CONSTI TOPIC:

Doctrine of State Immunity/ non-suability of the state/ Acts jure imperii vs. jure gestionis
CASE:
THE HOLY SEE, petitioner,
vs.
THE HON. ERIBERTO U. ROSARIO, JR., as Presiding Judge of the Regional Trial Court of Makati,
Branch 61 and STARBRIGHT SALES ENTERPRISES, INC., respondents.

FACTS:
A parcel of land consisting of 6,000 square meters (Lot 5-A) located in the
Municipality of Paranaque, Metro Manila is registered in the name of the petitioner.
Said Lot 5-A is contiguous to Lots 5-B and 5-D registered in the name of the Philippine
Realty Corporation (PRC).

The three lots were sold to Ramon Licup, through Msgr. Domingo A. Cirilos, Jr., acting
as agent to the sellers. He then assigned his rights to the sale to private respondent.

Because of the refusal of the squatters to vacate the lots, a dispute arose as to who
has the responsibility of evicting and clearing them.

Complicating the relations of the parties was the sale by the petitioner of Lot 5-A to
Tropicana Properties and Development Corporation.
The respondent filed a complaint with the RTC and prayed for the annulment of the
deed of sale of the three parcels of land between the petitioner and the PRC on the
one hand, and Tropicana on the other. Second, the reconveyance of the lots in
question. Third, specific performance of the agreement to sell between it and the
owners of the lots. And fourth, damages against petitioner, represented by Papal
Nuncio and the three defendants namely, Msgr. Cirilos Jr., the PRC and Tropicana.
The petitioner and Msgr. Cirilos separately moved to dismiss the complaint
petitioner for lack of jurisdiction based on sovereign immunity from suit, and Msgr.
Cirilos for being an improper party.
The trial court issued an order denying, among others, petitioner's motion to dismiss
after finding that petitioner "shed off [its] sovereign immunity by entering into the
business contract in question."
The petitioner elevated the matter to the court of appeals invoking the privilege of
sovereign immunity only on its own behalf and on behalf of its official representative,
the Papal Nuncio.

The DFA filed a motion for intervention supporting the petitioners claim of sovereign
immunity.
ISSUES:
1. WON the respondent trial court has jurisdiction over the petitioner, being a foreign
state enjoying sovereign immunity.
2. WON the petitioner has divested itself of such a cloak when, of its own free will, it
entered into a commercial transaction for the sale of a parcel of land located in the
Philippines.
RULING:

1. The trial court has no jurisdiction over the petitioner.

With reference to the history of the Vatican City, The Lateran Treaty established the
statehood of the state "for the purpose of assuring to the Holy See absolute and
visible independence and of guaranteeing to it indisputable sovereignty also in the
field of international relations." Supporting such claims, Republic of the Philippines
has accorded the Holy See the status of a foreign sovereign. This is manifested
wherein Holy See, through its Ambassador, the Papal Nuncio, has had diplomatic
representations with the Philippine government since 1957.
In view thereof, the petitioner enjoys the immunity from suit.
2. No.
The newer or restrictive theory, as opposed to the classical or absolute theory,
stipulates that sovereign immunity is recognized only with regard to public acts or
acts jure imperii of a state but not with regard to private acts or acts jure gestionis.
However, the mere entering into a contract by a foreign state with a private party
cannot be considered as the ultimate test of whether an act is jure imperii or
gestionis. The logical question to is whether the foreign state is engaged in the
activity in the regular course of business. If the foreign state is not engaged regularly
in a business or trade, the particular act or transaction must then be tested by its
nature. If the act is in pursuit of a sovereign activity, or an incident thereof, then it is
an act jure imperii, especially when it is not undertaken for gain or profit.
In the case at bench, if petitioner has bought and sold lands in the ordinary course of
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
disposal of Lot 5-A were made for profit but claimed that it acquired said property for
the site of its mission or the Apostolic Nunciature in the Philippines.
Lot 5-A was acquired by petitioner as a donation from the Archdiocese of Manila. The
donation was made not for commercial purpose, but for the use of petitioner to
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
for the creation and maintenance of its diplomatic mission, is recognized in the 1961
Vienna Convention on Diplomatic Relations (Arts. 20-22). This treaty was concurred in
by the Philippine Senate and entered into force in the Philippines on November 15,
1965.
As for the case of Msgr. Cirilos, according to 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 to private immovable property
situated in the territory of the receiving state which the envoy holds on behalf of the
sending state for the purposes of the mission. If this immunity is provided for a
diplomatic envoy, with all the more reason should immunity be recognized as regards
the sovereign itself, which in this case is the Holy See.

N.B.
The restrictive theory came about because of the entry of sovereign states into purely
commercial activities remotely connected with the discharge of governmental functions.