Two Decades of Reforms in the Judiciary; Six phases in a continuous process of reform since 1986

sc.judiciary.gov.ph/pio/news/2012/09/CJ_presentation.pdf

Go to the link above to read the full text of CJ Sereno's recent lecture on judicial reform.


Two Decades of Reforms in the Judiciary

Six phases in a continuous process of reform since 1986:

1. Following the Feb 1986 revolution: Created the sound
constitutional basis for an effective justice system.

2. 1990s reform: Strengthening human and institutional
capabilities to respond to increased workload.

3. Preliminary Phase to the Major Reform Programs:
Blueprint for Judicial Reform (1999)

4. The Davide Watch: Creating the Action Program for
Judicial Reform 2001-2006 (APJR)

5. Panganiban Court (2005-2006): Liberty and Prosperity

6. Puno Court (2006-2010): Writs of Amparo, Habeas
Data and Kalikasan Party-List.

Gov't Owns SMC Shares Bought From Coco Levy Funds

Supreme Court of the Philippines

See - http://sc.judiciary.gov.ph/pio/news/2012/09/09281201.php


"x x x.

It’s final. The Government owns the San Miguel Corporation (SMC) shares bought from the coconut levy funds.
 
The Supreme Court En Banc has denied with finality for lack of merit the motion for reconsideration of the Philippine Coconut Producers Federation, Inc. (COCOFED), et al. of its January 24, 2012 decision which affirmed the Sandiganbayan ruling that re-conveyed to the government shares in San Miguel Corporation (SMC) in the aggregate amount of P1.656 billion bought using coconut levy funds and registered in the names of the Coconut Industry Investment Fund (CIIF) and its holding companies.

The Court declared that no further pleadings shall be entertained and ordered that an entry of judgment on the case be made.

In a nine-page signed resolution penned by Justice Presbitero J. Velasco, Jr., the Court ruled that the said motion for reconsideration was but a mere reiteration or rehash of the arguments that had already been previously pleaded, discussed, and resolved by the Court in its January 24, 2012 Decision. “[C]onsidering that the motion’s arguments are unsubstantial to warrant a reconsideration or at least a modification, this Court finds no reason to modify or let alone reverse the challenged Decision,” held the Court.

The Court also clarified that the 753,848,312 SMC Series 1 preferred shares of the CIIF companies converted from the CIIF block of SMC common shares subject of its September 17, 2009 Resolution in GR Nos. 177857-78, GR No. 1781933, and GR No. 180705, shall now be the subject matter of the aforesaid January 24, 2012 decision and shall be declared owned by the Government and be used only for the benefit of all coconut farmers and for the development of the coconut industry.

In its January 24, 2012 decision, the Court also had held that since the CIIF companies and the CIIF block of SMC shares were acquired using coconut levy funds – funds, which have been established to be public in character – it goes without saying that the concerned acquired corporations and assets ought to be regarded and treated as government assets. Thus, being government properties, they are accordingly owned by the Government, for the coconut industry pursuant to currently existing laws, the Court ruled.

The six CIIF Oil Mills were acquired by United Coconut Planters Bank (UCPB) using coconut levy funds. On the other hand, the 14 CIIF holding companies are wholly owned subsidiaries of the CIIF Oil Mills. These 14 CIIF holding companies used borrowed funds from the UCPB to acquire the SMC shares in the aggregate amount of P1.656 billion. (GR Nos. 177857-58, COCOFED v. Tañada; GR No. 178193, Ursua v. Republic, September 4, 2012)

x x x."

Why is Heidi Mendoza still unconfirmed?

Why is Heidi Mendoza still unconfirmed?
See - http://opinion.inquirer.net/37660/why-is-heidi-mendoza-still-unconfirmed

"x x x.

Well, from where I sit, it looks more like Heidi is the victim rather than the attacker, the target of a demolition job rather than the perpetrator. Worse, it is beginning to look like there is no great rush to defend Heidi, seeing as anyone defending her would have to contend with a sitting Vice President whose desire to be President is obvious. Discretion is the better part of valor, after all.

When did Heidi Mendoza get into the Binay gun sights, in the first place? At least 10 years ago, when the COA formed a “Special Task Force to Review and/or Audit Contracts involving Purchases and Infrastructure Projects of Local Government Units in Metro Manila.” Heidi was the head of the team which did a “review/audit of contracts involving purchases of office partitions and furniture of the Makati City government for the years 2000 and 2001,” as well as the expenditures on the Makati City Hospital (which is another story).

