G.R. No. 178789 - Lim vs. National Power Corp.

The appeal arises from a declaratory action filed on January 10, 1900, in the Court of First Instance of Tondo.
The case involves Don Manuel Garcia Gavieres, acting as plaintiff and successor in interest of the deceased Dona Ignacia de Gorricho, and Don Trinidad H. Pardo de Tavera, defendant and universal heir of the deceased Don Felix Pardo de Tavera.
The subject matter is the collection of 1,423.75 pesos, which is said to be the remaining balance on an original obligation of 3,000 pesos.

The contract originated on January 31, 1859, as evidenced by a written instrument signed by Don Felix Pardo de Tavera in Binondo.
The document states: "Received of Senorita Ignacia de 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 per cent per annum with a hypothecation of the goods now owned by me or which may be owned hereafter, as security of the payment."
The agreement, though referring to a deposit, contained elements such as accruing interest and terms that allowed for the depositary to utilize the funds, which later became critical in its interpretation.

The plaintiff maintained that the document constituted a contract of deposit.
The defendant countered, arguing that the document represented a contract of loan, not a deposit.
The inclusion of an obligation to pay interest at the rate of 6% was highlighted by the defendant as evidence that it was, in fact, a loan.
In addition, the defendant asserted that the proper prescription period for a loan had elapsed, extinguishing the plaintiff’s right to recover the balance.

A document dated January 8, 1869, executed by Don Felix Garcia Gavieres (husband and legal representative of the deceased Dona Ignacia de Gorricho), acknowledged the receipt of 1,224 pesos.
The receipt was made by Don Manuel Darvin, representative of the deceased Don Felix Pardo de Tavera, and declared the sum as the balance due on a debt of 2,000 pesos.
This evidence supported the argument that payments had been made towards settling the original obligation.
It was inferred from the absence of contrary evidence that this payment was intended to satisfy the remaining balance of the original transaction.

The original contract was executed in 1859, nearly half a century prior to the appeal.
The legal effects of personal actions arising from loans, under the applicable prescription laws (twenty years under the former law or fifteen years under the current Civil Code), played a significant role in the dispute.
The eventual non-existence of the contracting parties and the passage of a long time further complicated the issue of evidence preservation.

Whether the document in question should be interpreted as a contract of deposit or as a contract of loan.
Determination of the true intention of the parties based on the terms provided in the document.

Whether the prescription period applicable to a contract of loan (fifteen years under the current Civil Code) applies to the case.
If the prescription elapsed, whether it extinguishes the plaintiff’s right to recover the claimed balance.

Whether the document dated January 8, 1869, sufficiently established that a substantial part of the debt had been settled.
The impact of laches and the consequent failure of proof due to the delay in asserting the claim.