GAVIERES VS TAVERA

FACTS:

Don Manuel Garcia Gavieres, plaintiff and successor in interest of the deceased Doa
Ignacia de Gorricho filed an action against Don Trinidad H. Pardo de Tavera, heir of Don Felix
de Tavera for the collection of a balance of P1,423.75, remaining due on the original obligation
of P3,000.00. The agreement between the parties appears in the following writing:
Received of Seorita Ignacia e Gorricho the sum of 3,000 pesos, gold (3,000 pesos), as
a deposit payable on two months notice in advance, with interest at 6 percent per annum with
a hypothecation of the goods now owned by me or which may be owned thereafter, as a security
of payment.

The plaintiff alleged in the complaint that the contract executed by Felix and Ignacia
was a contract of deposit. The defendant, on the other hand, alleged that it was a contract of
loan and therefore the prescription applicable to the contract of loan extinguished the right of
action.

ISSUE:
W/N the contract executed is a contract of loan or deposit.

HELD:
The contract executed is a CONTRACT OF LOAN.
There is a stipulation of interest at 6% per annum and the amount could be collected
after notice of two months in advance, evident that the intention of the parties that the
depositary should have the right to make use of the amount deposited (The purpose of the
contract of deposit is the safekeeping of the thing delivered by the depositor to the depository.
Art. 1962)
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The prescription has extinguished the contract of loan as provided in the old civil code.
All personal actions, such as those which arise from a contract of loan, cease to have legal
effect after twenty years according to the former law and after fifteen years according to the Civil
Code now in force. (PRSCRIPTION. Please refer to full text for dates )