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Subjects of International Law

EN BANC
[A.M. No. 90-11-2697-CA. June 29, 1992.]
LETTER OF ASSOCIATE JUSTICE REYNATO S. PUNO of the Court of Appeals dated 14
November 1990.
R E S O LUTI O N
PADILLA, J.:
Petitioner Associate Justice Reynato S. Puno, a member of the Court of Appeals, wrote a letter dated 14
November 1990 addressed to this Court, seeking the correction of his seniority ranking in the Court of
Appeals.
It appears from the records that petitioner was first appointed Associate Justice of the Court of Appeals on
20 June 1980 but took his oath of office for said position only on 29 November 1982, after serving as
Assistant Solicitor General in the Office of the Solicitor General since 1974. 1
On 17 January 1983, the Court of Appeals was reorganized and became the Intermediate Appellate Court
pursuant to Batas Pambansa Blg. 129 entitled "An Act Reorganizing the Judiciary. Appropriating Funds
Therefor and For Other Purposes." 2 Petitioner was appointed Appellate Justice in the First Special Cases
Division of the Intermediate Appellate Court. On 7 November 1984, petitioner accepted an appointment
to be ceased to be a member of the Judiciary. 3
The aftermath of the EDSA Revolution in February 1986 brought about a reorganization of the entire
government, including the Judiciary. To effect the reorganization of the Intermediate Appellate Court and
other lower courts, a Screening Committee was created, with the then Minister of Justice, now Senator
Neptali Gonzales as Chairman and then Solicitor General, now Philippine Ambassador to the United
Nations Sedfrey Ordoez as Vice Chairman. President Corazon C. Aquino, exercising legislative powers
by virtue of the revolution, issued Executive Order No. 33 to govern the aforementioned reorganization of
the Judiciary. 4
The Screening Committee recommended the return of petitioner as Associate Justice of the new Court of
Appeals and assigned him the rank of number eleven (11) in the roster of appellate court justices. When
the appointments were signed by President Aquino on 28 July 1986, petitioners seniority ranking
changed, however, from number eleven (11) to number twenty six (26). 5
Petitioner now alleges that the change in his seniority ranking could only be attributed to inadvertence for,
otherwise, it would run counter to the provisions of Section 2 of Executive Order No. 33, which
reads:chanrobles virtual lawlibrary
"SECTION 2. Section 3, Chapter 1 of Batas Pambansa Blg. 129, is hereby amended to read as
follows:jgc:chanrobles.com.ph
"SEC. 2. Organization. There is hereby created a Court of Appeals which shall consist of a Presiding

Justice and fifty Associate Justices who shall be appointed by the President of the Philippines. The
Presiding Justice shall be so designated in his appointment and the Associate Justice shall have
precedence according to the dates of their respective appointments, or when the appointments of two or
more shall bear the same date, according to the order in which their appointments were issued by the
President. Any Member who is reappointed to the Court after rendering service in any other position in
the government shall retain the precedence to which he was entitled under his original appointment, and
his service in the Court shall, for all intents and purpose be considered as continuous and uninterrupted."
6
Petitioner elaborates that President Aquino is presumed to have intended to comply with her own
Executive Order No. 33 so much so that the correction of the inadvertent error would only implement the
intent of the President as well as the spirit of Executive Order No. 33 and will not provoke any kind of
constitutional confrontation (between the President and the Supreme Court). 7
Petitioner points to the case of Justice Oscar Victoriano, former Presiding Justice of the Court of Appeals
who, according to petitioner, was transferred from his position as Justice of the Court of Appeals to the
Ministry of Justice as Commissioner of Land Registration and in 1986 was reappointed to the Court of
Appeals. Petitioner states that his (Victorianos) stint in the Commission of Land Registration did not
adversely affect his seniority ranking in the Court of Appeals, for, in his case, Executive Order No. 33
was correctly applied. 8
In a resolution of the Court en banc dated 29 November 1990, the Court granted Justice Punos request. 9
It will be noted that before the issuance of said resolution, there was no written opposition to, or comment
on petitioners aforesaid request. The dispositive portion of the resolution reads:jgc:chanrobles.com.ph
"IN VIEW WHEREOF, the petition of Associate Justice Reynato S. Puno for correction of his seniority
ranking in the Court of Appeals is granted. The presiding Justice of the Court of Appeals, the Honorable
Rodolfo A. Nocon, is hereby directed to correct the seniority rank of Justice Puno from number twelve
(12) to number five (5). Let copies of this Resolution be furnished the Court Administrator and the
Judicial and Bar Council for their guidance and information." 10
A motion for reconsideration of the resolution of the Court en banc dated 29 November 1990 was later
filed by Associate Justices Jose C. Campos, Jr. and Luis A. Javellana, two (2) of the Associate Justices
affected by the ordered correction. They contend that the present Court of Appeals is a new Court with
fifty one (51) members and that petitioner could not claim a reappointment to a prior court; neither can he
claim that he was returning to his former court, for the courts where he had previously been appointed
ceased to exist at the date of his last appointment. 11
The Court en banc in a resolution dated 17 January 1992 required the petitioner to file his comment on the
motion for reconsideration of the resolution dated 29 November 1990.
In his Comment, petitioner argues that, by virtue of Executive Order No. 33 read in relation to B.P. Blg.
129, his seniority ranking in the Court of Appeals is now number five (5) for, though President Aquino
rose to power by virtue of a revolution, she had pledged at the issuance of Proclamation No. 3 (otherwise
known as the Freedom Constitution) that "no right provided under the unratified 1973 Constitution (shall)
be absent in the Freedom Constitution." 12
Moreover, since the last sentence of Section 2 of Executive Order No. 33 virtually re-enacted the last
sentence of Sec. 3, Chapter 1 of B.P. Blg. 129, statutory construction rules on simultaneous repeal and reenactment mandate, according to petitioner, the preservation and enforcement of all rights and liabilities
which had accrued under the original statute. 13 Furthermore, petitioner avers that, although the power of

