Money Repayment Condition Based on Serial Numbers: Philippine Legal Perspective
(A general legal discussion for informational purposes; not intended as formal legal advice.)

I. Introduction

In the Philippines, obligations to pay money are primarily governed by the Civil Code of the Philippines (Republic Act No. 386) and various laws and issuances of the Bangko Sentral ng Pilipinas (“BSP”). Typically, money is regarded as a fungible good—that is, each unit of currency is presumed interchangeable with another of the same amount and denomination. This fungibility forms the core rationale behind legal tender laws: as long as the currency offered is genuine Philippine legal tender, the creditor is generally bound to accept it in settlement of a monetary obligation.

Occasionally, however, questions arise concerning repayment obligations that hinge on the specific serial numbers of the banknotes. For instance, one might encounter a situation where a lender insists that the debtor repay the loan with the same banknotes (i.e., with the exact serial numbers) initially borrowed, or else the debt is not considered settled. This article aims to examine the legal underpinnings of such a condition under Philippine law, including whether it is valid, enforceable, or in conflict with existing legal principles and public policy.

II. Nature of Money as Fungible Property

Fungibility of Money
Under Philippine law, money is categorized as a fungible good. Article 416 of the Civil Code mentions that “[p]ersonal property… which cannot be used without being consumed” is fungible, and money fits squarely into this definition—its chief characteristic is that one unit is customarily treated as equivalent to another of the same denomination.
Generic vs. Specific (or Determinate) Things
- Article 1460 of the Civil Code distinguishes a “generic thing” from a “specific/determinate thing.” A determinate thing is one that is identified by its individual identity (e.g., a specific collectible coin or a unique painting), whereas a generic thing refers to something identified by its class, quantity, and quality.
- Money typically belongs to the generic category. When a debtor owes a sum of money, the obligation is to pay an amount (the “principal”), often with interest if stipulated—not to deliver the exact same physical banknotes.
Implication for Repayment
Because money is fungible, the specific identity (including the serial numbers) of particular bills is generally immaterial to fulfilling an obligation. As long as the debtor tenders the correct amount in legal tender, the creditor is obliged to accept payment.

III. Legal Tender Laws and Central Bank Regulations

Legal Tender Under the New Central Bank Act
Republic Act No. 7653 (as amended by RA 11211), also known as the New Central Bank Act, grants the BSP the power to issue notes and coins, which constitute legal tender within the Philippines. Unless restricted by specific BSP circulars regarding maximum limits for coins or demonetized banknotes, all valid Philippine banknotes are legal tender for all debts, public and private.
Relevant BSP Circulars
- Acceptance of Legal Tender: Over the years, BSP has issued circulars reminding the public that Philippine banknotes and coins, if not mutilated or demonetized, must be accepted as valid payment for any monetary obligation.
- Demonetization Programs: At times, the BSP demonetizes older series banknotes (e.g., the old peso bills replaced by the New Generation Currency). During a stated grace period, such notes remain legal tender. Once fully demonetized, however, they lose their status and cannot be used for payment. This demonetization rule is typically the only major restriction on which specific bills can be used for repayment.
Effect on Serial Number Conditions
Given the BSP’s position on legal tender, a stipulation demanding only notes bearing particular serial numbers would conflict with the principle that “legal tender” suffices for debt payment. Creditors do not have a blanket right to reject lawful currency merely because the serial numbers differ from those originally exchanged.

IV. Enforceability of Serial Number-Based Conditions

Freedom of Contract (Article 1306, Civil Code)
The Civil Code recognizes the principle of freedom to contract: parties may establish terms and conditions as they wish, so long as these are not contrary to law, morals, good customs, public order, or public policy.
Possible Grounds for Invalidity
A repayment condition that insists on specific serial numbers can be viewed as:
- Contrary to the Fungibility Principle: By attempting to convert a fungible good (money) into a specific/determinate object with unique serial numbers, the stipulation potentially runs afoul of the fundamental concept that money is interchangeable.
- Contrary to Public Policy: Refusing to accept valid legal tender could be seen as opposing the public policy that protects the stability of the Philippine monetary system. The law generally disfavors any stipulation that obstructs the free flow and acceptance of legal tender.
- Potentially Impractical or Impossible Condition: Where the condition demands the same physical bills that were initially borrowed—especially if time has passed—obtaining those exact serial-numbered notes might be close to impossible. An obligation containing such an “impossible condition” can be rendered void.
Case Law and Jurisprudence
- There is no widely known Supreme Court precedent that directly addresses the exact scenario of demanding specific serial-numbered banknotes. However, the broader legal principles involving fungibility of money and the duty to accept legal tender are well-established.
- Courts generally prioritize substantive justice and the overarching policy that money is a measure of value, not an object singled out for its specific identity.
Exception: Collectible Currency or Special Agreements
In rare cases where the parties enter into a bona fide agreement that includes the transfer of specific collectible currency (for instance, a historically significant banknote), that arrangement may be enforced if:
- The collectible note (or coin) is treated more like a unique item (e.g., an antique or a rare coin) rather than a standard banknote.
- Both parties freely consented and recognized its collectible or numismatic value beyond the face value of the currency.
  Outside of such specialized contexts, the routine use of Philippine legal tender remains subject to the general rule of fungibility.

V. Practical and Legal Implications

Creditor’s Right to Demand Payment
- The creditor has the right to be paid in the amount owed, potentially with interest if agreed upon. However, demanding specific bills with certain serial numbers is typically ineffective and may be struck down if disputed.
- If the creditor refuses payment made with valid legal tender solely because it lacks the required “serial numbers,” the debtor may validly consign payment in court or deposit it with the proper judicial authority, discharging the obligation.
Debtor’s Right to Pay with Legal Tender
- The debtor retains the right to settle the debt using any valid Philippine currency in circulation.
- As long as the full amount is tendered in valid notes or coins, the creditor is legally obligated to accept it.
Best Practices
- For Creditors: Ensure that payment terms do not violate the fungibility of currency or local legal tender laws. If you wish to recover the exact same bills for sentimental or evidentiary reasons (for example, to trace theft or embezzlement), consult legal counsel to see if there is a valid basis, such as a specific or collectible value.
- For Debtors: If presented with an unusual repayment stipulation tied to specific serial numbers, seek clarification or legal advice. As a rule, legitimate legal tender is sufficient to discharge an ordinary obligation to pay money.

VI. Conclusion

Under Philippine law, money is generally considered fungible property, and any stipulation requiring specific banknote serial numbers for repayment is, in most situations, unenforceable. The principle of freedom to contract does allow parties to make special agreements, but such agreements must not run counter to the overarching legal policies on legal tender, the fungibility of money, and public policy.

Unless the arrangement involves genuinely collectible or numismatic currency with a recognized and agreed-upon special value, serial numbers are usually irrelevant to the validity of payment. Creditors cannot legally refuse to accept full payment in valid Philippine banknotes on the ground that the serial numbers differ from those originally exchanged. Ultimately, parties should remain mindful of the legal boundaries set by the Civil Code and BSP regulations to ensure enforceable and compliant repayment obligations.

Disclaimer: This article provides a general overview of the topic and is not intended as a substitute for specific legal advice. For particular concerns or cases, one is advised to consult a qualified lawyer experienced in Philippine contract and monetary law.