And the findings of her team were extremely damning to the government of Makati. I should know. I read both reports in their entirety, complete with annexes. And I ask/challenge the COA, in the interest of transparency, to upload the two reports on its website—the findings, the comments of the Makati government, the rejoinders, the supporting documents, the whole enchilada—so the Readers can see for themselves that every single statement Heidi makes is supported by documentary evidence of the most meticulous, contained in the annexes.

For example, her statement that the award on the furniture was made ahead of the bidding (Sept. 15, award; Sept. 17, bidding) is supported by official documents, not only dated letters of award, but also other official letters referring to the date of award, Sept. 15, so it cannot be deemed a typo error. That kind of meticulous. The statement that the bidding companies had the same owners is backed by documents provided by the different firms themselves (e.g., the warehouse of one bidding company is located at the same address used by the City of Makati in sending a letter of invitation intended for another bidding company; the official address of one company is also the showroom of another bidding company; an authorization letter involving one company was signed by an officer who was also an officer of another company).

But if that were so, why did the Sandiganbayan dismiss one of the four cases filed against Elenita Binay? Apparently, because the Sandiganbayan found that the prosecution came to court with “shoddy evidence,” and that “the audit procedure was also questionable in validating the prosecution’s claim of excess purchase and overprice.” I don’t know what “shoddy evidence” the special prosecutors presented, but no way was the audit procedure questionable. It might however, be germane that the Sandiganbayan dismissed the case in 2011, when Binay was already VP.

Heidi an attack dog for Mar Roxas? Does that mean that way back in 2002 (when the Makati report was filed), she (and Mar) already knew that not only was Mar planning to run for the vice presidency in 2010, Binay was also going to be a threat to any future plans?  Doing it too brown.

And now let us focus on the issue of Heidi and her desire to be confirmed by the COA, so much so that she is using her testimony at the Sandiganbayan to project herself to the media.

The real question is: Why, 18 months after she was appointed as COA commissioner, is she still unconfirmed? Is it because she isn’t qualified? She was with the COA for 22 years, before she quit in 2006—and her record is spotless. The ADB hired her, and if one remembers correctly, it stood ready to rehire her when she quit because she was going to testify in the Garcia case. That she quit the ADB is a testament to her complete indifference to financial security. Her statements of assets, liabilities and net worth show no unexplained wealth.

Then why is she still awaiting confirmation? Ah, there’s the rub. It is an open secret, apparently, in the COA secretariat, that the one responsible for this situation is—guess who?—the Binay camp.

And yet Heidi stands by her 2002 audit report. That the Binay camp is accusing her of using her Sandiganbayan testimony for confirmation purposes is dissimulation at its most contemptible. But if the Binay camp thinks that Heidi Mendoza wants her job so much that she can be persuaded to even soft-pedal on the findings of her 2002 report on Makati and the corruption there, it has another think coming.

x x x."

Comelec chair: Party-list system a joke

Comelec chair: Party-list system a joke

See - http://newsinfo.inquirer.net/278636/comelec-chair-party-list-system-a-joke


"x x x.

The list of groups seeking congressional seats gets stranger and more absurd every election season, making the party-list system a joke, according to Commission on Elections (Comelec) Chairman Sixto Brillantes Jr.

A quick look at the Comelec’s list of the groups shows that health promoters, aviation advocates, athletes and hobbyists, entrepreneurs, former drug users, ex-military renegades, school dropouts and even foreign-exchange dealers want to run for seats in the House of Representatives that the Constitution reserves for marginalized and underrepresented sectors.

In a review of party-list groups, the election watchdog Kontra Daya cited, among many other groups,  Ang Mata’y Alagaan (AMA), a group that claims to represent blind indigents and people afflicted with all kinds of eye diseases and disorders but whose nominees belong to the well-connected Velasco family.

AMA chose Lorna Velasco, a nurse and the wife of Supreme Court Associate Justice Presbitero Velasco, as its first nominee. Velasco’s daughter, Tricia Nicole, a lawyer, was chosen as AMA’s second nominee.

“The Velascos are very powerful politically and economically, considering that they have as head of the family a sitting member of the highest court of this country,” Kontra Daya said.

“Clearly, the AMA has no bona fide intention to represent the sector it claims to represent, but rather to represent the interest of the already powerful, well-connected Velascos,” Kontra Daya added.

New groups have also sprouted claiming to represent the urban poor, whose current nominees in the House come from the upper crust of society.

Some organizations also claim to represent the sick and the handicapped, but their representatives are neither ill nor handicapped and some of them come from well-known wealthy political families.

