DIGESTS immunity is recognized by the executive branch of

the government as in the case at bar, it is then the

World Health Organization v. Aquino 48 SCRA duty of the courts to accept the claim of immunity
243 upon appropriate suggestion by the principal law
officer of the government, the Solicitor General in
this case, or other officer acting under his
Facts: discretion. Courts may not so exercise their
jurisdiction by seizure and detention of property, as
Herein petitioner, in behalf of Dr. Verstuyft, was to embarass the executive arm of the government
allegedly suspected by the Constabulary Offshore in conducting foreign relations.
Action Center (COSAC) officers of carrying dutiable
goods under the Customs and Tariff Code of the The Court, therefore, holds the respondent judge
Philippines. Respondent Judge then issued a acted without jurisdiction and with grave abuse of
search warrant at the instance of the COSAC discretion in not ordering the quashal of the search
officers for the search and seizure of the personla warrant issued by him in disregard of the diplomatic
effects of Dr. Verstuyft notwithstanding his being immunity of petitioner Verstuyft.
entitled to diplomatic immunity, as duly recognized
by the Executive branch of the government.

The Secretary of Foreign Affairs Carlos P. Romulo THE HOLY SEE vs. THE HON. ERIBERTO U.
advised the respondent judge that Dr. Verstuyft is ROSARIO, JR., as Presiding Judge of the Regional Trial
entitled to immunity from search in respect for his Court of Makati,Branch 61 and STARBRIGHT
personal baggage as accorded to members of SALESENTERPRISES, INC.
diplomatic missions pursuant to the Host
Agreement and further requested for the FACTS:
suspension of the search warrant. The Solicitor
General accordingly joined the petitioner for the This petition arose from a controversy over a
quashal of the search warrant but respondent judge parcel of land, Lot 5-A, located in the Municipality of
nevertheless summarily denied the quashal. 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
Issue: Philippine Realty Corporation (PRC). The three lots
were sold to Ramon Licup, through Msgr. Domingo
Whether or not personal effect of WHO Officer Dr. A. Cirilos, Jr., acting as agent to the sellers. Later,
Verstuyft can be exempted from search and seizure Licup assigned his rights to the sale to private
under the diplomatic immunity. respondent, Starbright Enterprises. The squatters
refused to vacate the lots sold to private
respondent so a dispute arose as to who of the
Ruling: parties has the responsibility of evicting and
clearing the land of squatters occurred.
The executive branch of the Phils has expressly Complicating the relations of the parties was the
recognized that Verstuyft is entitled to diplomatic sale by petitioner of Lot 5-A to Tropicana Properties
immunity, pursuant to the provisions of the Host and Development Corporation (Tropicana).Private
Agreement. The DFA formally advised respondent respondent filed a complaint for annulment of
judge of the Philippine Government's official the sale of the three parcels of land, and specific
position. The Solicitor General, as principal law performance and damages against petitioner,
officer of the gorvernment, likewise expressly represented by the Papal Nuncio, and three other
affirmed said petitioner's right to diplomatic defendants: namely, Msgr. Domingo A. Cirilos, Jr.,
immunity and asked for the quashal of the search the PRC and Tropicana.
warrant.
ISSUE:
It recognized principle of international law and WON (whether or not) the petitioner Holy See is
under our system of separation of powers that immune from suit.
diplomatic immunity is essentially a political
question and courts should refuse to look beyond a HELD:
determination by the executive branch of
government, and where the plea of diplomatic
YES. The logical question is whether the foreign mere entering into a contract by a foreign state with
state is engaged in the activity in the regular course a private party cannot be the ultimate test. Such an
of business. If the foreign state is not engaged act can only be the start of the inquiry. The logical
regularly in a business or trade, the particular act or question is whether the foreign state is engaged in
transaction must then be tested by its nature. If the the activity in the regular course of business. If the
act is in pursuit of a sovereign activity, or an foreign state is not engaged regularly in a business
incident thereof, then it is an act jure imperii or trade, the particular act or transaction must then
especially when it is not undertaken for gain or be tested by its nature. If the act is in pursuit of
profit.Lot5-A was acquired by petitioner as a a sovereign activity, or an incident thereof, then it is
donation from the Archdiocese of Manila. The an act jure imperii, especially when it is not
donation was made not for commercial purpose, undertaken for gain or profit." The service contracts
but for the use of petitioner to construct thereon the referred to by private respondent have not been
official place of residence of the Papal Nuncio. The intended by the ADB for profit or gain but are
right of a foreign sovereign to acquire property, real official acts over which a waiver of immunity would
or personal, in a receiving state, necessary for not attach. How does the Philippine government
the creation and maintenance of its diplomatic treat the Holy See or Vatican?
