This article explains the legal framework, practical differences, risks, and best-practice workflows when deciding between sending a written demand letter and picking up the phone to collect credit card receivables in the Philippines. It is written for lenders, collection agencies, and in-house counsel, but it’s equally useful for cardholders who want to understand their rights.

1) The Legal Groundwork

1.1 Obligations and “Delay” (Mora)

Under the Civil Code, a debtor generally falls into delay (mora) only after demand—judicial or extrajudicial—unless:
1. the agreement says no demand is needed,
2. time is of the essence (a “day certain” and performance was fixed to a date), or
3. demand would be useless (e.g., performance has become impossible or the debtor made it clear they will not pay).
A written demand is not always legally required to sue, but it is the clearest, least-controversial proof that the creditor placed the debtor in default.

1.2 Interruption of Prescription

Civil Code Article 1155 provides that the running of prescription (the time to sue) is interrupted by:
- filing a case,
- a written extrajudicial demand, or
- the debtor’s written acknowledgment of the debt.
For credit cards (typically written agreements), actions usually prescribe in ten (10) years from accrual, subject to case-specific facts. A written demand helps establish dates and can interrupt prescription.

1.3 Regulatory Landscape for Credit Cards

Banks and credit card issuers operate under the Bangko Sentral ng Pilipinas (BSP) consumer-protection regime and issuances implementing the Philippine Credit Card Industry Regulation Law (RA 10870).
Financing and lending companies (particularly those using digital apps) are overseen by the SEC, which has issued rules against unfair collection practices (e.g., harassment, public shaming).
Data Privacy Act (RA 10173) governs personal data processing. In collections, this means:
- Collect only what is necessary, use it only for legitimate collection purposes, and secure it appropriately.
- Do not disclose a consumer’s debt to third parties (neighbors, co-workers, relatives) without a lawful basis or consent, except minimal “skip-tracing” requests strictly to locate the debtor, without revealing the debt.
Anti-Wiretapping Act (RA 4200): recording a phone call requires consent of all parties, unless a valid court order exists. Non-consensual secret recordings are criminally punishable.
Unfair/deceptive acts can create liability under criminal laws (e.g., coercion, threats), tort principles (abuse of rights), and administrative sanctions (BSP/SEC/Privacy Commission).

2) Demand Letter vs. Phone Call: What Each Does Legally

Aspect	Written Demand Letter	Phone Call
Puts debtor in legal delay (mora)	Yes (strongest evidence)	Possibly (if clearly made and well-documented), but harder to prove
Interrupts prescription	Yes, if written	No, not by itself
Evidentiary value in court	High (attachable document, dates, contents)	Variable (call logs help; recordings need consent)
Consumer-protection risk	Lower if professional, accurate, non-threatening	Higher risk of harassment/misrepresentation claims if not controlled
Negotiation dynamics	Formal; encourages structured settlement	Flexible; can rapidly explore options, clarify disputes
Proof of disclosure/computation	Easy to show (enclose statements, interest tables)	Must be memorialized afterwards (call notes, follow-up email/text)

Bottom line: For legal positioning, a written demand letter is foundational. Calls are excellent for resolution momentum but should be paired with written documentation.

3) When to Use Each (and Why)

3.1 Use a Demand Letter when you need to:

Start the clock on default (mora) in a way that is provable.
Interrupt prescription.
Fix the record: amount due, interest/penalties computation, contract references, and a pay-by date.
Provide a final demand before endorsing to litigation or a collection agency.
Show regulators/courts that you followed fair collection and data privacy steps.

3.2 Use a Phone Call when you need to:

Locate the cardholder or quickly verify identity/contact details.
Diagnose disputes (fraud claims, billing errors, fee misunderstandings).
Offer restructuring (installments, temporary interest relief) or discuss settlement.
Re-establish goodwill and reduce the chance of formal complaints.

