7/20/2016

G.R.No.L9959

TodayisWednesday,July20,2016

RepublicofthePhilippines
SUPREMECOURT
Manila
ENBANC
G.R.No.L9959December13,1916
THEGOVERNMENTOFTHEPHILIPPINEISLANDS,representedbytheTreasurerofthePhilippineIslands,
plaintiffappellee,
vs.
ELMONTEDEPIEDADYCAJADEAHORRASDEMANILA,defendantappellant.
WilliamA.KincaidandThomasL.Hartiganforappellant.
AttorneyGeneralAvanceaforappellee.

TRENT,J.:
About $400,000, were subscribed and paid into the treasury of the Philippine Islands by the inhabitants of the
SpanishDominionsofthereliefofthosedamagedbytheearthquakewhichtookplaceinthePhilippineIslandson
June 3, 1863. Subsequent thereto and on October 6 of that year, a central relief board was appointed, by
authorityoftheKingofSpain,todistributethemoneysthusvoluntarilycontributed.Afterathoroughinvestigation
and consideration, the relief board allotted $365,703.50 to the various sufferers named in its resolution, dated
September22,1866,and,byorderoftheGovernorGeneralofthePhilippineIslands,alistoftheseallotments,
together with the names of those entitled thereto, was published in the Official Gazette of Manila datedApril 7,
1870. There was later distributed, inaccordance with the abovementioned allotments, the sum of $30,299.65,
leavingabalanceofS365,403.85fordistribution.UponthepetitionofthegoverningbodyoftheMontedePiedad,
datedFebruary1,1833,thePhilippineGovernment,byorderdatedthe1stofthatmonth,directeditstreasurerto
turnovertotheMontedePiedad the sum of $80,000 of the relief fund in installments of $20,000 each.These
amountswerereceivedonthefollowingdates:February15,March12,April14,andJune2,1883,andarestillin
the possession of the Monte de Piedad. On account of various petitions of the persons, and heirs of others to
whomtheabovementionedallotmentsweremadebythecentralreliefboardforthepaymentofthoseamounts,
thePhilippineIslandstobringsuitagainsttheMontedePiedadarecover,"throughtheAttorneyGeneralandin
representationoftheGovernmentofthePhilippineIslands,"the$80.000,togetherwithinterest,forthebenefitof
thosepersonsortheirheirsappearinginthelistofnamespublishedintheOfficialGazetteinstitutedonMay3,
1912, by the Government of the Philippine Islands, represented by the Insular Treasurer, and after due trial,
judgmentwasenteredinfavoroftheplaintiffforthesumof$80,000goldoritsequivalentinPhilippinecurrency,
together with legal interest from February 28, 1912, and the costs of the cause. The defendant appealed and
makesthefollowingassignmentoferrors:
1.Thecourterredinnotfindingthattheeightythousanddollars($80,000),givetotheMontedePiedady
CajadeAhorros, were so given as a donation subject to one condition, to wit: the return of such sum of
money to the Spanish Government of these Islands, within eight days following the day when claimed, in
casetheSupremeGovernmentofSpainshouldnotapprovetheactiontakenbytheformergovernment.
2.Thecourterredinnothavingdecreedthatthisdonationhadbeenclearedsaideightythousanddollars
($80,000)beingatpresenttheexclusivepropertyoftheappellanttheMontedePiedadyCajadeAhorros.
3.ThatthecourterredinstatingthattheGovernmentofthePhilippineIslandshassubrogatedtheSpanish
Government in its rights, as regards an important sum of money resulting from a national subscription
openedbyreasonoftheearthquakeofJune3,1863,intheseIsland.
4.ThatthecourterredinnotdeclaringthatActNumbered2109,passedbythePhilippineLegislatureon
January30,1912,isunconstitutional.
5.Thatthecourterredinholdinginitsdecisionthatthereisnotitlefortheprescriptionofthissuitbrought
bytheInsularGovernmentagainsttheMontedePiedady Caja deAhorros for the reimbursement of the
http://www.lawphil.net/judjuris/juri1916/dec1916/gr_l9959_1916.html

