Small Claims Case for Unpaid Loan With Promissory Note (Philippines)

Direct answer: If a friend or relative signed a promissory note and has not paid, you can file a small claims case in the Municipal or Metropolitan Trial Court if the amount claimed is ₱1,000,000 or less, not counting interest and costs.^[1] File a verified Statement of Claim (Form 1-SCC) with certified copies of the note. Go through barangay conciliation first if you both live in the same city or municipality.^[3][4] Lawyers do not appear for the parties at the hearing, the judge decides within 24 hours after it, and the decision cannot be appealed.^[1]

Key takeaways

• The ₱1,000,000 ceiling excludes interest and costs, so accrued interest does not push a qualifying balance out of small claims.^[1]
• The promissory note is your “actionable document”; attach certified copies of it to Form 1-SCC.^[1]
• A note with a fixed due date and interest “from default” puts the borrower in delay on the due date, without demand.^[6]
• Interest is collectible only if written in the note. Otherwise claim 6% a year legal interest as damages from demand.^[2][8][9]
• Barangay conciliation applies only between individuals actually residing in the same city or municipality.^[3][4]
• You have 10 years from the due date to sue on a written note; a written demand or written acknowledgment interrupts the period.^[2][12]

This guide covers one situation: you lent money to a friend, relative or co-worker, the borrower signed a promissory note, and the due date has passed. It gives the lender’s steps and the borrower’s options. For the general walkthrough that applies to any money claim, see how to file a small claims case in the Philippines, with forms and fees.

Legal basis

These are the rules that decide a promissory-note claim in small claims.

Authority	What it says	How it applies here
Rules on Expedited Procedures, Rule I, Sec. 1; Rule IV, Sec. 4[1]	Small claims covers money claims of up to ₱1,000,000, exclusive of interest and costs, including contracts of loan. The case starts with a verified Statement of Claim and certified copies of the actionable document.	Your note is the actionable document.
Civil Code Arts. 1933, 1953[2]	In a simple loan, the borrower becomes owner of the money and must pay back an equal amount.	“I spent it” is no defense.
Civil Code Art. 1169[2][6]	Delay starts from demand, unless the obligation or the law expressly makes demand unnecessary.	The note’s wording decides whether you need a demand.
Civil Code Arts. 1956, 2209, 2212[2][8]	No interest unless stipulated in writing; legal interest as damages on delay; interest due earns interest from judicial demand.	Read the interest clause before computing.
Civil Code Arts. 1144, 1155[2][12]	Actions upon a written contract prescribe in 10 years; a written demand or written acknowledgment interrupts prescription.	Count from the due date.
LGC Secs. 408, 412; Admin. Circular 14-93[3][4]	Disputes between individuals actually residing in the same city or municipality go to the Lupon first.	Most friend-to-friend loans.
Rules on Expedited Procedures, Rule IV, Secs. 18, 24[1]	No attorney appears for a party at the hearing; the decision is final, executory and unappealable.	Your papers must speak for themselves.

These provisions sit in Book IV of the Civil Code on obligations and contracts.

Does your loan qualify?

• Money only. You want payment of the loan with interest and costs, not recovery of a car or land given as security.^[1]
• Amount. ₱1,000,000 or less, excluding interest and costs. Two or more notes from the same borrower may be joined in one claim if the total, excluding interest and costs, stays within the ceiling.^[1]
• Court. MeTC, MTCC, MTC or MCTC.

Above the ceiling, you need a regular collection case with lawyers, full trial and appeal. See small claims compared with a regular civil action.

Where to file. Regular venue rules apply:^[1] where you live or where the borrower lives, at your choice.^[5] If the lender is in the lending or banking business and has a branch where the borrower lives, the case must be filed there.^[1]

Installment notes. Without an acceleration clause, only installments already due can be collected now. See how acceleration clauses make the whole loan due.

Demand and interest

Is a demand letter required?

The rules require certified copies of the actionable document, witness affidavits and other evidence; a demand letter is not listed as a separate requirement.^[1] Whether you need one depends on the note.

