DIGESTS
, as Presiding
World Health Organization v. Aquino 48 SCRA 243
Facts:
Herein petitioner, in behalf of Dr. Verstuyft, was allegedly suspected
by the Constabulary Offshore Action Center (COSAC) officers of
carrying dutiable goods under the Customs and Tariff Code of the
Philippines. Respondent Judge then issued a search warrant at the
instance of the COSAC officers for the search and seizure of the
personla effects of Dr. Verstuyft notwithstanding his being entitled to
diplomatic immunity, as duly recognized by the Executive branch of
the government.
The Secretary of Foreign Affairs Carlos P. Romulo advised the
respondent judge that Dr. Verstuyft is entitled to immunity from
search in respect for his personal baggage as accorded to members
of diplomatic missions pursuant to the Host Agreement and further
requested for the suspension of the search warrant. The Solicitor
General accordingly joined the petitioner for the quashal of the
search warrant but respondent judge nevertheless summarily denied
the quashal.
Issue:
Whether or not personal effect of WHO Officer Dr. Verstuyft can be
exempted from search and seizure under the diplomatic immunity.
Ruling:
The executive branch of the Phils has expressly recognized that
Verstuyft is entitled to diplomatic immunity, pursuant to the provisions
of the Host Agreement. The DFA formally advised respondent judge
of the Philippine Government's official position. The Solicitor General,
as principal law officer of the gorvernment, likewise expressly
affirmed said petitioner's right to diplomatic immunity and asked for
the quashal of the search warrant.
It recognized principle of international law and under our system of
separation of powers that diplomatic immunity is essentially a political
question and courts should refuse to look beyond a determination by
the executive branch of government, and where the plea of
diplomatic immunity is recognized by the executive branch of the
government as in the case at bar, it is then the duty of the courts to
accept the claim of immunity upon appropriate suggestion by the
principal law officer of the government, the Solicitor General in this
case, or other officer acting under his discretion. Courts may not so
exercise their jurisdiction by seizure and detention of property, as to
embarass the executive arm of the government in conducting foreign
relations.
The Court, therefore, holds the respondent judge acted without
jurisdiction and with grave abuse of discretion in not ordering the
quashal of the search warrant issued by him in disregard of the
diplomatic immunity of petitioner Verstuyft.
THE HOLY SEE vs. THE HON. ERIBERTO U. ROSARIO, JR.
Judge of the Regional Trial Court of Makati,Branch 61 and STARBRIGHT
SALESENTERPRISES, INC.
FACTS:
This petition arose from a controversy over a parcel of land, Lot 5-A,
located in the Municipality of Parañaque, Metro Manila and
registered in the name of petitioner. Said Lot5-A is contiguous to
Lots5-B and 5-Dregistered 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,
Starbright Enterprises. The squatters refused to vacate the lots sold
to private respondent so a dispute arose as to who of the parties has
the responsibility of evicting and clearing the land of squatters
occurred. Complicating the relations of the parties was the sale by
petitioner of Lot 5-A to Tropicana Properties and Development
Corporation (Tropicana).Private respondent filed a complaint 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.
ISSUE:
WON (whether or not) the petitioner Holy See is immune from suit.
HELD:
YES. 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.Lot5-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. 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 envo yholds 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.
SALIENT POINTS:
There are two conflicting concepts of sovereign immunity, according
to the Supreme Court: (a) Classical or absolute theory
—
a sovereign cannot, without its consent, be made a respondent in the
courts of another sovereign; and (b) Restrictive theory
—
the immunity of the sovereign is recognized only with regard to public
acts or acts jure imperii (public acof a state, but not with regard to
private acts or acts jure gestionis. JURE IMPERII AND JURE
GESTIONIS. - "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 act or acts jure gestionis. x x x
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." The service contracts referred to by private respondent have
not been intended by the ADB for profit or gain but are official acts
over which a waiver of immunity would not attach. How does the
Philippine government treat the Holy See or Vatican?
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. This appears to be the universal practice in international
relations. What is the treaty that governs the sovereign immunity of
diplomats and other state agents?
The Vienna Convention on Diplomatic Relations, which was ratified
on 18 April 1961, is a codification of centuries-old customary law
affording protection to foreign diplomats. The Convention lists the
classes of heads of diplomatic missions to include(a) ambassadors
or nuncios accredited to the heads of state,(b) envoys, ministers or
internuncios accredited to the heads of states; and (c) charges d’
affairs accredited to the ministers of foreign affairs. Comprising the “staff of the
(diplomatic) mission” are the diplomatic staff, the administrative staff and the technical
and service staff.
