government v montedepiedad

7/28/2019 Government v Montedepiedad

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SECOND DIVISION

[G.R. No. 9959. December 13, 1916.]

THE GOVERNMENT OF THE PHILIPPINE ISLANDS,

represented by the Treasurer of the PhilippineIslands, plaintiff-appellee, vs. EL MONTE DE PIEDAD YCAJA DE AHORROS DE MANILA, defendant-appellant.

William A. Kincaid and Thomas L. Hartigan forappellant.Attorney-General Avancea for appellee.

D E C I S I O N

TRENT, J p:

About $400,000 were subscribed and paid into theTreasury of the Philippine Islands by the inhabitants

of the Spanish Dominions for the relief of thosedamages by the earthquake which took place in thePhilippine Islands on June 3, 1863. Subsequentthereto and on October 6 of that year, a central reliefboard was appointed, by authority of the King ofSpain, to distribute the moneys thus voluntarilycontributed. After a thorough investigation and

consideration, the relief board allotted #365,703.50to the various sufferers named in its resolution, datedSeptember 22, 1866, and, by order of the Governor-General of the Philippine Islands, a list of theseallotments, together with the names of those entitledthereto, was published in the Official Gazette ofManila dated April 7, 1870. There was later

distributed, in accordance with the above-mentionedallotments, the sum of $40,299.65, leaving a balanceof #365,403.85 for distribution. Upon the petition ofthe governing body of the Monte de Piedad, datedFebruary 1, 1833, the Philippine Government, byorder dated the 1st of that month, directed its


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treasurer to turn over to the Monte de Piedad the sumof $80,000 of the relief fund in installments of$20,000 each. These amounts were received on thefollowing dates: February 15, March 12, April 14, and

June 2, 1883, and are still in the possession of theMonte de Piedad. On account of various petitions ofthe persons and heirs of others to whom the above-mentioned allotments were made by the central reliefboard for the payment of those amounts, thePhilippine Legislature passed Act No. 2109, effective

January 30, 1912, empowering and directing the

Treasurer of the Philippine Islands to bring suitagainst the Monte de Piedad to recover, "through theAttorney-General and in representation of theGovernment of the Philippine Islands," the $80,000,together with interest, for the benefit of thosepersons or their heirs appearing in the list of namespublished in the Official Gazette under date of April 7,

1912, by the Government of the Philippine Islands,represented by the Insular Treasurer, and after duetrial, judgment was entered in favor of the plaintiff forthe sum of $80,000 gold or its equivalent in Philippinecurrency, together with legal interest from February28, 1912, and the costs of the cause. The defendantappealed and makes the following assignment of

errors:

"1. The court erred in not finding that theeighty thousand dollars ($80,000), given to theMonte de Piedad y Caja de Ahorros, were sogiven as a donation subject to one condition, towit: the return of such sum of money to the

Spanish Government of these Islands, withineight days following the day when claimed, incase the Supreme Government of Spain shouldnot approve the action taken by the formergovernment.


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"2. The court erred in not having decreedthat this donation had been cleared; said eightythousand dollars ($80,000) being at present theexclusive property of the appellant the Monte

de Piedad y Caja de Ahorros.

"3. That the court erred in stating that theGovernment of the Philippine Islands hassubrogated the Spanish Government in itsrights, as regards an important sum of moneyresulting from a national subscription opened

by reason of the earthquake of June 3, 1863, inthese Islands.

"4. That the court erred in not declaring thatAct Numbered 2109, passed by the PhilippineLegislature on January 30, 1912, isunconstitutional.

"5. That the court erred in holding in its decisionthat there is no title for the prescription of thissuit brought by the Insular Government againstthe Monte de Piedad y Caja de Ahorros for thereimbursement of the eighty thousand dollars($80,000) given to it by the late Spanish

Government of these Islands.

"6. That the court erred in sentencing theMonte de Piedad y Caja de Ahorros to reimbursethe Philippine Government in the sum of eightythousand dollars ($80,000), gold coin, or theequivalent thereof in the present legal tender

currency in circulation, with legal interestthereon from February 28th, 1912, and thecosts of this suit."

In the royal order of June 29, 1879, the governor-General of the Philippine Islands was directed to


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inform the home Government in what manner theindemnity might board, the persons who suffereddamage by the earthquake might be entitled, in orderto perform the sacred obligation which the

Government of Spain had assumed toward thedonors.

The next pertinent document in order is thedefendant's petition, dated February 1, 1883,addressed to the Governor-General of the PhilippineIslands, which reads:

"Board of Directors of the Monte dePiedad of Manila. Presidencia.

