Short answer. You become the owner of the money. Article 1953 says a person who receives a loan of money or another fungible thing acquires ownership of it and is bound to return an equal amount of the same kind and quality. So you do not return the identical bills you received; you owe an equivalent sum.
What the law says
A person who receives a loan of money or any other fungible thing acquires the ownership thereof, and is bound to pay to the creditor an equal amount of the same kind and quality.
Civil Code, Article 1953 — Mutuum Transfers Ownership. Read the full provision →
A loan of money transfers ownership
When you borrow money, the law does not treat you as merely holding the lender's bills for safekeeping. Article 1953 provides that a person who receives a loan of money or any other fungible thing acquires the ownership thereof. This kind of loan, called a mutuum, is a loan of consumable or fungible things, and it works by passing ownership to the borrower. That is only sensible: the whole point of borrowing money is to spend it, which you could not do if it were not yours. Ownership must move to the borrower for the loan to serve its purpose.
What you must return
Because ownership passes, you do not owe the very same coins or notes back. The article says the borrower is bound to pay to the creditor an equal amount of the same kind and quality. You repay an equivalent, not the identical thing. For money, that means returning the same sum in the same currency; for another fungible thing, an equal quantity of the same kind and quality. The lender is protected not by keeping title to the particular bills, which are gone, but by the borrower's obligation to render back their equivalent.
Why this matters for risk
The transfer of ownership has a practical consequence for who bears loss. Since the borrowed money becomes the borrower's own, its loss or destruction after it is received is the borrower's problem, not the lender's, and does not excuse repayment. A borrower who loses or spends the money still owes the equivalent sum. The debt is to pay back an amount, and that duty stands regardless of what happens to the specific funds once they have passed into the borrower's ownership and control.
Mutuum compared with a loan for use
It helps to contrast this with the other kind of loan, where a specific non-consumable thing is lent for use and must be returned as itself, with ownership staying with the lender. Money and other fungibles do not fit that model, because using them means consuming them. Article 1953 captures the difference: a money loan is a transfer of ownership coupled with a duty to return the equivalent. Understanding this explains why a borrower can freely spend borrowed money and why the obligation is always measured as a sum to be repaid.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Romulado J. Bawasanta vs. People of the Philippines/Rodolfo G. Valencia vs. People of the, G.R. No. 219300 / G.R. No. 219323 / G.R. No. 219343, November 17, 2021 — read the decision on LawPhil →
- Spouses Ramon Sy and Anita Ng, Richard Sy, Josie Ong, William Sy and Jackeline De Lucia vs. Westmont Bank (Now United Overseas Bank Philippines) and Philippine Deposit Insurance Corporation, as Assignee of United Overseas Bank Philippines, G.R. No. 201074, October 19, 2016 — read the decision on LawPhil →
- Spouses Salvador Abella and Alma Abella vs. Spouses Romeo Abella and Annie Abella, G.R. No. 195166, July 8, 2015 — read the decision on LawPhil →
- Land Bank of the Philippines vs. Lamberto C. Perez, et al, G.R. No. 166884, June 13, 2012 — read the decision on LawPhil →