Par in parem imperium non habet
. An equal has no power over an equal. Jenk. Cent. 174.Example:
One of two judges of the same court cannot commit the other
for contempt.
KHOSROW MINUCHER, petitioner, vs. HON. COURT OF
APPEALS and ARTHUR SCALZO, respondents
FACTS:
Khosrow Minucher, an Iranian national and a Labor Attaché for the
Iranian Embassies in Tokyo, Japan and Manila came to the country
to study in 1974 and continued to stay as head of the Iranian
National Resistance Movement.
In May 1986, Minucher was charged with an Information for violation
of Republic Act No. 6425, Dangerous Drugs Act of 1972. The
criminal charge followed a “buy-bust operation” conducted by the
Philippine police narcotic agents in his house where a quantity of
heroin was said to have been seized. The narcotic agents were
accompanied by private respondent Arthur Scalzo who became one
of the principal witnesses for the prosecution.
In August 1988, Minucher filed Civil Case before the Regional Trial
Court (RTC) for damages on the ‘trumped-up’ charges of drug
trafficking made by Arthur Scalzo.
ISSUE:
WON private respondent Arthur Scalzo can be sued provided his
alleged diplomatic immunity conformably with the Vienna Convention
on Diplomatic Relations
RULING:
The SC DENIED the petition.
Conformably with the Vienna Convention, the functions of the
diplomatic mission involve, the representation of the interests of the
sending state and promoting friendly relations with the receiving
state. Only “diplomatic agents,” are vested with blanket diplomatic
immunity from civil and criminal suits. Indeed, the main yardstick in
ascertaining whether a person is a diplomat entitled to immunity is
the determination of whether or not he performs duties of diplomatic
nature. Being an Attache, Scalzo’s main function is to observe,
analyze and interpret trends and developments in their respective
fields in the host country and submit reports to their own ministries or
departments in the home government. He is not generally regarded
as a member of the diplomatic mission. On the basis of an erroneous
assumption that simply because of the diplomatic note, divesting the
trial court of jurisdiction over his person, his diplomatic immunity is
contentious.
Under the related doctrine of State Immunity from Suit, the precept
that a State cannot be sued in the courts of a foreign state is a long-
standing rule of customary international law. If the acts giving rise to
a suit are those of a foreign government done by its foreign agent,
although not necessarily a diplomatic personage, but acting in his
official capacity, the complaint could be barred by the immunity of the
foreign sovereign from suit without its consent. Suing a
representative of a state is believed to be, in effect, suing the state
itself. The proscription is not accorded for the benefit of an individual
but for the State, in whose service he is, under the maxim – par in
parem, non habet imperium – that all states are sovereign equals
and cannot assert jurisdiction over one another. The implication is
that if the judgment against an official would require the state itself to
perform an affirmative act to satisfy the award, such as the
appropriation of the amount needed to pay the damages decreed
against him, the suit must be regarded as being against the state
itself, although it has not been formally impleaded
A foreign agent, operating within a territory, can be cloaked with
immunity from suit but only as long as it can be established that he is
acting within the directives of the sending state. The consent of the
host state is an indispensable requirement of basic courtesy between
the two sovereigns.
The “buy-bust operation” and other such acts are indication that the
Philippine government has given its imprimatur, if not consent, to the
activities within Philippine territory of agent Scalzo of the United
States Drug Enforcement Agency. In conducting surveillance
activities on Minucher, later acting as the poseur-buyer during the
buy-bust operation, and then becoming a principal witness in the
criminal case against Minucher, Scalzo hardly can be said to have
acted beyond the scope of his official function or duties.
G.R. No. 125865 January 28, 2000
JEFFREY LIANG (HUEFENG), petitioner,vs.
PEOPLE OF THE PHILIPPINES, respondent.
FACTS:
Petitioner is an economist working with the Asian Development Bank.
Sometime in 1994,for allegedly uttering defamatory words against
fellow ADB worker Joyce Cabal, he was charged before the
Metropolitan Trial Court of Mandaluyong City with two counts of
grave oral defamation.