"Excellency: The Board of Directors of theMonte de Piedad y Caja de Ahorros of Manilainforms your Excellency, First: That the funds

which it has up to the present been able todispose of have been exhausted in loans on

jewelry, and there only remains the sum of onethousand and odd pesos, which will beexpended between to-day and day afterestablishment, which would be greatly injuredwere its operations suspended, it is necessary

to procure money. Third: That your Excellencyhas proposed to His Majesty's Government toapply to the funds of the Monte de Piedad a partof the funds held in the treasury derived fromthe national subscription for the relief of thedistress caused by the earthquake of 1863.Fourth: That in the public treasury there is held

at the disposal of the central earthquake reliefboard over $100,000, which was deposited inthe said treasury by order of your generalGovernment, it having been transferred theretofrom the Spanish-Filipino Bank where it hadbeen held. Fifth: That in the straightened


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circumstances of the moment, your Excellencycan, to avert impending disaster to the Montede Piedad, order that, out of that sum of onehundred thousand pesos held in the Treasury at

the disposal of the central relief board, there betransferred to the Monte de Piedad the sum of$80,000, there to be held under the sameconditions as at present in the Treasury, to wit,at the disposal of the Relief Board. Sixth: Thatshould this transfer not be approved for anyreason, either because of the failure of His

Majesty's Government to approve the proposalmade by your Excellency relative to theapplication to the needs of the Monte de Piedadof a part of the subscription intended to relievethe distress caused by the earthquake of 1863,or for any other reason, the board of directorsof the Monte de Piedad obligates itself to return

any sums which it may have received onaccount of the eighty thousand pesos, or thewhole thereof, should it have received thesame, by securing a loan from whichever bankor banks may lend it the money at the cheapestrate upon the security of pawned jewelry.

This present crisis and the board of directors

trusts to secure your Excellency's entirecooperation and that of the other officials whohave to take part in the transaction."

The Governor-General's resolution on the foregoingpetition is as follows:

"GENERAL GOVERNMENT OF THEPHILIPPINES.

"MANILA, February 1, 1883.


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"In view of the foregoing petition addressed tome by the board of directors of the Monte dePiedad of this city, in which it is stated that thefunds which the said institution counted upon

are nearly all invested in loans on jewelry andthat the small amount remaining will scarcelysuffice to cover the transactions of the next twodays, for which reason it entreats the generalGovernment that, in pursuance of itstelegraphic advice to H. M. Government, thelatter direct that there be turned over to said

Monte de Piedad $80,000 out of the funds in thepublic treasury obtained from the nationalsubscription for the relief of the distress causedby the earthquake of 1863, said boardobligating itself to return this sum should H. M.Government, for any reason, not approve thesaid proposal, and for this purpose it will

procure funds by means of loans raised onpawned jewelry; it stated further that if the aidso solicited is not furnished, it will be compelledto suspend operations, which would seriouslyinjure the credit of so beneficent an institution;and in view of the report upon the matter madeby the Intendencia General de Hacienda; and

considering the fact that the public treasury hason hand a much greater sum from the sourcementioned than that solicited; and consideringthat this general Government has submitted forthe determination of H. M. Government that thebalance which, after strictly applying theproceeds obtained from the subscription

referred to, may remain as a surplus should bedelivered to the Monte de Piedad, either as adonation, or as a loan upon the security of thecredit of the institution, believing that in sodoing the wishes of the donors would befaithfully interpreted inasmuch as those wishes


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were no other than to relieve distress, an act ofcharity which is exercised in the highest degreeby the Monte de Piedad, for it liberates needypersons from the pernicious effects of usury;

and

"Considering that the lofty purposes thatbrought about the creation of the piousinstitution referred to would be frustrated, andthat the great and laudable work of itsestablishment would be immediately lost and

wiped out if the aid it urgently seeks is notgranted, since the suspension of its operationswould seriously and regrettably damage theever-growing credit of the Monte de Piedad; and

"Considering that if such a thing would at anytime cause deep distress in the public mind, it

might be said that at the present juncture itwould assume the nature of a disturbance ofpublic order because of the extreme poverty ofthe poorer classes resulting from the latercalamities, and because it is the only institutionwhich can mitigate the effects of such poverty;and

"Considering that no reasonable objection canbe made to granting the request hereincontained, for the funds in question aresufficiently secured in the unlikely event that H.M. Government does not approve therecommendation mentioned, this general

Government, in the exercise of theextraordinary powers conferred upon it and inconformity with the report of the Intendencia deHacienda, resolves as follows:


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"First. Authority is hereby given to deliver tothe Monte de Piedad, out of the sum held inthe public treasury of these Islands obtainedfrom the national subscription opened by

reason of the earthquakes of 1863, amountsup to the sum of $80,000, as its needs mayrequire, in installments of $20,000.

"Second. The board of directors of the Montede Piedad is solemnly bound to return, withineight days after demand, the sums it may

have so received, if H. M. Government doesnot approve this resolution.

"Third. The Intendencia General de Haciendashall forthwith, and in preference to all otherwork, proceed to prepare the necessarypapers so that with the least possible delay

the payment referred to may be made andthe danger that menaces the Monte dePiedad of having to suspend its operationsmay be averted.

"H. M. Government shall be advisedhereof.

(Signed) "P. DE RIVERA."

