D.

Sovereignty- Sovereign Immunity

a. Basis/theories-Sec. 3, Art. XVI, 1987 Const;

> Section 3. The State may not be sued without its consent.

RP V. VILLASOR 11/28/73;
In the case of Republic of the Philippines vs. Hon. Guillermo P. Villasor, the
main issues revolved around the validity of an order issued by Judge Guillermo
P. Villasor, who was a judge of the Court of First Instance of Cebu, Branch I,
declaring a decision final and executory, and the issuance of an alias writ of
execution against the funds of the Armed Forces of the Philippines. The
petitioner, the Republic of the Philippines, claimed that the judge acted in
excess of jurisdiction or with grave abuse of discretion by allowing the
garnishment of public funds.
Facts:
A decision was rendered on July 3, 1961, in Special Proceedings No. 2156-R in
favor of respondents P. J. Kiener Co., Ltd., Gavino Unchuan, and International
Construction Corporation, against the Republic of the Philippines, confirming
an arbitration award in the amount of P1,712,396.40.
On June 24, 1969, respondent Judge Guillermo P. Villasor issued an Order
declaring the July 3, 1961 decision final and executory and directed the sheriffs
to execute it.
An alias writ of execution was issued on June 26, 1969, pursuant to the order.
The Provincial Sheriff of Rizal served notices of garnishment on June 28, 1969,
targeting the funds of the Armed Forces of the Philippines.
Issues:
Whether respondent Judge acted in excess of jurisdiction or with grave abuse of
discretion in allowing an alias writ of execution against the properties of the
Armed Forces of the Philippines.
Whether the alias writ of execution and notices of garnishment issued pursuant
to it are null and void.
Rulings and Court's Reasoning:
The court ruled in favor of the Republic of the Philippines, stating that the judge
acted in excess of jurisdiction and with grave abuse of discretion. The court
emphasized the fundamental principle of constitutionalism, which holds that the
state and its government are immune from suit unless they give their consent.
This immunity from suit is based on the logical and practical ground that there
can be no legal right against the authority that makes the law.
The court further explained that the principle of non-suability of the state is
enshrined in the Constitution, which expressly provides that "The State may not
be sued without its consent." This means that the state cannot be sued without
its explicit consent.
The court also held that public funds cannot be the object of a garnishment
proceeding, even if consent to be sued had been previously granted, and the
state's liability had been adjudged. This is because disbursements of public
funds must be covered by the corresponding appropriation as required by law,
and the functions and public services rendered by the state should not be
paralyzed or disrupted by the diversion of public funds from their legitimate and
specific objects.
The court cited previous decisions that affirmed this principle, stating that
money in the hands of public officers, even if it is due to government
employees, is not liable to the creditors of these employees through
garnishment. Garnishing public funds would indirectly permit what is
prohibited directly, and it goes against considerations of public policy.
In conclusion, the court granted the writs of certiorari and prohibition,
nullifying the order declaring the decision final and executory and the alias writ
of execution. The preliminary injunction issued by the court earlier was made
permanent.

