Republic of the Philippines In view of the refusal of the squatters to vacate the lots sold to private respondent,

SUPREME COURT a dispute arose as to who of the parties has the responsibility of evicting and clearing
Manila the land of squatters. Complicating the relations of the parties was the sale by
petitioner of Lot 5-A to Tropicana Properties and Development Corporation
EN BANC (Tropicana).

G.R. No. 101949 December 1, 1994 I

THE HOLY SEE, petitioner, vs. THE HON. ERIBERTO U. ROSARIO, JR., as Presiding On January 23, 1990, private respondent filed a complaint with the Regional Trial
Judge of the Regional Trial Court of Makati, Branch 61 and STARBRIGHT SALES Court, Branch 61, Makati, Metro Manila for annulment of the sale of the three parcels
ENTERPRISES, INC., respondents. of land, and specific performance and damages against petitioner, represented by
the Papal Nuncio, and three other defendants: namely, Msgr. Domingo A. Cirilos, Jr.,
Padilla Law Office for petitioner. the PRC and Tropicana (Civil Case No.
90-183).
Siguion Reyna, Montecillo & Ongsiako for private respondent.
The complaint alleged that: (1) on April 17, 1988, Msgr. Cirilos, Jr., on behalf of
petitioner and the PRC, agreed to sell to Ramon Licup Lots 5-A, 5-B and 5-D at the
QUIASON, J.:
price of P1,240.00 per square meters; (2) the agreement to sell was made on the
condition that earnest money of P100,000.00 be paid by Licup to the sellers, and that
This is a petition for certiorari under Rule 65 of the Revised Rules of Court to reverse
the sellers clear the said lots of squatters who were then occupying the same; (3)
and set aside the Orders dated June 20, 1991 and September 19, 1991 of the Regional
Licup paid the earnest money to Msgr. Cirilos; (4) in the same month, Licup assigned
Trial Court, Branch 61, Makati, Metro Manila in Civil Case No. 90-183.
his rights over the property to private respondent and informed the sellers of the said
assignment; (5) thereafter, private respondent demanded from Msgr. Cirilos that the
The Order dated June 20, 1991 denied the motion of petitioner to dismiss the sellers fulfill their undertaking and clear the property of squatters; however, Msgr.
complaint in Civil Case No. 90-183, while the Order dated September 19, 1991 denied Cirilos informed private respondent of the squatters' refusal to vacate the lots,
the motion for reconsideration of the June 20,1991 Order. proposing instead either that private respondent undertake the eviction or that the
earnest money be returned to the latter; (6) private respondent counterproposed
Petitioner is the Holy See who exercises sovereignty over the Vatican City in Rome, that if it would undertake the eviction of the squatters, the purchase price of the lots
Italy, and is represented in the Philippines by the Papal Nuncio. should be reduced from P1,240.00 to P1,150.00 per square meter; (7) Msgr. Cirilos
returned the earnest money of P100,000.00 and wrote private respondent giving it
Private respondent, Starbright Sales Enterprises, Inc., is a domestic corporation seven days from receipt of the letter to pay the original purchase price in cash; (8)
engaged in the real estate business. private respondent sent the earnest money back to the sellers, but later discovered
that on March 30, 1989, petitioner and the PRC, without notice to private
This petition arose from a controversy over a parcel of land consisting of 6,000 square respondent, sold the lots to Tropicana, as evidenced by two separate Deeds of Sale,
meters (Lot 5-A, Transfer Certificate of Title No. 390440) located in the Municipality one over Lot 5-A, and another over Lots 5-B and 5-D; and that the sellers' transfer
of Parañaque, Metro Manila and registered in the name of petitioner. certificate of title over the lots were cancelled, transferred and registered in the
name of Tropicana; (9) Tropicana induced petitioner and the PRC to sell the lots to it
Said Lot 5-A is contiguous to Lots 5-B and 5-D which are covered by Transfer and thus enriched itself at the expense of private respondent;
Certificates of Title Nos. 271108 and 265388 respectively and registered in the name
of the Philippine Realty Corporation (PRC). The three lots were sold to Ramon Licup, (10) private respondent demanded the rescission of the sale to Tropicana and the
through Msgr. Domingo A. Cirilos, Jr., acting as agent to the sellers. Later, Licup reconveyance of the lots, to no avail; and (11) private respondent is willing and able
assigned his rights to the sale to private respondent. to comply with the terms of the contract to sell and has actually made plans to
develop the lots into a townhouse project, but in view of the sellers' breach,
it lost profits of not less than P30,000.000.00. II

