1) The usual problem

You applied for a loan (bank, financing company, lending company, cooperative, or a “loan facilitator”), paid upfront amounts—often called processing fee, application fee, reservation/commitment fee, appraisal fee, documentation fee, notarial fee, insurance, or “release fee”—and then the loan did not push through (denied, delayed indefinitely, or simply never released). Now the payer wants to recover what was paid.

In Philippine practice, recovery depends on four core questions:

What exactly did you pay for (and what did the contract/receipt say)?
Who received the money (regulated lender vs. broker/scammer)?
Why did the loan fail (lender’s fault, borrower’s non-compliance, or mutual)?
Was there actual service rendered or a valid basis to keep the fee?

This article lays out the legal tools, remedies, and step-by-step recovery strategy.

2) Know what you paid: refundable vs. possibly non-refundable

A. Fees that are often arguably refundable when the loan fails

These are commonly challenged when the loan does not proceed and the payee cannot justify retaining them:

“Advance payment” toward principal or interest (e.g., you were told it’s a downpayment for release).
“Release fee,” “activation fee,” “rush fee,” “guarantee fee,” “collateral fee,” “AML fee,” or other vague charges—especially when no loan is released.
Duplicative “documentation” charges without proof of work and official receipts.
Amounts taken after approval but before release where the lender later backs out without valid reason.

These often fit legal theories like unjust enrichment or solutio indebiti (explained below), especially if the loan never existed as a perfected, released credit.

B. Fees that may be validly chargeable even if the loan fails (but require proof and proper disclosure)

Some fees pay for actual third-party services or work already performed, such as:

Appraisal/inspection fees (property inspection performed, report issued)
Credit investigation/background check fees (if actually conducted)
Notarial fees (if documents were actually notarized)
Documentary stamp taxes / registration (if paid to government and supported by receipts)
Insurance premium (if a policy was actually issued; unused premiums may still be refundable depending on insurer rules)

Even then, you can still dispute overpricing, lack of disclosure, lack of official receipts, or “no service rendered.”

C. “Non-refundable” labels are not magic

A printed “NON-REFUNDABLE” is not automatically enforceable if:

the fee is unconscionable or contrary to law, morals, good customs, public order, or public policy (Civil Code principles),
there was no meeting of minds (you didn’t clearly agree),
it was obtained through fraud, deception, or undue pressure, or
the lender/broker failed to deliver the promised consideration (e.g., approval/release they assured in exchange for the payment).

3) Legal foundations you can use (Philippine law concepts)

A. Contract law: “What did we actually agree on?”

If you have an application form, terms sheet, or receipt describing the fee:

You can argue breach of contract if the lender promised release upon compliance and you complied, yet they refused without basis.
Or argue rescission/cancellation and return of payments if the contract failed due to the other party’s fault.

Key practical point: many “loan applications” are not yet a perfected loan contract; they are merely negotiations. That matters for what the payee can keep.

B. Unjust enrichment (Civil Code, Article 22)

No one should enrich themselves at another’s expense without just or legal ground. If the lender/broker kept money despite no loan released and no legitimate service equivalent to what was paid, Article 22 is often your backbone.

C. Solutio indebiti / Quasi-contract (Civil Code, Article 2154 and related provisions)

If you paid something not due (e.g., you were induced to pay a “release fee” when no loan existed), the recipient must return it. This is especially useful when the payee claims, “No contract”—because quasi-contracts allow recovery even without a conventional contract.

D. Fraud and damages (Civil Code Articles 19, 20, 21; plus damages provisions)

If the fee was collected through misrepresentation (“approved na,” “for release na,” “guaranteed”):

You can claim actual damages (the amount paid),
potentially moral damages (in appropriate cases),
exemplary damages (if there was wanton conduct),
and attorney’s fees (when justified).