By the royal order of December 3, 1892, theGovernor-General of the Philippine Islands wasordered to "inform this ministerio what is the totalsum available at the present time, taking intoconsideration the sums delivered to the Monte de

Piedad pursuant to the decree issued by your generalGovernment on February 1, 1883," and after therights of the claimants, whose names were publishedin the Official Gazette of Manila on April 7, 1870, andtheir heirs had been established, as therein provided,as such persons "have an unquestionable right to be


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paid the donations assigned to them therein, yourgeneral Government shall convoke them all within areasonable period and shall pay their shares to suchas shall identify themselves, without regard to their

financial status," and finally "that when all theproceedings and operations herein mentioned havebeen concluded and the Government can consideritself free from all kinds of claims on the part of thoseinterested in the distribution of the funds deposited inthe vaults of the Treasury, such action may be takenas the circumstances shall require, after first

consulting the relief board and your generalGovernment and taking account of what sums havebeen delivered to the Monte de Piedad and those thatwere expended in 1888 to relieve public calamities,"and "in order that all the points in connection with theproceedings had as a result of the earthquake beclearly understood, it is indispensable that the offices

hereinbefore mentioned comply with the provisionscontained in paragraphs 2 and 3 of the royal order of

June 25, 1879." On receipt of this royal order by theGovernor-General, the Department of Finance wascalled upon for a report in reference to the $80,000turned over to the defendant, and that Department'sreport to the Governor-General dated June 28, 1893,

reads:

"Intendencia General de Hacienda de Filipinas(General Treasury of the Philippines) Excellency. By Royal Order No. 1044 ofDecember 3, last, it is provided that the personswho sustained losses by the earthquakes that

occurred in your capital in the year 1863 shallbe paid the amounts allotted to them out of thesums sent from Spain for this purpose, withobservance of the rules specified in the saidroyal order, one of them being that beforemaking the payments to the interested parties


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the assets shall be reduced to money. Theseassets, during the long period of time that haselapsed since they were turned over to the

Treasury of the Philippine Islands, were used to

cover the general needs of the appropriation, apart besides being invested in the relief ofcharitable institutions and another part to meetpressing needs occasioned by public calamities.On January 30, last, your Excellency waspleased to order the fulfillment of thatsovereign mandate and referred the same to

this Intendencia for its information and thepurposes desired (that is, for compliance withits directions and, as aforesaid, one of thesebeing the liquidation, recovery, and deposit withthe Treasury of the sums paid out of that fundand which were expended in a different wayfrom that intended by the donors) and this

Intendencia believed the moment had arrived toclaim from the board of directors of the Montede Piedad y Caja de Ahorros the sum of 80,000pesos which, by decree of your generalGovernment of the date of February 1, 1883,was loaned to it out of the said funds, the(Monte de Piedad) obligating itself to return the

same within the period of eight days if H. M.Government did not approve the delivery. Onthis Intendencia's demanding from the Montede Piedad the eighty thousand pesos, thuscomplying with the provisions of the RoyalOrder, it was to be supposed that no objectionto its return would be made by the Monte de

Piedad for, when it received the loan, it formallyengaged itself to return it; and, besides, it wasindisputable that the moment to do so hadarrived, inasmuch as H. M. Government, inordering that the assets of the earthquake relieffund should be collected, makes express


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mention of the 80,000 pesos loaned to theMonte de Piedad, without doubt considering assufficient the period of ten years during which ithas been using this large sum which lawfully

belongs to other persons. This Intendencia alsosupposed that the Monte de Piedad no longerneeded the amount of that loan, inasmuch as,far from investing it in beneficent transactions,it had turned the whole amount into thevoluntary deposit funds bearing 5 per centinterests, the result of this operation being that

the debtor loaned to the creditor on interestwhat the former had gratuitously received. Butthe Monte de Piedad, instead of fulfilling thepromise it made on receiving the sum, afterrepeated demands refused to return the moneyon the ground that only your Excellency, andnot the Intendencia (Treasury), is entitled to

order the reimbursement, taking no account ofthe fact that this Intendencia was acting in thedischarge of a sovereign command, thefulfillment of which your Excellency was pleasedto order; and on the further ground that thesum of P80,000 pesos which it received fromthe fund intended for the earthquake victims

was not received as a loan, but as a donation,thus in the opinion of this Intendencia,erroneously interpreting both the last royalorder which directed the apportionment of theamount of the subscription raised in the year1863 and the superior decree which granted theloan, inasmuch as in this letter no donation is

made to the Monte de Piedad to reimbursewithin the period of eight days the 80,000 whichit owes, and that you give this Intendenciapower to carry out the provisions of the saidroyal order. I must call to the attention of yourExcellency that the said pious establishment,


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during the last few days and after demand wasmade upon it, has endorsed to the Spanish-Filipino Bank nearly the whole of the sum whichit had on deposit in the general deposit funds."

The record in the case under consideration fails todisclose any further definite action taken by eitherthe Philippine Government of the SpanishGovernment in regard to the $80,000 turned over tothe Monte de Piedad.

In the defendant's general ledger the followingentries appear: "Public Treasury: February 15, 1883,$20,000; March 12, 1883, $20,000; April 14, 1883,$20,000; June 2, 1883; $20,000, total $80,000." Thebook entry for this total is as follows: "To the public

Treasury derived from the subscription for theearthquake of 1863, $80,000 received from the

general Treasury as a returnable loan, and withoutinterest." The account was carried in this manneruntil January 1, 1899, when it was closed bytransferring the amount to an account called"Sagrada Mitra," which latter account was a loan of$15,000 made to the defendant by the Archbishop ofManila, without interest, thereby placing the "Sagrada

Mitra" account at $95,000 instead of $15,000. Theabove-mentioned journal entry for January 1, 1899,reads: "Sagrada Mitra and subscription, balance ofthese two accounts which on this date are united inaccordance with an order of the Exmo. Sr. Presidenteof the Council transmitted verbally to the PresidenteGerente of these institutions, $95,000."