appointment is executive in character and cannot be usurped by any other branch of the Government, such
power can still be regulated by the Constitution and by the appropriate law, in this case, by the limits set
by Executive Order NO. 33 14 for the power of appointment cannot be wielded in violation of law. 15
Justices Javellana and Campos were required by the Court to file their reply to Justice Punos comment on
their motion for reconsideration of the resolution of the Court en banc dated 24 January
1991.chanrobles.com:cralaw:red
In their Reply and Supplemental Reply, Associate Justices Javellana and Campos submit that the appeal
or request for correction filed by the petitioner was addressed to the wrong party. They aver that as
petitioner himself had alleged the mistake to be an "inadvertent error" of the Office of the President, ergo,
he should have filed his request for correction also with said Office of the President and not directly with
the Supreme Court. 16 Furthermore, they point out that petitioner had indeed filed with the Office of the
President a request or petition for correction of his ranking, (seniority) but the same was not approved
such that his recourse should have been an appropriate action before the proper court and impleading all
parties concerned. The aforesaid non-approval by the Office of the President they argue, should be
respected by the Supreme Court "not only on the basis of the doctrine of separation of powers but also
their presumed knowledge ability and even expertise in the laws they are entrusted to enforce" 17 for it
(the non-approval) is a confirmation that petitioners seniority ranking at the time of his appointment by
President Aquino was, in fact, deliberate and not an "inadvertent error" as petitioner would have the Court
believe. 18
The resolution of this controversy is not a pleasant task for the Court since it involves not only members
of the next highest court of the land but persons who are close to members of this Court. But the
controversy has to be resolved. The core issue in this case is whether the present Court of Appeals is a
new court such that it would negate any claim to precedence or seniority admittedly enjoyed by petitioner
in the Court of Appeals and Intermediate Appellate Court existing prior to Executive Order No. 33 or
whether the present Court of Appeals is merely a continuation of the Court of Appeals and Intermediate
Appellate Court existing prior to said Executive Order No. 33.
It is the holding of the Court that the present Court of Appeals is a new entity, different and distinct from
the Court of Appeals or the Intermediate Appellate Court existing prior to Executive Order No. 33, for it
was created in the wake of the massive reorganization launched by the revolutionary government of
Corazon C. Aquino in the aftermath of the people power (EDSA) revolution in 1986.
A resolution has been defined as "the complete overthrow of the established government in any country or
state by those who were previously subject to it" 19 or as "a sudden, radical and fundamental change in
the government or political system, usually effected with violence or at least some acts of violence." 20 In
Kelsens book, General Theory of Law and State, it is defined as that which "occurs whenever the legal
order of a community is nullified and replaced by a new order . . . a way not prescribed by the first order
itself." 21
It was through the February 1986 revolution, a relatively peaceful one, and more popularly known as the
"people power revolution" that the Filipino people tore themselves away from an existing regime. This
revolution also saw the unprecedented rise to power of the Aquino government.
From the natural law point of view, the right of revolution has been defined as "an inherent right of a
people to cast out their rulers, change their policy or effect radical reforms in their system of government
or institutions by force or a general uprising when the legal and constitutional methods of making such
change have proved inadequate or are so obstructed as to be unavailable." 22 It has been said that "the
locus of positive law-making power lies with the people of the state" and from there is derived "the right