mission, is recognized in the 1961 Vienna
Convention on Diplomatic Relations. In Article 31(a) The Philippines has accorded the Holy See the
of the Convention, a diplomatic envoy is granted status of a foreign sovereign. The Holy See,
immunity from the civil and administrative through its Ambassador, the Papal Nuncio, has
jurisdiction of the receiving state over any real had diplomatic representations with the Philippine
action relating to private immovable property government since 1957. This appears to be the
situated in the territory of the receiving state which universal practice in international relations. What is
the envo yholds on behalf of the sending state for the treaty that governs the sovereign immunity of
the purposes of the mission. If this immunity is diplomats and other state agents?
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 The Vienna Convention on Diplomatic Relations,
See. which was ratified on 18 April 1961, is a codification
SALIENT POINTS: of centuries-old customary law affording protection
to foreign diplomats. The Convention lists the
There are two conflicting concepts of sovereign classes of heads of diplomatic missions to
immunity, according to the Supreme Court: (a) include(a) ambassadors or nuncios accredited to
Classical or absolute theory 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
a sovereign cannot, without its consent, be made a the diplomatic staff, the administrative staff and the technical
respondent in the courts of another sovereign; and and service staff.
(b) Restrictive theory
Par in parem imperium non habet
—
. An equal has no power over an equal. Jenk. Cent.
the immunity of the sovereign is recognized only [Link]: One of two judges of the same court
with regard to public acts or acts jure imperii (public cannot commit the other for contempt.
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 KHOSROW MINUCHER, petitioner, vs. HON.
established. According to the classical or COURT OF APPEALS and ARTHUR SCALZO,
absolute theory, a sovereign cannot, without its respondents
consent, be made a respondent in the Courts of
another sovereign. According to the newer or FACTS:
restrictive theory, the immunity of the sovereign is
recognized only with regard to public acts or acts Khosrow Minucher, an Iranian national and a Labor
jure imperii of a state, but not with regard to private Attaché for the Iranian Embassies in Tokyo, Japan
act or acts jure gestionis. x x x Certainly, the and Manila came to the country to study in 1974
and continued to stay as head of the Iranian foreign agent, although not necessarily a diplomatic
National Resistance Movement. personage, but acting in his official capacity, the
complaint could be barred by the immunity of the
In May 1986, Minucher was charged with an foreign sovereign from suit without its consent.
Information for violation of Republic Act No. 6425, Suing a representative of a state is believed to be,
Dangerous Drugs Act of 1972. The criminal charge in effect, suing the state itself. The proscription is
followed a “buy-bust operation” conducted by the not accorded for the benefit of an individual but for
Philippine police narcotic agents in his house where the State, in whose service he is, under the maxim
a quantity of heroin was said to have been seized. – par in parem, non habet imperium – that all states
The narcotic agents were accompanied by private are sovereign equals and cannot assert jurisdiction
respondent Arthur Scalzo who became one of the over one another. The implication is that if the
principal witnesses for the prosecution. judgment against an official would require the state
itself to perform an affirmative act to satisfy the
In August 1988, Minucher filed Civil Case before award, such as the appropriation of the amount
the Regional Trial Court (RTC) for damages on the needed to pay the damages decreed against him,
‘trumped-up’ charges of drug trafficking made by the suit must be regarded as being against the
Arthur Scalzo. state itself, although it has not been formally
impleaded

ISSUE: A foreign agent, operating within a territory, can be

cloaked with immunity from suit but only as long as
WON private respondent Arthur Scalzo can be it can be established that he is acting within the
sued provided his alleged diplomatic immunity directives of the sending state. The consent of the
conformably with the Vienna Convention on host state is an indispensable requirement of basic
Diplomatic Relations courtesy between the two sovereigns.

