ONLINE LOAN APPROVED BUT NOT DISBURSED, YET INTEREST ACCRUES: PHILIPPINE LEGAL ANALYSIS & REMEDIES

“In a simple loan (mutuum) delivery, not mere approval, perfects the contract. Until the thing loaned is placed in the borrower’s control, there is no demandable obligation.”
— Civil Code, Art. 1934

1. Overview of the Problem

Digital-lending apps sometimes mark a loan “approved” in their dashboard and immediately start the interest clock, even though the borrower never receives the proceeds (bank rejection, e-wallet glitch, platform error, or lender’s unilateral cancellation). The borrower is then dunned for “accrued interest” on money that never reached him, harming his credit record and sometimes triggering harassment tactics.

2. Sources of Philippine Law that Govern the Situation

Layer	Key Statutes / Regulations	Core Relevance
Civil Code	Arts. 1159, 1189, 1933-1942, 1960	Perfection of loan; requirement of delivery; prohibition on interest absent a perfected loan & written stipulation
Truth in Lending Act (R.A. 3765) & BSP/SEC Rules	Obliges truthful disclosure of charges; interest may only be imposed on an actual loan balance
Financial Products and Services Consumer Protection Act (R.A. 11765, 2022 + BSP/SEC IRR 2023)	Creates borrower cause of action vs. unfair, abusive, deceptive acts; empowers BSP/SEC to award restitution & damages
Lending Company Regulation Act (R.A. 9474) / Financing Company Act (R.A. 8556)	Licensing & conduct of non-bank digital lenders; SEC cease-and-desist & revocation powers
Credit Information System Act (R.A. 9510)	Borrower’s right to dispute erroneous negative reports
E-Commerce Act (R.A. 8792) & Electronic Signatures Guidelines	Validates electronic contracts, but does not override the requirement of delivery for a loan
Data Privacy Act (R.A. 10173)	Limits lender’s use of contact scraping & public shaming if no lawful basis exists
Relevant Jurisprudence	Rivero v. CA (G.R. 119665, 23 July 1997) – loan not demandable absent delivery; Spouses Abella v. Spouses Gobonseng (G.R. 156708, 05 May 2006) – written interest stipulation required; Heirs of Malate v. Gamboa (G.R. 170139, 23 Jan 2013) – constructive delivery doctrine explained.

3. Doctrinal Analysis

Perfection of a Loan Requires Delivery
Article 1934 is explicit: a mutuum “shall not be perfected until the delivery of the thing loaned.”
- Practical import: An “approval notification” or even an e-signed Promissory Note does not alone create a demandable debt.
- An app balance tagged “to be credited” is, at best, a conditional obligation under Art. 1189; non-fulfilment (no disbursement) extinguishes the obligation.
Interest Cannot Accrue Without a Principal
Article 1960 allows interest only when (a) “expressly stipulated in writing” and (b) a loan exists. No principal, no interest.
Constructive Delivery—When Might the Lender Still Be Right?
Courts recognize constructive delivery if the amount is placed under the borrower’s exclusive control (e.g., instantly fungible to his in-app wallet and withdrawable at will).
- If the borrower’s own fault (e.g., wrong account number) blocks withdrawal, interest may validly run from that constructive delivery date.
- Burden of proof rests on the lender under Art. 1315.
Unjust Enrichment & Restitution
Should the borrower inadvertently benefit (e.g., merchant paid directly on his behalf), Art. 22/2142 on quasi-contracts obliges restitution; interest can then be computed as damages under Art. 2200 et seq.—but never before enrichment occurs.