On March 16, 1902, the Philippine Government calledupon the defendant for information concerning thestatus of the $80,000 and received the followingreply:


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"MANILA, March 31, 1902.

"To the Attorney-General of theDepartment of Justice of the Philippine

Islands.

"SIR: In reply to your courteous letter of the16th inst., in which you request informationfrom this office as to when and for whatpurpose the Spanish Government delivered tothe Monte de Piedad eighty thousand pesos

obtained from the subscription opened inconnection with the earthquake of 1863, as wellas any other information that might be usefulfor the report which your office is called upon tofurnish, I must state to your department thatthe books kept in these Pious, show that on the15th of February, 1883, they received as a

reimbursable loan and without interest, twentythousand pesos, which they deposited with theirown funds. On the same account and on each ofthe dates of March 12, April 14 and June 2 ofthe said year, 1883, they also received andturned into their funds a like sum of twentythousand pesos, making a total of eighty

thousand pesos. (Signed) Emilio Moreta.

"I hereby certify that the foregoing is aliteral copy of that found in the letterbook No. 2 of those Pious Institutions.

"Manila, November 19, 1913.

(Sgd.) "EMILIO LAZCANOTEGUI,"Secretary.

(Sgd.) "O. K. EMILIO MORETA,"Managing Director."


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The foregoing documentary evidence shows thenature of the transactions which took place betweenthe Government of Spain and the Philippine

Government on the one side and the Monte de Piedadon the other, concerning the $80,000. The Monte dePiedad, after setting forth in its petition to theGovernor-General its financial condition and itsabsolute necessity for more working capital, askedthat out of the sum of $100,000 held in the Treasuryof the Philippine Islands, at the disposal of the central

relief board, there be transferred to it the sum of$80,000 to be held under the same conditions, to wit,"at the disposal of the relief board." The Monte dePiedad agreed that if the transfer of these fundsshould not be approved by the Government of Spain,the same would be returned forthwith. It did not askthat the $80,000 be given to its as a donation. The

Governor-General, after reciting the substance of thepetition, stated that "this general Government hassubmitted for the determination of H. M. Governmentthat the balance which, after strictly applying theproceeds obtained from the subscription referred to,may remain as a surplus, should be delivered to theMonte de Piedad, either as a donation, or as a loan

upon the security of the credit of the institution," and"considering that no reasonable objection can bemade to granting the request herein contained,"directed the transfer of $80,000 to be made with theunderstanding that "the Board of Directors of theMonte de Piedad is solemnly bound to return, withineight days after demand, the sums it may have so

received, if H. M. Government does not approve thisresolution." It will be noted that the first and onlytime the word "donation" was used in connection withthe $80,000 appears in this resolution of theGovernor-General. It may be inferred from the royalorders that the Madrid Government did tacitly


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approve of the transfer of the $80,000 to the Montede Piedad as a loan without interest, but thatGovernment certainly did not approve such transferas a donation for the reason that the Governor-

General was directed by the royal order of December3, 1892, to inform the Madrid Government of the totalavailable sum of the earthquake fund, "taking intoconsideration the sums delivered to the Monte dePiedad pursuant to the decree issued by your generalGovernment on February 1, 1883." This language,nothing else appearing, might admit of the

interpretation that the Madrid Government did notintent that the Governor-General of the PhilippineIslands should include the $80,000 in the totalavailable sum, but when considered in connectionwith the report of the Department of Finance, actingunder the orders of the Governor-General, understoodthat the $80,000 was transferred to the Monte de

Piedad well knew that it received this sum as a loan,for it appears in its books that it received the amountfrom the general treasury "as a returnable loan, andwithout interest." The amount was thus carried in itsbooks until January, 1899, when it was transferred tothe account of the "Sagrada Mitra" and was thereafterknown as the "Sagrada Mitra and subscription

account." Furthermore, the Monte de Piedadrecognized and considered as late as March 31, 1902,that it received the $80,000 "as a returnable loan,and without interest." Therefore, there cannot be theslightest doubt about the fact that the Monte dePiedad received the $80,000 as a mere loan ordeposit and not as a donation. Consequently, the first

alleged error is entirely without foundation.

Counsel for the defendant, in support of their thirdassignment of error, say in their principal brief that:


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"The Spanish nation was professedly RomanCatholic and its King enjoyed the distinction ofbeing deputy ex officio of the Holy See andApostolic Vicar-General of the Indies, and as

such it was this duty to protect all pious worksand charitable institutions in his kingdoms,especially those of the Indies; among the latterwas the Monte de Piedad of the Philippines, ofwhich said King and his deputy the Governor-General of the Philippines, as royal vice-patron,were, in a special and peculiar manner, the

protectors; the latter, as a result of the cessionof the Philippine Islands, implicitly renouncedthis high office and tacitly returned it to theHoly See, now represented by the Archbishop ofManila; the national subscription in questionwas a kind of foundation or pious work, for acharitable purpose in these Islands; and the

entire subscription not being needed for itsoriginal purpose, the royal vice-patron, with theconsent of the King, gave the surplus thereof toan analogous purpose the fulfillment of all thesethings involved, in the majority, if not in allcases, faithful compliance with the dutyimposed upon him by the Holy See, when it

conferred upon him the royal patronage of theIndies, a thing that touched him very closely inhis conscience and religion; the cessionaryGovernment, though Christian, was not RomanCatholic and prided itself on its policy of non-interference in religious matters, andinveterately maintained a complete separation

between the ecclesiastical and civil powers.