Private respondent thus prayed for: (1) the annulment of the Deeds of Sale between A preliminary matter to be threshed out is the procedural issue of whether the
petitioner and the PRC on the one hand, and Tropicana on the other; (2) the petition for certiorari under Rule 65 of the Revised Rules of Court can be availed of
reconveyance of the lots in question; (3) specific performance of the agreement to to question the order denying petitioner's motion to dismiss. The general rule is that
sell between it and the owners of the lots; and (4) damages. an order denying a motion to dismiss is not reviewable by the appellate courts, the
remedy of the movant being to file his answer and to proceed with the hearing before
On June 8, 1990, petitioner and Msgr. Cirilos separately moved to dismiss the the trial court. But the general rule admits of exceptions, and one of these is when it
complaint — petitioner for lack of jurisdiction based on sovereign immunity from is very clear in the records that the trial court has no alternative but to dismiss the
suit, and Msgr. Cirilos for being an improper party. An opposition to the motion was complaint (Philippine National Bank v. Florendo, 206 SCRA 582 [1992]; Zagada v. Civil
filed by private respondent. Service Commission, 216 SCRA 114 [1992]. In such a case, it would be a sheer waste
of time and energy to require the parties to undergo the rigors of a trial.
On June 20, 1991, the trial court issued an order denying, among others, petitioner's
motion to dismiss after finding that petitioner "shed off [its] sovereign immunity by The other procedural question raised by private respondent is the personality or legal
entering into the business contract in question" (Rollo, pp. 20-21). interest of the Department of Foreign Affairs to intervene in the case in behalf of the
Holy See (Rollo, pp. 186-190).
On July 12, 1991, petitioner moved for reconsideration of the order. On August 30,
1991, petitioner filed a "Motion for a Hearing for the Sole Purpose of Establishing In Public International Law, when a state or international agency wishes to plead
Factual Allegation for claim of Immunity as a Jurisdictional Defense." So as to sovereign or diplomatic immunity in a foreign court, it requests the Foreign Office of
facilitate the determination of its defense of sovereign immunity, petitioner prayed the state where it is sued to convey to the court that said defendant is entitled to
that a hearing be conducted to allow it to establish certain facts upon which the said immunity.
defense is based. Private respondent opposed this motion as well as the motion for
reconsideration. In the United States, the procedure followed is the process of "suggestion," where
the foreign state or the international organization sued in an American court requests
On October 1, 1991, the trial court issued an order deferring the resolution on the the Secretary of State to make a determination as to whether it is entitled to
motion for reconsideration until after trial on the merits and directing petitioner to immunity. If the Secretary of State finds that the defendant is immune from suit, he,
file its answer (Rollo, p. 22). in turn, asks the Attorney General to submit to the court a "suggestion" that the
defendant is entitled to immunity. In England, a similar procedure is followed, only
Petitioner forthwith elevated the matter to us. In its petition, petitioner invokes the the Foreign Office issues a certification to that effect instead of submitting a
privilege of sovereign immunity only on its own behalf and on behalf of its official "suggestion" (O'Connell, I International Law 130 [1965]; Note: Immunity from Suit of
representative, the Papal Nuncio. Foreign Sovereign Instrumentalities and Obligations, 50 Yale Law Journal 1088
[1941]).
On December 9, 1991, a Motion for Intervention was filed before us by the
Department of Foreign Affairs, claiming that it has a legal interest in the outcome of In the Philippines, the practice is for the foreign government or the international
the case as regards the diplomatic immunity of petitioner, and that it "adopts by organization to first secure an executive endorsement of its claim of sovereign or
reference, the allegations contained in the petition of the Holy See insofar as they diplomatic immunity. But how the Philippine Foreign Office conveys its endorsement
refer to arguments relative to its claim of sovereign immunity from suit" (Rollo, p. to the courts varies. In International Catholic Migration Commission v. Calleja, 190
87). SCRA 130 (1990), the Secretary of Foreign Affairs just sent a letter directly to the
Secretary of Labor and Employment, informing the latter that the respondent-
employer could not be sued because it enjoyed diplomatic immunity. In World Health
Private respondent opposed the intervention of the Department of Foreign Affairs.
