ART. 1977. OBLIGATION NOT TO MAKE USE OF THING DEPOSITED UNLESS AUTHORIZED. JAVELLANA VS.

LIM FACTS: Defendants executed a document in favor of plaintiff-appellee wherein it states that they have received, as a deposit, without interest, money from plaintiff-appellee and agreed upon a date when they will return the money. Upon the stipulated due date, defendants asked for an extension to pay and binding themselves to pay 15% interest per annum on the amount of their indebtedness, to which the plaintiff- appellee acceded. The defendants were not able to pay the full amount of their indebtedness notwithstanding the request made by plaintiff-appellee. The lower court ruled in favor of plaintiff-appellee for the recovery of the amount due. ISSUE: Whether the agreement entered into by the parties is one of loan or of deposit? HELD: The document executed was a contract of loan. Where money, consisting of coins of legal tender, is deposited with a person and the latter is authorized by the depositor to use and dispose of the same, the agreement is not a contract of deposit, but a loan. A subsequent agreement between the parties as to interest on the amount said to have been deposited, because the same could not be returned at the time fixed therefor, does not constitute a renewal of an agreement of deposit, but it is the best evidence that the original contract entered into between therein was for a loan under the guise of a deposit.