of the people to abolish, to reform and to alter any existing form of government without regard to the
existing constitution." 23
The three (3) clauses that precede the text of the Provisional (Freedom) Constitution, 24
read:jgc:chanrobles.com.ph
"WHEREAS, the new government under President Corazon C. Aquino was installed through a direct
exercise of the power of the Filipino people assisted by units of the New Armed Forces of the Philippines;
"WHEREAS, the heroic action of the people was done in defiance of the provisions of the 1973
Constitution, as amended;
"WHEREFORE, I, Corazon C. Aquino, President of the Philippines, by virtue of the powers vested in me
by the sovereign mandate of the people, do hereby promulgate the following Provisional
Constitution."25cralaw:red
These summarize the Aquino governments position that its mandate is taken from "a direct exercise of
the power of the Filipino people." 26
Discussions and opinions of legal experts also proclaim that the Aquino government was "revolutionary
in the sense that it came into existence in defiance of the existing legal processes" 27 and that it was a
revolutionary government "instituted by the direct action of the people and in opposition to the
authoritarian values and practices of the overthrown government." 28
A question which naturally comes to mind is whether the then existing legal order was overthrown by the
Aquino government. "A legal order is the authoritative code of a polity. Such code consists of all the rules
found in the enactments of the organs of the polity. Where the state operates under a written constitution,
its organs may be readily determined from a reading of its provisions. Once such organs are ascertained, it
becomes an easy matter to locate their enactments. The rules in such enactments, along with those in the
constitution, comprise the legal order of that constitutional state." 29 It is assumed that the legal order
remains as a "culture system" of the polity as long as the latter endures 30 and that a point may be
reached, however, where the legal system ceases to be operative as a whole for it is no longer obeyed by
the population nor enforced by the officials. 31
It is widely known that Mrs. Aquinos rise to the presidency was not due to constitutional processes; in
fact, it was achieved in violation of the provisions of the 1973 Constitution as a Batasang Pambansa
resolution had earlier declared Mr. Marcos at the winner in the 1986 presidential election. 32 Thus it can
be said that the organization of Mrs. Aquinos Government which was met by little resistance and her
control of the state evidenced by the appointment of the Cabinet and other key officers of the
administration, the departure of the Marcos Cabinet officials, revampt of the Judiciary and the Military
signalled the point where the legal system then in effect, had ceased to be obeyed by the Filipino.
The Court holds that the Court of Appeals and Intermediate Appellate Court existing prior to Executive
Order No. 33 phased out as part of the legal system abolished by the revolution and that the Court of
Appeals established under Executive Order No. 33 was an entirely new court with appointments thereto
having no relation to earlier appointments to the abolished courts, and that the reference to precedence in
rank contained in the last sentence of Sec. 2, BP Blg. No. 129 as amended by Executive Order No. 33
refers to prospective situations as distinguished from retroactive ones.
But even assuming, arguendo, that Executive Order No. 33 did not abolish the precedence or seniority
ranking resulting from previous appointment to the Court of Appeals or Intermediate Appellate Court

existing prior to the 1986 revolution, it is believed that President Aquino as head of then revolutionary
government, could disregard or set aside such precedence or seniority in ranking when she made her
appointments to the reorganized Court of Appeals in 1986.
It is to be noted that, at the time of the issuance of Executive Order No. 33, President Aquino was still
exercising the powers of a revolutionary government, encompassing both executive and legislative
powers, such that she could, if she so desired, amend, modify or repeal any part of B.P. Blg. 129 or her
own Executive Order No. 33. It should also be remembered that the same situation was still in force when
she issued the 1986 appointments to the Court of Appeals. In other words, President Aquino, at the time
of the issuance of the 1986 appointments, modified or disregarded the rule embodied in B.P. Blg. 129 as
amended by Executive Order No. 33, on precedence or seniority in the case of the petitioner, for reasons
known only to her. Since the appointment extended by the President to the petitioner in 1986 for
membership in the new Court of Appeals with its implicit ranking in the roster of justices, was a valid
appointment anchored on the Presidents exercise of her then revolutionary powers, it is not for the Court
at this time to question or correct that exercise.
ACCORDINGLY, the Court GRANTS the Motion for Reconsideration and the seniority rankings of
members of the Court of Appeals, including that of the petitioner, at the time the appointments were made
by the President in 1986, are recognized and upheld.
SO ORDERED.

G.R. No. 101949 December 1, 1994


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.
Padilla Law Office for petitioner.
Siguion Reyna, Montecillo & Ongsiako for private respondent.

QUIASON, J.:
This is a petition for certiorari under Rule 65 of the Revised Rules of Court to reverse and set aside the
Orders dated June 20, 1991 and September 19, 1991 of the Regional Trial Court, Branch 61, Makati,
Metro Manila in Civil Case No. 90-183.
The Order dated June 20, 1991 denied the motion of petitioner to dismiss the complaint in Civil Case No.
90-183, while the Order dated September 19, 1991 denied the motion for reconsideration of the June
20,1991 Order.
Petitioner is the Holy See who exercises sovereignty over the Vatican City in Rome, Italy, and is
represented in the Philippines by the Papal Nuncio.
Private respondent, Starbright Sales Enterprises, Inc., is a domestic corporation engaged in the real estate
business.
This petition arose from a controversy over a parcel of land consisting of 6,000 square meters (Lot 5-A,
Transfer Certificate of Title No. 390440) located in the Municipality of Paraaque, Metro Manila and
registered in the name of petitioner.
Said Lot 5-A is contiguous to Lots 5-B and 5-D which are covered by Transfer 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, through Msgr. Domingo A. Cirilos, Jr., acting as agent to the
sellers. Later, Licup assigned his rights to the sale to private respondent.
In view of the refusal of the squatters to vacate the lots sold to private respondent, a dispute arose as to
who of the parties has the responsibility of evicting and clearing 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 (Tropicana).
I

