Below is a comprehensive discussion of the “Loan Scam Demanding ‘Tax’ for Releasing Funds,” with particular focus on the Philippine context. This article covers how these scams typically operate, the legal framework applicable in the Philippines, the possible remedies, and preventive measures.

I. Introduction

In the Philippines, one of the most prevalent financial frauds is the “advance-fee” loan scam. A specific variation of this is the so-called “Loan Scam Demanding ‘Tax’ for Releasing Funds.” Here, fraudsters pose as legitimate lenders or representatives of financial institutions and offer seemingly attractive loan packages. Once the victim has shown interest, the scammers claim that a certain “tax,” “processing fee,” or “releasing fee” must be paid upfront before the loan proceeds can be disbursed. After the victim pays this amount, the scammers disappear, and no loan ever materializes.

II. Typical Modus Operandi

Initial Contact
- Scammers often reach out via phone calls, text messages, social media, or fraudulent online lending platforms. They claim to represent legitimate banks or financing firms.
- Alternatively, they may send mass emails (phishing) or place online advertisements offering loans at extremely low interest rates or with very lenient eligibility requirements.
Presentation of “Loan Approval”
- Once the victim responds, the scammer quickly “confirms” that the borrower has been approved for a loan—often for a higher amount than what was initially requested.
- This instant or guaranteed approval is designed to lure the victim into believing that the process is straightforward and nearly risk-free.
Demand for Upfront Payment
- Shortly after, scammers claim there is a mandatory “tax,” “release fee,” or “advanced charge” required by the Bureau of Internal Revenue (BIR), Bangko Sentral ng Pilipinas (BSP), or some other official-sounding entity.
- They will demand payment via deposit to a personal bank account, e-wallet transfer, or through remittance centers, sometimes using bogus official receipts or letters to “legitimize” the request.
Vanishing Act
- After receiving payment, the scammers either continue to demand more fees under different pretexts or sever all contact.
- The victim never receives the promised loan funds.

III. Legal Framework in the Philippines

1. Revised Penal Code on Estafa (Swindling)

Estafa (Article 315, Revised Penal Code)
Estafa generally involves defrauding another by abuse of confidence or deceit. Demanding money under false pretenses—such as promising a loan in exchange for an upfront “tax” fee—may constitute estafa.
- Key elements:
  1. The offender defrauded the victim by means of abuse of confidence or deceit.
  2. Damage or prejudice to the victim as a result.
Penalties for Estafa
Penalties vary depending on the amount of fraud. Generally, the larger the amount swindled, the heavier the penalty. Imprisonment and fines may be imposed.

2. Cybercrime Prevention Act of 2012 (Republic Act No. 10175)

Online Fraud
If the scam is perpetrated via the internet, the Cybercrime Prevention Act may also apply. Online messages, social media, or phishing emails used to execute fraud can qualify as cybercrime.
- Additional penalty:
  Estafa committed through electronic means can carry a penalty one degree higher than ordinary estafa.

3. Other Relevant Laws and Regulations

Securities Regulation Code (Republic Act No. 8799)
If the scammer is misrepresenting themselves as a licensed investment or financing company, the Securities and Exchange Commission (SEC) may investigate for any unauthorized or fraudulent activities.
Consumer Act of the Philippines (Republic Act No. 7394)
While primarily focused on consumer products and services, it also covers fraudulent or deceptive practices that harm consumers in financial transactions.
BSP Regulations on Lending and Financing Companies
The BSP monitors banks and other financial institutions, mandating them to follow lawful practices. Any claim that a “BSP tax” or “BSP releasing fee” must be paid directly to an individual (rather than the institution) is highly suspicious and usually a red flag.

IV. Red Flags and Warning Signs

Unsolicited Loan Offers
- Legitimate banks or financing firms rarely send mass unsolicited loan offers promising approval without verifying the borrower’s credit standing.
Upfront or “Advance” Fees
- In genuine loan transactions, any fees (e.g., processing or documentary fees) are usually deducted from the loan proceeds or paid directly at a secure office. A demand for direct transfer to a personal account is a common sign of a scam.
Excessive Pressure and Urgency
- Scammers often pressure victims to pay the fee immediately. They may claim a limited promotional period or threaten to revoke the loan approval if payment is not done right away.
Unprofessional Communication
- Poor grammar, mismatched domain names or email addresses, inconsistent brand images, and lack of legitimate documentation are strong indicators of fraudulent schemes.
Requests for Confidential Information
- Excessive inquiries for personal data, such as full banking details or one-time passwords (OTPs), are likely signs of a scam.