The “buy-bust operation” and other such acts are

RULING: indication that the Philippine government has given
its imprimatur, if not consent, to the activities within
The SC DENIED the petition. Philippine territory of agent Scalzo of the United
States Drug Enforcement Agency. In conducting
Conformably with the Vienna Convention, the surveillance activities on Minucher, later acting as
functions of the diplomatic mission involve, the the poseur-buyer during the buy-bust operation,
representation of the interests of the sending state and then becoming a principal witness in the
and promoting friendly relations with the receiving criminal case against Minucher, Scalzo hardly can
state. Only “diplomatic agents,” are vested with be said to have acted beyond the scope of his
blanket diplomatic immunity from civil and criminal official function or duties.
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 G.R. No. 125865 January 28, 2000
duties of diplomatic nature. Being an Attache, JEFFREY LIANG (HUEFENG), petitioner,vs.
Scalzo’s main function is to observe, analyze and PEOPLE OF THE PHILIPPINES, respondent.
interpret trends and developments in their
respective fields in the host country and submit FACTS:
reports to their own ministries or departments in the
home government. He is not generally regarded as Petitioner is an economist working with the Asian
a member of the diplomatic mission. On the basis Development Bank. Sometime in 1994,for allegedly
of an erroneous assumption that simply because of uttering defamatory words against fellow
the diplomatic note, divesting the trial court of ADB worker Joyce Cabal, he was charged before
jurisdiction over his person, his diplomatic immunity the Metropolitan Trial Court of Mandaluyong City
is contentious. with two counts of grave oral defamation.

Under the related doctrine of State Immunity from Petitioner was arrested by virtue of a warrant issued by the
Suit, the precept that a State cannot be sued in the MeTC. MeTC Judge received an “office of protocol” from
courts of a foreign state is a long-standing rule of the Department of Foreign Affairs stating that petitioner is
customary international law. If the acts giving rise to covered by immunity from legal process under Section
a suit are those of a foreign government done by its 45 of the Agreement between the ADB and the
Philippine Government regarding the Headquarters that their agreements are duly regarded. In our
of the ADB in the country. The MeTC judge without country, this task falls principally on the DFA as
notice to the prosecution dismissed the case based being the highest executive department with the
from the said protocol. The latter filed a motion competence and authority to so act in this aspect of
for reconsideration which was opposed by the DFA. the international arena.[18] In Holy See vs. Hon.
When its motion was denied, the prosecution filed Rosario, Jr.,[19]this Court has explained the matter
a petition for certiorari and mandamus with the RTC in good detail; viz:
of Pasig City which set aside the MeTC rulings and
ordered the latter court to enforce the warrant of "In Public International Law, when a state or
arrest it earlier issued. After the motion for international agency wishes to plead sovereign
reconsideration was denied, petitioner elevated the or diplomatic immunity in a foreign court, it requests
case to this court via a petition for review arguing the Foreign Office of the state where it is sued
that he is covered by immunity under the to convey to the court that said defendant is entitled
Agreement and that no preliminary investigation to immunity.
was held before the criminal cases were filed in
court. "In the United States, the procedure followed is the
process of 'suggestion,' where the foreign state or
ISSUE: the international organization sued in an American
court requests the Secretary of State to make a
Whether immunity invoked by DFA for ADB determination as to whether it is entitled to
employees based on the Agreement is cognizable immunity. If the Secretary of State finds that the
in our courts. defendant is immune from suit, he, in turn, asks the
Attorney General to submit to the court a
HELD: 'suggestion' that the defendant is entitled to
The immunity mentioned therein is not absolute, immunity. In England, a similar procedure is
but subject to the exception that the act was done in followed, only the Foreign Office issues
“official capacity.” The prosecution should have been given a certification to that effect instead of submitting a
the chance to rebut the DFA protocol and it must 'suggestion'(O'Connell, I International Law 130
be accorded the opportunity to present its [1965]; Note: Immunity from Suit of Foreign
controverting evidence. Slandering a person could Sovereign Instrumentalities and Obligations, 50
not possibly be covered by the immunity agreement Yale Law Journal 1088 [1941]).
