Short answer. Ownership transfers to the borrower. Article 1933 explains that a loan of money is a mutuum, and in simple loan, unlike commodatum, ownership of what is loaned passes to the borrower. He owes you back the same amount of the same kind and quality, not the identical bills.
What the law says
money or other consumable thing, upon the condition that the same amount of the same kind and quality shall be paid, in which case the contract is simply called a loan or mutuum.
Civil Code, Article 1933 — Loan: Commodatum and Mutuum. Read the full provision →
What the law says
In commodatum the bailor retains the ownership of the thing loaned, while in simple loan, ownership passes to the borrower.
Civil Code, Article 1933 — Loan: Commodatum and Mutuum. Read the full provision →
A money loan is legally a mutuum
Article 1933 explains that when someone delivers "money or other consumable thing, upon the condition that the same amount of the same kind and quality shall be paid," the arrangement is "simply called a loan or mutuum." Lending someone a sum of money falls squarely within this description: you handed over money on the understanding that an equivalent amount would eventually be returned, not that the exact same bills or coins would come back to you.
Ownership passes to the borrower under a mutuum
The article directly answers your question about ownership: "in commodatum the bailor retains the ownership of the thing loaned, while in simple loan, ownership passes to the borrower." Because your arrangement is a mutuum rather than a commodatum, ownership of the money you lent transferred to the borrower the moment you delivered it. He became the owner of those funds, free to spend, save, or otherwise use them as his own.
What the borrower actually owes you back
Since ownership passed to the borrower, what he owes you is not the return of the specific money you handed over — that money is now his to have used however he wished. What he owes is described in the article as delivery of "the same amount of the same kind and quality" back to you. Your claim is a claim for repayment of an equivalent sum, not a claim to recover specific property you still technically own, since you no longer own the money at all.
The contrast with commodatum makes the distinction clearer
The article draws this distinction by contrasting mutuum with commodatum, where someone lends a non-consumable item for temporary use and expects the very same item back, all while retaining ownership throughout the loan. Because money is consumable and fungible by nature, the law does not treat a money loan the same way — it makes more sense, and matches how borrowed money is actually used, to transfer ownership to the borrower and convert your interest into a right to repayment rather than a right to recover a specific, identifiable object.
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.
- Roberto L. Yupangco and Regina y De Ocampo vs. O.J. Development and Trading Corporation, G.R. No. 242074, November 10, 2021 — read the decision on LawPhil →
- Raquel Estipona (Lelandlord E. Sto. Domingo) and Sps. Alberto Co and Lulu Co, G.R. No. 207407, September 29, 2021 — read the decision on LawPhil →
- Rex Sorongon vs. People of the Philippines, G.R. No. 230669, June 16, 2021 — read the decision on LawPhil →
- Atty. Leonardo Florent O. Bulatao vs. Zenaida C. Estonactoc, G.R. No. 235020, December 10, 2019 — read the decision on LawPhil →