Best practice: Send a written demand, then call to discuss options, and memorialize any agreements in writing.

4) Content & Crafting of a Demand Letter

4.1 Essential Elements

Creditor details (issuer/collector, contact person).
Debtor identity (name, last known address, account number—redact where prudent).
Basis of obligation (credit card agreement; cite key clauses if helpful).
Itemized amount due (principal, interest, penalty, other charges) with computation date and formula or statement references.
Clear deadline to pay or contact (e.g., 10–15 days from receipt).
Consequences of non-payment (referral to counsel/agency, reporting to credit information systems as allowed by law, filing of suit). Avoid threats of arrest or criminal cases for ordinary non-payment.
Payment options and channels; right to dispute and how.
Data privacy notice (purpose, lawful basis, contact for privacy concerns).
Attachments: latest statements, SOA, ledger, excerpts of terms and conditions.

4.2 Service & Proof

Send by registered mail with return card, reputable courier with POD, or personal service with signed acknowledgment.
Email can supplement, but physical service builds stronger proof of delivery.
Keep a document trail: draft, enclosures, proof of posting, returned card, and internal approvals.

4.3 Tone & Compliance

Be accurate, neutral, and non-intimidating.
Avoid deceptive letterheads (e.g., imitating government or court).
Do not list the debtor’s employer or relatives in the address block unless that’s the actual mailing address provided for correspondence, and be mindful of privacy.

5) Calling the Debtor: Do’s and Don’ts

5.1 Do’s

Verify identity before discussing specifics.
Call at reasonable hours and keep tries proportionate; space attempts.
Identify yourself, your organization, and your purpose honestly.
Keep a polite, factual tone; offer solutions (restructuring, payment plan).
Take notes (date/time, who you spoke with, summary).
If you intend to record, obtain express consent on the call before recording.
Follow with a confirmatory message (email/text) summarizing any agreed actions.

5.2 Don’ts

No harassment: repeated calls, shouting, insults, or shaming.
No misrepresentation: do not claim to be a government officer, lawyer, or court representative if you’re not.
No unlawful threats: ordinary credit card non-payment is civil, not criminal (absent independent crimes like fraud or bouncing checks under special circumstances).
No third-party disclosure: do not reveal the debt to co-workers, supervisors, neighbors, or family members without lawful basis/consent.
No secret recordings without consent.
No workplace disruptions that could trigger privacy or labor complaints.

6) Interest, Fees, and “Unconscionability”

Although historical usury ceilings have been largely lifted, Philippine courts strike down or reduce unconscionable interest and penalty charges.
Ensure that interest rates, penalty charges, and fees match the card agreement and current regulatory limits/issuances, if any.
Provide transparent computations; ambiguity is usually construed against the drafter/issuer.

7) Using Third-Party Collection Agencies

Ensure a written authorization from the issuer to the agency, and that agents identify themselves and the principal.
Align scripts, letter templates, and data flows with:
- BSP/SEC consumer-protection standards,
- the Data Privacy Act (minimize, secure, and lawfully process data), and
- recordkeeping (audit trails of attempts, letters, and outcomes).
Monitor for complaints and maintain a remediation protocol.

8) Escalation Path: From Soft Collection to Litigation

Soft Collection (0–90 days from default, depending on issuer policy)
- Courtesy reminders, SMS/email nudges, first written demand, and calls.
Hard Collection
- Final demand letter, settlement offers, formal restructurings.
Pre-Litigation
- Account reconciliation, documentary build-out (card application, T&Cs, statements, computation, proof of demands).
Litigation
- Choose between small claims (if within the Supreme Court’s current monetary threshold) or ordinary civil action.
- Anticipate defenses (billing errors, lack of written proof, unconscionable interest, prescription).
- Keep chain of custody for documents and authenticated business records.