because our laws do not allow the commission of a
crime, such as defamation, in the name of official "In the Philippines, the practice is for the foreign
duty. It is a well-settled principle of law that a public government or the international organization to first
official may be liable in his personal private secure an executive endorsement of its claim of
capacity for whatever damage he may have caused sovereign or diplomatic immunity. But how the
by his act done with malice or in bad faith or Philippine Foreign Office conveys its endorsement
beyond the scope of his authority or jurisdiction. to the courts varies. In International Catholic
Under the Vienna Convention on Diplomatic Migration Commission vs. Calleja, 190 SCRA 130
Relations, the commission of a crime is not part (1990), the Secretary of Foreign Affairs just sent a
of official duty. The petition is therefore denied. letter directly to the Secretary of Labor and
Employment, informing the latter that the
SALIENT POINTS: respondent-employer could not be sued because it
enjoyed diplomatic immunity. In World Health
The DFA's function includes, among its other Organizations. Aquino, 48 SCRA 242 (1972), the
mandates, the determination of persons and Secretary of Foreign Affairs sent the trial court a
institutions covered by diplomatic immunities, a telegram to that effect. In Baer vs. Tizon, 57 SCRA
determination which, when challenged, entitles it to 1 (1974), the U.S. Embassy asked the Secretary of
seek relief from the court so as not to seriously Foreign Affairs to request the Solicitor General to
impair the conduct of the country's foreign make, in behalf of the Commander of the United
relations. The DFA must be allowed to plead its States Naval Base at Olongapo City, Zambales, a
case whenever necessary or advisable to enable it 'suggestion' to respondent Judge. The Solicitor
to help keep the credibility of the Philippine General embodied the 'suggestion' in a
government before the international manifestation and memorandum as amicus curiae.
community. When international agreements are
concluded, the parties thereto are deemed to have "In the case at bench, the Department of Foreign
likewise accepted the responsibility of seeing to it Affairs, through the Office of Legal Affairs
movedwith this Court to be allowed to intervene on respondent of their decision to terminate the
the side of petitioner. The Court allowed the said agreement. On the other hand, respondent claims
Department to file its memorandum in support of that the aforesaid termination was arbitrary and
petitioner's claim of sovereign immunity. unlawful. Respondent filed a complaint against
petitioners (RTC) of Makati, petitioners filed a
"In some cases, the defense of sovereign immunity Motion to Dismiss, alleging that the Republic of
was submitted directly to the local courts by the Indonesia, as a foreign sovereign State, has
respondents through their private counsels sovereign immunity from suit and cannot be sued
(Raquiza vs. Bradford, 75 Phil. 50 [1945]; as a party-defendant in the Philippines. The said
Miquiabas [Link]-Ryukyus Command, 80 motion further alleged that Ambassador Soeratmin
Phil. 262 [1948]; United States of America vs. and Minister Counsellor Kasim are diplomatic
Guinto, 182 SCRA644 [1990] and companion agents as defined under the Vienna Convention on
cases). In cases where the foreign states bypass Diplomatic Relations and therefore enjoy diplomatic
the Foreign Office, the courts can inquire into the immunity. In turn, respondent filed on March 20,
facts and make their own determination as to the 2001, an Opposition to the said motion alleging that
nature of the acts and transactions involved." the Republic of Indonesia has expressly waived its
immunity from suit. He based this claim upon the
following provision in the Maintenance Agreement.
Republic of Indonesia vs. James Vizon Digested
ISSUE:
Republic of Indonesia vs. James Vizon G.R. No.
54705, June 26, 2003 Whether or not the Republic of Indonesia can be
sued.
FACTS:
RULING:
Petitioner, Republic of Indonesia entered into a
Maintenance Agreement in August 1995 with The Supreme Court on the matter ruled that the
respondent James Vinzon, sole proprietor of republic of Indonesia cannot be deemed to have
Vinzon Trade and Services. The Maintenance waived its immunity to suit. The existence alone of
Agreement stated that respondent shall, for a a paragraph in a contract stating that any legal
consideration, maintain specified equipment at the action arising out of the agreement shall be settled
Embassy Main Building, Embassy Annex Building according to the laws of the Philippines and by a
and the Wisma Duta, the official residence of specified court of the Philippines is not necessarily
petitioner Ambassador Soeratmin. The equipments a waiver of sovereign immunity from suit. The
covered by the Maintenance Agreement are air aforesaid provision contains language not
conditioning units, generator sets, electrical necessarily inconsistent with sovereign immunity.
facilities, water heaters, and water motor pumps. It On the other hand, such provision may also be
is likewise stated therein that the agreement shall meant to apply where the sovereign party elects to
be effective for a period of four years and will renew sue in the local courts, or otherwise waives its
itself automatically unless cancelled by either party immunity by any subsequent act. The applicability
by giving thirty days prior written notice from the of Philippine laws must be deemed to include
date of expiry. Philippine laws in its totality, including the principle
recognizing sovereign immunity. Hence, the proper
Petitioners claim that sometime prior to the date of court may have no proper action, by way of settling
expiration of the said agreement, or before August the case, except to dismiss it.
