CASE DIGEST: CNMEG v SANTAMARIA

FACTS: CNMEG entered into a Contract Agreement with the North Luzon Railways Corporation
regarding the construction of the Northrail Project. Subsequently, a Memorandum of
Understanding between the EXIM Bank (China) and the Department of Finance where China
agreed to extend Preferential Buyers Credit to the Philippine Government for the Northrail Project.
Respondents then filed a civil case against the parties on the basis that the Contract and Loan
Agreement are unconstitutional. RTC Br. 145 issued an order setting the case for hearing. CNMEG
then filed a motion for reconsideration on the grounds that the RTC does not have jurisdiction over
its person because it was an agent of the Chinese government and that it was immune from suit.

ISSUES:

1. WoN CNMEG is entitled to immunity from suit

2. WoN the Contract Agreement is an executive agreement

RULING:

1. CNMEG is not entitled to immunity from suit

Its main purpose when it entered into an agreement in the Philippines was of a proprietary
venture and not one to function with its sovereign powers. An entity must only be granted
immunity from suit if it has acted pursuant to the functions set by its sovereign state.
2. The Contract Agreement is not an executive agreement
An executive agreement is one that allows for it to be regarded as a treaty, subjecting it to
international law. It is clear that when CNMEG and the North Luzon Railways Corporation
entered into agreement, both parties were not recognized as states. To be recognized as
states is a requisite for an executive agreement and in the case at bar, the aforementioned
parties were not.