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Case Digest: Kapisanan ng mga Mangagawa sa MRR vs Credit Union, etc., G.R. No. L-14332

Kapisanan ng mga Mangagawa sa MRR vs Credit Union, etc., GR No. L-14332, May 20, 1960

Subject: Obligations and Contracts

FACTS

The plaintiff, a registered labor organization, sued the defendant, a credit and cooperative association, to recover a sum of money. - The parties submitted the case for decision based on a stipulation of facts. - It was established that the defendant had borrowed a total of P104,000.00 from the plaintiff between 1950 and 1951, with the loan payable in ten equal annual installments. - As per the terms of the loan contract, the defendant owed the plaintiff a balance of P49,900.00, of which only P18,500.00 had been paid. - The defendant argued that during the period from 1950 to 1953, when the General President of the plaintiff and the Chairman of the defendant credit union were the same person, no payment was made to the plaintiff. - The defendant contended that the amount of P26,800.00 due and unpaid during that period should not be paid due to a supposed merger between the creditor and debtor under Article 1276 of the New Civil Code. - The defendant also claimed that the plaintiff's demand was premature, citing a provision requiring prior notice to the Administrator before a suit could be filed against a cooperative.  

ISSUE

Whether or not there was merger of rights for the 2 juridical entities.

RULING

No, there was never any merger of the two juridical entities.

Under the law (Art. 1275, NCC), the obligation is extinguished from the time the characters of creditor and debtor are merged in the same person. 

In this case, they kept their own identities and activities: the one was duly registered and operated under Commonwealth Act 213 and Republic Act 875, while the other functioned under the provisions of the National Cooperative Act (Act 2508 as amended). Thus, there can be no confusion or merger if the debtor and creditor represent (different) juridical entities even if the officers of both are the SAME. Note that only a majority — not all — of the members of the boards of the two organizations were the same persons.

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