Small Claims Court (Philippines): How to File Collection Cases for Unpaid Debts

This is a practical, everything-you-need guide to filing a sum of money case for unpaid debts in the Philippine small claims courts. It’s written for creditors/collectors (individuals and businesses) and for debtors who want to know what to expect. Laws and Supreme Court rules do change, so before you file, check the latest version of the Rules of Procedure for Small Claims Cases (A.M. No. 08-8-7-SC, as amended) at your nearest first-level court or the Supreme Court website.

1) What “Small Claims” Means

Small claims are purely civil actions for the payment or reimbursement of a sum of money. Typical examples:

Unpaid personal loans or cash advances
Unpaid credit/charge card balances, store cards, or payday/online loans
Unpaid goods sold and delivered, professional fees, rentals, utilities, security deposits due, etc.
Damages to property (e.g., vehicle repair costs)
Enforcement of Barangay amicable settlements or Pangkat arbitration awards (for money)

Not covered: claims that involve ownership/possession of real property, injunctions, specific performance other than paying money, or claims that are criminal in nature (e.g., estafa). (A bad check or estafa angle may be separate; small claims is strictly for the civil money claim.)

Amount limit (jurisdictional threshold)

Small claims have a maximum amount (exclusive of interest, damages, penalties, attorney’s fees, and costs). The Supreme Court has raised this cap several times. Verify the current peso limit with the court clerk or the latest small claims rules. Your principal claim must be within the limit; interest/penalties may exceed it.

2) Where and Who Can File

Which court?

File in the first-level courts (MeTC/MTCC/MTC/MCTC). Venue follows the usual rule for personal actions:

Where plaintiff resides, or
Where defendant resides, or
Where the cause of action arose (e.g., where payment was due)

Who may sue and be sued

Natural persons (Filipino or foreign, resident or non-resident)
Juridical persons (corporations, partnerships, cooperatives, associations, sole proprietorships)

Representation (no-lawyer rule)

Lawyers are not allowed to appear in small claims hearings for or against a party (unless the lawyer is the party).
Corporations/partnerships appear through an authorized representative (e.g., officer/employee) armed with a Board Resolution/Secretary’s Certificate.
Individuals may authorize a representative via Special Power of Attorney (SPA).

3) Before You File

A. Check prescription (deadline to sue)

Written contract (e.g., loan/credit card/contract): 10 years
Oral contract / quasi-contract: 6 years
Quasi-delict (tort): 4 years (often outside small claims scope)

Counting usually starts from default (e.g., date payment was due or demand was received and unpaid).

B. Demand letter (not always mandatory, but smart)

Send a dated written demand to:

Fix the date of default (helps for interest),
Encourage voluntary payment/settlement, and
Show good faith (attach it to your claim).

C. Barangay conciliation (Katarungang Pambarangay Law)

If both parties are natural persons and reside in the same city/municipality, barangay conciliation is generally a condition precedent. Obtain a Certification to File Action if no settlement is reached. Not required when any party is a juridical person, parties reside in different cities/municipalities, or the dispute is excluded by law.

4) What to File (Court Forms & Attachments)

The small claims system is forms-driven. Go to the first-level court or download the Small Claims Forms (e.g., Statement of Claim, Response, Summons, Agreement of Settlement) and fill them out legibly.

Your packet:

Statement of Claim (SoC) – verified, with Certification against Forum Shopping.
Attachments (certified true copies or duplicates, if possible):
- Contract/loan documents, promissory notes, charge slips, invoices/SOA
- Proof of deliveries/services (receipts, job orders, acceptance)
- Demand letter and proof of service/receipt
- Computation of claim (principal, interest, penalties, less payments)
- Barangay Certification to File Action (if applicable)
- SPA (individual) or Secretary’s Certificate/Board Resolution (corporation)
Affidavits of the plaintiff and any witnesses (Q&A format is best practice), plus IDs.
Filing & sheriff’s/process fees (ask the Clerk of Court for the current schedule). You may apply as an indigent/pàuper litigant to reduce/waive fees (attach proof of income).

Tip: Number the pages and exhibits (Exh. “A”, “A-1”, etc.). Make extra sets for the court and each defendant.

5) How the Case Proceeds (Timeline)

Filing: Lodge your SoC and pay fees at the docket section. The court issues Summons and sets a hearing.
Service of Summons: By sheriff/process server, often within a few days. If personal service fails, courts may allow substituted service or electronic service (email/messaging), per current rules/administrative circulars.
Response: The defendant typically has 10 calendar days from receipt of Summons to file a verified Response with attachments and any counterclaim within the small-claims cap.
One-day hearing: Small claims are non-litigious and informal. The judge:
- Tries amicable settlement first.
- If no settlement, proceeds to simplified hearing. Strict rules of evidence don’t apply; affidavits and documents usually suffice.
- No lawyers. The judge directly asks questions of the parties.
Decision: Usually on the same day or within 24 hours from the end of the hearing. The decision is final, executory, and unappealable under the Rules.
Execution: Upon motion, the court issues a Writ of Execution to collect (garnish bank accounts/receivables, levy non-exempt personal property, etc.).

Prohibited filings (examples): motions to dismiss (except for lack of jurisdiction/improper venue), motions for reconsideration/new trial, petitions for relief, replies, memoranda, demurrers, discovery, motions for extension, third-party complaints, etc. The goal is speed and simplicity.

