(JESS) Constitutional Law 1 – State Immunity

CNMEG v. Hon. Santamaria

G.R. No. 185572

February 7, 2012

Facts

On February 13, 2006, respondents filed a Complaint for Annulment of Contract and Injunction
against CNMEG, office of the executive secretary, department of finance, among others, at the Makati
RTC, pertaining to the MOU and Loan Agreement between the petitioner and North Luzon Railways
Corporation and Department of Finance(Philippines)

On March 17, 2006, RTC issued an Order setting the case for hearing on the issuance of
injunctive reliefs. On March 29, CNMEG filed an Urgent Motion for Reconsideration of this Order and
subsequently filed a Motion to Dismiss on April 12, 2006 arguing that the trial court did not have
jurisdiction over (a) its person as it was an agent of the Chinese government, and (b) the subject matter,
as the Northrail Project was a product of an executive agreement.

On May 15, 2007, the motion to dismiss was denied setting the case for summary hearing to
determine whether the injunctive reliefs should be issued. CNMEG filed another motion for
reconsideration which was denied by the RTC again in March 10, 2008. CNMEG elevated the case to the
Court of Appeals via petition for certiorari which the latter denied in December 5, 2008. On January 21,
2009, CNMEG filed the instant petition for Review on Certiorari.

ISSUE
WON CNMEG’s petition can prosper following the doctrine of state immunity.

RULING

In Holy See v. Rosario, the court explained the doctrine of sovereign immunity. “x x x 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.”

Following the reading in full of the Contract Agreement in conjunction with the other
documents in relation to the Northrail Project between NCMEG and Northrail, the court held that it was
CNMEG that initiated the undertaking, and not the Chinese Government. That the desire of CNMEG to
secure the Northrail Project was in the ordinary or regular course of its business as a global construction
company. The implementation of the project was intended to generate profit for CNMEG, with the
Contract Agreement placing a contract price of USD 421,050,000 for the venture.

Further, for failure to secure a certification from the DFA, despite securing certifications from
other departments as well as the Embassy of the People’s Republic of China, they cannot be granted
immunity pursuant to the pertinent rule that the issuance of certification for immunity is exclusive to
the “Foreign Office of the State where it is sued.”

WHEREFORE, petition is DENIED.