CHAPTER 35: STATE IMMUNITY FROM SUIT
PRINCIPLES AND CASES IN PRIVATE INTERNATIONAL LAW:
A PROCEDURAL APPROACH
-oOo-
MARK ANGELO S. DELA PEÑA
To cite this online book, please use the following:
Dela Peña. 2023. "Principles and Cases in Private International Law: A Procedural Approach." Published by Project Jurisprudence - Philippines. Published: September 17, 2023. Link: [Insert link] Last accessed: [Insert date of access].
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The Philippine State may not be sued without its consent.[1]
It may seem unfair that this State cannot be sued without its consent. It appears to be an impenetrable shield or a cloak that may be used for misconduct or dishonesty but that is precisely the historical significance of this rule. In fact, this doctrine has been mockingly called the “royal prerogative of dishonesty” because it grants the Philippine State the prerogative to defeat any legitimate claim against it by simply invoking its non-suability.[2]
While the State’s non-suability appears to be an unfair setup, there is a good reason behind it. In fact, there are three justifications for this rule, namely: (a) the legal reason; (b) the logical reason; and, (c) the practical reason.
If asked why the Philippine State is immune from suit, the law student’s answer should be “because the Constitution says so.” The Filipino people, in their sovereign power, have determined that the State should enjoy non-suability and there can actually be no valid argument against this. Plainly and simply, the Constitution clothes the State with a protective mantle that renders it invulnerable to suits, simply by invoking this principle.
If the question insists on a deeper or higher reason, the next answer is based on logic. There can be no legal right as against the authority that makes the law on which the right depends.[3] True enough, the State is the corporate body that represents the sovereign powers held by the Filipino people. It is through the State that the will of the people is habitually exercised through the passage of laws by Congress, the State’s legislative arm, and the implementation of said laws by the President, the head of state. If the cause of action is based on law, that cause flows necessarily from a statute created by Congress and implemented by the President.
Obviously, such an answer would remain unsatisfactory to a curious mind. The last but certainly not the least justification is the practical advantage or advantages that may be derived from this rule. Public service would be rendered nugatory and public safety endangered if the supreme authority could be subjected to suit at the instance of every citizen, thereby negative affecting the proper administration of the government.[4] In the words of Justice Gray, the “broader reason is that it would be inconsistent with the very idea of supreme executive power and would endanger the performance of the public duties of the sovereign, to subject him to repeated suits as a matter of right, at the will of any citizen, and to submit to the judicial tribunals the control and disposition of his property, his instruments and means of carrying on his government in war and peace, and the money of his treasury.”[5]
Without this rule, every accident on the road constructed by the State would expose it to liability. Every inconvenience, regardless of the level of vexation, arising from the Philippine Government’s public works, services and activities would be confronted with legal demands. It is not difficult to imagine that such a situation would create chaos not only in the justice system but also in the proper performance of public functions.
IMMUNITY OF FOREIGN STATES
In the case of foreign states, the question is whether the same mantle of immunity extends to them. The answer is in the affirmative. The reason for this rule is the principle of the sovereign equality of states, which states that par in parem non habet imperium. A soverign has no authority over another sovereign.[6]
A contrary attitude would unduly vex the peace of nations.[7] Moreover, adherence to this precept is formally expressed no less in the 1987 Constitution of the Philippines which adopts the generally accepted principles of international law as part of the law of the land. Also, the principle of reciprocity which prevails in the community of nations demands this.
Suffice it to say that, in the world of conflict of laws, the issue is usually the invocation of immunity by a foreign state or by an arm or an agency of such foreign state in a suit filed in a Philippine forum. It may also deal with the Philippine State itself invoking such immunity in a foreign forum.[8]
LAYERS OF RULES ON STATE IMMUNITY
The doctrine of state immunity penetrates several, nay numerous, layers of exceptions to exceptions such as those relating to incorporated and unincorporated agencies of the government, the matter of proper invocation by the proper defendant, the difference between suability and liability, the question on commercial or sovereign dealings (ministrant and constituent functions) and many more. These, of course, need not be discussed in length in this book on private international law.
HOLY SEE V. ROSARIO
Holy See v. Rosario[9] involved petitioner who/which is the Holy See who exercises sovereignty over the Vatican City in Rome, Italy, and is represented in the Philippines by the Papal Nuncio. Private respondent, Starbright Sales Enterprises, Inc., is a domestic corporation engaged in the real estate business.
