Case Digest: Republic of the Philippines vs Jose Grijaldo, G.R. No L-20240

Republic of the Philippines vs Jose Grijaldo, GR No L-20240, December 31, 1965

Subject: Obligations and Contracts

FACTS

In 1943 appellant Jose Grijaldo obtained five loans from the branch office of the Bank of Taiwan, Ltd. in Bacolod City, evidence by 5 promissory notes. To secure the payment of the loans, the appellant executed a chattel mortgage on the standing crops on his land, known as Hacienda Campugas in Hinigiran, Negros Occidental.

In January1946 and under the authority provided for in the Trading with the Enemy Act, as amended, the assets in the Philippines of the Bank of Taiwan, Ltd. were vested in the Government of the United States. Pursuant to the Philippine Property Act of 1946 of the United States, these assets, including the loans in question, were subsequently transferred to the Republic of the Philippines by the Government of the United States under Transfer Agreement dated July 20, 1954. These assets were among the properties that were placed under the administration of the Board of Liquidators created under EO 372, dated November 24, 1950, and in accordance with RAs 8 and 477 and other pertinent laws.

In the present appeal, the appellant contends that the appellee has no cause of action against the appellant because the loans were secured by a chattel mortgage on the standing crops on a land owned by him and these crops were lost or destroyed through enemy action (during Japanese occupation), thus, his obligation to pay the loans was thereby extinguished.

 ISSUE

Whether or not the obligation was extinguished by virtue of the loss of the thing mortgaged

RULING

No.

Article 1263 of the Civil Code provides: In an obligation to deliver a generic thing, the loss or destruction of anything of the same kind does not extinguish the obligation.

In this case, the obligation of the appellant under the five promissory notes was not to deliver a determinate thing namely, the crops to be harvested from his land, or the value of the crops that would be harvested from his land. Rather, his obligation was to pay a generic thing — the amount of money representing the total sum of the five loans, with interest. Appellant obligation was not extinguished by loss of thing mortgaged. The chattel mortgage on the crops growing on appellant's land simply stood as a security for the fulfillment of appellant's obligation covered by the five promissory notes, and the loss of the crops did not extinguish his obligation to pay, because the account could still be paid from other sources aside from the mortgaged crops.