On January 23, 1990, private respondent filed a complaint with the Regional Trial Court, Branch 61,
Makati, Metro Manila for annulment of the sale of the three parcels of land, and specific performance and
damages against petitioner, represented by the Papal Nuncio, and three other defendants: namely, Msgr.
Domingo
A.
Cirilos,
Jr.,
the
PRC
and
Tropicana
(Civil
Case
No.
90-183).
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 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 the sellers clear the said lots of squatters who were then occupying the same; (3) Licup
paid the earnest money to Msgr. Cirilos; (4) in the same month, Licup assigned 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 sellers fulfill their undertaking and clear the property of
squatters; however, Msgr. Cirilos informed private respondent of the squatters' refusal to vacate the lots,
proposing instead either that private respondent undertake the eviction or that the earnest money be
returned to the latter; (6) private respondent counterproposed that if it would undertake the eviction of the
squatters, the purchase price of the lots 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 seven
days from receipt of the letter to pay the original purchase price in cash; (8) 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 respondent, sold the lots to Tropicana, as evidenced by two separate Deeds of
Sale, one over Lot 5-A, and another over Lots 5-B and 5-D; and that the sellers' transfer 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 and thus enriched itself at the expense of private respondent;
(10) private respondent demanded the rescission of the sale to Tropicana and the reconveyance of the lots,
to no avail; and (11) private respondent is willing and able 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.
Private respondent thus prayed for: (1) the annulment of the Deeds of Sale between petitioner and the
PRC on the one hand, and Tropicana on the other; (2) the reconveyance of the lots in question; (3)
specific performance of the agreement to sell between it and the owners of the lots; and (4) damages.
On June 8, 1990, 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.
An opposition to the motion was filed by private respondent.
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 entering into the business contract in
question" (Rollo, pp. 20-21).
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 Factual Allegation for claim of Immunity as
a Jurisdictional Defense." So as to facilitate the determination of its defense of sovereign immunity,

petitioner prayed that a hearing be conducted to allow it to establish certain facts upon which the said
defense is based. Private respondent opposed this motion as well as the motion for reconsideration.
On October 1, 1991, the trial court issued an order deferring the resolution on the motion for
reconsideration until after trial on the merits and directing petitioner to file its answer (Rollo, p. 22).
Petitioner forthwith elevated the matter to us. In its petition, petitioner invokes the privilege of sovereign
immunity only on its own behalf and on behalf of its official representative, the Papal Nuncio.
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 the case as regards the diplomatic immunity
of petitioner, and that it "adopts by reference, the allegations contained in the petition of the Holy See
insofar as they refer to arguments relative to its claim of sovereign immunity from suit" (Rollo, p. 87).
Private respondent opposed the intervention of the Department of Foreign Affairs. In compliance with the
resolution of this Court, both parties and the Department of Foreign Affairs submitted their respective
memoranda.
II
A preliminary matter to be threshed out is the procedural issue of whether the petition for certiorari under
Rule 65 of the Revised Rules of Court can be availed of to question the order denying petitioner's motion
to dismiss. The general rule is that 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 the trial
court. But the general rule admits of exceptions, and one of these is when it is very clear in the records
that the trial court has no alternative but to dismiss the complaint (Philippine National Bank v. Florendo,
206 SCRA 582 [1992]; Zagada v. Civil 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.
The other procedural question raised by private respondent is the personality or legal interest of the
Department of Foreign Affairs to intervene in the case in behalf of the Holy See (Rollo, pp. 186-190).
In Public International Law, when a state or international agency wishes to plead sovereign or diplomatic
immunity in a foreign court, it requests the Foreign Office of the state where it is sued to convey to the
court that said defendant is entitled to immunity.
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 the Secretary of State to make a
determination as to whether it is entitled to immunity. If the Secretary of State finds that the defendant is
immune from suit, he, 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 the Foreign Office
issues a certification to that effect instead of submitting a "suggestion" (O'Connell, I International Law
130 [1965]; Note: Immunity from Suit of Foreign Sovereign Instrumentalities and Obligations, 50 Yale
Law Journal 1088 [1941]).