1999, they informed respondent that the renewal of
the agreement shall be at the discretion of the The Court stated that the upkeep of its furnishings
incoming Chief of Administration, Minister and equipment is still part sovereign function of the
Counsellor Azhari Kasim, who was expected to State. A sovereign State does not merely establish
arrive in February 2000. When Minister Counsellor a diplomatic mission and leave it at that; the
Kasim assumed the position of Chief of establishment of a diplomatic mission
Administration in March 2000, he allegedly found encompasses its maintenance and upkeep. Hence,
respondents work and services unsatisfactory and the State may enter into contracts with private
not in compliance with the standards set in the entities to maintain the premises, furnishings and
Maintenance Agreement. Hence, the Indonesian equipment of the embassy and the living quarters
Embassy terminated the agreement in a letter of its agents and officials. It is therefore clear that
dated August 31, 2000. Petitioners claim, petitioner Republic of Indonesia was acting in
moreover, that they had earlier verbally informed pursuit of a sovereign activity when it entered into a
contract with respondent for the upkeep or Buyer’s Credit to the Philippine government to
maintenance of the air conditioning units, generator finance the Northrail Project.3 The Chinese
sets, electrical facilities, water heaters, and water government designated EXIM Bank as the lender,
motor pumps of the Indonesian Embassy and the while the Philippine government named the DOF as
official residence of the Indonesian ambassador. the borrower. Under the Aug 30 MOU, EXIM Bank
The Supreme Court grants the petition and agreed to extend an amount not exceeding USD
reversed the decision of the Court of Appeals. 400,000,000 in favor of the DOF, payable in 20
years, with a 5-year grace period, and at the rate of
public official charged with some administrative or 3% per annum.
technical office who can be held to the proper
responsibility in the manner laid down by the law of On 1 October 2003, the Chinese Ambassador to
civil responsibility. Consequently, the trial court in the Philippines, Wang Chungui (Amb. Wang), wrote
not so deciding and in sentencing the said entity to a letter to DOF Secretary Jose Isidro Camacho
the payment of damages, caused by an official of (Sec. Camacho) informing him of CNMEG’s
the second class referred to, has by erroneous designation as the Prime Contractor for the
interpretation infringed the provisions of Articles Northrail Project.
1902 and 1903 of the Civil Code.
On 30 December 2003, Northrail and CNMEG
It is, therefore, evidence that the State (GPI) is only executed a Contract Agreement for the construction
liable, according to the above quoted decisions of of Section I, Phase I of the North Luzon Railway
the Supreme Court of Spain, for the acts of its System from Caloocan to Malolos on a turnkey
agents, officers and employees when they act as basis (the Contract Agreement).7 The contract price
special agents within the meaning of paragraph 5 of for the Northrail Project was pegged at USD
Article 1903, supra, and that the chauffeur of the 421,050,000.
ambulance of the General Hospital was not such an
agent. On 26 February 2004, the Philippine government
and EXIM Bank entered into a counterpart financial
For the foregoing reasons, the judgment appealed
agreement – Buyer Credit Loan Agreement No.
from must be reversed, without costs in this
BLA 04055 (the Loan Agreement). In the Loan
instance. Whether the Government intends to make
Agreement, EXIM Bank agreed to extend
itself legally liable for the amount of damages
Preferential Buyer’s Credit in the amount of USD
above set forth, which the plaintiff has sustained by
400,000,000 in favor of the Philippine government
reason of the negligent acts of one of its
in order to finance the construction of Phase I of the
employees, be legislative enactment and by
Northrail Project.
