An entity claiming state immunity from suit, especially one described as a private company organized under foreign law even if state-owned, bears the burden of proving its entitlement to such immunity; failure to adduce evidence of its legal status under its parent country's law consenting to or restricting suit, or to secure an endorsement from the Department of Foreign Affairs, can lead to the denial of the claim for immunity.

The case arose from a technical cooperation agreement between the Federal Republic of Germany and the Republic of the Philippines, initiated in 1971 and extended by subsequent arrangements. One such arrangement in 1999 concerned a project called Social Health Insurance--Networking and Empowerment (SHINE), designed to improve health care for Philippine families. The German government designated GTZ as its implementing agency for its contributions to the SHINE project, while the Philippines designated the Department of Health (DOH) and Philippine Health Insurance Corporation (Philhealth).

• Private respondents were hired by GTZ as contract employees for the SHINE project between December 1998 and September 1999; their employment contracts identified Dr. Rainer Tollkotter, a GTZ adviser, as the "employer" acting on behalf of GTZ for the Philippine-German bilateral project.
• In September 1999, Anne Nicolay, a Belgian national, became the SHINE Project Manager, leading to disagreements with private respondents over salary adjustments and project implementation direction.
• On June 8, 2000, private respondents sent a letter to Nicolay, with copies to DOH, Philhealth, and GTZ Manila, outlining their concerns about the project's direction and management, concluding that they "could no longer find any reason to stay with the project unless ALL of these issues be addressed immediately and appropriately."
• On June 21, 2000, Nicolay responded to each private respondent, interpreting their letter as a resignation and stating she would accept it.
• Private respondents clarified in a subsequent letter that their June 8 letter was not a resignation but intended to raise vital issues.
• On July 11, 2000, Nicolay sent letters to private respondents pre-terminating their employment contracts due to "serious and gross insubordination, among others, resulting to loss of confidence and trust."
• Private respondents filed a complaint for illegal dismissal with the NLRC against GTZ, Hans Peter Paulenz (Director of GTZ Manila), and Anne Nicolay.
• GTZ filed a Motion to Dismiss, claiming immunity from suit as its acts were governmental functions of the Federal Republic of Germany.
• The Labor Arbiter denied the Motion to Dismiss and later ruled in favor of the private respondents, finding illegal dismissal.
• GTZ, instead of appealing to the NLRC, filed a certiorari petition with the Court of Appeals, which dismissed it for failure to exhaust administrative remedies.
• GTZ's own website describes itself as a "federally owned" "federal enterprise" "founded in 1975 as a company under private law," and the Federal Republic of Germany's official website describes GTZ as "a private company owned by the Federal Republic of Germany."

• GTZ argued that the Labor Arbiter had no jurisdiction over the case because GTZ's acts were undertaken in the discharge of governmental functions and sovereign acts of the Federal Republic of Germany, thus entitling it to state immunity.
• GTZ contended that it was the implementing agency of the German government for the SHINE project, a joint undertaking based on bilateral agreements.
• GTZ claimed that the Court of Appeals erred in dismissing its certiorari petition, arguing that direct recourse to the CA was proper because the Labor Arbiter's decision was a patent nullity due to lack of jurisdiction.
• GTZ asserted that entering into employment contracts did not divest it of its immunity, as the activities were not proprietary or commercial but related to the promotion of health insurance, a governmental function.
• GTZ, supported by the OSG, maintained its status as an implementing agency performing governmental functions, not proprietary ones.

• Private respondents argued that GTZ failed to secure a certification from the Department of Foreign Affairs (DFA) stating it was immune from suit.
• Private respondents contended that GTZ, not the German government, implemented the SHINE project and entered into the employment contracts.
• Private respondents asserted that GTZ was a private corporation engaged in development projects, as found by the Labor Arbiter, and this finding was uncontroverted.
• Private respondents maintained that the Labor Arbiter had jurisdiction because the employment contracts stipulated that they would be subject to the laws of the locality where services were performed.
• Private respondents argued that by entering into contracts, GTZ could no longer invoke sovereign immunity.

• Whether GTZ is entitled to immunity from suit in relation to the illegal dismissal complaint filed by its former employees.
• Whether the Court of Appeals correctly dismissed GTZ's petition for certiorari for failure to exhaust administrative remedies by not appealing the Labor Arbiter's decision to the NLRC.

• The Supreme Court denied GTZ's petition.
• The Court held that GTZ failed to establish that it enjoyed immunity from suit. While GTZ was designated as the implementing agency for the German government's contributions to the SHINE project, its own submitted information (from its website and the German government's website) described GTZ as a "private company owned by the Federal Republic of Germany" and "founded in 1975 as a company under private law."
• The Court reasoned that if an agency is incorporated with a separate juridical personality, its suability depends on its charter. If organized under private law, like a Philippine government-owned or controlled corporation without an original charter, it is generally suable. GTZ did not provide evidence of German law that would grant it immunity despite being a company organized under private law.
• The Court emphasized that GTZ did not secure a certification from the Philippine Department of Foreign Affairs (DFA) attesting to its diplomatic status or immunity, which could have provided a factual basis for its claim. The OSG's endorsement in the Supreme Court was not considered a substitute for DFA certification.
• Since GTZ failed to prove its immunity, the Labor Arbiter acted properly in assuming jurisdiction. Therefore, the Labor Arbiter's decision was not a "patent nullity" that would justify bypassing an appeal to the NLRC.
• Consequently, the Court of Appeals correctly dismissed GTZ's certiorari petition for failure to exhaust administrative remedies. The Labor Arbiter's decision, not having been appealed to the NLRC, became final and executory.