Petitioner was arrested by virtue of a warrant issued by the MeTC. MeTC Judge
received an “office of protocol” from the Department of Foreign Affairs stating that
petitioner is covered by immunity from legal process under Section 45 of the
Agreement between the ADB and the Philippine Government
regarding the Headquarters of the ADB in the country. The MeTC
judge without notice to the prosecution dismissed the case based
from the said protocol. The latter filed a motion for reconsideration
which was opposed by the DFA. When its motion was denied, the
prosecution filed a petition for certiorari and mandamus with the RTC
of Pasig City which set aside the MeTC rulings and ordered the latter
court to enforce the warrant of arrest it earlier issued. After the
motion for reconsideration was denied, petitioner elevated the case
to this court via a petition for review arguing that he is covered by
immunity under the Agreement and that no preliminary investigation
was held before the criminal cases were filed in court.
ISSUE:
Whether immunity invoked by DFA for ADB employees based on the
Agreement is cognizable in our courts.
HELD:
The immunity mentioned therein is not absolute, but subject to the
exception that the act was done in “official capacity.” The prosecution should
have been given the chance to rebut the DFA protocol and it must
be accorded the opportunity to present its controverting evidence.
Slandering a person could not possibly be covered by the immunity
agreement because our laws do not allow the commission of a crime,
such as defamation, in the name of official duty. It is a well-settled
principle of law that a public official may be liable in his personal
private capacity for whatever damage he may have caused by his act
done with malice or in bad faith or beyond the scope of his authority
or jurisdiction. Under the Vienna Convention on Diplomatic Relations,
the commission of a crime is not part of official duty. The petition is
therefore denied.
SALIENT POINTS:
The DFA's function includes, among its other mandates, the
determination of persons and institutions covered by diplomatic
immunities, a determination which, when challenged, entitles it to
seek relief from the court so as not to seriously impair the conduct of
the country's foreign relations. The DFA must be allowed to plead its
case whenever necessary or advisable to enable it to help keep the
credibility of the Philippine government before the international
community. When international agreements are concluded, the
parties thereto are deemed to have likewise accepted the
responsibility of seeing to it that their agreements are duly
regarded. In our country, this task falls principally on the DFA as
being the highest executive department with the competence and
authority to so act in this aspect of the international arena.[18] In Holy
See vs. Hon. Rosario, Jr.,[19]this Court has explained the matter in
good detail; viz:
"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 vs. 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 Organizations. Aquino,
48 SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial
court a telegram to that effect. In Baer vs. 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 movedwith 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 vs. Bradford, 75 Phil. 50 [1945];
Miquiabas vs.Philippine-Ryukyus Command, 80 Phil. 262 [1948];
United States of America vs. Guinto, 182 SCRA644 [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."
Republic of Indonesia vs. James Vizon Digested
Republic of Indonesia vs. James Vizon G.R. No. 54705, June 26,
2003
FACTS:
Petitioner, Republic of Indonesia entered into a Maintenance
Agreement in August 1995 with respondent James Vinzon, sole
proprietor of Vinzon Trade and Services. The Maintenance
Agreement stated that respondent shall, for a consideration, maintain
specified equipment at the Embassy Main Building, Embassy Annex
Building and the Wisma Duta, the official residence of petitioner
Ambassador Soeratmin. The equipments covered by the
Maintenance Agreement are air conditioning units, generator sets,
electrical facilities, water heaters, and water motor pumps. It is
likewise stated therein that the agreement shall be effective for a
period of four years and will renew itself automatically unless
cancelled by either party by giving thirty days prior written notice from
the date of expiry.
Petitioners claim that sometime prior to the date of expiration of the
said agreement, or before August 1999, they informed respondent
that the renewal of the agreement shall be at the discretion of the
incoming Chief of Administration, Minister Counsellor Azhari Kasim,
who was expected to arrive in February 2000. When Minister
Counsellor Kasim assumed the position of Chief of Administration in
March 2000, he allegedly found respondents work and services
unsatisfactory and not in compliance with the standards set in the
Maintenance Agreement. Hence, the Indonesian Embassy
terminated the agreement in a letter dated August 31, 2000.
Petitioners claim, moreover, that they had earlier verbally informed
respondent of their decision to terminate the agreement. On the other
hand, respondent claims that the aforesaid termination was arbitrary
and unlawful. Respondent filed a complaint against petitioners (RTC)
of Makati, petitioners filed a Motion to Dismiss, alleging that the
Republic of Indonesia, as a foreign sovereign State, has sovereign
immunity from suit and cannot be sued as a party-defendant in the
Philippines. The said motion further alleged that Ambassador
Soeratmin and Minister Counsellor Kasim are diplomatic agents as
defined under the Vienna Convention on Diplomatic Relations and
therefore enjoy diplomatic immunity. In turn, respondent filed on
March 20, 2001, an Opposition to the said motion alleging that the
Republic of Indonesia has expressly waived its immunity from suit.