E. Criminal liability (when appropriate): Estafa (Revised Penal Code)

If the scheme involved deceit and you were induced to give money, and the payee never intended (or was never able) to release a loan, it may be estafa. Criminal complaints are especially relevant when:

the “lender” is unreachable after payment,
receipts are fake or there are many victims,
there is clear misrepresentation of authority, approval, or licensing.

Criminal cases can pressure restitution, but they require stronger proof and are slower/heavier than civil recovery.

4) Identify the payee and regulator: your complaint channel depends on who took the money

A. Banks and BSP-supervised financial institutions

If a bank or BSP-supervised entity collected questionable fees or mishandled your application, you typically escalate through:

the institution’s internal complaints process, then
BSP consumer assistance/complaints mechanisms (especially strong after the Financial Consumer Protection framework).

B. Lending companies and financing companies (SEC-regulated)

Many non-bank lenders fall under SEC regulation (lending/financing companies). Complaints can go to:

the company first (written demand), then
SEC for regulatory/administrative action (especially for illegal fee practices, licensing issues, or repeated consumer harm).

C. Cooperatives

If the loan is through a cooperative, complaint paths often involve:

internal grievance committee, then
the cooperative’s regulator/authority and dispute mechanisms (depending on cooperative type).

D. “Loan facilitators,” agents, brokers, and Facebook/online “processors”

If the money went to an individual, a “processor,” or a “facilitator” (especially to a personal e-wallet/bank account), this is frequently:

a civil collection issue,
and potentially criminal (estafa) if deceptive.

Regulators may still help if the person falsely claimed affiliation with a regulated company, but enforcement often relies on prosecution and civil suits.

5) Step-by-step recovery roadmap (practical and legally sound)

Step 1: Gather proof (before you confront)

Create a folder with:

Official receipts, acknowledgment receipts, deposit slips, bank transfer details
Screenshots of chats, texts, emails, ads, “guarantees,” approval claims
The application form, fee schedule, term sheet, any “commitment letter”
IDs, business cards, company details, office address
Names of employees/agents and dates of meetings/calls

If payment was via bank transfer/e-wallet, keep the transaction reference and beneficiary name.

Step 2: Classify each payment

For each fee, write:

amount, date, who received, stated purpose, supporting document
whether any service was actually performed (appraisal done? notarized? credit check?).

This classification drives your demand letter and your choice of forum.

Step 3: Send a formal written demand (the cornerstone)

A demand letter should:

State facts chronologically (application, payments, non-release/denial)
Itemize the amounts demanded for return
Cite the basis: no loan released, no service, unjust enrichment / solutio indebiti, and/or breach
Give a firm deadline (e.g., 5–10 business days)
Provide payment instructions and request written reply
Warn that you will file administrative/civil/criminal actions if ignored

Deliver via email + courier + personal service if possible. Keep proof of sending.

Step 4: Use “pressure points” that are lawful and effective

Depending on who took the money:

Chargeback / dispute: If paid by credit card, request reversal/dispute citing “service not delivered.”
Bank assistance: If paid via bank transfer, ask your bank about possible dispute steps (limited, but sometimes helpful).
Regulator complaint: BSP (banks), SEC (lending/financing companies), relevant authority for cooperatives.
Barangay proceedings: Often required for disputes between individuals in the same city/municipality before filing certain court actions (subject to exceptions).
NBI/PNP report: Particularly for scams with multiple victims.

Step 5: Choose the right legal action (civil vs. small claims vs. criminal)

A. Small claims (if within the allowable amount and the claim fits the rules) Best for straightforward money recovery: “You received X; you must return X.” Pros: faster, simplified, typically no lawyers required. Cons: limited types of claims/defenses; strict paperwork.

B. Regular civil case (collection of sum of money / damages) For larger amounts, complex facts, or when you claim damages beyond the principal.

C. Criminal complaint (estafa) + civil recovery Useful when deception is clear or the payee vanishes. Note: Criminal filing is not a “collection shortcut”—it must be supported by facts meeting criminal elements.