"In view of these circumstances it must be quiteclear that, even without the express provisionsof the Treaty of Paris, which apparentlyexpressly exclude such an idea, it did not befit


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the honor of either of the contracting parties tosubrogate to the American Government in lieuof the Spanish Government anything respectingthe disposition of the funds delivered by the

latter to the Monte de Piedad. the same reasonsthat induced the Spanish government to takeover such things would result in greatinconvenience to the American Government inattempting to do so. The question was such adelicate one, for the reason that it affected theconscience, deeply religious, of the King of

Spain, that it cannot be believed that it wasever his intention to confide the exercisethereof to a Government like the American.(U.S. vs. Arredondo, 6 Pet. [U. S.], 711.)

"It is thus seen that the American Governmentdid not subrogate the Spanish Government or

rather, the King of Spain, in this regard; and asthe condition annexed to the donation waslawful and possible of fulfillment at the time thecontract was made, but became impossible offulfillment by the cession made by the SpanishGovernment in these Islands, compliancetherewith is excused and the contract has been

cleared thereof."

The contention of counsel, as thus stated, isuntenable for two reasons, (1) because suchcontention is based upon the erroneous theory thatthe sum in question was a donation to the Monte dePiedad and not a loan, and (2) because sufferers is

not and never was intended to be an ecclesiasticalpious work. The first proposition has already beendecided adversely to the defendant's contention. Asto the second, the record shows clearly that the fundwas given by the donors for a specific and definitepurpose the relief of the earthquake sufferers


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and for no other purpose. The money was turned overto the Spanish government to be devoted to thatpurpose. The Spanish government remitted themoney to the Philippine Government to be distributed

among the sufferers. All officials, including the Kinglands, who took part in the disposal of the fund, actedin might have belonged to a certain church hadnothing to do with their acts in this matter. Thechurch, as such, had nothing to do with their acts inthis matter. The church, as such, had nothing to dowith the fund in any way whatever until the $80,000

reached the coffers of the Monte de Piedad (aninstitution under the control of the church) as a loanor deposit. If the charity in question has been foundedas an ecclesiastical pious work, the King of Spain andthe Governor-General, in their capacities as vicar-general of the Indies and as royal vice-patron,respectively, would have disposed of the fund as such

and not in their civil capacities, and such functionscould not have been transferred to the presentPhilippine Government, because the right to so actwould have arisen out of the special agreementbetween the Government of Spain and the Holy See,based on the union of the church and state which wascompletely separated with the change of sovereignty.

And in their supplemental brief counsel say:

"By the conceded facts the money in question ispart of a charitable subscription. The donorswere persons in Spain, the trustee was theSpanish Government, the donees, the certuis

que trustent, were certain persons in thePhilippine Islands. The whole matter is one oftrusteeship. This is undisputed and indisputable.It follows that the Spanish Government at notime was the owner of the fund. Not being theowner of the fund it could not transfer the


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ownership. Whether or not it could transfer itstrusteeship it certainly never has expresslydone so and the general terms of propertytransfer in the Treaty of Paris are wholly

insufficient for such a purpose even could Spainhave transferred its trusteeship without theconsent of the donors and even could theUnited States, as a Government, have acceptedsuch a trust under any power granted to it bythe thirteen original States in the Constitution,which is more than doubtful. It follows further

that this Government is not a proper party tothe action. The only persons who could claim tobe damages by this payment to the Monte, if itwas unlawful, are the donors or the cestuis quetrustent, and this Government is neither."

If "the whole matter is one of trusteeship," and it

being true that the Spanish Government could not, ascounsel say, transfer the ownership of the fund to theMonte de Piedad, the question arises, who may sue torecover this loan? It needs no argument to show thatthe Spanish or Philippine Government, as trustee,could maintain an action for this purpose had therebeen no change of sovereignty and if the right of

action has not prescribed. But those governmentswere something more than mere common lawtrustees of the fund. In order to determine their exactstatus with reference to this fund, it is necessary toexamine the law in force at the time thesetransactions took place, which are the law of June 20,1849, the royal decree of April 27, 1875, and the

instructions promulgated on the latter date. Theselegal provisions were applicable to the PhilippineIslands (Benedicto vs. De la Rama, 3 Phil. Rep., 34).

The funds collected as a result of the nationalsubscription opened in Spain by royal order of the


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Spanish Government and which were remitted to thePhilippine government to be distributed among theearthquake sufferers by the Central Relief Boardconstituted, under article 1 of the law of June 20,