Nominee from Corinthian

Kontra Daya also cited 1-AsalPartylist, a group that claims to represent the urban poor but not one of its first three nominees is a squatter in any slum in Metro Manila.

Its first nominee, Ryan Tanjucto, lives in posh Corinthian Gardens in Quezon City, according to Kontra Daya. His wife, Maria Lourdes, is the third nominee while the second nominee is Manila City Councilor Raymundo Yupangco.

Kontra Daya, led by Fr. Joe Dizon, also referred to the Association of Local Athletics Entrepreneurs and Hobbyists Inc. (Ala-Eh), whose first nominee, Elmer Anuran, is a known boxing promoter who runs a boxing gym and oversees Saved by the Bell Promotions.

Another group, FXD/MC (www.forexdealers.com corp.) also appears to be out of place in the party-list system, as money changers are not a marginalized sector, Kontra Daya said.

Finding the growing list of party-list groups becoming ridiculous, the Quezon City-based Kontra Daya made a database of old and new groups that didn’t seem to meet the legal requirements and submitted it to the Comelec.

Comelec review 1st time

The Comelec in turn used the database as one of its guides in reviewing the eligibility of these groups to run in next year’s party-list elections.

And for the first time since the introduction of the party-list system in 1995, the Comelec is reassessing party-list groups and screening their representatives in Congress according to the standards laid down by the Constitution and the party-list law.

“The party-list system has become a joke,”  Brillantes said in an interview with the Philippine Daily Inquirer.

Brillantes said he was aware that many party-list representatives in the House are multimillionaires and many of the groups seeking accreditation for next year’s elections have handpicked nominees who are either former government officials or members of powerful political clans.

“That’s why we are doing this [review] to be able to cleanse the list,” Brillantes said.

Clad in their black robes, Brillantes and the five election commissioners took turns grilling witnesses during public hearings called recently to begin the review of 120 party-list groups applying for renewal of their accreditation.

Authorized by Comelec Resolution No. 9513 ordering a review of party-list organizations, the hearings were held from Aug. 16 to Sept. 6.

Probing for fakes

First to be called to the stand was Abot Tanaw whose representative got asked such questions as:

“Mr. Witness, since when did you become a member of the party-list group?”

“Before you became a member, did you check the background of the party-list group?”

“[How much were your] assets and liabilities and net worth when you retired?”

“Do you belong to the group [that] you represent?”

“Did you know how many votes the group received in the previous elections?”

“How come you did not bother to check before joining the party?”

Genuino creation?

Abot Tanaw representative Dante Guevarra, former president of the Polytechnic University of the Philippines, sat there for 30 minutes, answering questions that also touched on the controversy surrounding his organization.

Claiming to represent overseas Filipino workers and operate social media services to keep migrant workers in touch with their families in the Philippines, Abot Tanaw  is reportedly a creation of Efraim Genuino, former chairman  of Philippine Amusement and Gaming Corp. (Pagcor) who is facing charges involving alleged irregularities at the state-run casino operator during his term.

In the 2010 elections, Genuino’s son-in-law, Gerwin See, was named the first nominee of Abot Tanaw. The others were said to be Pagcor consultants.

Guevarra himself has never been a migrant worker but he said he studied migrants’ conditions in Iraq, Libya and in Asia in the 1980s.

The election commissioners asked Guevarra if he knew why he had replaced See as Abot Tanaw’s first nominee.

Guevarra replied, “I am not familiar your honor[s].”

Although a new member of Abot Tanaw, Guevarra said the group had no connection with the Genuinos.

But before letting Guevarra go, the commissioners instructed him to refute the allegations in writing. The Comelec will use his refutation in deciding whether to allow Abot Tanaw to run next year.

289 seeking accreditation

Two hundred eighty-nine groups have filed applications for accreditation to contest next year’s party-list elections. One hundred sixty-five of them are new groups, and the Comelec’s job is determining their legitimacy to cleanse the party-list system that it concedes is infested by sham organizations.

“Can you imagine if every three years there are 165 new groups applying? By 2019, there will be more than 1,000 of them listed on the ballot… that will make the party-list system of elections absurd,” Election Commissioner Rene Sarmiento said in an interview with the Inquirer. “So to me, this is the opportunity to screen and process these party-list organizations.”

At the hearings, the election commissioners asked nominees or representatives questions derived from papers the groups themselves had submitted to the Comelec. The papers included articles of incorporation,  lists of officers and nominees and their credentials.

The questions covered the history of the groups, the groups’ knowledge of the sectors they claimed to represent, the background of the nominees and the nominees’ knowledge about their fellow nominees, previous nominees, number of members, and votes polled in previous elections.