In Rivera v. Spouses Chua, the note fixed the due date at December 31, 1995 and imposed interest “from the date of default.” The Court held demand unnecessary; default began January 1, 1996.^[6] If your note has no fixed date or is payable on demand, the borrower is in default or delay only from your demand.

Send a final written demand anyway. It starts legal interest when the note is silent, interrupts prescription,^[2] gives the barangay something to mediate, and often produces payment. The exceptions to Art. 1169 are covered in when a debtor is in delay or default.

How much interest

What you can add to the principal depends on what the note says about interest.

The note says	You can claim
A rate, such as 1% a month	That rate from default until payment, not compounded unless agreed.[2]
Interest is due, no rate	The legal rate in force when the loan was made.[7]
Nothing, or interest agreed only orally	No monetary interest;[9] 6% a year legal interest as damages from demand.[2][8]
A very high rate, such as 5% a month	Risk of reduction: in Rivera, 5% a month was cut to the then legal rate of 12% a year.[6]

Unpaid interest itself earns legal interest from the time it is judicially demanded, that is, from filing.^[2][6] See how legal interest on unpaid debt is computed and when courts reduce excessive interest.

Barangay conciliation

No complaint within the Lupon’s authority may be filed directly in court without a confrontation before the Lupon chairman or pangkat and a certification that no settlement was reached.^[3][11]

• Required: both of you are individuals actually residing in the same city or municipality.^[3][4]
• Not required: you live in different cities or municipalities, unless the barangays adjoin and you both agree.^[4][11]
• Not required: a party is a corporation, partnership or other juridical entity.^[4]
• Not required: you need a provisional remedy such as attachment, or the claim may be barred by prescription if you wait.^[4]

If conciliation fails, attach the Certificate to File Action. A case filed without it may be dismissed on the borrower’s motion, not for lack of jurisdiction but for prematurity or failure to state a cause of action.^[4] In Abagatnan v. Spouses Clarito, the Court also refused to consider a lack-of-conciliation objection that had not been included in the pre-trial issues; do not count on that.^[11] The parties’ actual residence decides the question, not the address on the note.

Worked example

Facts. On March 1, 2025, Maricel Santos lent her former officemate Rodel Cruz ₱350,000. Both live in Quezon City. Rodel signed a notarized note: principal due September 1, 2025; interest at 1% a month from the loan date, continuing after default until full payment. On October 15, 2025, Rodel paid ₱50,000 and stopped.

Apply the payment. If a debt bears interest, principal is not paid until interest is covered (Art. 1253).^[2] Interest from March 1 to October 15 (7.5 months at ₱3,500) is ₱26,250. The other ₱23,750 reduces principal to ₱326,250.

Check the ceiling. ₱326,250 is within ₱1,000,000; interest is excluded.^[1]

Interest to filing. October 15, 2025 to March 16, 2026: 5 months at 1% of ₱326,250 = ₱16,312.50, still running.

Demand and barangay. The note fixed a due date and imposed interest on default, so Rodel was in delay from September 2, 2025.^[6] Maricel still sends a final demand on January 10, 2026, then goes to the Lupon and gets a Certificate to File Action.

File. On March 16, 2026, she files Form 1-SCC in the Quezon City MeTC for ₱326,250 plus 1% a month from October 15, 2025, attaching the note, the payment receipt, the demand with proof of delivery and the certificate.

Deadline. Her action accrued September 2, 2025; Art. 1144 gives her ten years, to September 2035. Her written demand, or a written acknowledgment by Rodel, would interrupt the period.^[2][12]

The borrower’s likely defenses

The borrower answers with a verified Response (Form 3-SCC) within a non-extendible 10 calendar days from receipt of summons.^[1] These are the defenses you should expect.

Defense	How the lender meets it
“Not my signature.”	Forgery must be proved by clear and convincing evidence; in Rivera, a bare denial lost to a document examiner’s finding. Bring papers with the borrower’s known signature.[6]
“I already paid.”	The borrower must prove payment; your bank and e-wallet history shows what arrived. See how payment extinguishes an obligation.
“I never got the money.”	Attach the transfer record or signed cash acknowledgment.
“The claim has prescribed.”	Ten years run from the due date, and a written demand or written acknowledgment interrupts them.[2][12]
“The interest is excessive.”	A moderate written rate usually stands; a very high one may be cut.[6]
“No barangay conciliation.”	Attach the certificate or show the exception that applies.[4]

What a creditor must prove is detailed in collecting unpaid debt: proof, interest and defenses. If a co-maker signed “jointly and severally,” the co-maker can be sued too; see solidary obligation.