1849, and article 2 of the instructions of April 27,1875, a special charity of a temporary nature asdistinguished from a permanent public charitableinstitution. As the Spanish Government initiated thecreation of the fund and as the donors turned theircontributions over to that Government, it became theduty of the latter, under article 7 of the instructions,

to exercise supervisions and control over the moniesthus collected to the end that the will of the donorsshould be carried out. The relief board had no powerwhatever to dispose of the funds confided to itscharge for other purposes than to distribute themamong the sufferers, because paragraph 3 of article11 of the instructions conferred the power upon the

secretary of the interior of Spain, and no other, todispose of the surplus funds, should there be any, byassigning them to some other charitable purpose orinstitution. The secretary could not dispose of any ofthe funds in this manner so long as they werenecessary for the specific purpose for which theywere contributed. The secretary had the power, under

the law above mentioned to appoint and totally orpartially change the personnel of the relief board andto authorize the board to defend the rights of thecharity in the courts. The authority of the boardconsisted only in carrying out the will of the donors asdirected by the Government whose duty it was towatch over the acts of the board and to see that the

funds wee applied to the purposes for which theywere contributed. The secretary of the interior, as therepresentative of His Majesty's Government,exercised these powers and duties through theGovernor-General of the Philippine Islands. TheGovernments of Spain and of the Philippine Islands in


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complying with their duties conferred upon them bylaw, acted in their governmental capacities inattempting to carry out the intention of thecontributors. It will thus be seen that those

governments were something more, as we have said,than mere trustees of the fund.

It is further contended that the obligation on the partof the Monte de Piedad to return the $80,000 to theGovernment, even considering it a loan, was wipedout on the change of sovereignty, or in other words,

the present Philippine Government cannot maintainthis action for that reason. This contention, if true,"must result from settled principles of rigid law," as itcannot rest upon any title to the fund in the Monte dePiedad acquired prior to such change. While theobligation to return the $80,000 to the SpanishGovernment was still pending, war between the

United States and Spain ensued. Under the Treaty ofthe Philippine Islands, was ceded to the United the

Treaty of Paris of December 10, 1898, theArchipelago, known as the Philippine Islands, wasceded to the United States, the latter agreeing to paySpain the sum of $20,000,000. Under the firstparagraph of the eighth article, Spain relinquished to

the United States "all buildings, wharves, barracks,forts, structures, public highways, and otherimmovable property which, in conformity with law,belonged to the public domain, and as such belongedto the crown of Spain." As the $80,000 were notincluded therein, it is said that the right to recoverthis amount did not, therefore, pass to the present

sovereign. This, in our opinion, does not follow as anecessary consequence, as the right to recover doesnot rest upon the proposition that the $80,000 mustbe "other immovable property" mentioned in article 8of the treaty, but upon contractual obligationsincurred before the Philippine Islands were ceded to


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the United States. We will now inquire what effect thiscession had upon the law of June 20, 1849, the royaldecree of April 27, 1875, and the instructionspromulgated on the latter date. In Vilas vs. Manila

(220 U. S., 345), the court said:

"That there is a total abrogation of the formerpolitical relations of the inhabitants of theceded region is obvious. That all lawstheretofore in force which are in conflict withthe political character, constitution, or

institutions of the substituted sovereign, losetheir force, is also plain. (Alvarez y Sanchez vs.United States, 216 U.S., 167.) But it is equallysettled in the same public law that great bodyof municipal law which regulates private anddomestic rights continues in force untilabrogated or changed by the new ruler."

If the above-mentioned legal provisions are in conflictwith the political character, constitution or institutionsof the new sovereign, they became inoperative or losttheir United States, but if they are among "that greatbody of municipal law which regulates private anddomestic rights," they continued in force and are still

in force unless they have been repealed by thepresent Government. That they fall within the latterclass is clear from their very nature and character.

They are laws which are not political in any sense ofthe word. They conferred upon the SpanishGovernment the right and duty to supervise, regulate,and to some extent control charities and charitable

institutions. The present sovereign, in exempting"provident institutions, savings banks, etc.," all ofwhich are in the nature of charitable institutions, fromtaxation, placed such institutions, in so far as theinvestment in securities are concerned, under thegeneral supervisions of the Insular Treasurer


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(paragraph 4 of section 111 of Act No. 1189; see alsoAct No. 701).

Furthermore, upon the cession of the Philippine

Islands the prerogatives of the crown of Spaindevolved upon the United States. In Magill vs. Brown(16 Fed. Cas., 408), quoted with approval in MormonChurch vs. United States (136 U.S., 1, 57), the courtsaid:

"The Revolution devolved on the State all the

transcendent power of Parliament, and theprerogative of the crown, and gave their Actsthe same force and effect."

In Fontain vs. Ravenel (17 How., 369, 384), Mr. JusticeMcLean, delivering the opinion of the court in acharity case, said:

"When this country achieved its independence,the prerogatives of the crown devolved uponthe people of the States. And this power stillremains with them except so far as they havedelegated a portion of it to the FederalGovernment. The sovereign will is made known

to us by legislative enactment. The State as asovereign, is the parens partiae."

Chancelor Kent says:

"In this country, the legislature or governmentof the State, as parens partiae, has the right to

enforce all charities of a public nature, by virtueof its general superintending authority over thepublic interests, where no other person isentrusted with it." (4 Kent Com., 508, note.)


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The Supreme Court of the United States in MormonChurch vs. United States, supra, after approving alsothe last quotations, said:

"This prerogative of parens partiae is inherentin the supreme power of every State, whetherthat power is lodged in a royal person or in thelegislature, and has no affinity to those arbitrarypowers which are sometimes exerted byirresponsible monarch to the great detriment ofthe people and the destruction of their liberties.

On the contrary, it is a most beneficentfunction, and often necessary to be exercised inthe interest of humanity, and for the preventionof injury to those who cannot protectthemselves."