In the Philippines, the practice is for the foreign government or the international organization to first
secure an executive endorsement of its claim of sovereign or diplomatic immunity. But how the
Philippine Foreign Office conveys its endorsement to the courts varies. In International Catholic
Migration Commission v. Calleja, 190 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 respondentemployer could not be sued because it enjoyed diplomatic immunity. In World Health Organization v.
Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court a telegram to that
effect. In Baer v. Tizon, 57 SCRA 1 (1974), the U.S. Embassy asked the Secretary of Foreign Affairs to
request the Solicitor General to make, in behalf of the Commander of the United States Naval Base at
Olongapo City, Zambales, a "suggestion" to respondent Judge. The Solicitor General embodied the
"suggestion" in a Manifestation and Memorandum as amicus curiae.
In the case at bench, the Department of Foreign Affairs, through the Office of Legal Affairs moved with
this Court to be allowed to intervene on the side of petitioner. The Court allowed the said Department to
file its memorandum in support of petitioner's claim of sovereign immunity.
In some cases, the defense of sovereign immunity was submitted directly to the local courts by the
respondents through their private counsels (Raquiza v. Bradford, 75 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 cases where the foreign states bypass the Foreign Office, the courts can
inquire into the facts and make their own determination as to the nature of the acts and transactions
involved.
III
The burden of the petition is that respondent trial court has no jurisdiction over petitioner, being a foreign
state enjoying sovereign immunity. On the other hand, private respondent insists that the doctrine of nonsuability is not anymore absolute and that 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.
A. The Holy See
Before we determine the issue of petitioner's non-suability, a brief look into its status as a sovereign state
is in order.
Before the annexation of the Papal States by Italy in 1870, the Pope was the monarch and he, as the Holy
See, was considered a subject of International Law. With the loss 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 (Salonga and Yap, Public International Law 36-37 [1992]).
In 1929, Italy and the Holy See entered into the Lateran Treaty, where Italy 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 to International Law (Garcia, Questions and Problems In International Law, Public and
Private 81 [1948]).
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 indisputable sovereignty also in the field
of international relations" (O'Connell, I International Law 311 [1965]).
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 suggested that the treaty created two
international persons the Holy See and Vatican City (Salonga and Yap, supra, 37).
The Vatican City fits into none of the established categories of states, and the attribution to it of
"sovereignty" must be made in a sense different from that in which it is applied to other states (Fenwick,
International Law 124-125 [1948]; Cruz, 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
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 Church, as the Holy See or Head of State, in
conformity with its traditions, and the demands of its mission in the world. Indeed, the world-wide
interests and activities of the Vatican City are such as to make it in a sense an "international state"
(Fenwick, supra., 125; Kelsen, Principles of International Law 160 [1956]).
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 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 Law 308 [1952]).
Inasmuch as the Pope prefers to conduct foreign relations and enter into transactions as the Holy See and
not in the name of the Vatican City, one can conclude that in the Pope's own view, it is the Holy See that
is the international person.
The Republic of the Philippines has accorded the Holy See the status of a foreign sovereign. The Holy
See, through its Ambassador, the Papal Nuncio, has had diplomatic representations with the Philippine
government since 1957 (Rollo, p. 87). This appears to be the universal practice in international relations.
B. Sovereign Immunity
As expressed in Section 2 of Article II of the 1987 Constitution, we have adopted the generally accepted
principles of International Law. Even without this affirmation, such principles of International Law are
deemed incorporated as part of the law of the land as a condition and consequence of our admission in the
society of nations (United States of America v. Guinto, 182 SCRA 644 [1990]).
There are two conflicting concepts of sovereign immunity, each widely held and firmly established.
According to the classical or absolute theory, a sovereign cannot, without its consent, be made a
respondent in the courts of another sovereign. According to the newer or restrictive theory, the immunity
of the sovereign 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
(United States of America v. Ruiz, 136 SCRA 487 [1987]; Coquia and Defensor-Santiago, Public
International Law 194 [1984]).
Some states passed legislation to serve as guidelines for the executive or judicial determination when an
act may be considered as jure gestionis. The United States passed the Foreign Sovereign Immunities Act
of 1976, which defines a commercial 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
the activity shall be determined by reference to the nature of the course of conduct or particular
transaction or act, rather than by reference to its purpose." The Canadian Parliament enacted in 1982 an
Act to Provide For State Immunity in Canadian Courts. The Act defines a "commercial activity" as any
particular transaction, act or conduct or any regular course of conduct that by reason of its nature, is of a
"commercial character."
The restrictive theory, which is intended to be a solution to the host of problems 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 difficulty in characterizing whether a contract of a sovereign state with a
private party is an act jure gestionis or an act jure imperii.
The restrictive theory came about because of the entry of sovereign states into purely commercial
activities remotely connected with the discharge of governmental functions. This is particularly true with
respect to the Communist states which took control of nationalized business activities and international
trading.
This Court has considered the following transactions by a foreign state with private parties as acts jure
imperii: (1) the lease by a foreign government of apartment buildings for use of its military officers
(Syquia v. Lopez, 84 Phil. 312 [1949]; (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
status of base employees (Sanders v. Veridiano, 162 SCRA 88 [1988]).
On the other hand, this Court has considered the following transactions by a foreign state with private
parties as acts jure gestionis: (1) the hiring of a cook in the 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 American servicemen and the general public (United States of America v.
Rodrigo, 182 SCRA 644 [1990]); and (2) the bidding for the operation of barber shops in Clark Air Base
in Angeles City (United States of America v. Guinto, 182 SCRA 644 [1990]). The operation of the
restaurants and other facilities open to the general public is undoubtedly for profit as a commercial and
not a governmental activity. By entering into the employment contract with the cook in the discharge of
its proprietary function, the United States government impliedly divested itself of its sovereign immunity
from suit.
In the absence of legislation defining what activities and transactions shall be considered "commercial"
and as constituting acts jure gestionis, we have to come out with our own guidelines, tentative they may
be.