V. Remedies for Victims

File a Complaint with Law Enforcement
- Philippine National Police (PNP) and National Bureau of Investigation (NBI) accept complaints regarding fraud. Victims should provide all supporting evidence, including receipts, chat logs, emails, phone numbers, and any other documents.
Report to the Cybercrime Division
- If the fraud was conducted online, victims can lodge a complaint with the NBI Cybercrime Division or the PNP Anti-Cybercrime Group.
Affidavit of Complaint / Estafa Case
- Victims can execute an affidavit of complaint for filing estafa charges. This would require assistance from a lawyer or the Public Attorney’s Office (PAO).
Inform Financial Regulators
- If the scammer impersonated a legitimate lending or financing company, notify the BSP or the SEC. These agencies can issue warnings and investigate or sanction entities misrepresenting their authority.
Civil Remedies
- In some cases, a victim can pursue a civil case to recover the amount defrauded. However, if the scammer is untraceable or has no assets, recovering money can be difficult.

VI. Preventive Measures and Best Practices

Verify Legitimacy of Lenders
- Check the official website or contact the official customer hotline of the purported lending institution.
- Confirm their SEC registration or BSP license if they claim to be a financing or lending company.
Conduct Due Diligence
- Research online. Look for reviews or red flags indicating a pattern of scamming. Legitimate firms are usually listed in government databases and have verifiable business addresses.
Never Pay Upfront Taxes or Fees to Personal Accounts
- Legitimate banks will typically deduct fees from the loan proceeds or request payment through official channels.
- The “tax” explanation is almost always bogus; any legitimate tax or documentary stamp tax is handled by the lending institution directly, not via personal e-wallet or personal account transfers.
Ask for Written Documentation
- Require a loan contract or agreement. Read the fine print, and do not sign or pay anything unless you fully understand the terms.
- Official receipts from the BIR or government agencies have security features. Verify authenticity if you are given any.
Protect Personal Information
- Avoid giving out personal, banking, or credit card details unless you are absolutely certain of the lender’s identity.
- Never share PINs, OTPs, or passwords with anyone.
Report Suspicious Offers
- Promptly inform friends, relatives, and authorities about suspicious phone numbers or social media accounts to prevent others from becoming victims.

VII. Penalties and Enforcement

Offenders found guilty of estafa can face imprisonment (ranging from a few months to years, depending on the amount defrauded) plus fines.
Under the Cybercrime Prevention Act, penalties may be one degree higher if fraud is committed using the internet.
The SEC can impose administrative sanctions on companies or persons operating without authority. This can include fines and revocation of business registration, in addition to criminal charges.
In especially egregious cases, multiple charges can be filed concurrently (e.g., estafa plus violation of the Cybercrime Prevention Act, or identity theft plus falsification of documents under the Revised Penal Code).

VIII. Conclusion

The “Loan Scam Demanding ‘Tax’ for Releasing Funds” is a dangerous form of advance-fee fraud that exploits the financial vulnerability or urgency of would-be borrowers in the Philippines. By masquerading as legitimate lenders and insisting on upfront payments for supposed “taxes,” scammers consistently dupe unsuspecting victims.

Key Takeaways

Stay vigilant: Always verify the credentials of any lender.
Exercise due diligence: A too-good-to-be-true offer usually is exactly that—too good to be true.
Know your rights: Familiarize yourself with Philippine laws relating to estafa and cybercrime.
Act immediately if scammed: File complaints with the PNP, NBI, and relevant regulatory bodies like the BSP or SEC. Provide as much evidence as possible for them to track perpetrators.

By understanding the warning signs and legal remedies, both borrowers and financial stakeholders can help curb these scams and protect themselves from financial harm in the Philippine lending landscape.