He based this claim upon the following provision in the Maintenance
Agreement.
ISSUE:
Whether or not the Republic of Indonesia can be sued.
RULING:
The Supreme Court on the matter ruled that the republic of Indonesia
cannot be deemed to have waived its immunity to suit. The existence
alone of a paragraph in a contract stating that any legal action arising
out of the agreement shall be settled according to the laws of the
Philippines and by a specified court of the Philippines is not
necessarily a waiver of sovereign immunity from suit. The aforesaid
provision contains language not necessarily inconsistent with
sovereign immunity. On the other hand, such provision may also be
meant to apply where the sovereign party elects to sue in the local
courts, or otherwise waives its immunity by any subsequent act. The
applicability of Philippine laws must be deemed to include Philippine
laws in its totality, including the principle recognizing sovereign
immunity. Hence, the proper court may have no proper action, by
way of settling the case, except to dismiss it.
The Court stated that the upkeep of its furnishings and equipment is
still part sovereign function of the State. A sovereign State does not
merely establish a diplomatic mission and leave it at that; the
establishment of a diplomatic mission encompasses its maintenance
and upkeep. Hence, the State may enter into contracts with private
entities to maintain the premises, furnishings and equipment of the
embassy and the living quarters of its agents and officials. It is
therefore clear that petitioner Republic of Indonesia was acting in
pursuit of a sovereign activity when it entered into a contract with
respondent for the upkeep or maintenance of the air conditioning
units, generator sets, electrical facilities, water heaters, and water
motor pumps of the Indonesian Embassy and the official residence of
the Indonesian ambassador. The Supreme Court grants the petition
and reversed the decision of the Court of Appeals.
public official charged with some administrative or technical office
who can be held to the proper responsibility in the manner laid down
by the law of civil responsibility. Consequently, the trial court in not so
deciding and in sentencing the said entity to the payment of
damages, caused by an official of the second class referred to, has
by erroneous interpretation infringed the provisions of Articles 1902
and 1903 of the Civil Code.
It is, therefore, evidence that the State (GPI) is only liable, according
to the above quoted decisions of the Supreme Court of Spain, for the
acts of its agents, officers and employees when they act as special
agents within the meaning of paragraph 5 of Article 1903, supra, and
that the chauffeur of the ambulance of the General Hospital was not
such an agent.
For the foregoing reasons, the judgment appealed from must be
reversed, without costs in this instance. Whether the Government
intends to make itself legally liable for the amount of damages above
set forth, which the plaintiff has sustained by reason of the negligent
acts of one of its employees, be legislative enactment and by
appropriating sufficient funds therefore, we are not called upon to
determine. This matter rests solely with the Legislature and not with
the courts.
China National Machinery v. Santamaria
Facts: On 14 September 2002, petitioner China National Machinery
& Equipment Corp. (Group) (CNMEG), represented by its
chairperson, Ren Hongbin, entered into a Memorandum of
Understanding with the North Luzon Railways Corporation
(Northrail), represented by its president, Jose L. Cortes, Jr. for the
conduct of a feasibility study on a possible railway line from Manila to
San Fernando, La Union (the Northrail Project).
On 30 August 2003, the Export Import Bank of China (EXIM Bank)
and the Department of Finance of the Philippines (DOF) entered into
a Memorandum of Understanding (Aug 30 MOU), wherein China
agreed to extend Preferential Buyer’s Credit to the Philippine
government to finance the Northrail Project.3 The Chinese
government designated EXIM Bank as the lender, while the
Philippine government named the DOF as the borrower. Under the
Aug 30 MOU, EXIM Bank agreed to extend an amount not exceeding
USD 400,000,000 in favor of the DOF, payable in 20 years, with a 5-
year grace period, and at the rate of 3% per annum.
On 1 October 2003, the Chinese Ambassador to the Philippines,
Wang Chungui (Amb. Wang), wrote a letter to DOF Secretary Jose
Isidro Camacho (Sec. Camacho) informing him of CNMEG’s
designation as the Prime Contractor for the Northrail Project.
On 30 December 2003, Northrail and CNMEG executed a Contract
Agreement for the construction of Section I, Phase I of the North
Luzon Railway System from Caloocan to Malolos on a turnkey basis
(the Contract Agreement).7 The contract price for the Northrail
Project was pegged at USD 421,050,000.