In asking those questions, the election commissioners were showing they doubted whether the groups and their nominees really came from the sectors they claimed to represent.

“There was this nominee supposedly representing indigent student athletes,” Brillantes said. “I told him, you don’t look like an indigent. You don’t look like a student and you don’t look like an athlete, either. So why are you the number one nominee?”

Who are qualified

Under Republic Act No. 7941, otherwise known as the Party-list System Act, only 12 marginalized and underrepresented sectors can seek congressional representation: Labor, peasant, fisherfolk, urban poor, indigenous cultural communities, elderly, handicapped, women, youth, veterans, overseas workers and professionals.

So why are former drug addicts, one-time coup plotters, athletes, and money changers seeking congressional representation? Or, for that matter, why are security guards and jeepney drivers represented in Congress not by security guards and jeepney drivers but by children or allies of big-time politicians?

Sarmiento said the Comelec would give weight to the documents provided by Kontra Daya in its review, likely to end in the fall of false party-list groups and in the recognition of the legitimate ones.

Brillantes said the Comelec would release the complete list of qualified party-list groups by the end of the month ahead of the five-day period allotted for the filing of certificates of candidacy (COCs), which starts Oct. 1.

“We want to get it over with before candidates start filing COCs because the party-list is a sensitive issue,” Brillantes said.

Ambiguities in the law

The Comelec blames the infestation of the party-list system with sham groups on the ambiguities in the law. Sarmiento said ambiguities in the law, exploited by politicians, blurred the concepts of marginalized and underrepresented in the Constitution.

The Constitution does not clearly define the two concepts and also does not lay down the qualifications for party-list nominees, Sarmiento said.

Congress could have filled those gaps by fine-tuning the party-list law, but it had done nothing to correct the flaws in the system.

“So now we have reached this point where many people are asking why are the moneyed people the ones sitting in Congress,” Sarmiento said.

Sarmiento referred to documents provided by Kontra Daya, one of which showed Rep. Catalina Bagasina of the Association of Labor and Employees as the “richest party-list solon” with a net worth of P133.938 million, based on her statement of assets and liabilities for 2011.

23 wealthy party-listers

Kontra Daya listed 23 other wealthy party-list lawmakers whose organizations will contest next year’s elections.

The representatives included Juan Miguel “Mikey” Arroyo of Ang Galing Pinoy (P99.954 million), Teodorico Haresco of Ang Kasangga (P92.814 million), Christopher Co of Ako Bicol (P91.063 million), and David Kho of Coalition of Senior Citizens (P59.521 million).

At a hearing on the Comelec’s budget in the House recently, Sarmiento and other election officials raised the need to amend the party-list law.

“We appealed that the vagueness in the law be addressed for the guidance of the Comelec since we implement the law,” Sarmiento said.

Comelec remedies

In the absence of a more rigid law for the accreditation of nominees, the Comelec has tried to remedy the ambiguities in the law by issuing Resolution No. 9366, specifying that only those who belong to marginalized underrepresented sectors can seek party-list representation in Congress.

“Since no amendment to the law is forthcoming, we issued the resolution, which basically says that if you want to represent a group, for instance a farmer’s group, you must be a farmer,” Sarmiento said.

He described the resolution as guided by jurisprudence, particularly the Supreme Court decision in Ang Bagong Bayani v. Comelec case in 2003.

In that decision written by then Chief Justice Artemio Panganiban, the Supreme Court issued guidelines to ensure that only those who belong to marginalized and underrepresented sectors can run for party-list seats in Congress.

Show your record

The Comelec resolution also requires applicants to submit documents showing their track record and platform of government.

It also requires nominees to have “active participation” in advancing their groups’ advocacies, which can be validated through documentary evidence such as copy of speeches, declarations and written articles showing their support for the sectors they claim to represent.

“We are hopeful that through this resolution, we will address these questions of so many of our people and criticisms that the House is loaded with party-list nominees who don’t belong to the marginalized and underrepresented,” Sarmiento said.

x x x."

Executive agreement clarified - G.R. No. 185572

G.R. No. 185572

"x x x.

Second issue: Whether the Contract Agreement is an executive agreement

Article 2(1) of the Vienna Convention on the Law of Treaties (Vienna Convention) defines a treaty as follows:

[A]n international agreement concluded between States in written form and governed by international law, whether embodied in a single instrument or in two or more related instruments and whatever its particular designation.