1/10

7/20/2016

G.R.No.L9959

eightythousanddollars($80,000)giventoitbythelateSpanishGovernmentoftheseIslands.
6.Thatthecourterredinsentencingthe MontedePiedadyCajadeAhorros to reimburse the Philippine
Government in the sum of eighty thousand dollars ($80,000) gold coin, or the equivalent thereof in the
presentlegaltendercurrencyincirculation,withlegalinterestthereonfromFebruary28th,1912,andthe
costsofthissuit.
In the royal order of June 29, 1879, the GovernorGeneral of the Philippine Islands was directed to inform the
homeGovernmentinwhatmannertheindemnitymightbepaidtowhich,byvirtueoftheresolutionsoftherelief
board, the persons who suffered damage by the earthquake might be entitled, in order to perform the sacred
obligationwhichtheGovernmentofSpainhadassumedtowardthedonors.
The next pertinent document in order is the defendant's petition, dated February 1, 1883, addressed to the
GovernorGeneralofthePhilippineIslands,whichreads:
BoardofDirectorsoftheMontedePiedadofManilaPresidencia.
Excellency: The Board of Directors of the Monte de Piedad y Caja de Ahorros of Manila informs your
Excellency, First: That the funds which it has up to the present been able to dispose of have been
exhaustedinloansonjewelry,andthereonlyremainsthesumofonethousandandoddpesos,whichwill
be expended between today and day after tomorrow. Second: That, to maintain the credit of the
establishment, which would be greatly injured were its operations suspended, it is necessary to procure
money.Third:ThatyourExcellencyhasproposedtoHisMajesty'sGovernmenttoapplytothefundsofthe
MontedePiedadapartofthefundsheldinthetreasuryderivedformthenationalsubscriptionfortherelief
of the distress caused by the earthquake of 1863. Fourth:That in the public treasury there is held at the
disposalofthecentralearthquakereliefboardover$1090,000whichwasdepositedinthesaidtreasuryby
orderofyourgeneralGovernment,ithavingbeentransferredtheretofromtheSpanishFilipinoBankwhere
ithadbeenheld.fifth:Thatinthestraightenedcircumstancesofthemoment,yourExcellencycan,toavert
impending disaster to the Monte de Piedad, order that, out of that sum of one hundred thousand pesos
heldintheTreasuryatthedisposalofthecentralreliefboard,therebetransferredtotheMontedePiedad
thesumof$80,000,theretobeheldunderthesameconditionsasatpresentintheTreasury,towit,atthe
disposal of the Relief Board. Sixth: That should this transfer not be approved for any reason, either
because of the failure of His Majesty's Government to approve the proposal made by your Excellency
relative to the application to the needs of the Monte de Piedad of a pat of the subscription intended to
believethedistresscausedbytheearthquakeof1863,orforanyotherreason,theboardofdirectorsof
theMontedePiedadobligatesitselftoreturnanysumswhichitmayhavereceivedonaccountoftheeighty
thousandpesos,orthewholethereof,shouldithavereceivedthesame,bysecuringaloanfromwhichever
bankorbanksmaylenditthemoneyatthecheapestrateuponthesecurityofpawnedjewelry.Thisis
anurgentmeasuretosavetheMontedePiedadinthepresentcrisisandtheboardofdirectorstruststo
secure your Excellency's entire cooperation and that of the other officials who have take part in the
transaction.
TheGovernorGeneral'sresolutionontheforegoingpetitionisasfollows:
GENERALGOVERNMENTOFTHEPHILIPPINES.
MANILA,February1,1883.
InviewoftheforegoingpetitionaddressedtomebytheboardofdirectorsoftheMontedePiedadofthis
city, in which it is stated that the funds which the said institution counted upon are nearly all invested in
loansonjewelryandthatthesmallaccountremainingwillscarcelysufficetocoverthetransactionsofthe
next two days, for which reason it entreats the general Government that, in pursuance of its telegraphic
advicetoH.M.Government,thelatterdirectthattherebeturnedovertosaidMontedePiedad $80,000
outofthefundsinthepublictreasuryobtainedfromthenationalsubscriptionforthereliefofthedistress
causedbytheearthquakeof1863,saidboardobligatingitselftoreturnthissumshouldH.M.Government,
foranyreason,notapprovethesaidproposal,andforthispurposeitwillprocurefundsbymeansofloans
raisedonpawnedjewelryitstatedfurtherthatiftheaidsosolicitedisnotfurnished,itwillbecompelledto
suspend operations, which would seriously injure the credit of so beneficient an institution and in view of
thereportuponthemattermadebytheIntendenciaGeneraldeHaciendaandconsideringthefactthatthe
public treasury has on hand a much greater sum from the source mentioned than that solicited and
consideringthatthisgeneralGovernmenthassubmittedforthedeterminationofH.M.Governmentthatthe
balancewhich,afterstrictlyapplyingtheproceedsobtainedfromthesubscriptionreferredto,mayremain
as a surplus should be delivered to the Monte de Piedad, either as a donation, or as a loan upon the
securityofthecreditoftheinstitution,believingthatinsodoingthewishesofthedonorswouldbefaithfully
interpreted inasmuch as those wishes were no other than to relieve distress, an act of charity which is
exercisedinthehighestdegreebytheMontedePiedad,foritliberatesneedypersonfromthepernicious
effectsofusuryand
http://www.lawphil.net/judjuris/juri1916/dec1916/gr_l9959_1916.html

2/10

7/20/2016

G.R.No.L9959

Consideringthattheloftypurposesthatbroughtaboutthecreationofthepiousinstitutionreferredtowould
be frustrated, and that the great and laudable work of its establishment, and that the great and laudable
and valuable if the aid it urgently seeks is not granted, since the suspension of its operations would
seriouslyandregrettablydamagetheevergrowingcreditoftheMontedePiedadand
Consideringthatifsuchathingwouldatanytimecausedeepdistressinthepublicmind,itmightbesaid
that at the present juncture it would assume the nature of a disturbance of public order because of the
extreme poverty of the poorer classes resulting from the late calamities, and because it is the only
institutionwhichcanmitigatetheeffectsofsuchpovertyand
Considering that no reasonable objection can be made to granting the request herein contained, for the
fundsinquestionaresufficientlysecuredintheunlikelyeventthatH>M.Governmentdoesnotapprovethe
recommendation mentioned, this general Government, in the exercise of the extraordinary powers
conferreduponitandinconformitywiththereportoftheIntendenciadeHacienda,resolvesasfollows:
First.AuthorityisherebygiventodelivertotheMontedePiedad,outofthesumheldinthepublictreasury
of these Islands obtained from the national subscription opened by reason of the earthquakes of 1863,
amountsuptothesum$80,000,asitsneedsmayrequire,ininstallmentsof$20,000.
Second.TheboardofdirectorsoftheMontedePiedadissolemnlyboundtoreturn,withineightdaysafter
demand,thesumsitmayhavesoreceived,ifH.M.Governmentdoesnotapprovethisresolution.
Third.TheIntendenciaGeneraldeHaciendashallforthwith,andinpreferencetoallotherwork,proceedto
preparethenecessarypaperssothatwiththeleastpossibledelaythepaymentreferredtomaybemade
andthedangerthatmenacestheMontedePiedadofhavingtosuspenditsoperationsmaybeaverted.
H.M.Governmentshallbeadvisedhereof.
(Signed)P.DERIVERA.

