In the Philippines, the shift toward digital finance has raised questions regarding the enforceability of loan contracts that lack traditional "wet ink" signatures. Under Philippine law, a physical signature is not a prerequisite for a contract to be legally binding, provided certain electronic requirements are met.

1. Legal Basis: The Electronic Commerce Act (R.A. 8792)

The primary legislation governing this is Republic Act No. 8792, also known as the Electronic Commerce Act of 2000. This law gives electronic documents and signatures the same legal weight as their paper-based counterparts.

Legal Equivalence: Section 7 of the Act states that electronic documents shall have the same legal effect, validity, or enforceability as any other writing or document.
Electronic Signatures: Section 8 specifically provides that an electronic signature on an electronic document shall be equivalent to the signature of a person on a written document if that signature is proved by a prescribed method.

2. What Constitutes an "Electronic Signature"?

In the context of online lending, an electronic signature is not limited to a digital image of a handwritten name. It can include:

Click-wrap Agreements: Checking a box that says "I agree to the Terms and Conditions."
OTP Verification: Entering a One-Time Password sent to a registered mobile number to "sign" the transaction.
Biometric Authentication: Using facial recognition or fingerprints to authorize the loan application.

3. Requirements for Validity

For an online lending agreement to be considered valid and enforceable in Philippine courts, it must satisfy the following criteria:

Consent: There must be a clear "meeting of the minds." The borrower must have had the opportunity to review the terms and must have performed an affirmative action (like clicking "Accept") to signify consent.
Integrity of the Document: The electronic system must ensure that the document remains unaltered from the moment it was "signed."
Reliability: The method used to identify the party (the borrower) must be reliable and appropriate for the purpose for which the electronic document was generated.

4. Regulatory Oversight: SEC and BSP

Online Lending Platforms (OLPs) are strictly regulated by the Securities and Exchange Commission (SEC) and, in some cases, the Bangko Sentral ng Pilipinas (BSP).

Disclosure Requirements: Under the Truth in Lending Act (R.A. 3765), lenders are required to provide a Disclosure Statement prior to the consummation of the transaction. In a digital setting, this means the borrower must be shown the interest rates, fees, and repayment schedule clearly on the screen before they click "Agree."
Registration: For a digital contract to be enforceable by the lender, the entity must be a registered Lending Company or Financing Company with a valid Certificate of Authority (CA) to operate an OLP.

5. Jurisprudence and Admissibility

The Rules on Electronic Evidence (A.M. No. 01-7-01-SC) issued by the Supreme Court of the Philippines provide the procedural framework for presenting these agreements in court.

Admissibility: Electronic documents are admissible as the functional equivalent of paper documents.
Authentication: If a borrower denies signing the agreement, the lender must prove the authenticity of the electronic signature by showing that a security procedure was applied (e.g., login credentials, timestamps, or audit trails).

6. Key Takeaways

Physical signatures are not required for a loan to be valid in the Philippines.
Digital "Acceptance" is binding if it is done through a secure and verifiable method.
The Truth in Lending Act still applies, meaning all costs must be disclosed electronically before the "signature" occurs.
Illegal Lenders: While the form of the contract may be valid (digital), the contract itself may be voidable or the lender may be penalized if they are not registered with the SEC.