your goal is to (1) avoid harmful admissions, (2) force clarity and documentation, (3) preserve defenses, and (4) keep settlement options open on your terms.

If you paste the text of the demand letter (remove personal details), I can draft a tailored reply that matches its claims and tone, and flags risky sentences to avoid.