EN BANC
[ G.R. No. 101949, December 01, 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.
D E C I S I O N
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 Paranaque, 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 of 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 meter; (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
respondent-employer 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 non-suability 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 resorting 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.
SO ORDERED.Narvasa, C.J., (Chairman), Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, and Mendoza, JJ., concur.
Feliciano, J., on official leave.
Padilla, J., no part.
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