6) How to argue your case (common winning theories)

Scenario 1: “You paid a release/processing fee, but no loan was released.”

Strong arguments:

No consideration: the payment was tied to a release that never happened.
Unjust enrichment / solutio indebiti: money was not due if release never occurred.
Fraud if they assured “approved” to induce payment.

What defeats you:

clear written agreement that the fee covers services actually rendered, plus proof those services were rendered.

Scenario 2: “Loan was denied; they kept the fee.”

Ask:

Was the fee disclosed as payment for credit investigation/appraisal?
Did they provide official receipts and proof of actual expenses? If not, you argue refund (full or partial) as unjust enrichment.

Scenario 3: “They blame you for non-compliance.”

Common in documentation-heavy loans. Your job is to show:

you complied, or
their requirements were unreasonable/constantly shifting, or
they accepted your payment despite knowing you wouldn’t qualify (bad faith).

Scenario 4: “The payee is a facilitator/agent, not the lender.”

You can pursue:

the individual for return of funds (quasi-contract / fraud),
and, if they falsely used a company’s name, complain to the company and regulator.

7) What you can recover: principal, interest, damages

A. Return of the amount paid

Your baseline claim is the exact amount paid that lacks lawful basis.

B. Interest

Courts may award legal interest from demand or filing (depending on circumstances and jurisprudence). This can materially increase recovery.

C. Damages and attorney’s fees

Possible if you prove bad faith, fraud, or oppressive conduct. Keep expectations realistic: courts require solid support.

8) Red flags (and how to prevent the problem next time)

Patterns strongly associated with non-release and fee loss:

“Guaranteed approval” in exchange for upfront fee
Payment requested to a personal account/e-wallet with no official receipt
Vague fees: “activation,” “release,” “AML,” “registry,” “unlocking”
Pressure tactics: “today only,” “last slot,” “approved na, pay now”
No clear written fee schedule or refund policy
Refusal to give company address, license details, or official email domain

Safer practice:

Pay only to official channels with official receipt
Demand a written schedule stating which fees are refundable/non-refundable and why
Treat “release fee before release” as a danger signal unless clearly documented and typical for the institution (and still insist on receipts and justification)

9) A demand letter template (structure you can copy)

Use this structure (adapt to your facts):

Heading: Date, name/company, address, email
Statement of facts: application date, promised timeline, payments with OR/transaction refs
Failure: loan not released/denied; your compliance efforts
Demand: itemized refund total; payment deadline; where to remit
Legal basis: unjust enrichment (Art. 22), solutio indebiti (Art. 2154), breach/fraud (as applicable)
Reservation: administrative complaint + civil action + criminal action if warranted
Attachments list: receipts, chats, proofs
Signature

10) Quick FAQ

Can I get a refund if the receipt says “non-refundable”? Sometimes. “Non-refundable” is not absolute—especially if no service was rendered, the fee is unconscionable, or it was obtained by deception.

Is an “application fee” always non-refundable? Not always. It depends on what it truly covers and whether the payee can show actual work/expense and proper disclosure.

Should I file criminal or civil first? If it looks like a scam (deceit, disappearance, many victims), criminal may be appropriate. If it’s a dispute over fees with a traceable company, start with demand + regulatory complaint and/or small claims/civil.

What’s the single most important thing to do early? Send a written demand with complete documentation and a clear deadline, then escalate to the proper forum.

Practical bottom line

To recover advance payments and fees from a failed loan application in the Philippines, you win by (1) proving payment, (2) proving no valid basis to keep it, (3) choosing the correct forum (regulator/small claims/civil/criminal), and (4) documenting bad faith or deception when present. The law’s workhorses are unjust enrichment (Civil Code Art. 22) and solutio indebiti (Civil Code Art. 2154)—especially when no loan is ever released.

If you paste (remove personal sensitive info if you want) the fee breakdown and the exact reason they gave for non-release, I can map each fee to the strongest refund argument and the best forum to file in.