Certainly, the mere entering into a contract by a foreign state with a private party cannot be the ultimate
test. Such an act can only be the start of the inquiry. The logical question 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.
As held in United States of America v. Guinto, (supra):
There is no question that the United States of America, like any other state, will be
deemed to have impliedly waived its non-suability if it has entered into a contract in its
proprietary or private capacity. It is only when the contract involves its sovereign or
governmental capacity that no such waiver may be implied.
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. Private
respondent failed to dispute said claim.
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.
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 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.
The decision to transfer the property and the subsequent disposal thereof are likewise clothed with a
governmental
character.
Petitioner
did
not
sell
Lot
5-A for profit or gain. It merely wanted to dispose off the same because the squatters living thereon made
it almost impossible for petitioner to use it for the purpose of the donation. The fact that squatters have
occupied and are still occupying the lot, and that they stubbornly refuse to leave the premises, has been
admitted by private respondent in its complaint (Rollo, pp. 26, 27).
The issue of petitioner's non-suability can be determined by the trial court without 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 established by the Memorandum and Certification of the
Department of Foreign Affairs. As the department tasked with the conduct of the Philippines' foreign

relations (Administrative Code of 1987, Book IV, Title I, Sec. 3), the Department of Foreign Affairs has
formally intervened in this case and officially certified that the 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. 156-157). 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. 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 embarrass the executive arm of the government in conducting the country's foreign
relations (World Health Organization v. Aquino, 48 SCRA 242 [1972]). As in International Catholic
Migration Commission and in World Health Organization, we abide by the certification of the
Department of Foreign Affairs.
Ordinarily, the procedure would be to remand the case and order the trial court to conduct a hearing to
establish the facts alleged by petitioner in its motion. In view of said certification, such procedure would
however be pointless and unduly circuitous (Ortigas & Co. Ltd. Partnership v. Judge Tirso Velasco, G.R.
No. 109645, July 25, 1994).
IV
Private respondent is not left without any legal remedy for the redress of its grievances. Under both
Public International Law and Transnational Law, a person who feels aggrieved by the acts of a foreign
sovereign can ask his own government to espouse his cause through diplomatic channels.
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 government to take up with the Holy See
the validity of its claims. Of course, the Foreign Office shall first make a determination of the impact of
its espousal on the relations between the Philippine government and the Holy See (Young, Remedies of
Private Claimants Against Foreign States, Selected Readings on Protection by Law of Private Foreign
Investments 905, 919 [1964]). Once the Philippine government decides to espouse the claim, the latter
ceases to be a private cause.
According to the Permanent Court of International Justice, the forerunner of the International Court of
Justice:
By taking up the case of one of its subjects and by reporting to diplomatic action or
international judicial proceedings on his behalf, a State is in reality asserting its own
rights its right to ensure, in the person of its subjects, respect for the rules of
international law (The Mavrommatis Palestine Concessions, 1 Hudson, World Court
Reports 293, 302 [1924]).
WHEREFORE, the petition for certiorari is GRANTED and the complaint in Civil Case No. 90-183
against petitioner is DISMISSED.

AWYERS LEAGUE FOR A BETTER PHILIPPINES AND/OR OLIVER A. LOZANO VS.


PRESIDENT CORAZON C. AQUINO, ET AL.
G.R. No. 73748, May 22, 1986

FACTS:
On February 25, 1986, President Corazon Aquino issued Proclamation No. 1
announcing that she and Vice President Laurel were taking power. On March 25,
1986, proclamation No.3 was issued providing the basis of the Aquino government
assumption of power by stating that the "new government was installed through a
direct exercise of the power of the Filipino people assisted by units of the New
Armed Forces of the Philippines."

ISSUE:
Whether or not the government of Corazon Aquino is legitimate.

