G.R. No. L-14332; May 20, 1960
KAPISANAN NG MGA MANGAGAWA SA MANILA RAILROAD COMPANY, plaintiff-appellee, vs. CREDIT UNION KAPISANAN NG MGA MANGAGAWA SA MANILA RAILROAD COMPANY, defendant-appellant.

FACTS

The plaintiff, a duly registered labor organization, filed a suit in the Manila court of first instance to recover a sum of money from the defendant, a credit and cooperative association. The case was submitted for decision based on a stipulation of facts. The court rendered judgment ordering the defendant to pay the plaintiff the sum of P49,900.00 plus stipulated interest of 1% per annum from 1953 until fully paid, and the costs. The defendant appealed. It was undisputed that from 1950 to 1951, the defendant borrowed from the plaintiff a total of P104,000.00, payable in ten equal annual installments over ten years. As of the time of the suit, P68,400.00 was due, of which only P18,500.00 had been paid, leaving a balance of P49,900.00. The stipulation of facts also revealed that from 1950 to 1953, the General President of the plaintiff and the Chairman of the defendant were the same person, Mr. Vicente K. Olazo, and the majority of the board members of both associations were the same. During this period, no payments were made, and an amount of P26,800.00 became due and unpaid.

ISSUE

1. Whether there was a merger of creditor and debtor under Article 1276 of the New Civil Code due to the identity of officers in both associations from 1950 to 1953, thereby extinguishing the obligation for the P26,800.00 that fell due during that period.
2. Whether the plaintiff’s suit was premature for failure to comply with the two-month prior written notice requirement under Section 148 of Republic Act No. 2023 before instituting suit against a cooperative.

RULING

1. No, there was no merger of creditor and debtor. The Court held the defendant’s argument untenable. The two entities remained distinct juridical persons with their own identities and activities: the plaintiff operated under Commonwealth Act 213 and Republic Act 875 (as a labor organization), while the defendant functioned under the National Cooperative Act (Act 2508 as amended). The fact that one is suing the other demonstrates the absence of fusion. Furthermore, only a majority, not all, of the board members were the same persons. Therefore, the obligation for the P26,800.00 was not extinguished.
2. No, the suit was not premature. The Court noted that Republic Act No. 2023 , which contains the notice requirement, took effect only on June 22, 1957. The complaint in this case was filed in January 1957, before the law’s effectivity. There was no indication of legislative intent to apply the law retroactively to pending litigations.
DISPOSITIVE PORTION:
The appealed judgment was affirmed, with costs against the appellant.