Government of the Philippine Islands vs. Monte De Piedad

THE GOVERNMENT OF THE PHILIPPINE ISLANDS, represented by the Treasurer of the Philippine Islands, plaintiff-appellee,
vs.
EL MONTE DE PIEDAD Y CAJA DE AHORRAS DE MANILA, defendant-appellant.

G.R. NO. L-9959
DECEMBER 13, 1916

FACTS:

About $400,000, were subscribed and paid into the treasury of the Philippine Islands by the inhabitants of the Spanish Dominions of the relief of those damaged by the earthquake, which took place in the Philippine Islands on June 3, 1863. Subsequent thereto a central relief board was appointed to distribute the moneys thus voluntarily contributed and allotted $365,703.50 to the various sufferers named in its resolution. By order of the Governor-General of the Philippine Islands, a list of these allotments, together with the names of those entitled thereto, was published in the Official Gazette of Manila. These were later distributed up to the sum of $30,299.65, leaving a balance of $365,403.85.

Upon the petition of the governing body of the Monte de Piedad, the Philippine Government, by order, directed its treasurer to turn over to the former the sum of $80,000 of the relief fund in installments of $20,000 each and were received on the following dates: February 15, March 12, April 14, and June 2, 1883, and are still in the possession of the Monte de Piedad. On account of various petitions of the persons, and heirs of others to whom the abovementioned allotments were made, the Philippine Islands filed a suit against the Monte de Piedad a recover, “through the Attorney-General and in representation of the Government of the Philippine Islands,” the $80.000, together with interest. After due trial, judgment was entered in favor of the plaintiff. Defendant appealed and made the following contentions:

1. that the $80,000, given to the Monte de Piedad y Caja de Ahorros, were so given as a donation, and that said donation had been cleared;
2. that the Government of the Philippine Islands has not subrogated the Spanish
3. Government in its rights, as regards an important sum of money abovementioned;
4. that the only persons who could claim to be damaged by this payment to the Monte, if it was unlawful, are the donors or the cestuis que trustent, thus, the plaintiff is not the proper party to bring the action;
5. that the court erred in holding in its decision that there is no title for the prescription of this suit brought by the Insular Government against the defendant appellant.
   
   

ISSUES:

1. WON the $80,000 received by Monte de Piedad was in form of donation.
2. WON 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.
3. WON the Government is a proper party to the case under the doctrine of parens patriae.
4. WON the Philippine Government is bound by the statute of limitations.
   
   

HELD:

1. No.Documentary evidence shows that Monte de Piedad, after setting forth in its petition to the Governor-General its financial condition and its absolute necessity for more working capital, asked that out of the sum of $100,000 held in the Treasury of the Philippine Islands, there be transferred to it the sum of $80,000. The Monte de Piedad agreed that if the transfer of these funds should not be approved by the Government of Spain, the same would be returned forthwith. It did not ask that the $80,000 be given to it as a donation.
   
   The Department of Finance, acting under the orders of the Governor-General, understood that the $80,000 was transferred to the Monte de Piedad well knew that it received this sum as a loan interest.” Furthermore, the Monte de Piedad recognized and considered as late as March 31, 1902, that it received the $80,000 “as a returnable loan, and without interest.” Thus, there cannot be the slightest doubt the fact that the Monte de Piedad received the $80,000 as a mere loan or deposit and not as a donation.
   
   
2. No. Court ruled that if legal provisions are in conflict with the political character, constitution or institutions of the new sovereign, they became inoperative or lost their force upon the cession of the Philippine Islands to the United States, but if they are among “that great body of municipal law which regulates private and domestic rights,” they continued in force and are still in force unless they have been repealed by the present Government.
   
   From the nature and class of the subject matter, it is clear that it falls within the latter class. They are laws, which are not political in any sense of the word. They conferred upon the Spanish Government 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 of which are in the nature of charitable institutions, from taxation, placed such institutions, in so far as the investment in securities are concerned, under the general supervision of the Insular Treasurer.
   
   
3. Yes. The ground upon which the right of the Government to maintain the action rests on the fact that the money, being given to a charity became a public property, only applicable to the specific purposes to which it was intended to be devoted. It is but within those limits consecrated to the public use, and became part of the public resources for promoting the happiness and welfare of the Philippine Government. To deny the Government’s right to maintain this action would be contrary to sound public policy.
   
   The Supreme Court of the United States in Sohier vs. Mass. General Hospital, ruled that: ―insane persons and person not known, or not in being, apply to the beneficiaries of charities, who are often in capable of vindicating their rights, and justly look for protection to the sovereign authority, acting as parens patriae. They show that this beneficent functions has not ceased to exist under the change of government from a monarchy to a republic; but that it now resides in the legislative department, ready to be called into exercise whenever required for the purposes of justice and right, and is a clearly capable of being exercised in cases of charities as in any other cases whatever.
   
   Chancellor Kent says: In this country, the legislature or government of the State, as parens patriae, has the right to enforce all charities of public nature, by virtue of its general superintending authority over the public interests, where no other person is entrusted with it. (4 Kent Com., 508, note.)
   
   
   
4. No. In 25 Cyc., 1006, the rule, supported by numerous authorities, is stated as follows: In the absence of express statutory provision to the contrary, statute of limitations do not as a general rule run against the sovereign or government, whether state or federal. But the rule is otherwise where the mischief to be remedied are of such a nature that the state must necessarily be included, where the state goes into business in concert or in competition with her citizens, or where a party seeks to enforces his private rights by suit in the name of the state or government, so that the latter is only a nominal party.
   
   In the instant case the Philippine Government is not a mere nominal party because it, in bringing and prosecuting 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. For the foregoing reasons the judgment appealed from is affirmed.

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