Digest (Edward John Dacer-Nerosa) deposited, which they have done, as subsequent shown

when asking for an extension of the time for the return

ANGEL JAVELLANA vs. JOSE LIM, ET AL thereof, inasmuch as, acknowledging that they have
subjected the letter, their creditor, to losses and
damages for not complying with what had been
Angel Javellana, file a complaint, with the CIF of Iloilo,
stipulated, and being conscious that they had used, for
praying that Jose Lim and Ceferino Domingo Lim, be
their own profit and gain, the money that they received
sentenced to jointly and severally pay the sum of
apparently as a deposit, they engaged to pay interest to
P2,686.58, with interest thereon at the rate of 15 per
the creditor from the date named until the time when the
cent per annum from the 20th of January, 1898, until full
refund should be made.
payment should be made.

Issue: W/N the transaction entered into between the

Authority from the court having been previously interested parties was deposit or a real contract of loan.
obtained, the complaint was amended on the 10th of
January, 1907; it was then alleged, on the 26th of May, Held: It was a contract of loan through deposit. Under
1897, the defendants executed and subscribed a the Civil Code
document in favor of the plaintiff reading as follows:
Article 1767 provides that —
We have received from Angel Javellana, as a deposit
without interest, the sum of two thousand six hundred The depository can not make use of the thing deposited
and eighty-six cents of pesos fuertes, which we will without the express permission of the depositor.
return to the said gentleman, jointly and severally, on the Otherwise he shall be liable for losses and damages.
20th of January, 1898. — Jaro, 26th of May, 1897. —
Signed Jose Lim. — Signed: Ceferino Domingo Lim. Article 1768 also provides that —
When the depository has permission to make use of the
thing deposited, the contract loses the character of a
That, when the obligation became due, the defendants
deposit and becomes a loan or bailment.
begged the plaintiff for an extension of time for the
payment thereof, building themselves to pay interest at The permission shall not be presumed, and its existence
the rate of 15 per cent on the amount of their must be proven.
indebtedness, to which the plaintiff acceded; that on the
15th of May, 1902, the debtors paid on account of For the reason above set forth it may, it can be inferred
interest due the sum of P1,000 pesos, with the exception that there was no renewal of the contract deposited
of either capital or interest, had thereby been subjected converted into a loan, because, as has already been
to loss and damages. stated, the defendants received said amount by virtue of
real loan contract under the name of a deposit, since the
so-called bailees were forthwith authorized to dispose of
Evidence was adduced by both parties and, upon their
the amount deposited. This they have done, as has been
exhibits, together with an account book having been
clearly shown.
made of record, the court below rendered judgment on
the 15th of January, 1907, in favor of the plaintiff for the
recovery of the sum of P5,714.44 and costs. The original joint obligation contracted by the defendant
debtor still exists, and it has not been shown or proven in
the proceedings that the creditor had released Jose Lim
The document of indebtedness inserted in the complaint
from complying with his obligation in order that he should
states that the plaintiff left on deposit with the defendants
a sum of money which they were jointly and severally not be sued for or sentenced to pay the amount of
obliged to return on a certain date. However, when the capital and interest together with his codebtor, Ceferino
Domingo Lim, because the record offers satisfactory
document written in the Visayan dialect and followed by
evidence against the pretension of Jose Lim, and it has
a translation into Spanish was executed, it was
also been proven that Jose Lim, being fully aware that
acknowledged that the amount deposited had not yet
been returned to the creditor, whereby he was subjected his debt had not yet been settled, took steps to secure
to losses and damages, when the return was again an extension of the time for payment, and consented to
pay interest in return for the concession requested from
stipulated with the further agreement that the amount
the creditor.
deposited should bear interest at the rate of 15 per cent
per annum, and that the 1,000 pesos paid to the
depositor according to the receipt issued by him to the ,
debtors, would be included, and that the said rate of
interest would obtain until the debtors on the 20th of