The court in the same case, after quoting from Sohier

vs. Mass. General Hospital (3 Cush., 483, 497),wherein the latter court held that it is deemedindispensible that there should be a power in thelegislature to authorize the sale of the estates ofinfants, idiots, insane persons, and persons notknown, or not in being, who cannot act forthemselves, said:

"These remarks in reference to infants, insanepersons and persons not known, or not in being,apply to the beneficiaries of charities, who areoften incapable of vindicating their rights, and

justly look for protection to the sovereignauthority, acting as parens partiae. They show

that this beneficent function has not ceased toexist under the change of government from amonarchy to a republic; but that it now residesin the legislative department, ready to be calledinto exercise whenever required for thepurposes of justice and right, and is as clearly


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capable of being exercised in cases of charitiesas in any other cases whatever."

In People vs. Cogswell (113 Cal. 129, 130), it was

urged that the plaintiff was not the real party ininterest; that the Attorney-General had no power toinstitute the action; and that there must be anallegation and proof of a distinct right of the peopleas a whole, as distinguished from the rights ofindividuals, before an action could be brought by theAttorney-General in the name of the people. The

court, in overruling these contentions, held that it wasnot only the right but the duty of the Attorney-General to prosecute the action, which related tocharities, and approved the following quotation fromAttorney-General vs. Compton (1 Young & C. C., 417):

"Where property affected by a trust for

public purposes is in the hands of thosewho hold it devoted to that trust, it is theprivilege of the public that the crownshould be entitled to intervene by itsofficers for the purpose of asserting, onbehalf on the public generally, the publicinterest and the public right, which,

probably, no individual could be foundeffectually to assert, even if the interestwere such as to allow it." (2 Kent'sCommentaries, 10th ed., 359; Lewin on

Trusts, sec. 665; 1 Daniell's ChanceryPractice, sec. 13; Perry on Trusts, sec.732.)

It is further urged, as above indicated, that "the onlypersons who could claim to be damages by thispayment to the Monte, if it was unlawful, are thedonor or the cestuis que trustent, and thisGovernment is neither. Consequently, the plaintiff is


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not the proper party to bring the action." Theearthquake fund was the result or the accumulationof a great number of small contributions. The namesof the contributors do not appear in the record. Their

whereabouts are unknown. They parted with the titleto their respective contributions. The beneficiaries,consisting of the original sufferers and their heirs,could have been ascertained. They are quitenumerous also. And no doubt a large number of theoriginal sufferers have died, leaving various heirs. Itwould be impracticable for them to institute an action

or actions either individually or collectively to recoverthe $80,000. The only course that can besatisfactorily pursued is for the Government toagainst assume control of the fund and devote it tothe object for which it was originally destined.

The impracticability of pursuing a different course,

however, is not the true ground upon which the rightof the Government to maintain the action rests. Thetrue ground is that the money being given to acharity became, in a measure, public property, onlyapplicable, it is true, to the specific purposes to whichit was intended to be devoted, but within those limitsconsecrated to the public use, and became part of the

public resources for promoting the happiness andwelfare of the Philippine Government. (MormonChurch vs. U. S., supra.) To deny the Government'sright to maintain this action would be contrary tosound public policy, as tending to discourage theprompt exercise of similar acts of humanity andChristian benevolences in like instances in the future.

As to the question raised in the court assignment oferror relating to the constitutionality of Act No. 2109,little need be said for the reason that we have justheld the present Philippine Government is the properparty to the action. The Act is only a manifestation on


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the part of the Philippine Government to exercise thepower or right which it undoubtedly had. The Act isnot, as contended by counsel, in conflict with the fifthsection of the Act of Congress of July 1, 1902,

because it does not take property without dueprocess of law. In fact, the defendant is not the ownerof the $80,000, but holds it as a loan subject to thedisposal of the central relief board. Therefore, therecan be nothing in the Act which transcends the powerof the Philippine Legislature.

In Vilas vs. Manila, supra, the plaintiff was a creditorof the city of Manila as it existed before the cession ofthe Philippine Islands to the United States by the

Treaty of Paris of December 10, 1898. The action wasbrought upon the theory that the city, under itspresent charter from the Government of thePhilippine Islands, was the same juristic person, and

liable upon the obligations of the old city. This courtheld that the present municipality is a totally differentcorporate entity and in no way liable for the debts ofthe Spanish municipality. The Supreme Court of theUnited States, in reversing this judgment and inholding the city liable for the old debt, said:

"The juristic identity of the corporationhas been in no wise affected, and, in law,the present city is, in every legal sense,the successor of the old. As such it isentitled to the property and propertyrights of the predecessor corporation, andis, in law, subject to all of its liabilities."

In support of the fifth assignment of error counsel forthe defendant argue that as the Monte de Piedaddeclined to return the $80,000 when ordered to do soby the Department of Finance in June, 1893, theplaintiff's right of action had prescribed at the time


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this suit was instituted on May 3, 1912, citing andrelying upon articles 1961, 1964 and 1969 and of theCivil Code. While on the other hand, the Attorney-General contends that the right of action had not

prescribed (a) because the defense off prescriptioncannot be set up against the Philippine Government,(b) because the right of action to recover a deposit ortrust funds does not prescribe, and (c) even if thedefense of prescription could be interposed againstthe Government and if the action had, in fact,prescribed, the same was revived by Act No. 2109.