The case arose from a controversy over a parcel of land consisting of 6,000 square meters, divided into three parcels, located in the Municipality of Paranaque, Metro Manila and registered in the name of petitioner. Later, the subject parcels of land found its way into the ownership of private respondent. In view of the refusal of the squatters to vacate the lots sold to private respondent, a dispute arose as to who of the parties had the responsibility of evicting and clearing the land of squatters. Complicating the relations of the parties was the sale by petitioner of one of the lots to Tropicana Properties and Development Corporation (Tropicana). Hence, the question was whether the Holy See could be sued under the contract it entered into through its representatives in the Philippines.
The Holy See is an international person. In fact, the Republic of the Philippines has accorded the Holy See the status of a foreign sovereign. The Holy See, through its Ambassador, the Papal Nuncio, has had diplomatic representations with the Philippine government since 1957. This appears to be the universal practice in international relations and generally accepted principles of international law are part of the law of the land.
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.[10] 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.
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.
If petitioner Holy See bought and sold lands in the ordinary course of a real estate business, surely the said transaction could be categorized as an act jure gestionis. However, petitioner has denied that their acquisition and subsequent disposal were made for profit but claimed that it acquired said property for the site of its mission or the Apostolic Nunciature in the Philippines. Private respondent failed to dispute said claim.
Under the 1961 Vienna Convention on Diplomatic Relations, a diplomatic envoy is granted immunity from the civil and administrative jurisdiction of the receiving state over any real action relating to private immovable property situated in the territory of the receiving state which the envoy holds on behalf of the sending state for the purposes of the mission. If this immunity is provided for a diplomatic envoy, with all the more reason should immunity be recognized as regards the sovereign itself, which in this case is the Holy See.
The decision to transfer the property and the subsequent disposal thereof were likewise clothed with a governmental character. Petitioner did not sell them for profit or gain. It merely wanted to dispose off the same because the squatters living thereon made it almost impossible for petitioner to use it for the purpose of the donation. The fact that squatters had occupied and were still occupying the lot, and that they stubbornly refused to leave the premises, has been admitted by private respondent in its complaint.
Besides, the privilege of sovereign immunity in this case was sufficiently established by the Memorandum and Certification of the Department of Foreign Affairs (DFA). As the department tasked with the conduct of the Philippines’ foreign relations, the DFA formally intervened in this case and officially certified that the Embassy of the Holy See is a duly accredited diplomatic mission to the Republic of the Philippines, exempt from local jurisdiction and entitled to all the rights, privileges and immunities of a diplomatic mission or embassy in this country. The determination of the executive arm of government that a state or instrumentality is entitled to sovereign or diplomatic immunity is a political question that is conclusive upon the courts.[11] Where the plea of immunity is recognized and affirmed by the executive branch, it is the duty of the courts to accept this claim so as not to embarrass the executive arm of the government in conducting the country's foreign relations.[12]
Does this leave the private respondent without legal remedy for its perceived violation of its rights? The answer is in the negative. Under both public international law and transnational law, a person who feels aggrieved by the acts of a foreign sovereign can ask his own government to espouse his cause through diplomatic channels through a process called “espousal.” Private respondent may ask the Philippine Government, through the DFA, to espouse its claims against the Holy See. Its first task is to persuade the Philippine Government to take up with the Holy See the validity of its claims. Of course, the DFA must first make a determination of the impact of its espousal on the relations between the Philippine government and the Holy See.[13] Once the Philippine government decides to espouse the claim, the latter ceases to be a private cause.
DEUTSCHE GESELLSCHAFT V. CA[14]
In this case of Deutsche Gesellschaft, the governments of the Federal Republic of Germany and the Republic of the Philippines ratified an “Agreement concerning Technical Co-operation” (agreement) in Bonn, Germany, affirming their common commitment of both governments to promote jointly a project called, Social Health Insurance-Networking and Empowerment (SHINE), which was designed to enable Philippine families-especially poor ones-to maintain their health and secure health care of sustainable quality.
Both governments named their respective implementing organizations for SHINE. The Philippines designated the Department of Health (DOH) and the Philippine Health Insurance Corporation (PhilHealth). For their part, the German government charged the Deustche Gesellschaft für Technische Zusammenarbeit (GTZ) with the implementation of its contributions. Filipino private respondents were hired as employees to work for SHINE.
