Small Claims Court Philippines: How to Sue for Unpaid Personal Loans

Quick takeaway: Small Claims Court is a fast, paperwork-driven way to collect a personal loan in the Philippines. Lawyers generally can’t appear as counsel, evidence is mostly documents, the hearing is brief, and the judgment is final, executory, and unappealable (subject only to extraordinary remedies). It’s ideal when you have a clear debt (e.g., signed IOU, chat acknowledgments, e-wallet transfers) within the court’s monetary ceiling (which the Supreme Court adjusts from time to time—verify the current cap with your local first-level court before filing).

1) What counts as a “small claim”?

Nature of claim: Purely civil claims for money only (no damages for moral injury or injunctions), arising from loans, unpaid debts, services, rentals, or similar obligations.
Court: First-level courts — MeTC/MTCC/MTC/MCTC — depending on location.
Monetary limit: The jurisdictional ceiling is periodically revised by the Supreme Court. Confirm the current peso limit (exclusive of interest, damages, and costs) with the clerk of court or by checking the latest Revised Rules on Small Claims Cases before you proceed.
Parties:
- Individuals may sue and appear without a lawyer.
- Sole proprietors/partnerships/corporations may sue through an authorized representative (board/partner resolution or secretary’s certificate + government ID).

2) Should you use Small Claims for a personal loan?

Choose Small Claims when:

The debt is clear and provable by documents (promissory note, receipts, bank/e-wallet proof, text/FB/IG/Viber acknowledgments).
You want a quick, low-cost process.
You don’t need to claim separate moral/exemplary damages or complex relief.

Consider other tracks when:

You want to criminally prosecute (e.g., B.P. 22 for bouncing checks, or estafa). Those are separate from Small Claims.
You need injunctive relief (e.g., to stop an act) or to recover property.
The amount exceeds the small-claims cap (use the regular civil track).

3) Prescriptive periods (deadlines to sue)

Written loan/IOU: generally 10 years from default.
Oral loan/open account: generally 6 years.
Default typically accrues after a demand becomes due and unpaid (if the loan has no fixed due date, demand is needed to put the debtor in delay). Tip: A written demand letter also interrupts prescription.

4) Pre-filing checklist

A. Evidence you’ll attach

Loan proof: promissory note/IOU, chat or email acknowledgments, spreadsheet of advances, etc.
Payment history: bank/e-wallet screenshots, deposit slips, receipts.
Identity & authority: your government ID; if suing for a business, attach authorization documents.
Demand letter: with proof of sending (registered mail/verified email/chat delivery receipt) and a computation of the amount due (principal + agreed/ legal interest).

B. Amount computation

Principal still unpaid.
Contractual interest (if any). Courts may reduce unconscionable rates.
Legal interest (if no agreed rate or after judicial demand), computed per annum from default until full payment.
No punitive extras: Small Claims is for sum of money only; keep the prayer simple.

C. Venue

File in the first-level court where you reside or where the defendant resides (personal actions rule). If your contract has a valid venue stipulation, you may follow that.

5) Forms you’ll use (names may vary slightly by latest revision)

Statement of Claim (standard Small Claims form)
Verification and Certification Against Forum Shopping (often integrated)
Affidavits of you and any witness based on personal knowledge
Annexes (label and paginate): contracts, chats, screenshots, IDs, computations
For entities: Board/partner resolution or SPA for the representative

Ask the clerk of court for the current Small Claims packet; many courts provide printed sets or downloadable templates.

6) Filing fees & indigent status

Filing is cheaper than ordinary civil cases. Fees scale with claim amount.
If you qualify as an indigent litigant, request fee waiver (submit proof: payslips, Barangay/DSWD certification, ITR, etc.).

7) What happens after filing?

Docketing & Summons. The court issues a Summons and sets a hearing date (often within weeks).
Service on defendant. Usually by sheriff/process server. Small Claims permits streamlined service methods per the latest rules; courts may also allow alternative service if justified.
Defendant’s Response. Must be filed before or at the hearing using the standard Response form with annexes/counterclaims (subject to the small-claims cap).

8) The hearing (fast, informal, one-day)

No lawyers as counsel. Parties must personally appear and speak for themselves. (Counsel may sit beside you to advise off-record; the judge may disallow active lawyering.)
Single-session model. The judge first tries amicable settlement. If none, the court proceeds to summary reception of evidence (primarily your documents and affidavits).
Limited witnesses. Live testimony is discouraged unless absolutely necessary.
On-the-spot judgment. Courts strive to render a decision the same day or shortly after, in plain language.

9) Outcomes & remedies

If plaintiff is absent: case may be dismissed without prejudice.
If defendant is absent: court may decide on the record; failure to appear can be taken against the absent party.
Decision: final, executory, and unappealable. Ordinary appeal is not available. Only extraordinary remedies (e.g., Rule 65 certiorari) may be attempted in rare, jurisdictional cases.