appropriating sufficient funds therefore, we are not
called upon to determine. This matter rests solely On 13 February 2006, respondents filed a
with the Legislature and not with the courts. Complaint for Annulment of Contract and Injunction
with Urgent Motion for Summary Hearing to
Determine the Existence of Facts and
China National Machinery v. Santamaria Circumstances Justifying the Issuance of Writs of
Preliminary Prohibitory and Mandatory Injunction
Facts: On 14 September 2002, petitioner China and/or TRO against CNMEG, the Office of the
National Machinery & Equipment Corp. (Group) Executive Secretary, the DOF, the Department of
(CNMEG), represented by its chairperson, Ren Budget and Management, the National Economic
Hongbin, entered into a Memorandum of Development Authority and Northrail. The case was
Understanding with the North Luzon Railways filed before the Regional Trial Court, National
Corporation (Northrail), represented by its Capital Judicial Region, Makati City, Branch 145
president, Jose L. Cortes, Jr. for the conduct of a (RTC Br. 145). In the Complaint, respondents
feasibility study on a possible railway line from alleged that the Contract Agreement and the Loan
Manila to San Fernando, La Union (the Northrail Agreement were void for being contrary to (a) the
Project). Constitution; (b) Republic Act No. 9184 (R.A. No.
9184), otherwise known as the Government
On 30 August 2003, the Export Import Bank of Procurement Reform Act; (c) Presidential Decree
China (EXIM Bank) and the Department of Finance No. 1445, otherwise known as the Government
of the Philippines (DOF) entered into a Auditing Code; and (d) Executive Order No. 292,
Memorandum of Understanding (Aug 30 MOU), otherwise known as the Administrative Code.
wherein China agreed to extend Preferential
On 15 May 2007, RTC Br. 145 issued an Omnibus sovereign. According to the newer or restrictive
Order denying CNMEG’s Motion to Dismiss and theory, the immunity of the sovereign is
setting the case for summary hearing to determine recognized only with regard to public acts or
whether the injunctive reliefs prayed for should be acts jure imperii of a state, but not with regard
issued. CNMEG then filed a Motion for to private acts or acts jure gestionis. (Emphasis
Reconsideration, which was denied by the trial supplied; citations omitted.)
court in an Order dated 10 March 2008. Thus,
CNMEG filed before the CA a Petition for Certiorari As it stands now, the application of the doctrine of
with Prayer for the Issuance of TRO and/or Writ of immunity from suit has been restricted to sovereign
Preliminary Injunction dated 4 April 2008. or governmental activities (jure imperii). The mantle
of state immunity cannot be extended to
the appellate court dismissed the Petition for commercial, private and proprietary acts (jure
Certiorari. Subsequently, CNMEG filed a Motion for gestionis).
Reconsideration, which was denied by the CA in a
Resolution dated 5 December 2008. Since the Philippines adheres to the
restrictive theory, it is crucial to ascertain the legal
Petitioners Argument: Petitioner claims that the nature of the act involved – whether the entity
EXIM Bank extended financial assistance to claiming immunity performs governmental, as
Northrail because the bank was mandated by the opposed to proprietary, functions. As held in United
Chinese government, and not because of any States of America v. Ruiz
motivation to do business in the Philippines, it is
clear from the foregoing provisions that the Northrail Admittedly, the Loan Agreement was entered
Project was a purely commercial transaction. into between EXIM Bank and the Philippine
government, while the Contract Agreement was
Respondents Argument: respondents alleged that between Northrail and CNMEG. Although the
the Contract Agreement and the Loan Agreement Contract Agreement is silent on the classification of
were void for being contrary to (a) the Constitution; the legal nature of the transaction, the foregoing
(b) Republic Act No. 9184 (R.A. No. 9184), provisions of the Loan Agreement, which is an
otherwise known as the Government Procurement inextricable part of the entire undertaking,
Reform Act; (c) Presidential Decree No. 1445, nonetheless reveal the intention of the parties to the
otherwise known as the Government Auditing Northrail Project to classify the whole venture as
Code; and (d) Executive Order No. 292, otherwise commercial or proprietary in character.
known as the Administrative Code.
Thus, piecing together the content and tenor
Issues: Whether or not petitioner CNMEG is an of the Contract Agreement, the Memorandum of
agent of the sovereign People’s Republic of China. Understanding dated 14 September 2002, Amb.
Wang’s letter dated 1 October 2003, and the Loan
Whether or not the Northrail contracts are products Agreement would reveal the desire of CNMEG to
of an executive agreement between two sovereign construct the Luzon Railways in pursuit of a purely
states. commercial activity performed in the ordinary
course of its business.
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