How to Make your Debtors Pay You through the Small Claims Court
Only a handful of things put a wedge between friendships, families, and business relationships more than debts left unpaid.
Maybe it shouldn’t be too big a deal when it’s just a couple of hundred pesos borrowed via verbal agreement, but it’s another thing altogether if the other party owes you several thousands of pesos with a promise to pay it all back (with or without interest) that was bound by legal obligation.
You try to call or send a message through Facebook and it’s either no one picks up the phone or your messages are “seenzoned”. It may seem like you’re at an impasse at that point as you’re not getting back your money anytime soon, but there’s yet an option you can take to resolve the issue—take it to the Small Claims Court.
What is the Small Claims Court?
By definition, a small claims court hears civil cases between private litigants. In other countries, it may be called a county court or a magistrate’s court.
Basically, such courts are established to settle disputes between private individuals, letting them settle in the court of law while the matter at hand is not big enough to be taken to the higher courts.
It just so happens a lot of civil cases involve financial disputes, specifically one party not paying another party the money they owe them. Do take note that this isn’t for sticking it to your former friend who wouldn’t pay the PHP 20 he borrowed to buy a softdrink that one time. The amounts involved in the majority of these cases are usually in thousands of pesos.
How to Legally Demand Payment Through the Small Claims Court
A small claims case does mean, as the name suggests, debt with a smaller amount.
In this case, the sum may not exceed PHP 200,000, exclusive of interest and other costs. Also, these claims or demands may be from either money owned under:
- a contract of lease, loan, services, sale, or mortgage;
- damages arising from a fault or negligence, quasi-contract, or full contract; or
- the enforcement of an amicable settlement or arbitration award involving a money claim
If your case fits one of those criteria, you should proceed to the first level court of your city of residence or (better yet) the first level court where the debtor resides in.
It can either be a Metropolitan or Municipal Trial Court in your area. Proceed to the Office of the Clerk of Court and request the following forms for fill up and submission:
- Information for Plaintiff (you)
- Statement of Claim, and
- Certification of Non-Forum Shopping.
Make sure to have two copies of each prepared and certified.
Proof of Loan
You must then provide a Proof of Loan. If you don’t have one, then you’re out of luck.
The Proof of Loan serves as evidence of the loan being agreed upon between defendant (the borrower) and complainant (the lender). It can be a promissory note, affidavit of witnesses, bank deposit slips, or so on.
Have two copies ready and have them certified in order to proceed. You will then have to pay a filing fee of PHP 1,250.
If the court finds merit to the case, a hearing will be scheduled and a Summon will be sent by the court to the defendant. The Summon includes a Notice of Hearing with information, as well as a Response Form and other documents.
The defendant is then given a maximum of 10 days to submit a response upon receipt of the Summon. The complainant will also be provided a Notice of Hearing that indicates the schedule of the hearing.
The hearing will be mediated by the Judge and both parties will be given an opportunity to make their case, discuss the settlement, and come to an agreement.
In most cases, the hearing proceeds in an informal manner and terminated within a day, so a resolution can be made on the same day as the hearing. If an agreement can’t be made on the same day, the case is then referred to the pairing judge for hearing and decision within 5 working days.
Taking a debt case to the Small Claims Court is quite far from being an act you’d enjoy, but you have to do what you have to do.
The money could be used for something else, like a more worthwhile investment or an emergency. That’s money you worked hard for, and the other party just took it—that must not stand.
When a debt is deliberately left unpaid and your attempts at claiming payment are either ignored or rebuffed, it’s safe to say the other party certainly doesn’t care about you at all. Thankfully, the Small Claims Court lets you have the matter settled definitely as civil as possible.