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.

FACTS

 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 Parañaque,
Metro Manila and registered in the name of petitioner.
 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. ( Starbright)
 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)—another person
 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

RTC GRANTED THE COMPLAINT OF STARBRIGHT

basis :after finding that petitioner "shed off [its] sovereign immunity by entering into the business
contract in question"

PETITION FOR RECONSIDERATION "Motion for a Hearing for the Sole Purpose of Establishing
Factual Allegation for claim of Immunity as a Jurisdictional Defense”. Department of Foreign Affairs filed
for a Motion of Intervention caliming its legal interest on the outcome of the case concerning the
diplomatic immunity of the petitioner.

Petitioner forthwith elevated the matter to Supreme Court

ISSUE:

Whether or not the Holy See can invoke its right to Sovereign Immunity to suit.

RULING:

Yes,

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

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.

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.

However, when the informal settlers refused to leave the property, the petitioner decided to dispose
the property, not for commercial purpose. The DFA intervened as they established in a Memorandum
and Certification the privilege of sovereign immunity of the petitioner, stating that they are a duly
accredited diplomatic mission to the Philippines exempt from local jurisdiction and has title to all rights,
privileges and immunities of a diplomatic mission or embassy in the country. When the plea of immunity
has been recognized by the executive department, such shall be conclusive to courts.

Lot 5-A was acquired by petitioner as a donation from the Archdiocese of Manila. 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 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