• State Immunity from Suit — A fundamental principle providing that a state cannot be sued in its own courts or in any other court without its consent. In this case, GTZ invoked this doctrine, claiming to be an arm of the German government performing sovereign functions. The Court found GTZ failed to prove its entitlement to this immunity, as it was characterized as a private company and did not present evidence of German law granting it immunity or a DFA certification.
• Suability of Incorporated Government Agencies — An incorporated government agency with a charter of its own that invests it with a separate juridical personality is suable if its charter says so, regardless of the functions it performs. The Court analogized GTZ's situation, described as a "private company owned by the Federal Republic of Germany," to a government-owned corporation without an original charter, which under Philippine law (Corporation Code) can sue and be sued.
• Act Jure Imperii vs. Act Jure Gestionis — Acts jure imperii are sovereign or governmental acts for which a state is immune, while acts jure gestionis are proprietary or commercial acts for which a state may be sued. The Court noted that while GTZ's activities for SHINE were governmental in nature, the primary issue was GTZ's capacity to be sued based on its legal personality, not just the nature of its acts.
• Waiver of Immunity — State immunity may be waived, expressly or impliedly. An express waiver can occur through a general or special law, such as a charter provision allowing an agency to sue and be sued. The Court found no explicit waiver by GTZ but focused on its failure to establish its inherent immunity in the first place.
• Presumption of Foreign Law (Processual Presumption) — 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. The Court applied this by presuming that under German law, an entity like GTZ (akin to a Philippine GOCC without an original charter) would be suable, as GTZ failed to prove otherwise.
• Exhaustion of Administrative Remedies — A doctrine requiring that where an administrative remedy is provided by statute, relief must be sought by exhausting this remedy before the courts will act. The Court upheld the CA's dismissal of GTZ's certiorari petition because GTZ failed to appeal the Labor Arbiter's decision to the NLRC, the proper administrative recourse.
• Finality of Judgment — Once a judgment becomes final and executory, it is immutable and unalterable. The Court concluded that the Labor Arbiter's decision became final and executory due to GTZ's failure to properly appeal it to the NLRC.
• Requirement of DFA Certification for Immunity Claims — While not strictly mandatory, securing an executive endorsement or certification from the Department of Foreign Affairs regarding a foreign entity's claim of sovereign or diplomatic immunity provides a strong factual basis for such a claim in Philippine courts. GTZ's failure to obtain this was a significant factor in the denial of its immunity claim.

• "The Court is 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."
• "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."
• "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."

• Holy See v. Rosario, Jr. — Referenced for the principle that mere entry into a contract by a foreign state does not automatically mean it is engaged in proprietary activity, and for outlining the procedure for claiming immunity, including seeking endorsement from the Foreign Office (DFA in the Philippines). The Court used this to highlight GTZ's failure to secure DFA certification.
• Air Service Cooperative v. Court of Appeals — Cited by the Court of Appeals to support dismissing GTZ's petition for bypassing appeal to the NLRC. The Supreme Court noted this case affirms the general rule that the Labor Arbiter's decision should first be appealed to the NLRC.
• Heirs of Mayor Nemencio Galvez v. Court of Appeals — Cited by the OSG for the proposition that certiorari may be allowed even if appeal is available if the lower court's order is a patent nullity (issued without or in excess of jurisdiction). The Supreme Court found the Labor Arbiter's decision was not a patent nullity.
• SSS v. Court of Appeals — Cited as an example of an incorporated government agency (SSS) that, due to an express provision in its charter allowing it to sue and be sued, does not enjoy immunity from suit, even when performing governmental functions. This supported the general principle of suability of incorporated state entities.
• Rayo v. Court of First Instance of Bulacan — Referenced for the National Power Corporation (NPC), a government-owned and controlled corporation, being suable under its charter without qualification as to the cause of action, including torts. This further illustrated the suability of GOCCs.
• International Catholic Migration Commission v. Calleja — Mentioned as an example of how the DFA conveys its endorsement of an immunity claim (letter to the Secretary of Labor).
• World Health Organization v. Aquino — Mentioned as an example of DFA endorsement (telegram to the trial court).
• Baer v. Tizon — Referenced in the context of the DFA directing the OSG to intervene on behalf of a foreign entity claiming immunity. The Court distinguished the present case as lacking such clear DFA endorsement.

• Section 9, Article XVI of the Constitution ("the State may not be sued without its consent.") — The fundamental constitutional basis for state immunity from suit, which the Court noted is available to foreign states in local courts.
• Corporation Code, Section 36 ("[e]very corporation incorporated under this Code has the power and capacity x x x to sue and be sued in its corporate name.") — Referenced to support the presumption that GTZ, being akin to a GOCC without an original charter (which would be formed under the Corporation Code), is suable.
• Republic Act No. 7875, Section 16(g) (Philippine Health Insurance Corporation charter) — Cited to show that PHIC, the Philippine implementing agency for SHINE, has the power "to sue and be sued," implying it would not enjoy immunity for its SHINE-related functions.