The Short Answer
Yes. A loan made by word of mouth is a valid loan, and the borrower must pay it back. What you lose without a written agreement is the interest: interest you only agreed on verbally cannot be collected. You will also need other proof that the money was handed over and was a loan, such as receipts, chats or GCash records.
Example: Rowena's ₱20,000 GCash Loan in Lipa
Names and details in this example are made up.
Rowena Macaraig runs a small carinderia in Barangay Sabang, Lipa City, Batangas. In February 2026, her kumare Jenny, who lives in the next barangay, called her: "Pahiram muna ng ₱20,000, pambayad sa ospital. Babalik ko sa Hunyo, dagdagan ko ng ₱2,000." Rowena sent ₱20,000 by GCash that same day. Nothing was signed.
Jenny then messaged on Messenger: "Salamat mare, sa June ko ibabalik yung 20k." June came and went. Jenny now says the money was "tulong" (help), not a loan.
Is there a loan? Rowena has three things that help: the GCash transaction record showing ₱20,000 sent to Jenny's number, Jenny's Messenger message promising to return "yung 20k" in June, and the date of both. Together they show money was handed over and Jenny promised to pay it back. That is what a court looks for.
What about the ₱2,000 "dagdag"? It was promised only on a phone call. Under the Civil Code, interest is due only if it was agreed in writing. Rowena can collect the ₱20,000, but not the ₱2,000 as interest.
What she can still add. If Rowena sends a written demand and Jenny still does not pay, a court may award legal interest of 6% a year from the demand. On ₱20,000, that is ₱1,200 for a full year. Estimate it with the legal interest calculator.
Her next steps. She keeps the phone with the original chat, screenshots the GCash record, and sends a written demand. Since they live in the same city, the barangay comes next, then small claims if they do not settle. Because the loan was not written, she has six years to file the case.
Why a Spoken Loan Still Counts
Under the Civil Code, a contract binds the people who made it in whatever form it was made, as long as they agreed and the basic requirements are present. A loan of money does not need to be written to exist. It exists once the lender hands over the money and the borrower agrees to pay back the same amount.
Writing the loan down is about proof, not validity. Without a paper, the borrower may say the money was a gift, a payment for something, or that they already paid. A signed Promissory Note or Acknowledgment Receipt settles those arguments before they start.
Interest You Agreed on Only by Word of Mouth
Article 1956 of the Civil Code says: "No interest shall be due unless it has been expressly stipulated in writing." In plain words: interest is owed only if it was clearly agreed in writing. So a spoken "5-6", "10% a month" or "dagdagan ko ng ₱2,000" cannot be collected as interest. You can collect only the amount you lent.
- Once you demand payment and the borrower is late, a court may award legal interest (a rate set by law) of 6% a year from the demand, as damages for the delay.
- If the borrower already paid the spoken interest, whether they can get it back is a separate question. Ask for legal advice if it matters to you.
- If you want interest on future loans, write the rate in the note. See how much interest a lender can charge.
How to Prove a Loan With No Contract
Collect anything that shows (1) the money was handed over and (2) it was a loan, not a gift. Common proof:
- Bank, GCash or Maya records showing the amount, date and the borrower's account or number.
- Chats, texts and emails where the borrower asks to borrow, promises to pay, asks for more time or mentions the balance. Electronic messages can be used as evidence in court.
- Partial payments. A transfer back from the borrower labelled "hulog" or "bayad" helps show it was a loan.
- Witnesses who saw the cash handed over or heard the borrower promise to pay.
- Any note in the borrower's handwriting, even a short "Utang ko kay Rowena ₱20,000".
Keep the original messages on the phone and do not delete the conversation. Print screenshots showing the name or number, date and time. Even now, you can ask the borrower to sign an Acknowledgment Receipt or a Promissory Note for the balance.
How Long You Have to Collect
| Kind of Loan | Deadline to File the Case |
|---|---|
| Spoken (oral) loan | 6 years (Civil Code, Art. 1145) |
| Loan in a written contract or Promissory Note | 10 years (Civil Code, Art. 1144) |
The time is generally counted from when the loan became due. Under Article 1155, the count is interrupted when you file a case, when you make a written demand, or when the borrower acknowledges (admits) the debt in writing. A dated Demand Letter and a signed note from the borrower both protect you.
Collecting It
- Send a written demand with the amount and a date to pay. See the Demand Letter template.
- Go to the barangay if you and the borrower live in the same city or municipality. See do I need to go to the barangay first.
- File a small claims case for amounts up to ₱1,000,000, excluding interest and costs. Lawyers do not appear for the parties at the hearing. See how to collect a small debt in court.
The borrower cannot be jailed just for not paying. See can I go to jail for unpaid debt.
For the steps and papers, see lending money and writing it down and collecting money through small claims court.
Common Questions
Walang Pirmahan, Pero May Screenshot Ako ng Chat. Puwede na ba Yun?
Chats can be used as evidence, especially when they show the borrower promising to pay or mentioning the amount. They are stronger together with a bank or GCash record of the transfer. Keep the originals on your phone, not just screenshots.
Can I Charge the Interest We Agreed on Verbally?
No. Interest is due only if it was agreed in writing (Civil Code, Art. 1956). You can collect the amount lent. After you demand payment, a court may add legal interest of 6% a year.
I Gave the Money in Cash. How Do I Prove It?
Look for witnesses, messages that mention the loan, and any partial payments. Then ask the borrower to sign an Acknowledgment Receipt or Promissory Note for the balance. A signed note also gives you ten years to collect instead of six.
Does a Promissory Note Need to Be Notarized to Be Valid?
No. A signed note is valid without a notary. Notarizing it makes it harder for the borrower to deny their signature later. See lending money and writing it down.
The Loan Was Seven Years Ago and Never Written. Can I Still Collect?
The six-year deadline for oral loans may already have passed, unless it was interrupted, for example by a written demand you sent or a written acknowledgment from the borrower. Whether your claim is still alive depends on the dates, so get legal advice. The Public Attorney's Office helps people who qualify.
Not legal advice. This is general information. For advice on your own situation, consult a lawyer. If you cannot afford one, the Public Attorney's Office (PAO) or an IBP legal aid office may help for free.
Government fees, rules and requirements change, so always check with the office concerned before you go. This page explains the general rules; it cannot tell you how they apply to your own family or case. Last reviewed October 8, 2026.