Step-by-step process

1. Compute the claim (you). Principal, payments applied to interest first, interest to date.
2. Final demand (you). Personal delivery with a receiving copy, or registered mail or courier. Give a reasonable deadline.
3. Barangay (you and the borrower, at the Lupon), if it applies. No settlement means a Certificate to File Action. Ask the barangay hall about any fees.^[3][4]
4. Prepare Form 1-SCC (you). It includes the verification and certification against forum shopping; attach certified copies of the note and witness affidavits. Evidence not attached cannot be presented at the hearing without good cause.^[1]
5. File and pay (Office of the Clerk of Court, first-level court). Regular docket fees apply, with surcharges once one party files more than five small claims in a calendar year. Confirm current fees with the clerk.^[1]
6. Summons (court). Issued within 24 hours; hearing within 30 calendar days of filing, or 60 if a defendant resides outside the judicial region.^[1]
7. Hearing (you in person, or a non-lawyer representative with an SPA on Form 7-SCC). The judge first tries to settle the case, then hears it and decides within 24 hours.^[1]
8. Execution. If the borrower does not pay, move for execution on Form 12-SCC.^[1]

For settlement offers and payment plans before and after court, use the roadmap for an unpaid-debt dispute.

Documents to prepare

• Original promissory note, plus certified photocopies
• Proof of release: bank transfer, e-wallet record or signed cash acknowledgment
• Records of every partial payment
• Interest computation sheet
• Final demand and proof of delivery
• Certificate to File Action, if conciliation applies
• Witness affidavits
• Valid IDs; Form 7-SCC SPA for a representative
• Accomplished Form 1-SCC

Common mistakes

• Counting interest toward the ceiling. It is excluded.^[1]
• Claiming oral interest. It is not collectible as interest; claim legal interest instead.^[9]
• Applying payments to principal first. Interest is covered first.^[2]
• Holding evidence back for the hearing. Attach it to the claim.^[1]
• Expecting a lawyer to argue for you. Lawyers cannot appear for parties at the hearing.^[1]
• Waiting too long. Ten years runs from the due date; see how long you have to file contract actions.^[2][12]

Related: no promissory note, only chats or a GCash receipt? See No Written Contract? How to Prove a Verbal or GCash Loan.

Related: Is a promissory note enforceable? What it must include — the clauses (interest, default, acceleration, co-makers) that decide what you can collect.

Frequently asked questions

Can I file small claims if the promissory note is not notarized?

Yes. The rules require the actionable document, not a notarized one. A signed private note is enough to start the case. Notarization makes the note harder to deny, but an unnotarized note backed by transfer records, payment receipts and messages acknowledging the debt can carry the claim. Bring the original to the hearing.

What if the loan is more than ₱1,000,000?

Small claims cannot hear it. Compute the amount claimed after applying payments, since interest and costs are excluded. If it is still above ₱1,000,000, file a regular collection case instead. Lawyers may appear there, the case goes through full trial, and the decision can be appealed.

Can I collect interest agreed only by text or verbally?

Not as monetary interest. Art. 1956 requires a written stipulation, and the Supreme Court applied it in Odiamar v. Odiamar Valencia to a 3% monthly interest that was never put in writing. You can still claim 6% legal interest as damages from demand.

Do I need a lawyer?

No. You fill out the forms yourself, and no attorney may appear for a party at the hearing unless the attorney is the plaintiff or defendant. You may consult a lawyer while preparing. A non-lawyer representative may appear for you with an SPA on Form 7-SCC.

What can the borrower do after losing?

The decision is final, executory and unappealable. In A.L. Ang Network v. Mondejar, the Supreme Court allowed a Rule 65 petition for certiorari in the RTC, but only for grave abuse of discretion amounting to lack or excess of jurisdiction. Disagreement with the judge’s view of the evidence is not enough.