10) Collecting after you win (execution)

If the defendant doesn’t pay by the date stated in the decision:

File a Motion for Execution (there’s usually a ready-made Small Claims form).
The court issues a Writ of Execution to the sheriff.
Sheriff’s options include:
- Garnishment of bank accounts or receivables (you must supply bank/employer info).
- Levy on non-exempt personal or real property.
- Examination of judgment obligor (court can compel disclosure of assets).
You may need to advance sheriff’s fees and provide leads on attachable assets. Keep your TIN, defendant’s full name/aliases, last known addresses, employers, and bank details ready.

11) Practical strategy for a personal-loan small claim

A. Build a clean documentary trail

Keep a timeline: date loaned, due date (or demand date), partial payments, promises to pay.
Export chat threads to PDF (with timestamps and names).
Consolidate bank/e-wallet proof and label each exhibit (Annex “A”, “B”, etc.).

B. Send a tight Demand Letter

State the amount, basis, deadline (e.g., 10 days), and the intent to file Small Claims if unpaid.
Send via registered mail and digital (email/chat) and save proof of sending/delivery.

Sample demand language (adapt as needed): “On 15 March 2024, you obtained a personal loan of ₱___ from me, payable on or before 15 June 2024. Despite repeated reminders, you have not paid. Please settle ₱[principal] + interest within 10 days from receipt of this letter, otherwise I will file a Small Claims case without further notice.”

C. File where it’s convenient to you (if venue allows)

Personal actions may be filed where you or the defendant resides — choose the venue that makes your attendance easiest.

D. Keep the “ask” simple

Your Prayer should be limited to: “Order defendant to pay ₱[sum] plus [contractual or legal interest] from [date], and costs.”

12) Common pitfalls (and how to avoid them)

Over-claiming beyond the cap. If your total claim busts the ceiling, the court may dismiss or refuse Small Claims jurisdiction. Trim to within the cap or use the regular civil route.
Messy screenshots. Courts appreciate orderly annexes. Paginate, label, and add a simple index.
No proof of default. If the loan had no due date, you must prove a demand (date sent + receipt).
Unconscionable interest. Very high rates can be reduced by the court; claim a reasonable rate or legal interest as fallback.
Representative lacks authority. If you’re suing for a business or as an assignee, attach the SPA/board resolution and IDs.
Skipping personal appearance. Your case can be dismissed if you (or your authorized representative) don’t show up.

13) Frequently asked questions

Q1: Can I include moral/exemplary damages? Not in Small Claims. It’s strictly for sum of money. Keep it to principal + interest + costs.

Q2: What if the debtor pays partially before hearing? You can amend the amount or enter into a compromise. If fully paid, move for dismissal.

Q3: Can we settle on installment terms? Yes. The court can approve a compromise agreement with clear installment schedule and default clause so it’s enforceable.

Q4: Can a lawyer speak for me? Generally no. Parties must personally present their case (lawyers may quietly advise).

Q5: What if the debtor files a counterclaim? It must also fit within the small-claims cap and be money-only; otherwise it’s for a different court track.

Q6: Is mediation required? Judges typically try conciliation at the start of the hearing. Many small claims settle here.

14) Step-by-step filing roadmap

Prepare: Evidence set, computation, demand, IDs, authority docs (if any).
Go to the first-level court for the correct venue; ask for the Small Claims forms and fee schedule.
Complete forms neatly; attach affidavits and annexes (properly labeled).
Pay filing fees (or apply as indigent).
Get your hearing date and copy of Summons (the court serves it; cooperate with the sheriff).
Attend the hearing on time with originals and extra copies.
Receive judgment; if in your favor and unpaid, file Motion for Execution.

15) Smart document pack (suggested)

Cover page (case title, party details)
Index of Exhibits
Statement of Claim + Verification/Certification
Affidavit (you) + any supporting affidavits
Demand Letter + proofs of sending/receipt
Contract/IOU/Chat printouts
Payment ledger (table with dates, amounts, running balance)
Proof of payments (receipts, bank/e-wallet)
Government IDs (parties/representatives)
Authority docs (SPA/board resolution/secretary’s certificate)

16) Final notes

Check the current monetary ceiling and the latest Small Claims forms with your local first-level court; these are occasionally revised by the Supreme Court.
Keep your claim clear, document-heavy, and within scope. Small Claims rewards prepared litigants.
This article is general information, not legal advice. If your situation has special wrinkles (multiple debtors, secured collateral, cross-border elements, or potential criminal exposure), consider a brief consult with counsel before you file, even if the hearing itself is lawyer-free.

If you want, I can draft a ready-to-file Small Claims packet (Statement of Claim, affidavits, demand letter, exhibit index) tailored to your facts—just share the key details (amount, dates, documents you have, and the city/municipality).