6) Elements You Must Prove (for Collections)

To win a collection case, be ready with:

Existence of the debt (contract, note, account statements, delivery receipts, proof of service)
Default (due date + non-payment; demand received but unpaid)
Amount due (clear computation of principal, payments/credits, interest, penalties, fees)
Your standing (you’re the creditor/assignee, with proof of assignment if applicable)

Interest & charges: Philippine jurisprudence generally uses 6% per annum legal interest for monetary judgments (the court may adjust from date of default/demand or filing until full payment). Penalty/interest clauses may be reduced if unconscionable.

No claim-splitting: Don’t file multiple small claims to evade the cap. If your principal exceeds the small claims limit, consider a regular civil action instead.

7) Practical Filing Checklist (Quick Reference)

Checkbox that your principal is within the current small-claims cap
Venue is proper (your residence, defendant’s residence, or where cause arose)
Within prescription (10 yrs written; 6 yrs oral/quasi-contract)
Barangay conciliation done or not required (attach certification if needed)
Statement of Claim completed, verified, with non-forum shopping certification
Computations (principal, interest, penalties, less payments), with dates
Supporting documents marked and attached
Affidavits (Q&A) and IDs
SPA or Sec. Cert./Board Resolution for representatives
Filing fees (or indigency proof)

8) Hearing Day: What to Expect

Be early; bring originals of your documents.
Be ready to settle—if you sign a compromise, it’s immediately enforceable like a judgment if the court approves.
Speak plainly. The judge will guide the discussion.
If you’re the defendant and you owe part—but not all—of the claim, say so and show your computation and proof.

9) The Judgment & How It’s Collected

If you win, the judgment will typically state:

Principal amount due
Interest (often 6% p.a., with clear start date)
Penalties (if reasonable)
Costs (filing/service fees; attorney’s fees are rare because lawyers don’t appear)

If the debtor doesn’t pay, file a Motion for Execution. The sheriff may:

Garnish bank accounts and receivables
Levy on non-exempt personal property
Serve the writ on employers/clients for wage/receivable garnishment (subject to exemptions)

Exemptions from execution (high level): necessary clothing, modest household items, tools of trade, and (with exceptions) the family home. Ask the court/sheriff for the current list and thresholds.

10) Special Situations & Tips

Multiple defendants: Clarify if liability is solidary (each is liable for the whole) or joint (liable only for their share). Contracts often say “solidary.”
Assignments/endorsed notes: If you bought the receivable, attach the assignment and proof you now own the claim.
Electronic evidence: Printed emails/SMS/chat logs can be admitted under the Rules on Electronic Evidence; authenticate via affidavit.
Remote appearances: Many courts allow videoconference for good cause—check local practice.
Data Privacy & fair collection: Keep debtor data secure; avoid harassing/abusive collection tactics. Threatening criminal cases for mere non-payment can be unlawful.
Credit cards/online lending: Attach account statements, terms & conditions, and transaction history. If interest/penalties are high, courts may moderate them.

11) Simple Interest Computation (Template)

Principal: ₱P
Contract rate, if any (state it, and compute from due date or demand); if none/invalid → apply 6% p.a. legal interest from default/demand
Judgment interest: even if you used a contract rate before judgment, courts typically apply 6% p.a. from finality until full payment
Penalties: only if reasonable; be ready for possible reduction
Less partial payments/credits

Formula (daily accrual): Interest = Amount × (annual rate) × (days/365). Attach a one-page table showing dates and running balance.

12) Common Questions (Quick Answers)

Can I claim more than the cap if interest/penalties push it over? Yes, cap is on principal only; interest/penalties/costs are excluded from the cap.
Can I appeal? Under the Rules, small claims judgments are final, executory, unappealable. A Rule 65 petition (certiorari) is extraordinary and only for grave abuse of discretion—don’t count on it.
Do I need to notarize everything? Affidavits must be notarized. Document copies should be clear; bring originals to the hearing.
What if I can’t find the defendant? Ask the court for alternative service (substituted/electronic) and provide details of efforts to serve.
Can a company file small claims? Yes—appear through an authorized representative (with proper corporate authority papers).

13) Filing Strategy (If You’re the Creditor)

File in the venue most convenient to you (if proper).
Lead with the strongest paper: signed note/contract + proof of default + clean computation.
Be reasonable on interest/penalties—courts often trim excessive rates.
Offer a settlement with a realistic installment plan you can enforce (e.g., post-dated checks or automatic transfer, with default clause).

14) If You’re the Debtor (Defenses That Matter)

No valid debt / mistaken identity
Wrong amount (show payments and correct computation)
Unconscionable interest/penalty
Prescription (time-barred)
Wrong venue / lack of barangay conciliation (if applicable)
Not the proper party (plaintiff lacks standing/ownership of the receivable)

Bring receipts, bank proofs, messages, and IDs to back up your side.

15) Quick Filing Roadmap (Step-by-Step)

Assess: Principal within cap? Within prescription? Proper venue?
Conciliate (if required) → get Certification to File Action.
Prepare: Statement of Claim + exhibits + affidavits + authority papers.
File & pay: Docket at first-level court; get hearing date; Summons to be served.
Wait for Response: (Defendant has ~10 days from service.)
Hearing: Attempt settlement → If none, one-day trial.
Decision: Usually same day / within 24 hours.
Execute: If unpaid, move for writ of execution.

Final Notes & Cautions

Threshold amount and some timelines have been amended over the years. Always confirm the current cap, latest prohibited pleadings, and service rules with the Office of the Clerk of Court when you file.
This guide is general information, not a substitute for tailored legal advice. For complex situations (e.g., multiple debtors, cross-border issues, secured obligations), consult counsel outside the hearing (counsel can still help you prepare your papers even if they can’t appear).

If you want, I can turn this into a printable checklist pack (fillable Statement of Claim template + computation sheet + sample demand letter).