Understanding Demand Letters and Associated Legal Costs in the Philippines: A Comprehensive Guide

Disclaimer: The information provided in this article is for general informational purposes only and should not be construed as legal advice. Always consult an attorney for legal concerns specific to your situation.

1. Introduction

In the Philippines, a demand letter is a formal, written communication typically sent by one party to another to request or “demand” the performance of a legal or contractual obligation. Demand letters commonly address issues such as non-payment of a debt, breach of contract, or other situations where a right has been violated and legal recourse may be imminent.

While demand letters are not strictly required in every legal dispute, sending one can be a crucial step: it places the recipient on notice of the claim, clarifies the amount or action sought, and can trigger legal remedies (such as the accrual of interest). Moreover, having documentary evidence that a demand was made can be important if litigation eventually ensues.

This guide will cover:

The legal basis and significance of demand letters.
Key elements typically found in a demand letter.
Common scenarios that call for a demand letter.
Associated legal costs.
Practical tips on handling and drafting demand letters.

2. Legal Basis and Significance of Demand Letters

2.1. Extrajudicial Demand Under Philippine Law

Under the Civil Code of the Philippines (Republic Act No. 386), particularly in obligations and contracts, certain rights, remedies, and obligations can be triggered upon an extrajudicial demand. For instance:

Accrual of Interest: Article 1169 of the Civil Code states that when the obligation consists in the payment of a determinate thing and the obligor delays, the demand may serve as a starting point for the accrual of legal interest or moratory interest.
Prescriptive Period: Although the general rule is that the prescriptive period (the period within which a case must be filed) is determined by law, making an extrajudicial demand can sometimes interrupt the running of the prescriptive period under specific circumstances.

2.2. Importance in Litigation

A well-drafted demand letter may:

Promote Settlement: Before a lawsuit is filed, a clearly communicated demand can encourage an out-of-court settlement.
Establish Good Faith: Courts often look favorably on attempts to settle disputes amicably before resorting to litigation.
Serve as Evidence: The demand letter can be presented to the court as evidence that the defendant had knowledge of the claim and refused or failed to comply.

3. Key Elements of a Demand Letter

While the exact content and structure of demand letters can vary depending on the nature of the dispute, a typical Philippine demand letter often includes:

Date and Heading
- The date of writing and a clear heading (e.g., “Demand Letter” or “Final Demand for Payment”).
Parties’ Information
- The name, address, and contact details of both the sender (or their legal counsel) and the recipient.
Statement of Facts
- A concise narration of the relevant facts: the nature of the agreement, the timeline of obligations, and the specific breach or violation committed.
Legal Basis
- Citation of relevant laws, contracts, or provisions in the Civil Code or other statutes that support the claim.
Specific Demand
- A clear, itemized demand for what is owed or what action must be taken. Examples include payment of a sum, return of property, or compliance with a contract clause.
Deadline or Timeline for Compliance
- The recipient is usually given a specific period (e.g., 5, 7, 10, or 15 days) within which to fulfill the demand.
Legal Consequences of Non-Compliance
- A notice stating that failure to comply may result in legal action, which could include a lawsuit, additional costs, damages, and interest.
Signature and Notarization
- The signature of the sender or the sender’s attorney. While not mandatory, notarization can strengthen the authenticity of the document.

4. Common Scenarios Requiring Demand Letters

Non-Payment of Debt or Loan
- Individuals or businesses may send demand letters to debtors who have defaulted on loan agreements or other financial obligations.
Breach of Contract
- A party to a contract that has been violated (e.g., failure to deliver goods or services) can send a demand letter for specific performance or damages.
Eviction and Lease Disputes
- Landlords or property owners often issue demand letters for unpaid rent or breaches of lease contracts as a precursor to eviction or ejectment proceedings.
Collection of Money Judgment
- After a court issues a money judgment, the winning party might send a demand letter to the losing party, reminding them to pay the adjudged amount.
Tort Claims (e.g., Property Damage)
- In cases where another party’s actions caused property damage or personal injury, a demand letter may be used to seek compensation before filing a lawsuit.

