1) Understanding the Problem

In the Philippines, a borrower may be “approved” for a loan but still not receive the proceeds (the “release,” “drawdown,” or “disbursement”). This can happen with banks, financing companies, cooperatives, lending investors, online lending platforms, pawnshops with credit products, and even informal lenders.

A failure to release proceeds after approval generally falls into one of these categories:

No perfected contract yet Approval may be conditional (subject to documentary completion, credit committee confirmation, compliance checks, collateral registration, insurance, or post-approval verification). In many products, the lender’s “approval” is an internal decision rather than a binding promise to disburse.
A perfected loan contract exists, but disbursement is wrongfully withheld If there is a signed loan agreement or promissory note with clear release terms and the borrower has complied, the lender’s refusal may be a breach of obligation and can expose the lender to damages.
Disbursement is withheld due to legal or compliance triggers Lenders may freeze releases due to anti-fraud checks, AML/CTF flags, sanctions screening, adverse findings, or suspected misrepresentation. They may not always disclose full reasons, but they should follow due process and fair dealing.
Operational or third-party delays Issues with releasing checks, bank transfers, remittance partners, system outages, errors in account details, employer approvals for salary loans, escrow instructions, or delays in collateral documentation.
Potentially unlawful “release conditions” Some practices—especially in certain online or informal lending contexts—include requiring “advance fees,” forced add-on purchases, or unclear deductions that effectively prevent release or reduce proceeds in ways that may be improper depending on the facts.

Your remedies depend on which category you are in.

2) Key Philippine Legal Concepts That Usually Control

A. Contract formation and enforceability

A loan is generally a contract where one party delivers money and the other repays with interest (if agreed). The crucial practical point: a loan contract is commonly treated as perfected upon agreement, but it becomes “consummated” upon delivery of the money. Many disputes turn on whether the lender actually bound itself to deliver funds, or whether “approval” was only an invitation or conditional commitment.

What matters most is the paper trail: term sheet, approval notice, loan offer, promissory note, loan agreement, disclosure statement, collateral documents, board/credit committee approval, and any conditions precedent.

B. Good faith and fair dealing

Philippine law imposes standards of good faith, honesty, and fair dealing in contractual relations. Even where a lender retains discretion, discretion must not be exercised arbitrarily, oppressively, or in bad faith.

C. Damages for breach

If there is a binding obligation to disburse and the lender unjustifiably fails, the borrower may claim:

Actual/compensatory damages (provable losses caused by non-release—e.g., penalties on a purchase contract, lost earnest money, higher interest paid to a replacement lender);
Moral damages (only in specific circumstances, usually when bad faith is shown and the case fits recognized categories);
Exemplary damages (to deter wrongful conduct, typically requiring bad faith);
Attorney’s fees (not automatic; must be justified).

D. Misrepresentation and unfair practices

If the “approval” was used to induce you to pay fees, provide collateral, sign documents, or take steps that benefit the lender—without genuine intent to release—this can raise issues of fraud, misrepresentation, or unfair/deceptive conduct, depending on the facts.

E. Special regulatory environment

Different lenders are regulated by different authorities. Your escalation path depends on who the lender is:

Banks (universal, commercial, thrift, rural, digital): supervised by the Bangko Sentral ng Pilipinas (BSP).
Financing companies / lending companies: registered and regulated by the Securities and Exchange Commission (SEC) (for corporate registration and compliance), and subject to consumer protection and other rules depending on product; many online lending platforms are in this category.
Cooperatives: supervised by the Cooperative Development Authority (CDA).
Insurance-related credit products: involve the Insurance Commission.
Pawnshops: typically under BSP for pawnshop operations (context-specific).
Government lenders (e.g., GSIS, SSS, Pag-IBIG, LandBank, DBP): have their own charters, grievance mechanisms, and sometimes COA/administrative processes.

3) Diagnose Your Case: Is the Lender Actually Obligated to Disburse?

Step 1: Identify the “approval” document type

Common documents and what they often mean:

Pre-approval / pre-qualified / indicative approval Usually non-binding; subject to verification and final underwriting.
Conditional approval Binding only after conditions are met. Conditions must be specific and communicated.
Loan offer / facility offer / term sheet accepted by borrower Often closer to a binding commitment, but still may state “subject to” clauses.
Signed promissory note / loan agreement with a release clause Strong evidence of obligation, especially if conditions were already satisfied.
Disclosure statement and truth-in-lending forms Helpful but not always determinative of an unconditional obligation to release.

Step 2: List all “conditions precedent” (release conditions)

Common conditions include:

Submission of IDs, income documents, and signed forms;
Employer certification / payroll arrangement (salary loans);
Opening of an account for proceeds;
Payment of documentary stamp taxes (DST) and fees (if legitimately chargeable);
Collateral appraisal, notarization, and execution of mortgage/pledge/chattel mortgage;
Registration of security interest (e.g., chattel mortgage registration; real estate mortgage registration);
Insurance (mortgage redemption insurance, fire insurance) naming lender as beneficiary/mortgagee;
Post-approval verification (CI calls, site visits);
No material adverse change (job loss, fraud indicators);
Compliance checks (KYC/AML).