9) Compliance Risks & How to Avoid Them

Harassment / Unfair Practices: institute call caps, cooling-off periods, and supervisor reviews.
Privacy Violations: role-based access; redact where possible; don’t leave detailed voicemails others can hear.
Evidence Gaps: missing contracts, unclear computations, or no proof of delivery—solve by front-loading documentation.
Unauthorized Recording: use consent scripts or disable recording.
Misstatements on Legal Consequences: avoid claiming arrest or criminal exposure for ordinary non-payment.

10) Practical Workflow (Checklist)

Before outreach

✓ Confirm KYC details, most recent address/email/phone.
✓ Reconcile ledger and freeze the computation date.
✓ Prepare a written demand (with annexed SOA/ledger).

Send

✓ Serve demand via registered mail/courier (keep proof).
✓ Email a courtesy copy.

Call

✓ Verify identity; explain purpose; discuss options.
✓ If negotiating, summarize in writing (email/text) and set a follow-up date.

If unresolved

✓ Issue final demand with a firm deadline.
✓ Prepare litigation file (contract, statements, demands with proofs, call logs, settlement offers).
✓ Decide on small claims vs ordinary action; check the current monetary threshold and venue rules.

11) Templates

11.1 Demand Letter (Credit Card)

Re: Account No. [XXXX-XX-XXXX] — Demand for Payment

Dear [Name],

Our records show that your credit card account is in arrears. As of [Computation Date], the following are due and demandable:

Principal: ₱[amount]

Interest: ₱[amount] (from [date] to [date] at [rate])

Late/Other Charges: ₱[amount]

Total: ₱[total]

Please settle the above within [__] days from receipt of this letter or contact us to discuss a payment arrangement. If we do not hear from you, we may endorse the matter for further action, including reporting to credit information systems as allowed by law and filing the appropriate civil case.

You may pay via [channels]. If you dispute this amount, kindly send your written explanation and supporting documents to [email/address] within the same period.

Data Privacy Notice: We process your personal data to manage and collect your account in accordance with the Data Privacy Act and our privacy policy. For concerns, contact our Data Protection Officer at [details].

Sincerely, [Name / Title] [Issuer/Agency] | [Address] | [Contact Numbers]

11.2 Call Script (Collector)

“Good [morning/afternoon], may I speak with [Full Name]? I’m [Name] from [Issuer/Agency] concerning your credit card account. Is this a convenient time to talk?”
Verify identity (e.g., last 2 digits of account or DOB—avoid excessive data).
“As of [date], your total due is ₱[amount]. We can explore payment options—a one-time settlement or an installment plan. What would work best?”
“Would you like me to email or text the breakdown and a link to pay?”
If recording: “With your permission, may we record this call for documentation?”
Close: “I’ll send you a summary of what we agreed and a reminder before the due date. Thank you for your time.”

12) Frequently Asked Questions

Q: Can we call family members or the debtor’s office? A: Only for location verification and without mentioning the debt. Disclosing the debt risks privacy and harassment violations.

Q: Is a demand letter mandatory before suing? A: Not always, but it’s strongly advisable to (a) establish delay, (b) interrupt prescription, and (c) strengthen your evidence.

Q: Can we threaten criminal cases for non-payment? A: No, not for ordinary credit card non-payment. Do not threaten arrest or prosecution.

Q: Can we record calls for quality and evidence? A: Only with express consent from the other party, unless a valid court order says otherwise.

Q: What about interest caps? A: Follow the card agreement and any current BSP ceilings/issuances. Courts may reduce unconscionable rates or penalties.

13) Takeaways

Send a written demand to lock in your legal posture—default, prescription interruption, and evidentiary clarity.
Call to solve the problem—negotiate, clarify, and keep relations professional.
Keep everything compliant: fair treatment, privacy safeguards, accurate disclosures, and proper documentation.
When in doubt, memorialize in writing and assume your materials may be reviewed by a court or regulator.

This article is for general information only and is not legal advice. For specific cases, consult Philippine counsel.