In Bayan Muna v. Romulo, this Court held that an executive agreement is similar to a treaty, except that the former (a) does not require legislative concurrence; (b) is usually less formal; and (c) deals with a narrower range of subject matters.[50]

Despite these differences, to be considered an executive agreement, the following three requisites provided under the Vienna Convention must nevertheless concur: (a) the agreement must be between states; (b) it must be written; and (c) it must governed  by international law. The first and the third requisites do not obtain in the case at bar.

A.                CNMEG is neither a government nor a government agency.

The Contract Agreement was not concluded between the Philippines and China, but between Northrail and CNMEG.[51] By the terms of the Contract Agreement, Northrail is a government-owned or -controlled corporation, while CNMEG is a corporation duly organized and created under the laws of the People’s Republic of China.[52]Thus, both Northrail and CNMEG entered into the Contract Agreement as entities with personalities distinct and separate from the Philippine and Chinese governments, respectively.

Neither can it be said that CNMEG acted as agent of the Chinese government. As previously discussed, the fact that Amb. Wang, in his letter dated 1 October 2003,[53] described CNMEG as a “state corporation” and declared its designation as the Primary Contractor in the Northrail Project did not mean it was to perform sovereign functions on behalf of China. That label was only descriptive of its nature as a state-owned corporation, and did not preclude it from engaging in purely commercial or proprietary ventures.

B.                The Contract Agreement is to be governed by Philippine law.

Article 2 of the Conditions of Contract,[54] which under Article 1.1 of the Contract Agreement is an integral part of the latter, states:

APPLICABLE LAW AND GOVERNING LANGUAGE

The contract shall in all respects be read and construed in accordance with the laws of the Philippines.

The contract shall be written in English language. All correspondence and other documents pertaining to the Contract which are exchanged by the parties shall be written in English language.

Since the Contract Agreement explicitly provides that Philippine law shall be applicable, the parties have effectively conceded that their rights and obligations thereunder are not governed by international law.

It is therefore clear from the foregoing reasons that the Contract Agreement does not partake of the nature of an executive agreement. It is merely an ordinary commercial contract that can be questioned before the local courts.

x x x."

Doctrine of sovereign immunity not applied - G.R. No. 185572

G.R. No. 185572

"x x x.

First issue: Whether CNMEG is entitled to immunity

This Court explained the doctrine of sovereign immunity in Holy See v. Rosario,[24] 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.)

xxx                              xxx                              xxx

The restrictive theory came about because of the entry of sovereign states into purely commercial activities remotely connected with the discharge of governmental functions. This is particularly true with respect to the Communist states which took control of nationalized business activities and international trading.

In JUSMAG v. National Labor Relations Commission,[25] this Court affirmed the Philippines’ adherence to the restrictive theory as follows:

The doctrine of state immunity from suit has undergone further metamorphosis. The view evolved that the existence of a contract does not, per se, mean that sovereign states may, at all times, be sued in local courts. The complexity of relationships between sovereign states, brought about by their increasing commercial activities, mothered a more restrictive application of the doctrine. 

xxx                              xxx                              xxx

As it stands now, the application of the doctrine of immunity from suit has been restricted to sovereign orgovernmental activities (jure imperii). The mantle of state immunity cannot be extended to commercial, private and proprietary acts (jure gestionis).[26] (Emphasis supplied.)

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 –[27]

The restrictive application of State immunity is proper only when the proceedings arise out of commercial transactions of the foreign sovereign, its commercial activities or economic affairs. Stated differently, a State may be said to have descended to the level of an individual and can thus be deemed to have tacitly given its consent to be sued only when it enters into business contracts. It does not apply where the contract relates to the exercise of its sovereign functions.[28]  

A.                CNMEG is engaged in a proprietary activity.

A threshold question that must be answered is whether CNMEG performs governmental or proprietary functions. A thorough examination of the basic facts of the case would show that CNMEG is engaged in a proprietary activity.

The parties executed the Contract Agreement for the purpose of constructing the Luzon Railways, viz:[29]

WHEREAS the Employer (Northrail) desired to construct the railways form Caloocan to Malolos, section I, Phase I of Philippine North Luzon Railways Project (hereinafter referred to as THE PROJECT);

AND WHEREAS the Contractor has offered to provide the Project on Turnkey basis, including design, manufacturing, supply, construction, commissioning, and training of the Employer’s personnel;

AND WHEREAS the Loan Agreement of the Preferential Buyer’s Credit between Export-Import Bank of Chinaand Department of Finance of Republic of the Philippines;

NOW, THEREFORE, the parties agree to sign this Contract for the Implementation of the Project.