If you have complied and can prove it, your position strengthens.

Step 3: Check for a lender “discretion to cancel”

Many offers contain clauses allowing withdrawal “at any time prior to disbursement.” These clauses exist, but their enforceability in practice can still be tested against good faith, fairness, and consumer protection standards—especially if the lender induced reliance or imposed unfair costs.

Step 4: Determine reliance and harm

Even if the lender argues no binding obligation, you may have remedies if:

You relied on the approval in good faith;
The lender encouraged that reliance;
You suffered foreseeable losses.

4) Immediate Practical Steps (Before Filing Complaints or Cases)

A. Secure and organize evidence

Collect:

Approval notices, emails, texts, chat logs, app screenshots;
Signed loan documents (promissory note, loan agreement, disclosure statement);
Schedule of fees/deductions; official receipts;
Proof of compliance with conditions (submitted documents, acknowledgement receipts);
Records of follow-ups (names, dates, reference numbers);
Any deadlines tied to the loan purpose (purchase contracts, invoices, reservation agreements).

Create a chronology with dates and attach documents.

B. Demand clarity in writing

Send a written request (email or letter) asking:

Specific reason for non-release;
Exact missing requirements (if any);
Definite release date upon compliance;
A copy of the lender’s internal release checklist or a formal list of conditions (if available);
Confirmation of whether the lender is cancelling the facility and on what contractual basis.

Keep it factual and non-accusatory; your goal is to force a clear position.

C. Escalate internally

Use the lender’s:

Branch manager / relationship officer supervisor;
Customer care escalation;
Complaints unit;
Compliance officer (particularly for banks).

Ask for a ticket/reference number.

D. Protect yourself from “advance-fee” traps

Be cautious if the lender asks for:

“Processing fee to release,” “unlocking fee,” “insurance fee upfront to disburse,” “membership fee” with no transparency;
Payments to personal accounts;
Unofficial channels.

Legitimate lenders typically deduct allowable charges transparently or issue official receipts, and they do not require dubious “release fees” paid to individuals.

E. Mitigate your damages

If the loan is tied to a time-sensitive transaction (property purchase, tuition, business inventory), try to:

Seek written extensions with your counterparty;
Compare bridge financing options;
Document your attempts to reduce loss (this matters if you later claim damages).

5) Formal Demand Letter: When and What to Include

A demand letter becomes important when:

You have complied with conditions; and
The lender is unreasonably delaying or refusing; or
You incurred losses; or
You want a clean record before filing a complaint.

A strong demand letter typically includes:

Your borrower details and loan reference number;
Recital of key facts and dates;
Citation to the release obligation (contract clause, written approval/offer);
Proof of compliance with conditions;
A clear demand: release proceeds by a specific date/time or issue a written final decision stating cancellation grounds;
A request for refund of fees (if applicable) and explanation of deductions;
Notice that you will elevate to the appropriate regulator and pursue remedies if unresolved.

Keep the demand deadline reasonable (e.g., 3–7 business days depending on context).

6) Choosing the Right Regulator or Forum (Philippines)

A. If the lender is a bank (including digital banks)

BSP is the primary regulator and handles consumer assistance/complaints. Filing a BSP consumer complaint can pressure a response, especially if the issue involves unfair handling, lack of transparency, or violation of consumer protection expectations.

B. If the lender is a financing company / lending company / online lending platform (OLP)

Common paths:

SEC for registration/compliance issues and OLP-related concerns;
Consumer complaint channels depending on the nature of misconduct (e.g., harassment is a separate issue; deceptive practices may implicate broader consumer protection frameworks).

C. If the lender is a cooperative

File with the CDA and the cooperative’s internal dispute mechanisms.

D. If the lender is SSS/GSIS/Pag-IBIG or a government financial institution

Use the agency’s grievance and appeals process; some disputes are administrative first before judicial actions are appropriate.

E. If your issue involves unfair collection tactics (even before disbursement)

If they are collecting money or pressuring you despite non-release, preserve evidence and consider:

Administrative complaints for unfair debt collection behavior;
Potential criminal angles only when facts clearly support (e.g., fraud/estafa patterns).

7) Court Options: Civil Actions and What You Must Prove

A. Breach of contract / specific performance

If you can show a binding obligation to disburse, you can seek:

Specific performance (compel release) plus damages, or
Rescission (cancel and recover fees/damages), depending on what best protects you.

In practice, compelling release can be difficult if the relationship has broken down, but it is a legal remedy when obligations are clear.

To win, you usually need:

Existence of a valid obligation to release;
Your compliance with conditions;
Lender’s unjustified refusal/delay;
Resulting damages (if claimed).