CHINA V. SANTAMARIA, 2/2/12

Facts:The Northrail Project: The case revolved around the Northrail Project, a
massive infrastructure undertaking in the Philippines aimed at constructing a
railway system on Luzon Island. Northrail Corporation, a government-owned or
controlled corporation, was tasked with implementing this project.
Involvement of China National Machinery & Equipment Corp. (CNMEG):
CNMEG, a corporation based in China, entered into a Contract Agreement with
Northrail for its participation in the project. CNMEG was designated as the
Primary Contractor for the construction of the railway system.
Claim of Immunity: CNMEG claimed immunity from suit, arguing that its
involvement in the Northrail Project was a government function on behalf of
China.
The Loan Agreement: In addition to the Contract Agreement, there was a Loan
Agreement related to the project. The Loan Agreement contained provisions
explicitly stating that the Borrower (Philippine government) waived immunity
from suit and recognized the application of the laws of the People's Republic of
China.
Lack of DFA Certification: CNMEG did not provide a certification from the
Department of Foreign Affairs (DFA) regarding its immunity claim.
Issues: The primary issue was whether CNMEG was entitled to immunity from
suit, given its claim that it was performing governmental functions on behalf of
China in the Northrail Project.
Whether the Contract Agreement between CNMEG and Northrail constituted an
executive agreement, which might affect the applicability of local laws and
jurisdiction.
Rulings and Court's Reasoning: Commercial Nature of the Northrail Project:
The court emphasized that the Northrail Project appeared to have a primarily
commercial nature. The Contract Agreement had a substantial contract price,
indicating a profit motive. The court rejected the idea that CNMEG's
designation as the Primary Contractor implied it was performing governmental
activities. It argued that labeling all Chinese corporations owned by the state as
performing governmental activities would lead to absurd results.
The Loan Agreement: The Loan Agreement, which originated from the same
Memorandum of Understanding as the Contract Agreement, contradicted
CNMEG's immunity claim. It contained provisions expressly stating that the
Borrower (Philippine government) waived immunity from suit. This, along with
other clauses, supported the argument that the Northrail Project was a
commercial transaction.
Lack of Evidence for Immunity: The court stated that even if CNMEG
performed some governmental functions, this claim did not automatically grant
immunity. It cited the case of Deutsche Gesellschaft Für Technische
Zusammenarbeit (GTZ) v. CA, which emphasized that immunity depends on the
character of the entity's organization and the nature of the activity in question.
Since CNMEG failed to present evidence that it was immune from suit under
Chinese law, the court found no basis for its immunity claim.
Absence of DFA Certification: The court pointed out that CNMEG did not
provide a certification from the Department of Foreign Affairs (DFA), which is
typically required to determine diplomatic immunity conclusively. The court
noted that the absence of such certification raised doubts about CNMEG's
immunity claim.
Agreement to Submit Disputes to Arbitration: The court observed that the
Contract Agreement contained provisions for arbitration in case of disputes,
suggesting an implicit waiver of immunity from suit.
Nature of the Contract Agreement:
The court also addressed whether the Contract Agreement constituted an
executive agreement:
Not an Executive Agreement: The court concluded that the Contract Agreement
did not fall under the category of an executive agreement. It noted that the
agreement was concluded between Northrail and CNMEG, not between states.
Furthermore, the Contract Agreement explicitly provided that Philippine law
would govern its interpretation.
As a result of its analysis, the court ruled that CNMEG was not entitled to
immunity from suit, and the Contract Agreement was considered an ordinary
commercial contract that could be challenged in local courts. The case was
remanded to the Regional Trial Court for further proceedings.
The court's reasoning revolved around the need for a clear basis for immunity
from suit, the commercial nature of the project, and the absence of a
certification from the DFA. These factors were instrumental in determining that
CNMEG could not claim immunity, and the Contract Agreement was subject to
local jurisdiction and law.
According to the video of state immunity:
The international community is made up of equal and independent sovereign
States, organized on a horizontal basis. As one sovereign State cannot be tried in
the courts of another ( par in parem non habet imperium ) , a State can claim
immunity from the exercise of jurisdiction by another State, State immunity is,
therefore, a procedural shield, that protects a State and its property from legal
action abroad, as it it stops the foreign courts from hearing the case, without
affecting the validity of the substance of the claim itself. With the increasing
engagement of States in commercial transactions, there was a need to secure
their accountability in business transactions, and to limit their Absolute
immunity when dealing with non-State parties. Accordingly, international law
endorsed the relative approach to State immunity in civil cases, which draws a
distinction between: Acts of States performed in a sovereign capacity (jure
imperii)—as opposed to commercial Activities undertaken by States ( jure
gestionis), (jure imperii) State immunity covers the acts of States performed by
the government in exercise of its sovereign authority As a result, public acts like
waging war or making political decisions, are are immune from the jurisdiction
of foreign courts. (jure gestionis) On the other side, States Commercial
transactions are not immune from foreign courts, Like a public airliner or a
public factory, or when a State oil corporation sells oil in international markets,
the state here is involved in commercial activity and therefore do not enjoy state
immunity. In the case of civil suits, the immunity will depend on the nature of
the conduct as commercial or sovereign act. Following the invasion of Kuwait,
Iraq ordered its national carrier to transport Kuwait Airways aircraft to Iraq. The
UK court rejected the Iraqi airway defense that the taking of the aircraft was a
public act done in the time of war and denied that it enjoys a state immunity.
While Immunity belong to the State, Its effect and the privilege afforded by an
immunity encompasses a State’s property as well as the person of its agents. In
respect of criminal suits (or prosecution), the culprit will be covered by
immunity whether by virtue of his status (ratione personae) personal immunity
or by the sovereign function of the contested conduct (ratione materiae).
functional immunity Functional immunity provides protection to the function,
rather than the individual behind the act. Because States perform acts through
their agents, the immunity covering said acts also covers the persons performing
them. While, Serving Heads of state enjoy absolute immunity from the exercise
of criminal jurisdiction by a foreign court, functional immunity also protects
former Head of States for the legitimate governmental functions they performed
during their term of office. Personal immunities shield a limited list of persons
from the jurisdiction of foreign courts, irrespective of whether the act is a
governmental or a private act, like heads of State, heads of government, foreign
ministers, and ambassadors or heads of diplomatic missions. Personal Immunity
lasts as long as the official maintains his position, following which the
immunity is lost and the person may lawfully be sued or prosecuted in respect
of all acts done during his or her tenure in office. In the Pinochet case, Spain
requested the UK to extradite the former Chiliean president for acts of torture
committed during his period of office. The British court held that As Pinochet
was a former Head of State, torture could not be classified as a legitimate State
function, and therefore he not protected by functional immunity.