The above-cited portion of the Contract Agreement, however, does not on its own reveal whether the construction of the Luzon railways was meant to be a proprietary endeavor. In order to fully understand the intention behind and the purpose of the entire undertaking, the Contract Agreement must not be read in isolation. Instead, it must be construed in conjunction with three other documents executed in relation to the Northrail Project, namely: (a) the Memorandum of Understanding dated 14 September 2002 between Northrail and CNMEG;[30] (b) the letter of Amb. Wang dated 1 October 2003 addressed to Sec. Camacho;[31] and (c) the Loan Agreement.[32]

x x x.

B.                CNMEG failed to adduce evidence that it is immune from suit under Chinese law.

Even assuming arguendo that CNMEG performs governmental functions, such claim does not automatically vest it with immunity. This view finds support in Malong v. Philippine National Railways, in which this Court held that “(i)mmunity from suit is determined by the character of the objects for which the entity was organized.”[39]

In this regard, this Court’s ruling in Deutsche Gesellschaft Für Technische Zusammenarbeit (GTZ) v. CA[40]must be examined. In Deutsche Gesellschaft, Germany and the Philippines entered into a Technical Cooperation Agreement, pursuant to which both signed an arrangement promoting the Social Health Insurance–Networking and Empowerment (SHINE) project. The two governments named their respective implementing organizations: the Department of Health (DOH) and the Philippine Health Insurance Corporation (PHIC) for the Philippines, and GTZ for the implementation of Germany’s contributions. In ruling that GTZ was not immune from suit, this Court held:

The arguments raised by GTZ and the [Office of the Solicitor General (OSG)] are rooted in several indisputable facts. The SHINE project was implemented pursuant to the bilateral agreements between the Philippine and German governments. GTZ was tasked, under the 1991 agreement, with the implementation of the contributions of the German government. The activities performed by GTZ pertaining to the SHINE project are governmental in nature, related as they are to the promotion of health insurance in the Philippines. The fact that GTZ entered into employment contracts with the private respondents did not disqualify it from invoking immunity from suit, as held in cases such as Holy See v. Rosario, Jr., which set forth what remains valid doctrine:

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.

Beyond dispute is the tenability of the comment points (sic) raised by GTZ and the OSG that GTZ was not performing proprietary functions notwithstanding its entry into the particular employment contracts. Yet there is an equally fundamental premise which GTZ and the OSG fail to address, namely: Is GTZ, by conception, able to enjoy theFederal Republic’s immunity from suit?

The principle of state immunity from suit, whether a local state or a foreign state, is reflected in Section 9, Article XVI of the Constitution, which states that “the State may not be sued without its consent.” Who or what consists of “the State”? For one, the doctrine is available to foreign States insofar as they are sought to be sued in the courts of the local State, necessary as it is to avoid “unduly vexing the peace of nations.”

If the instant suit had been brought directly against the Federal Republic of Germany, there would be no doubt that it is a suit brought against a State, and the only necessary inquiry is whether said State had consented to be sued. However, the present suit was brought against GTZ. It is necessary for us to understand what precisely are the parameters of the legal personality of GTZ.

Counsel for GTZ characterizes GTZ as “the implementing agency of the Government of the Federal Republic of Germany,” a depiction similarly adopted by the OSG. Assuming that the characterization is correct, it does not automatically invest GTZ with the ability to invoke State immunity from suit. The distinction lies in whether the agency is incorporated or unincorporated.

xxx                              xxx                              xxx

State immunity from suit may be waived by general or special law. The special law can take the form of the original charter of the incorporated government agency. Jurisprudence is replete with examples of incorporated government agencies which were ruled not entitled to invoke immunity from suit, owing to provisions in their charters manifesting their consent to be sued.

xxx                              xxx                              xxx

It is useful to note that on the part of the Philippine government, it had designated two entities, the Department of Health and the Philippine Health Insurance Corporation (PHIC), as the implementing agencies in behalf of the Philippines. The PHIC was established under Republic Act No. 7875, Section 16 (g) of which grants the corporation the power “to sue and be sued in court.” Applying the previously cited jurisprudence, PHIC would not enjoy immunity from suit even in the performance of its functions connected with SHINE, however, (sic) governmental in nature as (sic) they may be.

Is GTZ an incorporated agency of the German government? There is some mystery surrounding that question. Neither GTZ nor the OSG go beyond the claim that petitioner is “the implementing agency of the Government of the Federal Republic of Germany.” On the other hand, private respondents asserted before the Labor Arbiter that GTZ was “a private corporation engaged in the implementation of development projects.” The Labor Arbiter accepted that claim in his Order denying the Motion to Dismiss, though he was silent on that point in his Decision. Nevertheless, private respondents argue in their Comment that the finding that GTZ was a private corporation “was never controverted, and is therefore deemed admitted.” In its Reply, GTZ controverts that finding, saying that it is a matter of public knowledge that the status of petitioner GTZ is that of the “implementing agency,” and not that of a private corporation.