la w p h i1 .n e t

BytheroyalorderofDecember3,1892,theGovernorGeneralofthePhilippineIslandswasorderedto"inform
thisministeriowhatisthetotalsumavailableatthepresenttime,takingintoconsiderationthesumsdeliveredto
theMontedePiedadpursuanttothedecreeissuedbyyourgeneralGovernmentonFebruary1,1883,"andafter
therightsoftheclaimants,whosenameswerepublishedintheOfficialGazetteofManilaonApril7,1870,and
theirheirshadbeenestablished,asthereinprovided,assuchpersons"haveanunquestionablerighttobepaid
the donations assigned to them therein, your general Government shall convoke them all within a reasonable
periodandshallpaytheirsharestosuchasshallidentifythemselves,withoutregardtotheirfinancialstatus,"and
finally"thatwhenalltheproceedingsandoperationshereinmentionedhavebeenconcludedandtheGovernment
can consider itself free from all kinds of claims on the part of those interested in the distribution of the funds
deposited in the vaults of theTreasury, such action may be taken as the circumstances shall require, after first
consultingthereliefboardandyourgeneralGovernmentandtakingaccountofwhatsumshavebeendeliveredto
theMontedePiedadandthosethatwereexpendedin1888torelievepubliccalamities,"and"inorderthatallthe
points in connection with the proceedings had as a result of the earthquake be clearly understood, it is
indispensablethattheofficeshereinbeforementionedcomplywiththeprovisionscontainedinparagraphs2and3
oftheroyalorderofJune25,1879."OnreceiptofthisFinanceorderbytheGovernorGeneral,theDepartmentof
Finance was called upon for a report in reference to the $80,000 turned over to the defendant, and that
Department'sreporttotheGovernorGeneraldatedJune28,1893,reads:
Intendencia General de Hacienda de Filipinas (General Treasury of the Philippines) Excellency. By
Royal Order No. 1044 of December 3, last, it is provided that the persons who sustained losses by the
earthquakesthatoccurredinyourcapitalintheyear1863shallbepaidtheamountsallottedtothemoutof
thesumssentfromSpainforthispurpose,withobservanceoftherulesspecifiedinthesaidroyalorder,
oneofthembeingthatbeforemakingthepaymenttotheinterestedpartiestheassetsshallbereducedto
money.Theseassets,duringthelongperiodoftimethathaselapsedsincetheywereturnedovertothe
Treasury of the Philippine Islands, were used to cover the general needs of the appropriation, a part
besides being invested in the relief of charitable institutions and another part to meet pressing needs
occasionedbypubliccalamities.OnJanuary30,last,yourExcellencywaspleasetoorderthefulfillmentof
that sovereign mandate and referred the same to this Intendencia for its information and the purposes
desired (that is, for compliance with its directions and, as aforesaid, one of these being the liquidation,
recovery,anddepositwiththeTreasuryofthesumspaidoutofthatfundandwhichwereexpendedina
different way from that intended by the donors) and this Intendencia believed the moment had arrived to
claim from the board of directors of the Monte de Piedad y Caja de Ahorros the sum of 80,000 pesos
which,bydecreeofyourgeneralGovernmentofthedateofFebruary1,1883,wasloanedtoitoutofthe
saidfunds,the(MontedePiedad)obligatingitselftoreturnthesamewithintheperiodofeightdaysifH.M.
Governmentdidnotapprovethedelivery.OnthisIntendencia'sdemandingfromtheMontedePiedadthe
eightythousandpesos,thuscomplyingwiththeprovisionsoftheRoyalOrder,itwastobesupposedthat
noobjectiontoitsreturnwouldbemadebytheMontedePiedadfor,whenitreceivedtheloan,itformally
engageditselftoreturnitand,besides,itwasindisputablethatthemomenttodosohadarrived,inasmuch
http://www.lawphil.net/judjuris/juri1916/dec1916/gr_l9959_1916.html

3/10

7/20/2016

G.R.No.L9959

asH.M.Government,inorderingthattheassetsoftheearthquakerelieffundshouldhecollected,makes
express mention of the 80,000 pesos loaned to the Monte de Piedad, without doubt considering as
sufficient the period of ten years during which it has been using this large sum which lawfully belongs to
theirpersons.ThisIntendenciaalsosupposedthattheMontedePiedadnolongerneededtheamountof
thatloan,inasmuchas,farfrominvestingitinbeneficienttransactions,ithadturnedthewholeamountinto
the voluntary deposit funds bearing 5 per cent interests, the result of this operation being that the debtor
loaned to the creditor on interest what the former had gratuitously received. But the Monte de Piedad,
insteadoffulfillingthepromiseitmadeonreceivingthesum,afterrepeateddemandsrefusedtoreturnthe
moneyonthegroundthatonlyyourExcellency,andnottheIntendencia(Treasury),isentitledtoorderthe
reimbursement, taking no account of the fact that this Intendencia was acting in the discharge of a
sovereign command, the fulfillment of which your Excellency was pleased to order and on the further
groundthatthesumof80,000pesoswhichitreceivedfromthefundintendedfortheearthquakevictims
was not received as a loan, but as a donation, this in the opinion of this Intendencia, erroneously
interpreting both the last royal order which directed the apportionment of the amount of the subscription
raised in the year 1863 and the superior decree which granted the loan, inasmuch as in this letter no
donation is made to the Monte de Piedad of the 80,000 pesos, but simply a loan besides, no donation
whatevercouldbemadeoffundsderivedfromaprivatesubscriptionraisedforaspecificpurpose,which
fundsarealreadydistributedandthenamesofthebeneficiarieshavebeenpublishedintheGaceta,there
being lacking only the mere material act of the delivery, which has been unduly delayed. In view of the
unexpectedreplymadebytheMontedePiedad, and believing it useless to insist further in the matter of
the claim for the aforementioned loan, or to argue in support thereof, this Intendencia believes the
interventionofyourExcellencynecessaryinthismatter,iftheroyalOrderNo.1044ofDecember3,last,is
to be complied with, and for this purpose I beg your Excellency kindly to order the Monte de Piedad to
reimburse within the period of eight days the 80,000 which it owes, and that you give this Intendencia
powertocarryouttheprovisionsofthesaidroyalorder.ImustcalltotheattentionofyourExcellencythat
thesaidpiousestablishment,duringthelastfewdaysandafterdemandwasmadeuponit,hasendorsed
to the SpanishFilipino Bank nearly the whole of the sum which it had on deposit in the general deposit
funds.
The record in the case under consideration fails to disclose any further definite action taken by either the
PhilippineGovernmentortheSpanishGovernmentinregardtothe$80,000turnedovertotheMontedePiedad.
In the defendant's general ledger the following entries appear: "Public Treasury: February 15, 1883, $20,000
March12,1883,$20,000April14,1883,$20,000June2,1883,$20,000,total$80,000."Thebookentryforthis
total is as follows: "To the public Treasury derived from the subscription for the earthquake of 1863, $80,000
received from general Treasury as a returnable loan, and without interest." The account was carried in this
manner until January 1, 1899, when it was closed by transferring the amount to an account called "Sagrada
Mitra," which latter account was a loan of $15,000 made to the defendant by theArchbishop of Manila, without
interest, thereby placing the "Sagrada Mitra" account at $95,000 instead of $15,000. The abovementioned
journalentryforJanuary1,1899,reads:"SagradaMitraandsubscription,balanceofthesetwoaccountwhichon
thisdateareunitedinaccordancewithanorderoftheExmo.Sr.PresidenteoftheCounciltransmittedverballyto
thePresidenteGerenteoftheseinstitutions,$95,000."
OnMarch16,1902,thePhilippinegovernmentcalleduponthedefendantforinformationconcerningthestatusof
the$80,000andreceivedthefollowingreply:
MANILA,March31,1902.
TotheAttorneyGeneraloftheDepartmentofJusticeofthePhilippineIslands.
SIR:Inreplytoyourcourteousletterofthe16thinst.,inwhichyourequestinformationfromthisofficeasto
when and for what purpose the Spanish Government delivered to the Monte de Piedad eighty thousand
pesos obtained from the subscription opened in connection with the earthquake of 1863, as well as any
otherinformationthatmightbeusefulforthereportwhichyourofficeiscalledupontofurnish,Imuststate
toyourdepartmentthatthebookskeptinthesePiousInstitutions,andwhichhavebeenconsultedforthe
purpose, show that on the 15th of February, 1883, they received as a reimbursable loan and without
interest,twentythousandpesos,whichtheydepositedwiththeirownfunds.Onthesameaccountandon
eachofthedatesofMarch12,April14andJune2ofthesaidyear,1883,theyalsoreceivedandturned
intotheirfundsalikesumoftwentythousandpesos,makingatotalofeightythousandpesos.(Signed)
EmilioMoreta.
I hereby certify that the foregoing is a literal copy of that found in the letter book No. 2 of those Pious
Institutions.
Manila,November19,1913
(Sgd.)EMILIOLAZCANOTEGUI,
Secretary
http://www.lawphil.net/judjuris/juri1916/dec1916/gr_l9959_1916.html

