LEGAL AND EXTRA-LEGAL

COLLECTION EFFORTS

ATTY. RANDY B. BLANZA, CPA, MPA, CESE

JANUARY 26, 2019
Rationale for pursuing legal
collection efforts
 It is the necessary and logical thing to do
 To service as a leverage against the debtor
 You are a necessary party to the case
 As a mode of redress
 As a dilatory tactic
 Avoidance of liability
 Nuisance suit
Recovery techniques:
 Ex-deal payment in kind
 Dacion en pago of property
 Conversion of exposure into equity
 Seat/s in the board
 Financial controllership
 Assignments of credits
 Pari-passu agreements (obligations are equally managed without
preference)
 Extension/renegotiation of contracts
 Recovering or keeping possession of the goods
 Court actions, with attachment, if possible
Factors affecting legal collection
efforts
1. Absence or lack of supporting documents
2. Insufficient documents
3. Unregistered documents
4. Unnotarized documents
5. Unknown whereabouts of debtor
6. Summons cannot be served
7. Debtor has filed for involuntary insolvency and/or
suspension of payments
Extra-legal actions before taking
court actions:
 Check the whereabouts/ skip tracing of principal debtor
and co-debtors
 Property checking of principal debtor
 Gather, review, and consolidate actionable documents
 Ensure credible and competent witnesses are available
 Determine economics or viability of legal action vis-a-sis
costs, expenses
Stages of court actions:
1. Sending demand letters
2. Gathering actionable documents
3. Preparation of complaint
4. Filing of complaint in court
5. Service of summons
6. Answer by the Defendants / borrowers
7. Reply
8. Pre-trial Conference
9. Trial
10. Decision
11. Appeal
12. Execution
Kinds of legal actions against the
debtor:
a. Civil case for collection of sum of money with damages
b. Small claims cases
c. Judicial foreclosure of Real Estate & Chattel Mortgage
d. Extra-judicial foreclosures of Real & Chattel Mortgages
e. Replevin
f. Attachments
g. Criminal actions in cases of fraud
A.M. No. 08-8-7-SC: The 2016 Revised Rules of Procedures for
Small Claims Cases effective February 1, 2016

 To provide a simplified and inexpensive procedure for the disposition

of small claims cases

 The rule shall govern the procedure in actions before the MeTC,
MTCC, MTC and MCTC for payment of money where the value of
claim does not exceed P200,000, exclusive of interests and costs