HELD:
Yes. The legitimacy of the Aquino government is not a justiciable matter but belongs
to the realm of politics where only the people are the judge. The Court further held
that the people have accepted the Aquino government which is in effective control
of the entire country. It is not merely a de facto government but in fact and law a de
jure government. The community of nations has recognized the legitimacy of the
new government.

PEOPLE OF THE PHILIPPINE ISLANDS vs. GREGORIO PERFECTO (43 Phil 887) Case
Digest
Facts:
On September 7, 1920, Mr. Gregorio Perfecto published an article in the newspaper
La Nacion regarding the disappearance of certain documents in the Office of
Fernando M. Guerrero, the Secretary of the Philippine Senate. The article of Mr.
Perfecto suggested that the difficulty in finding the perpetrators was due to an
official concealment by the Senate since the missing documents constituted the
records of testimony given by witnesses in the investigation of oil companies. This
resulted to a case being filed against Mr. Perfecto for violation of Article 256 of the
Penal Code. He was found guilty by the Municipal Trial Court and again in the Court
of First Instance of Manila. Mr. Perfecto filed an appeal in the Supreme Court to
dismiss the case on the ground that Article 256 was not in force anymore.
Issue:
Will a law be abrogated by the change of Spanish to American Sovereignty over the
Philippines?
Ruling:
The Supreme Court held that Article 256 of the Spanish Penal Code was enacted by
the Government of Spain to protect Spanish officials who were representative of the
King. With the change of sovereignty, a new government, and a new theory of
government, was set up in the Philippines. It was no sense a continuation of the old
laws. No longer is there a Minister of the Crown or a person in authority of such
exalted position that the citizen must speak of him only in bated breath.
The crime of lese majeste disappeared in the Philippines with the ratification of the
Treaty of Paris. Ministers of the Crown have no place under the American flag.
Judgement is REVERED and the defendant and appellant ACQUITTED.

Great Britain v Costa Rica, (1923) 1 RIAA 369


Facts:
Government of Costa Rica was overthrown and the new government passed a law invalidating
all Ks and made a new Constitution. When this government fell Great Britain sued Costa Rica
for debts. Costa Rica's new government claims no responsibility for what the old government
did.
Great Britain says that Tinoco (the head of the old government) was the government de facto and
de jur Cost Rica says Tinoco wasnt a government in international law.
Tinoco contracted a lot of foreign debt while running Costa Rica, including with Great Britain.
Ratio:
Even an illegal government may bind a state to international obligations. International law looks
to the State, not the gov entity w/in the state.
Caveat: when government in power contrary to international law, not just domestic law, then
doctrine of state continuity will not generally apply
Analysis:
Tinoco was a sovereign government. Even though some sates did not recognize it that cannot
outweigh the evidence disclosed that de facto it was a government.
The question is not if the government abides by a constitution but is: Has it established itself in
such a way that all w/in the its influence recognize its control, and that there is no opposing force
assuming to be a gov in its place
As long a it is the effective government of the state it is the government of the state. Debts
owed are not owed by the government of the day but between the state the only legal entity that
is relevant is the state.
Holding:
Great Britain was able to sustain a claim against Costa Rica because the Ks were made with
Costa Rica not Tinoco.

Tinoco Claims Arbitration (Great Britain v. Costa Rica) case brief


Tinoco Claims Arbitration (Great Britain v. Costa Rica)
(1923) 1 R.I.A.A. 369
Procedural History:
Arbitration of contract repudiation.
Overview:
Great Britain (P) claimed that the former government of Costa Rica (D), the Tinoco regime, had
granted oil concessions to a British company that had to be honored by the present regime. The
Tinoco regime had seized power in Costa Rica by coup. Great Britain (P) and the United States
never recognized the Tinoco regime. When the Tinoco regime fell, the restored government
nullified all Tinoco contracts, including an oil concession to a British company. Great Britain (P)
claimed that the Tinoco government was the only government in existence at the time the
contract was signed and its acts could not be repudiated. Costa Rica (D) claimed that Great
Britain (P) was estopped from enforcing the contract by its nonrecognition of the Tinoco regime.
The matter was sent for arbitration.
Issue:
Does nonrecognition of a new government by other governments destroy the de facto status of
the government?
Rule:
-A government that establishes itself and maintains a peaceful de facto administration need not to
conform to previous constitution and nonrecognition of the govt. by other govt.s does not
destroy the de facto status of the govt.
Analysis:
The arbitrator found there was no estoppel. The evidence of nonrecognition did not outweigh the
evidence of the de facto status of the Tinoco regime. Unrecognized governments thus may have
the power to form valid contracts.
Outcome:
No. A government that establishes itself and maintains a peaceful de facto administration need
not conform to a previous constitution and nonrecognition of the govern ment by other
governments does not destroy the de facto status of the government. Great Britain's (P)
nonrecognition of the Tinoco regime did not dispute the de facto existence of that regime. There
was no estoppel since the successor government had not been led by British nonrecognition to
change its position.