4/10

7/20/2016

G.R.No.L9959

(Sgd.)O.K.EMILIOMORETA,
ManagingDirector.
The foregoing documentary evidence shows the nature of the transactions which took place between the
Government of Spain and the Philippine Government on the one side and the Monte de Piedad on the other,
concerning the $80,000. The Monte de Piedad, after setting forth in its petition to the GovernorGeneral its
financialconditionanditsabsolutenecessityformoreworkingcapital,askedthatoutofthesumof$100,000held
intheTreasuryofthePhilippineIslands,atthedisposalofthecentralreliefboard,therebetransferredtoitthe
sumof$80,000tobeheldunderthesameconditions,towit,"atthedisposalofthereliefboard."TheMontede
PiedadagreedthatifthetransferofthesefundsshouldnotbeapprovedbytheGovernmentofSpain,thesame
wouldbereturnedforthwith.Itdidnotaskthatthe$80,000begiventoitasadonation.TheGovernorGeneral,
after reciting the substance of the petition, stated that "this general Government has submitted for the
determinationofH.M.Governmentthatthebalancewhich,afterstrictlyapplyingtheproceedsobtainedfromthe
subscription referred to, may remain as a surplus, should be delivered to the Monte de Piedad, either as a
donation, or as a loan upon the security of the credit of the institution," and "considering that no reasonable
objectioncanbemadetograntingtherequesthereincontained,"directedthetransferofthe$80,000tobemade
with the understanding that "the Board of Directors of the Monte de Piedad is solemnly bound to return, within
eight days after demand, the sums it may have so received, if H. M. Government does not approve this
resolution." It will be noted that the first and only time the word "donation" was used in connection with the
$80,000 appears in this resolution of the GovernorGeneral. It may be inferred from the royal orders that the
MadridGovernmentdidtacitlyapproveofthetransferofthe$80,000totheMontedePiedadasaloanwithout
interest, but that Government certainly did not approve such transfer as a donation for the reason that the
GovernorGeneralwasdirectedbytheroyalorderofDecember3,1892,toinformtheMadridGovernmentofthe
totalavailablesumoftheearthquakefund,"takingintoconsiderationthesumsdeliveredtotheMontedePiedad
pursuant to the decree issued by your general Government on February 1, 1883."This language, nothing else
appearing,mightadmitoftheinterpretationthattheMadridGovernmentdidnotintendthattheGovernorGeneral
ofthePhilippineIslandsshouldincludethe$80,000inthetotalavailablesum,butwhenconsideredinconnection
with the report of the Department of Finance there can be no doubt that it was so intended.That report refers
expresslytotheroyalorderofDecember3d,andsetsforthindetailtheactiontakeninordertosecurethereturn
of the $80,000.The Department of Finance, acting under the orders of the GovernorGeneral, understood that
the$80,000wastransferredtotheMontedePiedadwellknewthatitreceivedthissumasaloaninterest."The
amountwasthuscarriedinitsbooksuntilJanuary,1899,whenitwastransferredtotheaccountofthe"Sagrada
Mitra" and was thereafter known as the "Sagrada Mitra and subscription account." Furthermore, the Monte de
PiedadrecognizedandconsideredaslateasMarch31,1902,thatitreceivedthe$80,000"asareturnableloan,
andwithoutinterest."Therefore,therecannotbetheslightestdoubtthefactthatthe MontedePiedad received
the $80,000 as a mere loan or deposit and not as a donation. Consequently, the first alleged error is entirely
withoutfoundation.
Counselforthedefendant,insupportoftheirthirdassignmentoferror,sayintheirprincipalbriefthat:
TheSpanishnationwasprofessedlyRomanCatholicanditsKingenjoyedthedistinctionofbeingdeputyex
officiooftheHolySeeandApostolicVicarGeneraloftheIndies,andassuchitwashisdutytoprotectall
piousworksandcharitableinstitutionsinhiskingdoms,especiallythoseoftheIndiesamongthelatterwas
theMonte de Piedad of the Philippines, of which said King and his deputy the GovernorGeneral of the
Philippines, as royal vicepatron, were, in a special and peculiar manner, the protectors the latter, as a
resultofthecessionofthePhilippineIslands,Implicitlyrenouncedthishighofficeandtacitlyreturneditto
the Holy See, now represented by theArchbishop of Manila the national subscription in question was a
kindoffoundationorpiouswork,foracharitablepurposeintheseIslandsandtheentiresubscriptionnot
beingneededforitsoriginalpurpose,theroyalvicepatron,withtheconsentoftheKing,gavethesurplus
thereof to an analogous purpose the fulfillment of all these things involved, in the majority, if not in all
cases,faithfulcompliancewiththedutyimposeduponhimbytheHolySee,whenitconferreduponhimthe
royal patronage of the Indies, a thing that touched him very closely in his conscience and religion the
cessionary Government though Christian, was not Roman Catholic and prided itself on its policy of non
interference in religious matters, and inveterately maintained a complete separation between the
ecclesiasticalandcivilpowers.
Inviewofthesecircumstancesitmustbequiteclearthat,evenwithouttheexpressprovisionsoftheTreaty
of Paris, which apparently expressly exclude such an idea, it did not befit the honor of either of the
contractingpartiestosubrogatetotheAmericanGovernmentinlieuoftheSpanishGovernmentanything
respectingthedispositionofthefundsdeliveredbythelattertotheMontedePiedad.The same reasons
thatinducedtheSpanishGovernmenttotakeoversuchthingswouldresultingreatinconveniencetothe
AmericanGovernmentinattemptingtodoso.Thequestionwassuchadelicateone,forthereasonthatit
affectedtheconscience,deeplyreligious,oftheKingofSpain,thatitcannotbebelievedthatitwaseverhis
intentiontoconfidetheexercisethereoftoaGovernmentliketheAmerican.(U.S.vs.Arredondo,6Pet.[U.
S.],711.)
http://www.lawphil.net/judjuris/juri1916/dec1916/gr_l9959_1916.html