B. Damages based on bad faith or abusive conduct

Where the lender acted in bad faith—stringing you along, extracting fees, changing requirements repeatedly without basis, or intentionally delaying to force you into worse terms—claims become stronger.

C. Small Claims Court (where applicable)

If your primary claim is for a sum of money within the small claims threshold and you can frame the dispute as refund/reimbursement (e.g., return of fees, return of amounts paid due to non-release), small claims can be a faster route. Small claims generally does not allow lawyers to appear for parties (with limited exceptions), and it is designed for simpler money disputes.

D. Provisional remedies (rare and fact-specific)

In urgent cases, a borrower might consider injunction-type relief, but Philippine courts require stringent proof and the posting of bonds, and courts are cautious in interfering with contractual discretion. This is typically reserved for clear rights and urgent irreparable harm.

8) Criminal Angles: When It Might (and Might Not) Apply

Not every non-release is a crime. Many are contractual or compliance-related disputes. Criminal exposure becomes plausible if the “approval” was used as a scheme to obtain money or property through deception.

Red flags that push toward a fraud theory:

The “lender” demanded advance payments and never had a real lending operation;
There is identity spoofing (fake company pages/apps);
Proceeds were promised upon paying “unlocking” fees repeatedly;
Documents and receipts are inconsistent or fabricated;
Multiple victims with the same pattern.

If this is your scenario, preserve evidence and consider reporting to law enforcement and cybercrime units, in addition to regulators.

9) Fees, Deductions, and “Net Proceeds” Disputes

Sometimes the dispute is not total non-release but that the borrower receives far less than expected.

A. Legitimate deductions (context-dependent)

Depending on the product and documentation, legitimate items may include:

DST and notarial fees;
Appraisal fees;
Mortgage registration expenses;
Insurance premiums (sometimes financed, sometimes paid upfront);
Service fees stated in disclosures.

The key is clear disclosure and agreement.

B. Potentially problematic deductions

Watch for:

Fees not in the signed disclosures;
Add-ons you did not consent to;
“Membership” or “release” fees paid to individuals;
Repeated “verification” fees;
Excessive charges disproportionate to the product.

Disputes here are often framed as:

Violation of disclosure obligations;
Unfair or unconscionable terms;
Deceptive practice.

10) Common Scenarios and How to Respond

Scenario 1: “Approved” but they keep adding requirements

Response: Request a single consolidated checklist in writing, with a final deadline and a named officer accountable. Ask what in your documents triggered additional requirements. Document each new requirement and when it was raised.

Scenario 2: They say you failed verification, but won’t explain

Response: Ask for the general ground (e.g., “employment unverifiable,” “KYC incomplete,” “fraud flag”) and what document can cure it. If they refuse to provide any meaningful explanation, escalate to the regulator.

Scenario 3: They insist you pay a fee to release

Response: Ask for the fee basis in the signed documents, official receipt issuance, and whether it will be deducted instead from proceeds. Refuse payments to personal accounts. If pressure continues, treat it as a red flag and elevate.

Scenario 4: Collateral loan—mortgage already signed but no release

Response: This is high risk because you may have encumbered property without receiving funds. Immediately demand release or cancellation plus assistance in reversing/withdrawing registration steps if possible. Consult counsel quickly because real property security documents can have lasting effects.

Scenario 5: Salary loan—employer coordination delays

Response: Coordinate directly with HR/payroll; ask lender for the exact employer-side requirement and whether the proceeds can be released to your account pending payroll setup.

11) Borrower Risk Management Going Forward

Never treat “approval” as cash in hand until you have a firm release schedule and all conditions are satisfied.
Avoid paying large upfront amounts unless clearly documented and receipted, and consistent with standard practice for that type of loan.
Insist on written disclosures of fees and deductions.
Prefer regulated entities (banks, registered financing/lending companies, cooperatives) and verify registration where possible.
Keep screenshots and chat logs for online transactions.

12) Practical Checklist

If you need the funds and want release:

Gather signed documents and proof of compliance.
Ask for a written list of missing items and a release date.
Escalate to branch/management and obtain a ticket number.
Send a demand letter referencing the release obligation.
File a complaint with the appropriate regulator if still unresolved.
Consider civil action if losses are significant.

If you no longer want the loan and want to unwind:

Send written cancellation.
Demand return/refund of any fees not properly earned.
Ensure any collateral documents are cancelled/returned and not registered.
Elevate to the regulator if they refuse to unwind.

13) What “All There Is to Know” Usually Comes Down To

Most disputes are won or lost on:

What exactly was promised (approval vs binding commitment);
Whether conditions precedent were met;
Whether the lender acted in good faith;
Whether you can prove concrete damages; and
Whether you escalated to the correct regulator and preserved evidence early.

The best outcome is often achieved by forcing the lender to take a clear, written position—release on a date certain, or a written denial with specific grounds—so you can choose the correct remedy quickly.