G.R. No. 152154 July 15, 2003REPUBLIC OF THE PHILIPPINES vs.HONORABLE


SANDIGANBAYAN(SPECIAL FIRST DIVISION),Ferdinand E. Marcos (representedby his
estate/heirs: Imelda R.Marcos, Maria Imelda [Imee]Marcos-Manotoc, Ferdinand R.Marcos, Jr.
and Irene Marcos-Araneta) and Imelda Romualdez Marcos
FACTS:
P e t i t i o n e r R e p u b l i c , t h r o u g h t h e Presidential Commission on Good
Government( P C G G ) , r e p r e s e n t e d b y t h e O f f i c e o f t h e S o l i c i t o r G e n e r a l
( O S G ) , f i l e d a p e t i t i o n f o r forfeiture before the Sandiganbayan. Petitioner s o u g h t
t h e d e c l a r a t i o n o f t h e a g g r e g a t e amount of US$356 million (now
estimated tob e m o r e t h a n U S $ 6 5 8 m i l l i o n i n c l u s i v e o f interest) deposited in
escrow in the PNB, as ill-gotten wealth. The funds were previously heldb y t h e f o l l o w i n g
five account groups, usingvarious foreign foundations in certain
S w i s s b a n k s . I n a d d i t i o n , t h e p e t i t i o n s o u g h t t h e forfeiture of US$25 million and
US$5 million int r e a s u r y n o t e s w h i c h e x c e e d e d t h e M a r c o s couples salaries, other
lawful income as wella s i n c o m e f r o m l e g i t i m a t e l y
a c q u i r e d property.T h e t r e a s u r y n o t e s a r e f r o z e n a t t h e Central Bank of the
Philippines by virtue of thefreeze order issued by the PCGG. Before the case was set for
pre-trial, a General Agreementa n d t h e S u p p l e m e n t a l A g r e e m e n t
d a t e d December 28, 1993 were executed by the M a r c o s c h i l d r e n a n d
t h e n P C G G C h a i r m a n Magtanggol Gunigundo for a global settlementof the assets of
the Marcos family to identify,collate, cause the inventory of and distribute all assets
presumed to be owned by the Marcosfamily under the conditions contained therein.ISSUE:
WON the Swiss funds can be forfeited i n f a v o r o f t h e R e p u b l i c , o n t h e b a s i s o f
t h e Marcoses lawful income.HELD: NO.R A 1 3 7 9 r a i s e s t h e p r i m a
f a c i e p r e s u m p t i o n t h a t a p r o p e r t y i s u n l a w f u l l y acquired, hence
s u b j e c t t o f o r f e i t u r e , i f i t s amount or value is manifestly disproportionateto the official
salary and other lawful income of the public officer who owns it. The following f a c t s
m u s t b e e s t a b l i s h e d i n o r d e r t h a t forfeiture or seizure of the Swiss deposits
maybe effected: (1) ownership by the public officero f m o n e y o r p r o p e r t y a c q u i r e d
d u r i n g h i s i n c u m b e n c y, w h e t h e r i t b e i n h i s n a m e o r otherwise, and
( 2 ) t h e e x t e n t t o w h i c h t h e amount of that money or property exceeds, i.e . , i s
g r o s s l y d i s p r o p o r t i o n a t e t o , t h e legitimate income of the public officer.
Herein,t h e s p o u s e s F e r d i n a n d a n d I m e l d a M a r c o s were public officials during the
time material tothe present case was never in dispute.T h e s p o u s e s a c c u m u l a t e d
s a l a r y o f $304,372.43 should be held as the only knownlawful income of the Marcoses
since they didnot file any Statement of Assets and Liabilities(SAL), as required by law, from
which their networth could be determined. Besides, under the1 9 3 5 C o n s t i t u t i o n ,
Ferdinand E. Marcos asP r e s i d e n t c o u l d n o t r e c e i v e " a n y
o t h e r emolument from the Government or any of itssubdivisions and instrumentalities".
Likewise,u n d e r t h e 1 9 7 3 C o n s t i t u t i o n , F e r d i n a n d E . Marcos as President could
"not receive duringh i s t e n u r e a n y o t h e r e m o l u m e n t f r o m t h e Government or
any other source."T h e i r o n l y k n o w n l a w f u l i n c o m e o f $304,372.43 can
therefore legally and fairlyserve as basis for determining the existence of a p r i m a f a c i e
c a s e o f f o r f e i t u r e o f t h e S w i s s funds. The Republic did not fail to establish
aprima facie case for the forfeiture of the Swissdeposits.T h e S w i s s d e p o s i t s
w h i c h w e r e transferred to and are deposited in escrow atthe Philippine

National Bank in the estimatedaggregate amount of US$658,175,373.60 as of 31 January


2002, plus interest, were forfeited in favor of the Republic,

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