5/10

7/20/2016

G.R.No.L9959

It is thus seen that theAmerican Government did not subrogate the Spanish Government or rather, the
King of Spain, in this regard and as the condition annexed to the donation was lawful and possible of
fulfillmentatthetimethecontractwasmade,butbecameimpossibleoffulfillmentbythecessionmadeby
the Spanish Government in these Islands, compliance therewith is excused and the contract has been
clearedthereof.
The contention of counsel, as thus stated, in untenable for two reason, (1) because such contention is based
upontheerroneoustheorythatthesuminquestionwasadonationtotheMontedePiedadandnotaloan,and
(2)becausethecharityfoundedbythedonationsfortheearthquakesufferersisnotandneverwasintendedto
be an ecclesiastical pious work. The first proposition has already been decided adversely to the defendant's
contention.Astothesecond,therecordshowsclearlythatthefundwasgivenbythedonorsforaspecificand
definite purpose the relief of the earthquake sufferers and for no other purpose. The money was turned
overtotheSpanishGovernmenttobedevotedtothatpurpose.TheSpanishGovernmentremittedthemoneyto
the Philippine Government to be distributed among the suffers.All officials, including the King of Spain and the
GovernorGeneral of the Philippine Islands, who took part in the disposal of the fund, acted in their purely civil,
officialcapacity,andthefactthattheymighthavebelongedtoacertainchurchhadnothingtodowiththeiractsin
thismatter.Thechurch,assuch,hadnothingtodowiththefundinanywaywhateveruntilthe$80,000reached
the coffers of the Monte de Piedad (an institution under the control of the church) as a loan or deposit. If the
charity in question had been founded as an ecclesiastical pious work, the King of Spain and the Governor
General, in their capacities as vicargeneral of the Indies and as royal vicepatron, respectively, would have
disposedofthefundassuchandnotintheircivilcapacities,andsuchfunctionscouldnothavebeentransferred
tothepresentPhilippineGovernment,becausetherighttosoactwouldhavearisenoutofthespecialagreement
between the Government of Spain and the Holy See, based on the union of the church and state which was
completelyseparatedwiththechangeofsovereignty.
Andintheirsupplementalbriefcounselsay:
Bytheconcededfactsthemoneyinquestionispartofacharitablesubscription.Thedonorswerepersons
in Spain, the trustee was the Spanish Government, the donees, the cestuis que trustent, were certain
persons in the Philippine Islands. The whole matter is one of trusteeship. This is undisputed and
indisputable.ItfollowsthattheSpanishGovernmentatnotimewastheownerofthefund.Notbeingthe
owner of the fund it could not transfer the ownership. Whether or not it could transfer its trusteeship it
certainlyneverhasexpresslydonesoandthegeneraltermsofpropertytransferintheTreatyofParisare
whollyinsufficientforsuchapurposeevencouldSpainhavetransferreditstrusteeshipwithouttheconsent
ofthedonorsandevencouldtheUnitedStates,asaGovernment,haveacceptedsuchatrustunderany
powergrantedtoitbythethirteenoriginalStatesintheConstitution,whichismorethandoubtful.Itfollows
further that this Government is not a proper party to the action.The only persons who could claim to be
damagedbythispaymenttotheMonte,ifitwasunlawful,arethedonorsorthecestuisquetrustent,and
thisGovernmentisneither.
If"thewholematterisoneoftrusteeship,"anditbeingtruethattheSpanishGovernmentcouldnot,ascounsel
say,transfertheownershipofthefundtotheMontedePiedad,thequestionarises,whomaysuetorecoverthis
loan? It needs no argument to show that the Spanish or Philippine Government, as trustee, could maintain an
actionforthispurposehadtherebeennochangeofsovereigntyandiftherightofactionhasnotprescribed.But
thosegovernmentsweresomethingmorethanmerecommonlawtrusteesofthefund.Inordertodeterminetheir
exactstatuswithreferencetothisfund,itisnecessarytoexaminethelawinforceatthetimetheretransactions
took place, which are the law of June 20, 1894, the royal decree of April 27. 1875, and the instructions
promulgatedonthelatterdate.TheselegalprovisionswereapplicabletothePhilippineIslands(Benedictovs.De
laRama,3Phil.Rep.,34)
The funds collected as a result of the national subscription opened in Spain by royal order of the Spanish
Government and which were remitted to the Philippine Government to be distributed among the earthquake
sufferersbytheCentralReliefBoardconstituted,underarticle1ofthelawofJune20,1894,andarticle2ofthe
instructions ofApril 27, 1875, a special charity of a temporary nature as distinguished from a permanent public
charitableinstitution.AstheSpanishGovernmentinitiatedthecreationofthefundandasthedonorsturnedtheir
contributions over to that Government, it became the duty of the latter, under article 7 of the instructions, to
exercisesupervisionandcontroloverthemoneysthuscollectedtotheendthatthewillofthedonorsshouldbe
carried out. The relief board had no power whatever to dispose of the funds confided to its charge for other
purposes than to distribute them among the sufferers, because paragraph 3 of article 11 of the instructions
conferred the power upon the secretary of the interior of Spain, and no other, to dispose of the surplus funds,
shouldtherebeany,byassigningthemtosomeothercharitablepurposeorinstitution.Thesecretarycouldnot
disposeofanyofthefundsinthismannersolongastheywerenecessaryforthespecificpurposeforwhichthey
werecontributed.Thesecretaryhadthepower,underthelawabovementionedtoappointandtotallyorpartially
change the personnel of the relief board and to authorize the board to defend the rights of the charity in the
courts. The authority of the board consisted only in carrying out the will of the donors as directed by the
Governmentwhosedutyitwastowatchovertheactsoftheboardandtoseethatthefundswereappliedtothe
http://www.lawphil.net/judjuris/juri1916/dec1916/gr_l9959_1916.html