Later, a Belgian national, Anne Nicolay (Nicolay), assumed the post of SHINE Project Manager. Disagreements eventually arose between Nicolay and private respondents in matters such as proposed salary adjustments, and the course Nicolay was taking in the implementation of SHINE different from her predecessors. A letter was sent by the private respondents which Nicolay took as a resignation letter. Later, after negotiations, Nicolay wrote them a letter informing them of their termination from employment on grounds of serious and gross insubordination, among others, resulting in loss of confidence and trust. A labor case ensued.
GTZ’s primary defense was that it was immune from suit as its acts were undertaken in the discharge of the governmental functions and sovereign acts of the Government of the Federal Republic of Germany. The counter-argument was that GTZ was a private corporation that entered into a contract, thereby descending to the level of an individual, and that GTZ failed to secure from the Department of Foreign Affairs (DFA) a certification as to its diplomatic status. In rebuttal, GTZ invoked a German law that rendered it immune from suit by reason of its functions.
GTZ failed the case. First, it was not able to prove the German law that vested it with immunity from suit. Second, there was no proper endorsement or certification (or “suggestion”[15]) from the DFA. Third, the Supreme Court of the Philippines found that GTZ was actually organized not through a legislative public charter, but under private law, in the same way that Philippine corporations can be organized under the Corporation Code even if fully owned by the Philippine government. As a result, the Court ruled that GTZ consistently has been unable to establish with satisfaction that it enjoys the immunity from suit generally enjoyed by its parent country, the Federal Republic of Germany.
As a final note, the Supreme Court said: “This decision should not be seen as deviation from the more common methodology employed in ascertaining whether a party enjoys state immunity from suit, one which focuses on the particular functions exercised by the party and determines whether these are proprietary or sovereign in nature. The nature of the acts performed by the entity invoking immunity remains the most important barometer for testing whether the privilege of State immunity from suit should apply. At the same time, our Constitution stipulates that a state immunity from suit is conditional on its withholding of consent; hence, the laws and circumstances pertaining to the creation and legal personality of an instrumentality or agency invoking immunity remain relevant. Consent to be sued, as exhibited in this decision, is often conferred by the very same statute or general law creating the instrumentality or agency.”
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[1] Section 3 of Article XVI of the 1987 Constitution.
[2] See Secretary of Heath v. Phil Pharmawealth, 704 Phil. 432 [ G.R. No. 182358. February 20, 2013 ]
[3] METRAN v. Paredes, 79 Phil. 819 [ G.R. No. L-1232. January 12, 1948 ].
[4] Siren vs. U.S., 74 U.S. 152 (1868).
[5] Briggs v. The Boats, 11 Allen 162.
[6] See Sanders v. Veridiano II, 245 Phil. 63 [ G.R. No. L-46930. June 10, 1988 ].
[7] De Haber v. Queen of Portugal, 17 Q.B. 171.
[8] The student must pay close attention to the difference between the doctrine of act of state and the doctrine of state immunity whenever invoked by a foreign state in a local forum.
[9] 308 Phil. 547 [G.R. No. 101949. December 01, 1994].
[10] See United States of America v. Ruiz, 136 SCRA 487 [1987]; Coquia and Defensor-Santiago, Public International Law 194 [1984].
[11] International Catholic Migration Commission v. Calleja, 190 SCRA 130 [1990].
[12] World Health Organization v. Aquino, 48 SCRA 242 [1972].
[13] Young, Remedies of Private Claimants Against Foreign States, Selected Readings on Protection by Law of Private Foreign Investments 905, 919 [1964].
[14] 603 Phil. 150 [ G.R. No. 152318. April 16, 2009 ].
[15] In the United States, the procedure followed is the process of “suggestion,” where the foreign state or the international organization sued in an American court requests the Secretary of State to make a determination as to whether it is entitled to immunity. If the Secretary of State finds that the defendant is immune from suit, he, in turn, asks the Attorney General to submit to the court a “suggestion” that the defendant is entitled to immunity. In England, a similar procedure is followed, only the Foreign Office issues a certification to that effect instead of submitting a “suggestion.” (O'Connell, I International Law 130 [1965]; Note: Immunity from Suit of Foreign Sovereign Instrumentalities and Obligations, 50 Yale Law Journal 1088 [1941])