The borrower moved to another city. Is the barangay still required?

Usually not. Conciliation applies to individuals actually residing in the same city or municipality. If you now live in different cities whose barangays do not adjoin, file directly in court, either where you live or where the borrower lives. Keep proof of the new address, such as where your demand letter was received.

What to do next

If you are the lender

1. Read the due date, interest and default clauses of the original note.
2. Compute principal and interest, applying payments to interest first.
3. Confirm the borrower’s actual residence for venue and barangay purposes.
4. Send a final written demand and keep proof of delivery.
5. Go through the Lupon if required, and get the Certificate to File Action.
6. File Form 1-SCC in the first-level court where you or the borrower lives.

If you are the borrower

• Read the summons date. Your verified Response (Form 3-SCC) is due within a non-extendible 10 calendar days from receipt of summons.^[1]
• Gather your proof. Receipts, bank or e-wallet records of payments, messages, and the note itself if you dispute it.
• Raise the defenses that fit. Payment; prescription (more than ten years from the due date with no written demand or acknowledgment in between); unconscionable interest; no written interest stipulation; or forgery, which you must prove by clear and convincing evidence, not a bare denial.^{[2][6][9][12]}
• Use the settlement stage. The judge first tries to settle the case at the hearing; a realistic payment plan offered in writing can end it there.^[1]
• Appear in person. Lawyers cannot represent you at the hearing, but you may consult one beforehand or ask the Public Attorney’s Office (PAO) whether you qualify.

Related CivilLaw.ph guides

• How to file a small claims case in the Philippines
• Small claims vs regular civil action
• How to handle a civil dispute over unpaid debt
• How to resolve everyday civil disputes
• Civil Code Book IV: Obligations and Contracts
• Forcible Entry vs Unlawful Detainer: Which Case to File (Philippines)
• Online Seller Did Not Deliver: What to Do in the Philippines

Sources and legal citations

Statutes and rules

• [1] Rules on Expedited Procedures in the First Level Courts, A.M. No. 08-8-7-SC (approved March 1, 2022; effective April 11, 2022), Rule I, Sec. 1; Rule IV, Secs. 4, 5, 6, 8, 10, 13, 17, 18, 22, 24 and 25. Supreme Court
• [2] Civil Code of the Philippines (Republic Act No. 386), Arts. 1144, 1155, 1169, 1253, 1933, 1953, 1956, 2209 and 2212. Lawphil
• [3] Local Government Code of 1991 (Republic Act No. 7160), Secs. 408 and 412, as quoted in [11]. Lawphil
• [4] Supreme Court Administrative Circular No. 14-93 (July 15, 1993), guidelines on the Katarungang Pambarangay conciliation procedure. Lawphil
• [5] Rules of Court, Rule 4, Sec. 2 (venue of personal actions), as applied in Hygienic Packaging Corp. v. Nutri-Asia, Inc., G.R. No. 201302, January 23, 2019. Lawphil

Supreme Court decisions

• [6] Rivera v. Spouses Chua, G.R. Nos. 184458 and 184472, January 14, 2015. Lawphil
• [7] Spouses Abella v. Spouses Abella, G.R. No. 195166, July 8, 2015. Lawphil
• [8] Nacar v. Gallery Frames, G.R. No. 189871, August 13, 2013 (En Banc). Lawphil
• [9] Odiamar v. Odiamar Valencia, G.R. No. 213582, June 28, 2016. Lawphil
• [10] A.L. Ang Network, Inc. v. Mondejar, G.R. No. 200804, January 22, 2014. Lawphil
• [11] Abagatnan v. Spouses Clarito, G.R. No. 211966, August 7, 2017. Lawphil
• [12] Selerio v. Bancasan, G.R. No. 222442, June 23, 2020. Lawphil

Sources rechecked as of: 7 October 2026.

This article is general legal information, not legal advice. The outcome of a collection case turns on the note’s exact wording, the payment records and the facts. For advice on your situation, consult a Philippine lawyer or the Public Attorney’s Office.