6/10

7/20/2016

G.R.No.L9959

purposes for which they were contributed .The secretary of the interior, as the representative of His Majesty's
Government, exercised these powers and duties through the GovernorGeneral of the Philippine Islands. The
Governments of Spain and of the Philippine Islands in complying with their duties conferred upon them by law,
acted in their governmental capacities in attempting to carry out the intention of the contributors. It will this be
seenthatthosegovernmentsweresomethingmore,aswehavesaid,thanmeretrusteesofthefund.
It is further contended that the obligation on the part of the Monte de Piedad to return the $80,000 to the
Government, even considering it a loan, was wiped out on the change of sovereignty, or inn other words, the
present Philippine Government cannot maintain this action for that reason.This contention, if true, "must result
fromsettledprinciplesofrigidlaw,"asitcannotrestuponanytitletothefundintheMontedePiedadacquired
priortosuchchange.Whiletheobligationtoreturnthe$80,000totheSpanishGovernmentwasstillpending,war
betweentheUnitedStatesandSpainensued.UndertheTreatyofParisofDecember10,1898,theArchipelago,
known as the Philippine Islands, was ceded to the United States, the latter agreeing to pay Spain the sum of
$20,000,000.Underthefirstparagraphoftheeightharticle,SpainrelinquishedtotheUnitedStates"allbuildings,
wharves,barracks,forts,structures,publichighways,andotherimmovablepropertywhich,inconformitywithlaw,
belongedtothepublicdomain,andassuchbelongedtothecrownofSpain."Asthe$80,000werenotincluded
therein,itissaidthattherighttorecoverthisamountdidnot,therefore,passtothepresentsovereign.This,in
our opinion, does not follow as a necessary consequence, as the right to recover does not rest upon the
proposition that the $80,000 must be "other immovable property" mentioned in article 8 of the treaty, but upon
contractualobligationsincurredbeforethePhilippineIslandswerecededtotheUnitedStates.Wewillnotinquire
whateffecthiscessionhaduponthelawofJune20,1849,theroyaldecreeofApril27,1875,andtheinstructions
promulgatedonthelatterdate.InVilasvs.Manila(220U.S.,345),thecourtsaid:
That there is a total abrogation of the former political relations of the inhabitants of the ceded region is
obvious.That all laws theretofore in force which are in conflict with the political character, constitution, or
institutionsofthesubstitutedsovereign,losetheirforce,isalsoplain.(AlvarezySanchezvs.UnitedStates,
216U.S.,167.)Butitisequallysettledinthesamepubliclawthatthegreatbodyofmunicipallawwhich
regulatesprivateanddomesticrightscontinuesinforceuntilabrogatedorchangedbythenewruler.
Iftheabovementionedlegalprovisionsareinconflictwiththepoliticalcharacter,constitutionorinstitutionsofthe
newsovereign,theybecameinoperativeorlosttheirforceuponthecessionofthePhilippineIslandstotheUnited
States,butiftheyareamong"thatgreatbodyofmunicipallawwhichregulatesprivateanddomesticrights,"they
continuedinforceandarestillinforceunlesstheyhavebeenrepealedbythepresentGovernment.Thattheyfall
within the latter class is clear from their very nature and character.They are laws which are not political in any
senseoftheword.TheyconferredupontheSpanishGovernmenttherightanddutytosupervise,regulate,andto
some extent control charities and charitable institutions. The present sovereign, in exempting "provident
institutions,savingsbanks,etc.,"allofwhichareinthenatureofcharitableinstitutions,fromtaxation,placedsuch
institutions,insofarastheinvestmentinsecuritiesareconcerned,underthegeneralsupervisionoftheInsular
Treasurer(paragraph4ofsection111ofActNo.1189seealsoActNo.701).
Furthermore,uponthecessionofthePhilippineIslandstheprerogativesofhecrownofSpaindevolveduponhe
UnitedStates.InMagillvs.Brown(16Fed.Cas.,408),quotedwithapprovalinMormonCharchvs.UnitedStates
(136U.S.,1,57),thecourtsaid:
TheRevolutiondevolvedontheStateallthetranscendentpowerofParliament,andtheprerogativeofthe
crown,andgavetheirActsthesameforceandeffect.
In Fontain vs. Ravenel (17 Hw., 369, 384), Mr. Justice McLean, delivering the opinion of the court in a charity
case,said:
Whenthiscountryachieveditsindependence,theprerogativesofthecrowndevolveduponthepeopleof
theStates.Andthispowerstillremainswiththemexceptsofactastheyhavedelegatedaportionofitto
theFederalGovernment.Thesovereignwillismadeknowntousbylegislativeenactment.TheStateasa
sovereign,istheparenspatriae.
ChancelorKentsays:
In this country, the legislature or government of the State, as parens patriae, has the right to enforce all
charitiesofpublicnature,byvirtueofitsgeneralsuperintendingauthorityoverthepublicinterests,where
nootherpersonisentrustedwithit.(4KentCom.,508,note.)
TheSupremeCourtoftheUnitedStatesinMormonChurchvs.UnitedStates,supra,afterapprovingalsothelast
quotations,said:
ThisprerogativeofparenspatriaeisinherentinthesupremepowerofeveryState,whetherthatpoweris
lodged in a royal person or in the legislature, and has no affinity to those arbitrary powers which are
sometimesexertedbyirresponsiblemonarchstothegreatdetrimentofthepeopleandthedestructionof
http://www.lawphil.net/judjuris/juri1916/dec1916/gr_l9959_1916.html