The material facts relating to this question are these:The Monte de Piedad received the $80,000 in 1883"to be held under the same conditions as at presentin the treasury, to wit, at the disposal of the reliefboard." In compliance with the provisions of the royalorder of December 3, 1892, the Department of

Finance called upon the Monte de Piedad in June,1893, to return the $80,000. The Monte declined tocomply with this order upon the ground that only theGovernor-General of the Philippine Islands and notthe Department of Finance had the right to order thereimbursement. The amount was carried on the booksof the Monte as a returnable loan until January 1,

1899, when it was transferred to the account of the"Sagrada Mitra." On March 31, 1902, the Monte,through its legal representative, stated in writing thatthe amount in question was received as areimbursable loan, without interest. Act No. 2109became effective January 30, 1912, and the actionwas instituted on May 3rd of that year.

Counsel for the defendant treat the question ofprescription as if the action was one betweenindividuals or corporations wherein the plaintiff isseeking to recover an ordinary loan. Upon this theory

June, 1893, cannot be taken as the date when the


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statute of limitations began to run, for the reason thatthe defendant acknowledged in writing on March 31,1902, that the $80,000 were received as a loan,thereby in effect admitting that it still owed the

amount. (Section 50, Code of Civil Procedure.) But ifcounsels' theory is the correct one the action mayhave prescribed on May 3, 1912, because more thanten full years had elapsed after March 31, 1902.(Sections 38 and 43, Code of Civil Procedure.)

Is the Philippine Government bound by the statute of

limitations? The Supreme Court of the United Statesin U.S. vs. Nashville, Chattanooga & St. Louis RailwayCo. (118 U.S., 120, 125), said:

"It is settled beyond doubt or controversy upon the foundation of the great principle ofpublic policy, applicable to all governments

alike, which forbids that the public interestsshould be prejudiced by the negligence of theofficers or agents to whose care they areconfided that the United States, assertingrights vested in it as a sovereign government, isnot bound by any statute of limitations, unlessCongress has clearly manifested its intention

that it should be so bound." (Lindsey vs. Miller,6 Pet. 666; U.S. vs. Knight, 14 Pet. 301, 315;Gibson vs. Chouteau, 13 Wall., 92; U.S. vs.

Thompson, 98 U. S., 486; Fink vs. O'Neil, 106U.S., 272, 281.)

In Gibson vs. Chouteau, supra, the court said:

"It is a matter of common knowledge thatstatutes of limitation do not run against theState. That no laches can be imputed to theKing, and that no time can bar his rights, wasthe maxim of the common law, and was


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founded on the was the maxim of the commonlaw, and was founded on the principle of publicpolicy, that as he was occupied with the caresof government he ought not to suffer from the

negligence of his officers and servants. Theprinciple is applicable to all governments, whichmust necessarily act through numerous agents,and is essential to a preservation of theinterests and property of the public. It is uponthis principle that in this country the statutes ofa State prescribing periods within which rights

must be prosecuted are not held to embracethe State itself, unless it is expressly designatedor the mischiefs to be remedies are of such anature that it must necessarily be included. Aslegislation of a State can only apply to personsand things over which the State has jurisdiction,the United States are also necessarily excluded

from the operation of such statutes.

In 25 Cyc., 1006, the rule, supported by numerousauthorities, is stated as follows:

"In the absence of express statutory provisionto the contrary, statutes of limitations do not as

a general rule run against the sovereign orgovernment, whether state or federal. But therule is otherwise where the mischiefs to beremedies are of such a nature that the statemust necessarily be included, where the stategoes into business in concert or in competitionwith her citizens, or where a party seeks to

enforce his private rights by suit in the name ofthe state or government, so that the latter isonly a nominal party."

In the instant case the Philippine Government is not amere nominal party because it, in bringing and


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prosecuting this action, is exercising its sovereignfunctions or powers and is seeking to carry out a trustdevolved upon it when the Philippine Islands wereceded to the United States. The United States having

in 1852, purchased as trustee for the ChickasawIndians under treaty with that tribe, certain bonds ofthe State of Tennessee, the right of action of theGovernment on the coupons of such bonds could notbe barred by the statute of limitations of Tennessee,either while it held them in trust for the Indians, orsince it became the owner of such coupons. (U. S. vs.

Nashville, etc., R. Co., supra.) So where lands are heldin trust by the state and the beneficiaries have noright to sue, a statute does not run against the State'sright of action for trespass on the trust lands. (Greene

Tp. vs. Campbell, 16 Ohio St., 11; see also Atty. Gen.vs. Midland R. Co., 3 Ont., 511 [following Reg. vs.Williams, 39 U.C.Q.B., 397].)

These principles being based "upon the foundation ofthe great principle of public policy" are, in the verynature of things, applicable to the PhilippineGovernment.

Counsel in their argument in support of the sixth and

last assignments of error do not question the amountof the judgment nor do they question the correctnessof the judgment in so far as it allows interest, anddirects its payment in gold coin or in the equivalent inPhilippine currency.

For the foregoing reasons the judgment appealed

from is affirmed, with costs against the appellant. Soordered.

Torres, Johnson, and Araullo, JJ., concur.Moreland, J., did not sign.

government v montedepiedad

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