Topic Author Case Title GR No Tickler Date Doctrine

2S PIL Case Digests
TOPIC Immunity from Suit AUTHOR #13_Chan
CASE TITLE GERMAN AGENCY FOR TECHNICAL COOPERATION (GTZ) vs. HON. COURT GR NO 152318
OF APPEALS
TICKLER Technical Cooperation Agreement between Germany and Philippines DATE April 16, 2009
DOCTRINE The Philippine 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 case, is often conferred by the very
same statute or general law creating the instrumentality or agency.
FACTS The governments of the Federal Republic of Germany and the Republic of the Philippines ratified an Agreement
concerning Technical Co-operation (Agreement) in Bonn, West Germany. The Agreement affirmed the countries’
common interest in promoting the technical and economic development of their States, and recognized the
benefits to be derived by both States from closer technical co-operation," and allowed for the conclusion of
"arrangements concerning individual projects of technical co-operation."
While the Agreement provided for a limited term of effective of five (5) years, it nonetheless was stated that "the
Agreement shall be tacitly extended for successive periods of one year unless either of the two Contracting
Parties denounces it in writing three months prior to its expiry," and that even upon the Agreement’s expiry, its
provisions would "continue to apply to any projects agreed until their completion."
On 10 December 1999, the Philippine government, through then Foreign Affairs Secretary Domingo Siazon, and
the German government, agreed to an Arrangement in furtherance of the 1971 Agreement, which affirmed the
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 and to
maintain their health and secure health care of sustainable quality."
The Republic of Germany assigned the GTZ as the implementing corporation for the program while the
Philippines designated the Department of Health and the Philippine Health Insurance Corporation
(PHILHEALTH). Private respondents were engaged as contract employees hired by GTZ to work for SHINE. But
in September of 1999, Anne Nicolay (Nicolay), a Belgian national, assumed the post of SHINE Project Manager.
Private respondents' had a misunderstanding with the Project Manager of SHINE. It was claimed that SHINE
under Nicolay had veered away from its original purpose to facilitate the development of social health insurance
by shoring up the national health insurance program and strengthening local initiatives, as Nicolay had refused
to support local partners and new initiatives on the premise that community and local government unit schemes
were not sustainable a philosophy that supposedly betrayed Nicolay’s lack of understanding of the purpose of
the project. This lead to an exchange of letters which was interpreted to be the resignation of the private
respondents.
Private respondents then filed a complaint for illegal dismissal to the labor arbiter. GTZ, through counsel, filed a
Motion to Dismiss, on the ground that the Labor Arbiter had no jurisdiction over the case, as its acts were
undertaken in the discharge of the governmental functions and sovereign acts of the Government of the Federal
Republic of Germany. This was opposed by private respondents with the arguments that GTZ had failed to secure
a certification that it was immune from suit from the Department of Foreign Affairs, and that it was GTZ and not
the German government which had implemented the SHINE Project and entered into the contracts of
employment.
The Labor Arbiter issued an Order denying the Motion to Dismiss. The Order cited, among others, that GTZ was
a private corporation which entered into an employment contract; and that GTZ had failed to secure from the
DFA a certification as to its diplomatic status. GTZ did not file a motion for reconsideration to the Labor Arbiters
Decision or elevate said decision for appeal to the NLRC. Instead, GTZ opted to assail the decision by way of a
special civil action for certiorari filed with the Court of Appeals.
2S [AY 2020-2021]
San Beda University – College of Law
2S PIL Case Digests
The Court of Appeals promulgated a Resolution dismissing GTZs petition, finding that judicial recourse at this
stage of the case is uncalled for, the appropriate remedy of the petitioners being an appeal to the NLRC.
Thus, the present petition for review under Rule 45, assailing the decision and resolutions of the Court of Appeals
and of the Labor Arbiter.
ISSUE/S Whether or not GTZ enjoys immunity from suit.
RULING/S No, GTZ does not enjoy 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.
In this case, GTZ’s counsel described GTZ as the implementing agency of the Government of the Federal
Republic of Germany, however it does not automatically mean that it has the ability to invoke State immunity
from suit. They had failed to adduce evidence, a certification from Department of Foreign Affairs which could
have been their factual basis for its claim of immunity. At the same time, it appears 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.
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 (GOCC) without original
charter. And it bears notice that Section 36 of the Corporate Code states that every corporation incorporated
under this Code has the power and capacity to sue and be sued in its corporate name.
The Court, thus, holds and so rules 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. 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.
WHEREFORE, the petition is DENIED.
2S [AY 2020-2021]
San Beda University – College of Law

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2S PIL Case Digests

TOPIC Immunity from Suit AUTHOR #13_Chan

ISSUE/S Whether or not GTZ enjoys immunity from suit.

RULING/S No, GTZ does not enjoy immunity from suit.

WHEREFORE, the petition is DENIED.

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