7/10

7/20/2016

G.R.No.L9959

theirliberties.Onthecontrary,itisamostbeneficientfunctions,andoftennecessarytobeexercisedinthe
interestofhumanity,andforthepreventionofinjurytothosewhocannotprotectthemselves.
Thecourtinthesamecase,afterquotingfromSohiervs.Mass.GeneralHospital(3Cush.,483,497),wherein
thelattercourtheldthatitisdeemedindispensiblethatthereshouldbeapowerinthelegislaturetoauthorizethe
sameoftheestatesofinfacts,idiots,insanepersons,andpersonsnotknown,ornotinbeing,whocannotactfor
themselves,said:
Theseremarksinreferencetoinfacts,insanepersonsandpersonnotknown,ornotinbeing,applytothe
beneficiariesofcharities,whoareoftenincapableofvindicatingtheirrights,andjustlylookforprotectionto
thesovereignauthority,actingasparenspatriae.Theyshowthatthisbeneficientfunctionshasnotceasedt
exist under the change of government from a monarchy to a republic but that it now resides in the
legislativedepartment,readytobecalledintoexercisewheneverrequiredforthepurposesofjusticeand
right,andisaclearlycapableofbeingexercisedincasesofcharitiesasinanyothercaseswhatever.
InPeoplevs.Cogswell(113Cal.129,130),itwasurgedthattheplaintiffwasnottherealpartyininterestthatthe
AttorneyGeneralhadnopowertoinstitutetheactionandthattheremustbeanallegationandproofofadistinct
rightofthepeopleasawhole,asdistinguishedfromtherightsofindividuals,beforeanactioncouldbebroughtby
theAttorneyGeneralinthenameofthepeople.Thecourt,inoverrulingthesecontentions,heldthatitwasnot
only the right but the duty of the AttorneyGeneral to prosecute the action, which related to charities, and
approvedthefollowingquotationfromAttorneyGeneralvs.Compton(1Younge&C.C.,417):
Wherepropertyaffectedbyatrustforpublicpurposesisinthehandsofthosewhoholditdevotedtothat
trust, it is the privilege of the public that the crown should be entitled to intervene by its officers for the
purpose of asserting, on behalf on the public generally, the public interest and the public right, which,
probably,noindividualcouldbefoundeffectuallytoassert,eveniftheinterestweresuchastoallowit.(2
Knet'sCommentaries,10thed.,359LewinonTrusts,sec.732.)
Itisfurtherurged,asaboveindicated,that"theonlypersonswhocouldclaimtobedamagedbythispaymentto
the Monte, if it was unlawful, are the donors or the cestuis que trustent, and this Government is neither.
Consequently,theplaintiffisnottheproperpartytobringtheaction."Theearthquakefundwastheresultorthe
accumulationofagreatnumberofsmallcontributions.Thenamesofthecontributorsdonotappearintherecord.
Their whereabouts are unknown. They parted with the title to their respective contributions. The beneficiaries,
consistingoftheoriginalsufferersandtheirheirs,couldhavebeenascertained.Theyarequitenumerousalso.
Andnodoubtalargenumberoftheoriginalsufferershavedied,leavingvariousheirs.Itwouldbeimpracticable
forthemtoinstituteanactionoractionseitherindividuallyorcollectivelytorecoverthe$80,000.Theonlycourse
thatcanbesatisfactorilypursuedisfortheGovernmenttoagainassumecontrolofthefundanddevoteittothe
objectforwhichitwasoriginallydestined.
The impracticability of pursuing a different course, however, is not the true ground upon which the right of the
Governmenttomaintaintheactionrests.Thetruegroundisthatthemoneybeinggiventoacharitybecame,ina
measure, public property, only applicable, it is true, to the specific purposes to which it was intended to be
devoted, but within those limits consecrated to the public use, and became part of the public resources for
promotingthehappinessandwelfareofthePhilippineGovernment.(MormonChurchvs.U.S.,supra.)Todeny
theGovernment'srighttomaintainthisactionwouldbecontrarytosoundpublicpolicy,astendingtodiscourage
thepromptexerciseofsimilaractsofhumanityandChristianbenevolenceinlikeinstancesinthefuture.
As to the question raised in the fourth assignment of error relating to the constitutionality ofAct No. 2109, little
needbesaidforthereasonthatwehavejustheldthatthepresentPhilippineGovernmentistheproperpartyto
theaction.TheActisonlyamanifestationonthepartofthePhilippineGovernmenttoexercisethepowerorright
whichitundoubtedlyhad.TheActisnot,ascontendedbycounsel,inconflictwiththefifthsectionoftheActof
CongressofJuly1,1902,becauseitdoesnottakepropertywithoutdueprocessoflaw.Infact,thedefendantis
nottheownerofthe$80,000,butholdsitasaloansubjecttothedisposalofthecentralreliefboard.Therefor,
therecanbenothingintheActwhichtranscendsthepowerofthePhilippineLegislature.
InVilasvs.Manila,supra,theplaintiffwasacreditorofthecityofManilaasitexistedbeforethecessionofthe
PhilippineIslandstotheUnitedStatesbytheTreatyofParisofDecember10,1898.Theactionwasbroughtupon
the theory that the city, under its present charter from the Government of the Philippine Islands, was the same
juristic person, and liable upon the obligations of the old city. This court held that the present municipality is a
totallydifferentcorporateentityandinnowayliableforthedebtsoftheSpanishmunicipality.TheSupremeCourt
oftheUnitedStates,inreversingthisjudgmentandinholdingthecityliablefortheolddebt,said:
Thejuristicidentityofthecorporationhasbeeninnowiseaffected,and,inlaw,thepresentcityis,inevery
legal sense, the successor of the old. As such it is entitled to the property and property rights of the
predecessorcorporation,andis,inlaw,subjecttoallofitsliabilities.
InsupportofthefifthassignmentoferrorcounselforthedefendantarguethatastheMontedePiedaddeclined
http://www.lawphil.net/judjuris/juri1916/dec1916/gr_l9959_1916.html