4. Regulatory & Administrative Remedies

Forum & Trigger	Procedure	Possible Outcomes
SEC Financing/Lending Division (non-banks)	Online complaint → show-cause order → hearing	CDO, ₱10k–₱1 M fine per violation, license revocation, refund of illegal charges
BSP Consumer Assistance Mechanism (banks, EMIs, digital banks)	Step-in after failure of lender’s internal helpdesk (10-day rule)	Mediation, directive to reverse interest, administrative sanctions
National Privacy Commission	For harassment via contact scraping or public shaming	Compliance order, ₱5 M fine, criminal referral
Credit Information Corporation Dispute Board	Wrongful negative reporting	Record correction within 30 days; damages in civil suit
DTI-Fair Trade & R.A. 11765 Provincial/Municipal Consumer Desks	UADAAP claims for deceptive marketing (“instant cash, zero hassle” ads)	Settlement, cease-and-desist, disgorgement
Barangay Mediation → Small Claims Court (≤ ₱400k)	Sue for nullification of loan & damages; no lawyer required	Decision in 30 days; execution via sheriff
RTC / Special Commercial Court	Bigger claims or class-action	Declaratory relief; attorneys’ fees; injunction against collection

5. Practical Step-by-Step Guide for Borrowers

Gather Evidence
- App screenshots: approval timestamp, failed disbursement logs, zero wallet balance.
- Bank proofs: no inward credit, return-to-sender notices.
- Correspondence: chat transcripts where support admits the glitch.
Send a Demand-Cancellation Letter (e-mail or registered mail)
Cite Art. 1934 & 1960, demand (a) reversal of interest, (b) deletion from CIC, (c) data-processing cease. Give 5 business days.
Lodge Regulatory Complaints Simultaneously
Use SEC “Online Lending Complaint Form” or BSP Consumer Assistance online portal. Attach the demand letter and proof of dispatch.
Dispute Credit Bureau Entry
File CIC Form 4-D within 30 days of learning of the negative report; lender must answer in 15 days or entry is deleted.
Document Any Harassment
Record calls/messages. File NPC complaint for privacy abuse and, where threats are made, report to PNP-ACG under R.A. 10175 (cyber-libel/harassment).
Escalate to Small Claims or RTC
If lender ignores regulators, file an action for declaration of inexistence of contract plus damages. Pray for preliminary injunction to stop collection and for attorney’s fees under Art. 2208.

6. Potential Defenses & How to Counter

Lender’s Argument	Borrower’s Rebuttal
*“Funds were constructively* delivered once credited in-app.”**	Show that wallet could not be cashed out; cite Heirs of Malate (constructive delivery requires control).
“Borrower provided wrong bank details.”	Delivery to wrong person is no delivery; debtor bears risk until thing is placed in creditor’s control (Art. 1262).
“Terms & Conditions allow interest from approval date.”	Stipulation contrary to Art. 1934 & public policy; void under Art. 1306, R.A. 11765 §4 (unfair terms).
“System auto-sent demand notices; no harassment intended.”	Automated harassment still violates SEC MC 18-2019 (anti-abusive collection) & NPC Circular 16-2023 on automated processing.

7. Compliance Checklist for Digital Lenders (Risk-Management Perspective)

Disbursement Audit Trail – Store API logs proving transfer & beneficiary receipt.
Interest Accrual Trigger – Program logic to start only upon confirmed crediting.
Reversal Protocol – Auto-cancel charges if credit fails within T+1 day.
Consumer-Friendly Dispute Desk – 24-hour acknowledgment, 10-day resolution per BSP/SEC IRR.
Harassment Guardrails – Opt-in consent for contacts; no public shaming; align with NPC rules.
Periodic Legal Review – Validate T&C clauses against Civil Code & R.A. 11765; purge unfair provisions.

8. Key Take-Aways

No delivery, no debt, no interest.
Written interest clauses do not override the Civil Code’s requirement of actual or constructive delivery.
Borrowers have an arsenal of administrative, civil, and—in extreme cases—criminal remedies.
Digital lenders that ignore these principles risk SEC/BSP sanctions, NPC penalties, civil damages, and reputational loss.

9. Disclaimer

This article is educational and not a substitute for independent legal advice. Facts and circumstances vary; consult a Philippine attorney for case-specific guidance.