Organization v. Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs sent the
In compliance with the resolution of this Court, both parties and the Department of
trial court a telegram to that effect. In Baer v. Tizon, 57 SCRA 1 (1974),
Foreign Affairs submitted their respective memoranda.
the U.S. Embassy asked the Secretary of Foreign Affairs to request the Solicitor to International Law (Garcia, Questions and Problems In International Law, Public and
General to make, in behalf of the Commander of the United States Naval Base at Private 81 [1948]).
Olongapo City, Zambales, a "suggestion" to respondent Judge. The Solicitor General
embodied the "suggestion" in a Manifestation and Memorandum as amicus curiae. The Lateran Treaty established the statehood of the Vatican City "for the purpose of
assuring to the Holy See absolute and visible independence and of guaranteeing to it
In the case at bench, the Department of Foreign Affairs, through the Office of Legal indisputable sovereignty also in the field of international relations" (O'Connell, I
Affairs moved with this Court to be allowed to intervene on the side of petitioner. International Law 311 [1965]).
The Court allowed the said Department to file its memorandum in support of
petitioner's claim of sovereign immunity. In view of the wordings of the Lateran Treaty, it is difficult to determine whether the
statehood is vested in the Holy See or in the Vatican City. Some writers even
In some cases, the defense of sovereign immunity was submitted directly to the local suggested that the treaty created two international persons — the Holy See and
courts by the respondents through their private counsels (Raquiza v. Bradford, 75 Vatican City (Salonga and Yap, supra, 37).
Phil. 50 [1945]; Miquiabas v. Philippine-Ryukyus Command, 80 Phil. 262 [1948];
United States of America v. Guinto, 182 SCRA 644 [1990] and companion cases). In The Vatican City fits into none of the established categories of states, and the
cases where the foreign states bypass the Foreign Office, the courts can inquire into attribution to it of "sovereignty" must be made in a sense different from that in which
the facts and make their own determination as to the nature of the acts and it is applied to other states (Fenwick, International Law 124-125 [1948]; Cruz,
transactions involved. International Law 37 [1991]). In a community of national states, the Vatican City
represents an entity organized not for political but for ecclesiastical purposes and
III international objects. Despite its size and object, the Vatican City has an independent
government of its own, with the Pope, who is also head of the Roman Catholic
The burden of the petition is that respondent trial court has no jurisdiction over Church, as the Holy See or Head of State, in conformity with its traditions, and the
petitioner, being a foreign state enjoying sovereign immunity. On the other hand, demands of its mission in the world. Indeed, the world-wide interests and activities
private respondent insists that the doctrine of non-suability is not anymore absolute of the Vatican City are such as to make it in a sense an "international state"
and that petitioner has divested itself of such a cloak when, of its own free will, it (Fenwick, supra., 125; Kelsen, Principles of International Law 160 [1956]).
entered into a commercial transaction for the sale of a parcel of land located in the
Philippines. One authority wrote that the recognition of the Vatican City as a state has significant
implication — that it is possible for any entity pursuing objects essentially different
A. The Holy See from those pursued by states to be invested with international personality (Kunz, The
Status of the Holy See in International Law, 46 The American Journal of International
Before we determine the issue of petitioner's non-suability, a brief look into its status Law 308 [1952]).
as a sovereign state is in order.
Inasmuch as the Pope prefers to conduct foreign relations and enter into transactions
Before the annexation of the Papal States by Italy in 1870, the Pope was the monarch as the Holy See and not in the name of the Vatican City, one can conclude that in the
and he, as the Holy See, was considered a subject of International Law. With the loss Pope's own view, it is the Holy See that is the international person.
of the Papal States and the limitation of the territory under the Holy See to an area
of 108.7 acres, the position of the Holy See in International Law became controversial The Republic of the Philippines has accorded the Holy See the status of a foreign
(Salonga and Yap, Public International Law 36-37 [1992]). sovereign. The Holy See, through its Ambassador, the Papal Nuncio, has had
diplomatic representations with the Philippine government since 1957 (Rollo, p. 87).
