Issuing a Letter of Demand: When and How to Take Legal Action (Philippine Context)

Disclaimer: The following discussion provides general legal information and is not a substitute for professional legal advice. If you need guidance specific to your situation, please consult a qualified attorney.

1. Introduction

In the Philippines, a Letter of Demand—often called a "demand letter"—is an essential preliminary step before initiating legal action. It is typically sent by an aggrieved individual or entity to another party to assert a right or claim, and to seek a remedy such as payment of a sum of money, fulfillment of an obligation, or cessation of harmful conduct. Understanding how and when to use a Letter of Demand can help avoid protracted disputes and clarify each party’s position before heading to court.

2. Legal Basis and Purpose

Civil Code Provisions
- While there is no single statute that exclusively governs the issuance of demand letters, Articles 1155 and 1169 of the Civil Code of the Philippines touch on the idea of “extrajudicial demand,” which can interrupt prescription (the running of the statute of limitations) or put the debtor in default.
Rules of Civil Procedure
- The Revised Rules of Court do not specifically prescribe the form of a Letter of Demand, but they often require that certain legal actions include evidence of prior demand or notice to the defendant to cure or settle the dispute before a suit is filed.

Why Issue a Demand Letter?

Settlement or Negotiation: It encourages an out-of-court resolution by informing the other party of the specific claim and the steps to rectify it.
Legal Prerequisite: In many contractual or debt-related disputes, sending a demand letter is either a legal requirement or a strong customary practice. Failure to send a letter of demand could weaken a plaintiff’s position in a subsequent lawsuit.
Proof of Good Faith: Courts generally look favorably on parties who attempt amicable settlement before resorting to litigation.
Interrupting Prescription or Putting in Default: A written demand can either interrupt the period within which a legal claim must be made (prescriptive period) or place the other party in legal default, which can affect interest obligations and other legal consequences.

3. When to Issue a Letter of Demand

A Letter of Demand may be issued in a wide range of situations, including but not limited to:

Unpaid Debts or Loans: When an individual or business owes a sum of money but refuses or fails to pay by the agreed date.
Breach of Contract: If one party fails to perform an obligation under a contract (e.g., failure to deliver goods, to complete services, or to honor warranty terms).
Unpaid Rent or Lease Violations: Landlords and lessors often issue demand letters to tenants for unpaid rent or breaches of a lease agreement.
Damages Claims: In personal injury or property damage cases, a demand letter can request compensation for medical expenses, repairs, or other financial losses.
Insurance Claims: Where an insurance company refuses or delays payment, the insured party may send a formal demand outlining the basis for the claim.

4. Elements of a Letter of Demand

Although the format is not strictly dictated by law, a well-crafted Letter of Demand in the Philippines usually contains the following elements:

Heading and Contact Details
- The sender’s full name, address, and contact information.
- The recipient’s full name, address, and contact information (to the extent known).
Date
- The date the letter is written is important for determining deadlines or default.
Salutation and Introduction
- A brief statement identifying the nature of the relationship between the parties (e.g., creditor-debtor, lessor-lessee, contracting parties) and the purpose of the letter.
Statement of Facts
- A clear, concise account of the relevant facts, including any pertinent dates, contract clauses, or events that led to the dispute.
Legal Basis (if applicable)
- Mention the relevant contractual provisions, laws, or regulations supporting your claim.
- For instance, if it’s a debt claim, reference the loan agreement or invoice details; if it’s a breach of contract, cite the specific clause violated.
Demand or Request
- A direct statement specifying what you want the recipient to do, such as pay an amount, deliver goods, or perform an obligation.
- It should also include the amount of money, interest rates (if any), or specific performance required.
Deadline or Time to Comply
- Typically, you give a reasonable period (e.g., 5, 7, 10, or 15 days) for the other party to comply. Reasonableness can depend on the nature of the obligation and industry practices.
Possible Consequences of Non-Compliance
- A warning that legal action (e.g., filing a civil, criminal, or administrative case) will be pursued if the party does not comply with the demand.
- This underscores the seriousness of the matter.
Closing and Signature
- Politely conclude the letter, reiterate the demand, and affix your signature (or the signature of your legal counsel if represented by one).
- Provide your name in print and your position/title if representing a business.