May, 1897, it is called a deposit consisted, and they
could have accomplished the return agreed upon by the
delivery of a sum equal to the one received by them. For
this reason it must be understood that the debtors were
lawfully authorized to make use of the amount
JOSE ROGERS v SMITH, BELL, & CO. Held: No, the Court in this case said that the contract in
question does not fulfill the requirements for it to be
Smith Bell and company has acknowledged that it considered irregular deposit. Manresa states that there
received an amount of 12,000 pesos (Confusing ang are three points of difference between a loan and an
case, sabi nila peso tapos dollars na naman.) through irregular deposit. The first difference which he points out
deposit from Jose Rogers, as evidenced by the consists in the fact that in an irregular deposit the only
documents presented before the CIF of Manila. The said benefit is that which accrues to the depositor, while in a
deposited amount will be paid within 6 months from the loan the essential cause for the transaction is the
receipt thereof; that it will be paid either in Manila or necessity of the borrower. The contract in question does
London or as what Roger wishes; that the said amount not fulfill this requirement of an irregular deposit. It is
will have an 8% interest per annum from the date of the very apparent that it was not for the sole benefit of
execution of the said document (Feb. 17, 18786). Rogers. It, like any other loan of money, was for the
benefit of both parties. The benefit which Smith, Bell &
Co. received was the use of the money; the benefit
The document presented should the undisputed fact of
which Rogers received was the interest on his money. In
the case that the delivered12,000 pesos in silver were
the letter in which Smith, Bell & Co. on the 30th of June,
worth more than 12,000 pesos in gold. The plaintiff
delivered to the defendants in consideration of the 1888, notified the plaintiff of the reduction of the interest,
execution of the document 12,000 in gold. Soon they said: "We call your attention to this matter in order
that you may if you think best employ your money in
thereafter the plaintiff moved to Barcelona and has since
some other place."
resided there. The defendants remitted the interest to
him every three months at the rate of 8 per cent per
annum until when they notified him that thereafter the Nor does the contract in question fulfill the third requisite
interest would be 6 per cent. The plaintiff accepted this indicated by Manresa, which is, that in an irregular
reduction and interest at that rate was remitted to him by deposit, the depositor can demand the return of the
the defendants. article at any time, while a lender is bound by the
provisions of the contract and cannot seek restitution
until the time for payment, as provided in the contract,
The interest was remitted in silver; that is to say, every
three months the defendants took 180 pesos in silver has arisen. It is apparent from the terms of this
documents that the plaintiff could not demand his money
and with it bought exchange on Barcelona or other
at any time. He was bound to give notice of his desire for
European point converted into pesetas. The plaintiff
its return and then to wait for six months before he could
received these payments in silver without any protest
insist upon payment.
whatever. However, he then called the attention of the
defendants to the fact that by the new American law in
force in the Philippines the gold standard had been The Supreme Court of Spain decided that the
introduced and that by reason thereof he was entitled to transaction is still a loan:
receive his interest in gold, in view of the fact that when
he delivered the money to the defendants in 1876 he Whereas, although the irregular deposit is considered as
delivered it in gold coin. In another letter, he expressly mutual, with respect to the repayment between the
refers to the act of Congress of March 2, 1903, and to depositor and the depositary, notwithstanding this, the
the subsequent proclamations of the Governor-General latter retains the original status of personal creditor and
relating to coinage. These are practically all the facts in is simply privileged, in concurrence with other creditors
the case, and the claim of the plaintiff is that, having paid against the former, and he must be paid after the
to the defendants 12,000 pesos in gold coin, he is now mortgage creditors and before the creditors whose right
entitled to receive from them the value of 12,000 pesos appears only by written instruments, in accordance with
in gold coin; that is to say, 24,000 pesos in silver. Law XII, Title XIV, fifth Partida.