In 1929, Italy and the Holy See entered into the Lateran Treaty, where Italy This appears to be the universal practice in international relations.
recognized the exclusive dominion and sovereign jurisdiction of the Holy See over the
Vatican City. It also recognized the right of the Holy See to receive foreign diplomats,
to send its own diplomats to foreign countries, and to enter into treaties according
B. Sovereign Immunity (2) the conduct of public bidding for the repair of a wharf at a United States Naval
Station (United States of America v. Ruiz, supra.); and (3) the change of employment
As expressed in Section 2 of Article II of the 1987 Constitution, we have adopted the status of base employees (Sanders v. Veridiano, 162 SCRA 88 [1988]).
generally accepted principles of International Law. Even without this affirmation,
such principles of International Law are deemed incorporated as part of the law of On the other hand, this Court has considered the following transactions by a foreign
the land as a condition and consequence of our admission in the society of nations state with private parties as acts jure gestionis: (1) the hiring of a cook in the
(United States of America v. Guinto, 182 SCRA 644 [1990]). recreation center, consisting of three restaurants, a cafeteria, a bakery, a store, and
a coffee and pastry shop at the John Hay Air Station in Baguio City, to cater to
There are two conflicting concepts of sovereign immunity, each widely held and American servicemen and the general public (United States of America v. Rodrigo,
firmly established. According to the classical or absolute theory, a sovereign cannot, 182 SCRA 644 [1990]); and (2) the bidding for the operation of barber shops in Clark
without its consent, be made a respondent in the courts of another sovereign. Air Base in Angeles City (United States of America v. Guinto, 182 SCRA 644 [1990]).
According to the newer or restrictive theory, the immunity of the sovereign is The operation of the restaurants and other facilities open to the general public is
recognized only with regard to public acts or acts jure imperii of a state, but not with undoubtedly for profit as a commercial and not a governmental activity. By entering
regard to private acts or acts jure gestionis into the employment contract with the cook in the discharge of its proprietary
(United States of America v. Ruiz, 136 SCRA 487 [1987]; Coquia and Defensor- function, the United States government impliedly divested itself of its sovereign
Santiago, Public International Law 194 [1984]). immunity from suit.

Some states passed legislation to serve as guidelines for the executive or judicial In the absence of legislation defining what activities and transactions shall be
determination when an act may be considered as jure gestionis. The United States considered "commercial" and as constituting acts jure gestionis, we have to come out
passed the Foreign Sovereign Immunities Act of 1976, which defines a commercial with our own guidelines, tentative they may be.
activity as "either a regular course of commercial conduct or a particular commercial
transaction or act." Furthermore, the law declared that the "commercial character of Certainly, the mere entering into a contract by a foreign state with a private party
the activity shall be determined by reference to the nature of the course of conduct cannot be the ultimate test. Such an act can only be the start of the inquiry. The
or particular transaction or act, rather than by reference to its purpose." The logical question is whether the foreign state is engaged in the activity in the regular
Canadian Parliament enacted in 1982 an Act to Provide For State Immunity in course of business. If the foreign state is not engaged regularly in a business or trade,
Canadian Courts. The Act defines a "commercial activity" as any particular the particular act or transaction must then be tested by its nature. If the act is in
transaction, act or conduct or any regular course of conduct that by reason of its pursuit of a sovereign activity, or an incident thereof, then it is an act jure imperii,
nature, is of a "commercial character." especially when it is not undertaken for gain or profit.

The restrictive theory, which is intended to be a solution to the host of problems As held in United States of America v. Guinto, (supra):
involving the issue of sovereign immunity, has created problems of its own. Legal
treatises and the decisions in countries which follow the restrictive theory have There is no question that the United States of America, like any
difficulty in characterizing whether a contract of a sovereign state with a private party other state, will be deemed to have impliedly waived its non-
is an act jure gestionis or an act jure imperii. suability if it has entered into a contract in its proprietary or private
capacity. It is only when the contract involves its sovereign or
The restrictive theory came about because of the entry of sovereign states into purely governmental capacity that no such waiver may be implied.
commercial activities remotely connected with the discharge of governmental
functions. This is particularly true with respect to the Communist states which took In the case at bench, if petitioner has bought and sold lands in the ordinary course of
control of nationalized business activities and international trading. a real estate business, surely the said transaction can be categorized as an act jure
gestionis. However, petitioner has denied that the acquisition and subsequent
This Court has considered the following transactions by a foreign state with private disposal of Lot 5-A were made for profit but claimed that it acquired said property
parties as acts jure imperii: (1) the lease by a foreign government of apartment for the site of its mission or the Apostolic Nunciature in the Philippines. Private
buildings for use of its military officers (Syquia v. Lopez, 84 Phil. 312 [1949]; respondent failed to dispute said claim.
