Creditor can file case over debtor’s delayed payments

Persida Acosta

Persida Acosta

Dear PAO,
I obtained a loan from a friend of my officemate. Lately, I have been experiencing financial difficulties and, to be honest, I have incurred delay in my payments. Last week, he called me over the phone and told me that I have to pay my entire balance, which amounts to P47,000.00 plus exemplary damages and attorney’s fees, otherwise he will file a case against me. I just want to know what case he can file against me. Can he also demand exemplary damages and attorney’s fees?

Dear Hazel,
In a contract of simple loan or mutuum, the creditor is obliged to deliver money or other consumable thing in favor of the debtor on the condition that the same amount of the same kind and quality shall be paid to him (Article 1933, Civil Code of the Philippines (CCP)). If the debtor fails to pay, the creditor may pursue all legal actions available to him, and this includes the filing of a case in court.

In the situation that you have presented, the friend of your officemate, being the creditor, may file a civil case against you should you still be unable to settle the amount of your loan, which has already become due. Since the total amount of your obligation is Forty Seven Thousand Pesos (P47,000.00), he may institute a small claims case before the Metropolitan Trial Court, Municipal Trial Court or Municipal Circuit Trial Court of the place where he resides (Section 2 in relation to Section 4, Rule of Procedure for Small Claims Cases as Amended, SC En Banc Resolution dated October 27, 2009 in Administrative Matter No. 08-8-7-SC).

Insofar as exemplary damages, he may demand the same from you and state such demand in his claims. It, however, is still left in the determination of the court whether such damages will be adjudicated. It can never be recovered as a matter of right (Article 2233, CCP). Further, it should be emphasized that exemplary damages may only be awarded by the court, in contracts and quasi-contracts, if the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner (Article 2232, CCP). Accordingly, if he will not be able to establish in court that you acted in any of the foregoing manner, then his demand for exemplary damages will be rendered futile.

As far as attorney’s fees are concerned, he may demand the same if such is expressly stipulated in your contract of loan. In the absence of stipulation, attorney’s fees and expenses of litigation, other than judicial costs, may only be recovered under any of the following circumstances stated in Article 2208 of the above-mentioned law: (1) When exemplary damages are awarded; (2) When the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest; x x x (4) In case of a clearly unfounded civil action or proceeding against the plaintiff; (5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff’s plainly valid, just and demandable claim; x x x (10) When at least double judicial costs are awarded; (11) In any other case where the court deems it just and equitable that attorney’s fees and expenses of litigation should be recovered.

We hope that we were able to answer your queries. Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to


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