Angel Javellana v. Jose Lim

Summary

This 1908 Supreme Court case established that a transaction characterized as a deposit becomes a loan when the depositary is authorized to use the deposited money. Javellana sued the Lim defendants to recover P2,686.58 plus interest on what was originally termed a deposit. The Court found that since defendants used the money for their business and later agreed to pay interest when requesting extension, the transaction was actually a loan contract under Civil Code Articles 1767-1768. The Supreme Court affirmed the lower court's judgment, emphasizing that permission to use deposited funds transforms deposit into loan, and defendants' conduct evidenced their understanding of the true contractual nature. The decision clarifies the legal distinction between deposit and loan contracts in Philippine civil law.