On 26 February 2004, the Philippine government and EXIM Bank
entered into a counterpart financial agreement – Buyer Credit Loan
Agreement No. BLA 04055 (the Loan Agreement). In the Loan
Agreement, EXIM Bank agreed to extend Preferential Buyer’s Credit
in the amount of USD 400,000,000 in favor of the Philippine
government in order to finance the construction of Phase I of the
Northrail Project.
On 13 February 2006, respondents filed a Complaint for Annulment
of Contract and Injunction with Urgent Motion for Summary Hearing
to Determine the Existence of Facts and Circumstances Justifying
the Issuance of Writs of Preliminary Prohibitory and Mandatory
Injunction and/or TRO against CNMEG, the Office of the Executive
Secretary, the DOF, the Department of Budget and Management, the
National Economic Development Authority and Northrail. The case
was filed before the Regional Trial Court, National Capital Judicial
Region, Makati City, Branch 145 (RTC Br. 145). In the Complaint,
respondents alleged that the Contract Agreement and the Loan
Agreement were void for being contrary to (a) the Constitution; (b)
Republic Act No. 9184 (R.A. No. 9184), otherwise known as the
Government Procurement Reform Act; (c) Presidential Decree No.
1445, otherwise known as the Government Auditing Code; and (d)
Executive Order No. 292, otherwise known as the Administrative
Code.
On 15 May 2007, RTC Br. 145 issued an Omnibus Order denying
CNMEG’s Motion to Dismiss and setting the case for summary
hearing to determine whether the injunctive reliefs prayed for should
be issued. CNMEG then filed a Motion for Reconsideration, which
was denied by the trial court in an Order dated 10 March 2008. Thus,
CNMEG filed before the CA a Petition for Certiorari with Prayer for
the Issuance of TRO and/or Writ of Preliminary Injunction dated 4
April 2008.
the appellate court dismissed the Petition for Certiorari.
Subsequently, CNMEG filed a Motion for Reconsideration, which was
denied by the CA in a Resolution dated 5 December 2008.
Petitioners Argument: Petitioner claims that the EXIM Bank
extended financial assistance to Northrail because the bank was
mandated by the Chinese government, and not because of any
motivation to do business in the Philippines, it is clear from the
foregoing provisions that the Northrail Project was a purely commercial
transaction.
Respondents Argument: respondents alleged that the Contract
Agreement and the Loan Agreement were void for being contrary to
(a) the Constitution; (b) Republic Act No. 9184 (R.A. No. 9184),
otherwise known as the Government Procurement Reform Act; (c)
Presidential Decree No. 1445, otherwise known as the Government
Auditing Code; and (d) Executive Order No. 292, otherwise known as
the Administrative Code.
Issues: Whether or not petitioner CNMEG is an agent of the
sovereign People’s Republic of China.
Whether or not the Northrail contracts are products of an executive
agreement between two sovereign states.
Ruling: The instant Petition is DENIED. Petitioner China National
Machinery & Equipment Corp. (Group) is not entitled to immunity from
suit, and the Contract Agreement is not an executive agreement.
CNMEG’s prayer for the issuance of a TRO and/or Writ of Preliminary
Injunction is DENIED for being moot and academic.
The Court explained the doctrine of sovereign immunity in
Holy See v. Rosario, to wit:
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.
(Emphasis supplied; citations omitted.)
As it stands now, the application of the doctrine of immunity from suit
has been restricted to sovereign or governmental activities (jure
imperii). The mantle of state immunity cannot be extended to
commercial, private and proprietary acts (jure gestionis).
Since the Philippines adheres to the restrictive theory, it is
crucial to ascertain the legal nature of the act involved – whether the
entity claiming immunity performs governmental, as opposed to
proprietary, functions. As held in United States of America v. Ruiz
Admittedly, the Loan Agreement was entered into between
EXIM Bank and the Philippine government, while the Contract
Agreement was between Northrail and CNMEG. Although the Contract
Agreement is silent on the classification of the legal nature of the
transaction, the foregoing provisions of the Loan Agreement, which is
an inextricable part of the entire undertaking, nonetheless reveal the
intention of the parties to the Northrail Project to classify the whole
venture as commercial or proprietary in character.
Thus, piecing together the content and tenor of the
Contract Agreement, the Memorandum of Understanding dated 14
September 2002, Amb. Wang’s letter dated 1 October 2003, and the
Loan Agreement would reveal the desire of CNMEG to construct the
Luzon Railways in pursuit of a purely commercial activity performed
in the ordinary course of its business.