In truth, private respondents were unable to adduce any evidence to substantiate their claim that GTZ was a “private corporation,” and the Labor Arbiter acted rashly in accepting such claim without explanation. But neither has GTZ supplied any evidence defining its legal nature beyond that of the bare descriptive “implementing agency.” There is no doubt that the 1991 Agreement designated GTZ as the “implementing agency” in behalf of the German government. Yet the catch is that such term has no precise definition that is responsive to our concerns. Inherently, an agent acts in behalf of a principal, and the GTZ can be said to act in behalf of the German state. But that is as far as “implementing agency” could take us. The term by itself does not supply whether GTZ is incorporated or unincorporated, whether it is owned by the German state or by private interests, whether it has juridical personality independent of the German government or none at all.

xxx                              xxx                              xxx

Again, we are uncertain of the corresponding legal implications under German law surrounding “a private company owned by the Federal Republic of Germany.” Yet taking the description on face value, the apparent equivalent under Philippine law is that of a corporation organized under the Corporation Code but owned by the Philippine government, or a government-owned or controlled corporation without original charter. And it bears notice that Section 36 of the Corporate Code states that “[e]very corporation incorporated under this Code has the power and capacity x x x to sue and be sued in its corporate name.”

It is entirely possible that under German law, an entity such as GTZ or particularly GTZ itself has not been vested or has been specifically deprived the power and capacity to sue and/or be sued. Yet in the proceedings below and before this Court, GTZ has failed to establish that under German law, it has not consented to be sued despite it being owned by the Federal Republic of Germany. We adhere to the rule that in the absence of evidence to the contrary, foreign laws on a particular subject are presumed to be the same as those of the Philippines, and following the most intelligent assumption we can gather, GTZ is akin to a governmental owned or controlled corporation without original charter which, by virtue of the Corporation Code, has expressly consented to be sued. At the very least, like the Labor Arbiter and the Court of Appeals, this Court has no basis in fact to conclude or presume that GTZ enjoys immunity from suit.[41] (Emphasis supplied.)

Applying the foregoing ruling to the case at bar, it is readily apparent that CNMEG cannot claim immunity from suit, even if it contends that it performs governmental functions. Its designation as the Primary Contractor does not automatically grant it immunity, just as the term “implementing agency” has no precise definition for purposes of ascertaining whether GTZ was immune from suit. Although CNMEG claims to be a government-owned corporation, it failed to adduce evidence that it has not consented to be sued under Chinese law. Thus, following this Court’s ruling inDeutsche Gesellschaft, in the absence of evidence to the contrary, CNMEG is to be presumed to be a government-owned and -controlled corporation without an original charter. As a result, it has the capacity to sue and be sued under Section 36 of the Corporation Code. 

C.               CNMEG failed to present a certification from the Department of Foreign Affairs.

In Holy See,[42] this Court reiterated the oft-cited doctrine that the determination by the Executive that an entity is entitled to sovereign or diplomatic immunity is a political question conclusive upon the courts, to wit:

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.

xxx                              xxx                              xxx

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 v. 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 Organization v. Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs sent the trial court a telegram to that effect. In Baer v. 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 moved with 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 v. Bradford, 75 Phil. 50 [1945]; Miquiabas v. Philippine-Ryukyus Command, 80 Phil. 262 [1948]; United States of America v. Guinto, 182 SCRA 644 [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.[43] (Emphasis supplied.)

The question now is whether any agency of the Executive Branch can make a determination of immunity from suit, which may be considered as conclusive upon the courts. This Court, in Department of Foreign Affairs (DFA) v. National Labor Relations Commission (NLRC),[44] emphasized the DFA’s competence and authority to provide such necessary determination, to wit:

The DFA’s function includes, among its other mandates, the determination of persons and institutions covered by diplomatic immunities, a determination which, when challenge, (sic) 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 of (sic) the DFA as being the highest executive department with the competence and authority to so act in this aspect of the international arena.[45] (Emphasis supplied.)