5. Practical Steps and Considerations

Drafting the Letter
- While you can write the letter yourself, seeking assistance from a lawyer ensures it meets any legal requirements and includes clear, well-founded arguments.
Mode of Delivery
- Send the letter by registered mail, courier with tracking, or personal service with proof of receipt. This formal proof of delivery is crucial if you later need to show in court that the other party was notified of the demand.
Keep Documentation
- Retain copies of the demand letter, proof of mailing, and any acknowledgement from the recipient. These may be used as evidence if the case escalates to court.
Wait for a Response
- Allow the recipient the indicated number of days to respond or comply. In some cases, they might settle, offer a payment plan, or request clarifications.
Follow-Up
- If the deadline expires without a response or settlement, a follow-up reminder can sometimes prompt action before you escalate the matter legally.

6. Timeline for Legal Action

Reasonable Period

A demand letter typically gives a time frame for compliance. This time period should be reasonable and proportionate to the nature of the obligation. For instance, a smaller debt may only warrant a short notice period, whereas a major contractual dispute could require more time.

Next Steps if the Demand is Ignored

If the letter is ignored or the other party refuses to settle, you may move to file a complaint in the appropriate court. The location (venue) and type of court depend on the nature and amount of the claim (e.g., Municipal Trial Court for smaller claims, Regional Trial Court for bigger or more complex cases).

Prescriptive Period

Sending a demand letter can interrupt the running of the prescriptive period. For example, in the context of debt collection, a written extrajudicial demand prevents a claim from becoming time-barred for a certain period.

7. Enforcement and Legal Remedies

Once you decide to pursue formal legal action, here are common remedies or actions:

Civil Case for Sum of Money or Damages
- Often involves a Complaint for Collection of Sum of Money (for debts) or a Complaint for Damages (for breaches of contract or tort claims).
Provisional Remedies
- In some cases, you can ask the court for a writ of attachment (to secure assets of the defendant), garnishment (to secure bank accounts or wages), or injunction (to stop certain actions).
Small Claims Court
- For claims not exceeding the amount set by Supreme Court rules (e.g., $10,000 or lower in some jurisdictions—but in the Philippines, check the updated limit in small claims procedure, which periodically changes), you can proceed under the small claims process, which is faster and does not necessarily require a lawyer to represent you.
Criminal Complaint (If Applicable)
- If fraud or other criminal conduct is involved (e.g., bouncing checks under the Batas Pambansa Blg. 22 or estafa under the Revised Penal Code), you may file a criminal complaint. However, legal counsel is highly advised in determining if criminal charges are warranted.
Alternative Dispute Resolution (ADR)
- Before or after sending a demand letter, parties may consider mediation or arbitration, especially if the underlying contract requires it or if both parties voluntarily agree to it.

8. Common Pitfalls and Tips

Vague or Confrontational Language
- A demand letter should be clear and factual. Avoid emotional, aggressive, or threatening language, which can backfire and complicate negotiations.
Unreasonable Demands
- Demanding sums of money without basis or imposing unrealistically short deadlines can weaken your credibility if the case goes to court.
Failing to Provide Supporting Documents
- Attach pertinent documents (e.g., invoices, contracts, receipts) to strengthen your position and show you are acting in good faith.
Ignoring the Recipient’s Response
- Even if the other party responds with a counter-offer, evaluate it carefully. Engaging in negotiation sometimes yields a better outcome than immediate litigation.
Not Seeking Legal Advice
- Complex or high-stakes cases should involve consultation with a legal professional to ensure that your rights and remedies are properly asserted.

9. Conclusion

A Letter of Demand is an important legal tool in the Philippines that can help parties resolve disputes before resorting to the courts. Properly issuing a demand letter involves stating the facts, providing a legal basis for the claim, clearly articulating what remedy is sought, and giving the other party a chance to comply or negotiate. When done correctly, it lays a solid foundation for a potential lawsuit if negotiations fail.

Ultimately, whether you are the party issuing or receiving a demand letter, prompt and careful attention is key. Seeking legal advice can help ensure that your rights are protected, that you follow the correct procedural requirements, and that you maximize the chance of a favorable resolution—whether by amicable settlement or court judgment.

Remember: Laws and court rules can change over time, so stay updated or consult a lawyer for current legal requirements and procedures.