Lot 5-A was acquired by petitioner as a donation from the Archdiocese of Manila. The As in International Catholic Migration Commission and in World Health Organization,
donation was made not for commercial purpose, but for the use of petitioner to we abide by the certification of the Department of Foreign Affairs.
construct thereon the official place of residence of the Papal Nuncio. The right of a
foreign sovereign to acquire property, real or personal, in a receiving state, necessary Ordinarily, the procedure would be to remand the case and order the trial court to
for the creation and maintenance of its diplomatic mission, is recognized in the 1961 conduct a hearing to establish the facts alleged by petitioner in its motion. In view of
Vienna Convention on Diplomatic Relations (Arts. 20-22). This treaty was concurred said certification, such procedure would however be pointless and unduly circuitous
in by the Philippine Senate and entered into force in the Philippines on November 15, (Ortigas & Co. Ltd. Partnership v. Judge Tirso Velasco, G.R. No. 109645, July 25, 1994).
1965.
IV
In Article 31(a) of the Convention, a diplomatic envoy is granted immunity from the
civil and administrative jurisdiction of the receiving state over any real action relating Private respondent is not left without any legal remedy for the redress of its
to private immovable property situated in the territory of the receiving state which grievances. Under both Public International Law and Transnational Law, a person
the envoy holds on behalf of the sending state for the purposes of the mission. If this who feels aggrieved by the acts of a foreign sovereign can ask his own government
immunity is provided for a diplomatic envoy, with all the more reason should to espouse his cause through diplomatic channels.
immunity be recognized as regards the sovereign itself, which in this case is the Holy
See.
Private respondent can ask the Philippine government, through the Foreign Office,
to espouse its claims against the Holy See. Its first task is to persuade the Philippine
The decision to transfer the property and the subsequent disposal thereof are government to take up with the Holy See the validity of its claims. Of course, the
likewise clothed with a governmental character. Petitioner did not sell Lot Foreign Office shall first make a determination of the impact of its espousal on the
5-A for profit or gain. It merely wanted to dispose off the same because the squatters relations between the Philippine government and the Holy See (Young, Remedies of
living thereon made it almost impossible for petitioner to use it for the purpose of Private Claimants Against Foreign States, Selected Readings on Protection by Law of
the donation. The fact that squatters have occupied and are still occupying the lot, Private Foreign Investments 905, 919 [1964]). Once the Philippine government
and that they stubbornly refuse to leave the premises, has been admitted by private decides to espouse the claim, the latter ceases to be a private cause.
respondent in its complaint (Rollo, pp. 26, 27).
According to the Permanent Court of International Justice, the forerunner of the
The issue of petitioner's non-suability can be determined by the trial court without International Court of Justice:
going to trial in the light of the pleadings, particularly the admission of private
respondent. Besides, the privilege of sovereign immunity in this case was sufficiently
By taking up the case of one of its subjects and by reporting to diplomatic
established by the Memorandum and Certification of the Department of Foreign
action or international judicial proceedings on his behalf, a State is in reality
Affairs. As the department tasked with the conduct of the Philippines' foreign
asserting its own rights — its right to ensure, in the person of its subjects,
relations (Administrative Code of 1987, Book IV, Title I, Sec. 3), the Department of
respect for the rules of international law (The Mavrommatis Palestine
Foreign Affairs has formally intervened in this case and officially certified that the
Concessions, 1 Hudson, World Court Reports 293, 302 [1924]).
Embassy of the Holy See is a duly accredited diplomatic mission to the Republic of
the Philippines exempt from local jurisdiction and entitled to all the rights, privileges
and immunities of a diplomatic mission or embassy in this country (Rollo, pp. 156- WHEREFORE, the petition for certiorari is GRANTED and the complaint in Civil Case
No. 90-183 against petitioner is DISMISSED.
157). The determination of the executive arm of government that a state or
instrumentality is entitled to sovereign or diplomatic immunity is a political question
that is conclusive upon the courts (International Catholic Migration Commission v. SO ORDERED.
Calleja, 190 SCRA 130 [1990]). Where the plea of immunity is recognized and affirmed
by the executive branch, it is the duty of the courts to accept this claim so as not to Narvasa, C.J., Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug,
embarrass the executive arm of the government in conducting the country's foreign Kapunan and Mendoza, JJ., concur.
relations (World Health Organization v. Aquino, 48 SCRA 242 [1972]).
Padilla, J., took no part, Feliciano, J., is on leave.