The appellant in his brief repeatedly calls it a deposit, but In the given case, the document presented by the
we do not understand that he claims that it is or ever appellant does not fall under the requisites which are
was a deposit in the technical sense of the term; that is, essential to an irregular deposit.
that his ownership of the particular coin which was
delivered by him to Smith, Bell & Co. did not pass But even if it did, it seems that the appellant's contention
to Smith, Bell & Co. but remained in him and that Smith, could not be sustained. He claims that in accordance
Bell & Co. was bound to return to him the identical coin with said Law II, title III, Fifth Partida, the defendants are
which they had received. It is claimed, however, by the bound to return to him the same kind of money which
appellant, that while not a deposit in the strict sense of was received. That law is in part as follows:
the word, the document evidences what is known as an
"irregular deposit." And the ownership of the thing given in deposit is not
transferred to the one who receives the same; but,
Issue: W/N this case falls under irregular deposit. should the thing be one of those which can be counted,
weighed, or measured, if, when receiving it, the same That the silver Philippine pesos authorized by this act
were given by count, weight, or measure, then the shall be legal tender in the Philippine Islands for all
ownership would be transferred to him. Yet he would be debts, public and private, unless otherwise specifically
obliged to return the same thing, or the same quantity, or provided by contract: Provided, That debts contracted
another similar to the one received, to him who gave it to prior to the thirty-first day of December, nineteen
him in deposit. hundred and three, may be paid in the legal tender
currency of said Islands existing at the time of the
An examination, however, of Law II, Title I, of the making of said contracts, unless otherwise expressly
Fifth Partida, which relates to loans, will show that the provided by contract.
obligation of the borrower in such case is stated in
almost exactly the same words. That law is in part as That this case falls within the terms of this section is very
follows: clear. The debt in question is a private debt, calling for
the payment of 12,000 pesos. This section authorizes
A man may loan to another any of the things mentioned the payment of that debt in the Philippine pesos
in the last law which are susceptible of being counted, authorized by the act.
weighed, or measured. And this is understood with
regard to things belonging to him who lends them, or (Ito na ang explanation kung bakit nag gamit ang dollars)
which are loaned by another by authority of his principal;
provided, however, that once the thing is in the The appellant in his brief discusses at length the
possession of him who secures the loan, he may meaning of the word "dollars." We do not see how such
dispose of it as though it were his own. But he must a discussion is material. The contract provides for the
return to the owner of the thing equal amount of the payment of "pesos," not "dollars." It is very evident that
same kind and quality, although the creditor should not the contract was not changed nor intended to be
specify either of the conditions. changed by the use of the word "dollars" in the letter of
February 17, 1876. That in English houses especially the
The supreme court of Spain in the judgment of the 27th word "dollars" was, until very recently, used to indicate
of October, 1868, speaking of the obligation of the pesos of local currency, whether Mexican, Spanish, or
borrower in such case, says: Hongkong, is well known.

Whereas the principle in Laws I and II of Title I of the In conclusion it may be said that the plaintiff, in 1876,
Fifth Partida, according to which the borrower, acquires delivered to the defendants the cheapest kind of money
ownership of the thing and is bound to return an equal then in use. If he had desired to be repaid in the same
amount of the same kind and quality, have special money which he delivered, he should have so provided
application to cases relating to loans of money or its expressly in the contract. He had a perfect right to do so,
equivalent; whereas the thing loaned not being in such and if he had done so he could now, by reason of the
cases what properly constitutes the material or the provisions of the said act of Congress, demand payment
object of deposit, as happens with other perishable in gold.
things, but rather the value that the coins or the paper
money represents, the obligation of the depository in this That the plaintiff's protest in 1904 was based entirely
kind of contracts is to return the sum or amount therein upon his construction of this act of Congress admits of
expressed, whatever may have been the increase or no doubt; that he delivered that by the terms of the
depreciation suffered by the specific kind of coin or contract, without the act of Congress, Smith, Bell &
paper, unless the contrary be stipulated. Co. had the right to pay him in silver is beyond question.
This belief is shown not only by his letters of protest
It seems clear from these citations that the document in which expressly refer to the act of Congress as the basis
question is evidence of an ordinary loan and created of his claim but also by his conduct during more than
between the plaintiff and defendants the relation of twenty-five years in receiving interest in silver without a
debtor and creditor. And, it appeared that the Bank of sign of protest. That he would have received the
Havana returned to the plaintiff the same kind of money principal also in silver had the defendants tendered it to
which it had received from him. It having been him at any time prior to 1903 is also free from doubt. In
determined that the contract between the parties created making his protest in 1904 he evidently believed that the
the common relation of debtor and creditor, the case is act of Congress required the payment of the 12,000
easily resolved. Section 3 of the act of Congress of pesos in gold and that he thereby has acquired
March 2, 1903, entitled "An act to establish a standard of additional rights. His construction of the act is, as we
value and to provide for a coinage system in the have seen, wrong.
Philippine Islands," is as follows: