Remedies for Non-Payment of Loan in Small Claims Court

Simplified Question: What should be done if someone who borrowed money refuses to pay and does not respond to the small claims court notice?

In the Philippines, the Small Claims Court provides a simplified and inexpensive procedure for litigating money claims not exceeding PHP 1,000,000. If the borrower refuses to pay and ignores the court notice, there are several steps and legal remedies you can pursue.

Understanding the Small Claims Process

1. Filing a Small Claims Case: You have already filed a case in the Small Claims Court, which is the correct initial step. This process involves submitting a Statement of Claim along with supporting documents such as promissory notes, receipts, and any written agreements.

2. Service of Summons: The court will issue a summons to the defendant (the borrower), notifying them of the claim and the scheduled hearing date. If the defendant refuses to receive the summons, the court may use alternative methods to serve the notice.

Defendant's Refusal to Accept Summons

1. Alternative Service: If the defendant avoids receiving the summons, the court can authorize alternative methods of service, such as:

   • Substituted Service: Leaving the summons with a person of suitable age and discretion at the defendant's residence or workplace.
   • Publication: Publishing the summons in a newspaper of general circulation, although this method is less common in small claims cases due to the cost involved.

2. Failure to Appear: If the defendant still does not appear at the scheduled hearing, the court can proceed with the case ex parte (in the absence of the defendant). The court will decide based on the evidence presented by the plaintiff (you).

Enforcement of Judgment

1. Court Judgment: If the court rules in your favor, a judgment will be issued ordering the defendant to pay the amount claimed. The judgment can be enforced through several means:

   • Writ of Execution: You can request the court to issue a writ of execution, which directs a sheriff to seize the defendant’s property to satisfy the judgment.
   • Garnishment: The court may order the garnishment of the defendant’s bank accounts or wages.

2. Sheriff’s Role: The sheriff is responsible for executing the writ. This may involve seizing and selling the defendant’s assets or garnishing their income until the debt is paid.

Additional Remedies

1. Contempt of Court: If the defendant repeatedly refuses to comply with court orders, they may be held in contempt of court. This can result in fines or imprisonment until the defendant complies with the court’s directives.

2. Negotiation and Mediation: Even after a judgment, you can still attempt to negotiate with the defendant for a payment plan or settlement. Mediation services are available to facilitate such negotiations.

Conclusion

In the Philippines, if someone refuses to pay a loan and ignores the Small Claims Court notice, the court can still proceed with the case and issue a judgment in your favor. Enforcement mechanisms such as a writ of execution or garnishment can be used to recover the debt. If the defendant continues to evade payment, they may face contempt charges. Utilizing these legal remedies ensures that your rights as a creditor are protected and that you can recover the amount owed.