Further, the fact that this authority is exclusive to the DFA was also emphasized in this Court’s ruling inDeutsche Gesellschaft:

It is to be recalled that the Labor Arbiter, in both of his rulings, noted that it was imperative for petitioners to secure from the Department of Foreign Affairs “a certification of respondents’ diplomatic status and entitlement to diplomatic privileges including immunity from suits.” The requirement might not necessarily be imperative. However, had GTZ obtained such certification from the DFA, it would have provided factual basis for its claim of immunity that would, at the very least, establish a disputable evidentiary presumption that the foreign party is indeed immune which the opposing party will have to overcome with its own factual evidence. We do not see why GTZ could not have secured such certification or endorsement from the DFA for purposes of this case. Certainly, it would have been highly prudential for GTZ to obtain the same after the Labor Arbiter had denied the motion to dismiss. Still, even at this juncture, we do not see any evidence that the DFA, the office of the executive branch in charge of our diplomatic relations, has indeed endorsed GTZ’s claim of immunity. It may be possible that GTZ tried, but failed to secure such certification, due to the same concerns that we have discussed herein.

Would the fact that the Solicitor General has endorsed GTZ’s claim of State’s immunity from suit before this Court sufficiently substitute for the DFA certification? Note that the rule in public international law quoted in Holy See referred to endorsement by the Foreign Office of the State where the suit is filed, such foreign office in the Philippines being the Department of Foreign Affairs. Nowhere in the Comment of the OSG is it manifested that the DFA has endorsed GTZ’s claim, or that the OSG had solicited the DFA’s views on the issue. The arguments raised by the OSG are virtually the same as the arguments raised by GTZ without any indication of any special and distinct perspective maintained by the Philippine government on the issue. The Comment filed by the OSG does not inspire the same degree of confidence as a certification from the DFA would have elicited.[46] (Emphasis supplied.)

In the case at bar, CNMEG offers the Certification executed by the Economic and Commercial Office of the Embassy of the People’s Republic of China, stating that the Northrail Project is in pursuit of a sovereign activity.[47]Surely, this is not the kind of certification that can establish CNMEG’s entitlement to immunity from suit, as Holy Seeunequivocally refers to the determination of the “Foreign Office of the state where it is sued.”

Further, CNMEG also claims that its immunity from suit has the executive endorsement of both the OSG and the Office of the Government Corporate Counsel (OGCC), which must be respected by the courts. However, as expressly enunciated in Deutsche Gesellschaft, this determination by the OSG, or by the OGCC for that matter, does not inspire the same degree of confidence as a DFA certification. Even with a DFA certification, however, it must be remembered that this Court is not precluded from making an inquiry into the intrinsic correctness of such certification. 

D.                An agreement to submit any dispute to arbitration may be construed as an implicit waiver of immunity from suit.

In the United States, the Foreign Sovereign Immunities Act of 1976 provides for a waiver by implication of state immunity. In the said law, the agreement to submit disputes to arbitration in a foreign country is construed as an implicit waiver of immunity from suit. Although there is no similar law in the Philippines, there is reason to apply the legal reasoning behind the waiver in this case.

The Conditions of Contract,[48] which is an integral part of the Contract Agreement,[49] states:

33. SETTLEMENT OF DISPUTES AND ARBITRATION

33.1. Amicable Settlement

Both parties shall attempt to amicably settle all disputes or controversies arising from this Contract before the commencement of arbitration.

33.2. Arbitration

All disputes or controversies arising from this Contract which cannot be settled between the Employer and the Contractor shall be submitted to arbitration in accordance with the UNCITRAL Arbitration Rules at present in force and as may be amended by the rest of this Clause. The appointing authority shall be Hong Kong International Arbitration Center. The place of arbitration shall be in Hong Kong at Hong Kong International Arbitration Center (HKIAC).

Under the above provisions, if any dispute arises between Northrail and CNMEG, both parties are bound to submit the matter to the HKIAC for arbitration. In case the HKIAC makes an arbitral award in favor of Northrail, its enforcement in the Philippines would be subject to the Special Rules on Alternative Dispute Resolution (Special Rules). Rule 13 thereof provides for the Recognition and Enforcement of a Foreign Arbitral Award. Under Rules 13.2 and 13.3 of the Special Rules, the party to arbitration wishing to have an arbitral award recognized and enforced in the Philippines must petition the proper regional trial court (a) where the assets to be attached or levied upon is located; (b) where the acts to be enjoined are being performed; (c) in the principal place of business in the Philippines of any of the parties; (d) if any of the parties is an individual, where any of those individuals resides; or (e) in the National Capital Judicial Region.

From all the foregoing, it is clear that CNMEG has agreed that it will not be afforded immunity from suit. Thus, the courts have the competence and jurisdiction to ascertain the validity of the Contract Agreement.

x x x."