8/10

7/20/2016

G.R.No.L9959

toreturnthe$80,000whenorderedtodosobytheDepartmentofFinanceinJune,1893,theplaintiff'srightof
action had prescribed at the time this suit was instituted on May 3, 1912, citing and relying upon article 1961,
1964and1969oftheCivilCode.Whileontheotherhand,theAttorneyGeneralcontendsthattherightofaction
hadnotprescribed(a)becausethedefenseofprescriptioncannotbesetupagainstthePhilippineGovernment,
(b)becausetherightofactiontorecoveradepositortrustfundsdoesnotprescribe,and(c)evenifthedefense
of prescription could be interposed against the Government and if the action had, in fact, prescribed, the same
wasrevivedbyActNo.2109.
Thematerialfactsrelatingtothisquestionarethese:TheMontedePiedadreceivedthe$80,000in1883"tobe
held under the same conditions as at present in the treasury, to wit, at the disposal of the relief board." In
compliancewiththeprovisionsoftheroyalorderofDecember3,1892,theDepartmentofFinancecalledupon
theMontedePiedadinJune,1893,toreturnthe$80,000.TheMontedeclinedtocomplywiththisorderuponthe
groundthatonlytheGovernorGeneralofthePhilippineIslandsandnottheDepartmentofFinancehadtheright
to order the reimbursement. The amount was carried on the books of the Monte as a returnable loan until
January1,1899,whenitwastransferredtotheaccountofthe"SagradaMitra."OnMarch31,1902,theMonte,
throughitslegalrepresentative,statedinwritingthattheamountinquestionwasreceivedasareimbursableloan,
without interest.Act No. 2109 became effective January 30, 1912, and the action was instituted on May 3rd of
thatyear.
Counsel for the defendant treat the question of prescription as if the action was one between individuals or
corporationswhereintheplaintiffisseekingtorecoveranordinaryloan.UponthistheoryJune,1893,cannotbe
takenasthedatewhenthestatuteoflimitationsbegantorun,forthereasonthatthedefendantacknowledgedin
writingonMarch31,1902,thatthe$80,000werereceivedasaloan,therebyineffectadmittingthatitstillowed
theamount.(Section50,CodeofCivilProcedure.)Butifcounsels'theoryisthecorrectonetheactionmayhave
prescribedonMay3,1912,becausemorethantenfullyearshadelapsedafterMarch31,1902.(Sections38and
43,CodeofCivilProcedure.)
IsthePhilippineGovernmentboundbythestatuteoflimitations?TheSupremeCourtoftheUnitedStatesinU.S.
vs.Nashville,Chattanooga&St.LouisRailwayCo.(118U.S.,120,125),said:
It is settled beyond doubt or controversy upon the foundation of the great principle of public policy,
applicable to all governments alike, which forbids that the public interests should be prejudiced by the
negligence of the officers or agents to whose care they are confided that the United States, asserting
rightsvestedinitasasovereigngovernment,isnotboundbyanystatuteoflimitations,unlessCongress
has clearly manifested its intention that it should be so bound. (Lindsey vs. Miller, 6 Pet. 666 U. S. vs.
Knight,14Pet.,301Gibsonvs.Chouteau,13Wall.,92U.S.vs.Thompson,98U.S.,486Finkvs.O'Neil,
106U.S.,272,281.)
InGibsonvs.Choteau,supra,thecourtsaid:
ItisamatterofcommonknowledgethatstatutesoflimitationdonotrunagainsttheState.Thatnolaches
canbeimputedtotheKing,andthatnotimecanbarhisrights,wasthemaximofthecommonlaws,and
was founded on the principle of public policy, that as he was occupied with the cares of government he
ought not to suffer from the negligence of his officer and servants. The principle is applicable to all
governments, which must necessarily act through numerous agents, and is essential to a preservation of
theinterestsandpropertyofthepublic.ItisuponthisprinciplethatinthiscountrythestatutesofaState
prescribingperiodswithinwhichrightsmustbeprosecutedarenotheldtoembracetheStateitself,unlessit
is expressly designated or the mischiefs to be remedied are of such a nature that it must necessarily be
included.AslegislationofaStatecanonlyapplytopersonsandthingoverwhichtheStatehasjurisdiction,
theUnitedStatesarealsonecessarilyexcludedfromtheoperationofsuchstatutes.
In25Cyc.,1006,therule,supportedbynumerousauthorities,isstatedasfollows:
Intheabsenceofexpressstatutoryprovisiontothecontrary,statuteoflimitationsdonotasageneralrule
run against the sovereign or government, whether state or federal. But the rule is otherwise where the
mischiefstoberemediedareofsuchanaturethatthestatemustnecessarilybeincluded,wherethestate
goes into business in concert or in competition with her citizens, or where a party seeks to enforces his
privaterightsbysuitinthenameofthestateorgovernment,sothatthelatterisonlyanominalparty.
IntheinstantcasethePhilippineGovernmentisnotamerenominalpartybecauseit,inbringingandprosecuting
this action, is exercising its sovereign functions or powers and is seeking to carry out a trust developed upon it
when the Philippine Islands were ceded to the United States. The United States having in 1852, purchased as
trusteefortheChickasawIndiansundertreatywiththattribe,certainbondsoftheStateofTennessee,therightof
action of the Government on the coupons of such bonds could not be barred by the statute of limitations of
Tennessee,eitherwhileitheldthemintrustfortheIndians,orsinceitbecametheownerofsuchcoupons.(U.S.
vs.Nashville,etc.,R.Co.,supra.)Sowherelandsareheldintrustbythestateandthebeneficiarieshavenoright
tosue,astatutedoesnotrunagainsttheState'srightofactionfortrespassonthetrustlands.(GreeneTp. vs.
http://www.lawphil.net/judjuris/juri1916/dec1916/gr_l9959_1916.html

9/10

7/20/2016

G.R.No.L9959

Campbell,16OhioSt.,11seealsoAtty.Gen. vs.MidlandR.Co.,3Ont.,511[followingReg.vs.Williams,39U.
C.Q.B.,397].)
Theseprinciplesbeingbased"uponthefoundationofthegreatprincipleofpublicpolicy"are,intheverynatureof
things,applicabletothePhilippineGovernment.
Counselintheirargumentinsupportofthesixthandlastassignmentsoferrordonotquestiontheamountofthe
judgment nor do they question the correctness of the judgment in so far as it allows interest, and directs its
paymentingoldcoinorintheequivalentinPhilippinecurrency.
Fortheforegoingreasonsthejudgmentappealedfromisaffirmed,withcostsagainsttheappellant.Soordered.
Torres,JohnsonandAraullo,JJ.,concur.
Moreland,J.,didnotsign.
TheLawphilProjectArellanoLawFoundation

http://www.lawphil.net/judjuris/juri1916/dec1916/gr_l9959_1916.html

10/10