5. Associated Legal Costs

5.1. Attorney’s Fees for Drafting a Demand Letter

The professional fee for drafting a demand letter in the Philippines varies depending on factors such as:

The complexity of the case.
The attorney’s experience and reputation.
The urgency of the matter.

A simple demand letter could cost anywhere from ₱3,000 to ₱10,000 or more, while more complex disputes (involving large sums, multiple parties, or intricate legal issues) may incur higher charges. In some instances, attorneys charge hourly rates ranging from ₱1,500 to ₱5,000 or more per hour, especially in larger law firms.

5.2. Consultation and Acceptance Fees

Besides the fee for the letter’s preparation, lawyers may charge:

A consultation fee (often ranging between ₱1,000 to ₱2,500 per session).
An acceptance fee for taking on the case, covering preliminary research, client interviews, and initial drafting of documents.

5.3. Notarial Fees

While not mandatory for a demand letter, notarization can bolster the letter’s credibility. Notarial fees in the Philippines typically range from ₱100 to ₱500, depending on the notary public and the document’s nature, but they can be higher in certain regions or exclusive law offices.

5.4. Courier and Service Costs

Demand letters are often sent through:

Registered Mail with Return Card (Philippine Postal Corporation),
Private Courier Services, or
Sheriff/Process Server (in certain cases).

The costs vary depending on:

The mode of delivery,
The distance,
Additional services (e.g., return receipt, proof of service), and
Whether an official process server is used in ongoing litigation.

5.5. Potential Court Costs if Litigation Ensues

If the demand is ignored or unsatisfactorily addressed, you might proceed to court. Court-related expenses in the Philippines include:

Filing Fees
- Determined by the rules of court and usually based on the claim’s monetary value.
Sheriff’s Fees and Other Docket Fees
- Additional charges related to serving summonses, orders, and transporting documents.
Litigation Attorney’s Fees
- For representation in court, lawyers often charge acceptance fees plus an hourly or fixed rate that depends on the case’s complexity.
Miscellaneous Expenses
- Photocopying, transcript fees, exhibit preparation, and other administrative costs.

6. Practical Tips on Handling and Drafting Demand Letters

Be Clear and Concise
- Avoid ambiguity and present your facts and demands in a straightforward manner.
State the Legal and Factual Basis
- Ensure the recipient understands the specific law, contract clause, or legal principle you are invoking.
Give a Reasonable Deadline
- Usually 5–15 days, depending on the nature of the obligation and your willingness to accommodate negotiations.
Consider Sending via Registered Mail or Personal Service
- This provides proof of receipt. Keep all receipts and tracking information.
Consult a Lawyer When Necessary
- If the claim is complex, or if you anticipate the recipient will not comply, consider engaging legal counsel to ensure your rights are adequately protected.
Keep Copies and Documentation
- Retain a complete file of the demand letter, proofs of service, contracts, receipts, or other relevant evidence.
Be Mindful of Good Faith and Reasonableness
- Courts value litigants who attempt to settle disputes amicably. Demonstrating good faith can be beneficial if litigation arises.

7. Conclusion

In the Philippine legal landscape, a demand letter serves as a pivotal and often cost-effective mechanism for asserting one’s rights before resorting to formal litigation. It can prompt swift compliance, foster amicable settlements, or, if ignored, lay the groundwork for a well-supported legal case.

Understanding the associated legal costs is equally important. While expenses may vary based on an attorney’s fees, notarial charges, and courier costs, these up-front costs often pale in comparison to the benefits of resolving a dispute promptly or preparing a strong case for court if necessary.

If you find yourself on either side of a demand letter—whether you are issuing one or receiving one—consulting a qualified Filipino attorney can make a significant difference in protecting your legal rights and interests.

References

Civil Code of the Philippines (Republic Act No. 386) – Particularly Book IV on Obligations and Contracts.
Rules of Court – Governs procedural aspects like filing fees, service of pleadings, and legal processes.
Legal Interest and Interest Rates – As provided by Bangko Sentral ng Pilipinas (BSP) issuances and prevailing jurisprudence.
Notarial Law (A.M. No. 02-8-13-SC) – Governs notarial practices in the Philippines.

This article is a general overview and does not substitute for professional legal advice. If you have specific concerns or legal questions regarding demand letters and associated costs, consult a licensed Filipino attorney.