REPUBLIC OF INDONESIA
vs. VINZON
G.R.
No. 154705. June 26, 2003
FACTS:
Petitioner, Republic
of Indonesia, represented by its Counsellor, Siti Partinah, entered into a
Maintenance Agreement in August 1995 with respondent James Vinzon, sole
proprietor of Vinzon Trade and Services. The Maintenance Agreement stated that
respondent shall, for a consideration, maintain specified equipment at the
Embassy Main Building, Embassy Annex Building and the Wisma Duta, the official
residence of petitioner Ambassador Soeratmin. The equipments covered by the
Maintenance Agreement are air conditioning units, generator sets, electrical
facilities, water heaters, and water motor pumps. It is likewise stated therein
that the agreement shall be effective for a period of four years and will renew
itself automatically unless cancelled by either party by giving thirty days
prior written notice from the date of expiry.
When Indonesian
Minister Counsellor Kasim assumed the position of Chief of Administration in
March 2000, he allegedly found respondent’s work and services unsatisfactory
and not in compliance with the standards set in the Maintenance Agreement.
Hence, the Indonesian Embassy terminated the agreement in a letter dated August
31, 2000.
Respondent filed a
complaint claiming that the aforesaid termination was arbitrary and unlawful.
Petitioners filed a Motion to Dismiss assailing that Republic of Indonesia, as
a foreign sovereign State, has sovereign immunity from suit and cannot be sued
as a party-defendant in the Philippines.
In turn, respondent
filed an Opposition to the said motion alleging that the Republic of Indonesia
has expressly waived its immunity from suit based on the following provision in
the Maintenance Agreement: “Any legal
action arising out of this Maintenance Agreement shall be settled according to
the laws of the Philippines and by the proper court of Makati City,
Philippines.” Respondent’s Opposition likewise alleged that Ambassador
Soeratmin and Minister Counsellor Kasim can be sued and held liable in their
private capacities for tortious acts done with malice and bad faith.
ISSUE:
1. Whether or not Republic
of Indonesia is immune from suit
2. Whether or not
petitioners Ambassador Soeratmin and Minister Counsellor Kasim may be sued
herein in their private capacities
HELD:
1. Yes. International
law is founded largely upon the principles of reciprocity, comity,
independence, and equality of States which were adopted as part of the law of
our land under Article II, Section 2 of the 1987 Constitution. The rule that a
State may not be sued without its consent is a necessary consequence of the
principles of independence and equality of States. The practical
justification for the doctrine of sovereign immunity is that there can be no
legal right against the authority that makes the law on which the right
depends. In the case of foreign States,
the rule is derived from the principle of the sovereign equality of States,
as expressed in the maxim par in parem non habet imperium. All states are sovereign equals and cannot
assert jurisdiction over one another. A contrary attitude would “unduly vex the
peace of nations.”
The rules of
International Law, however, are neither unyielding nor impervious to
change. The increasing need of sovereign
States to enter into purely commercial activities remotely connected with the
discharge of their governmental functions brought about a new concept of
sovereign immunity. This concept, the
restrictive theory, holds that the immunity of the sovereign is recognized
only with regard to public acts or acts jure imperii, but not with regard to
private acts or acts jure gestionis.
In United States v.
Ruiz, for instance, we held that the conduct of public bidding for the repair
of a wharf at a United States Naval Station is an act jure imperii. On the other hand, we considered as an act
jure gestionis the hiring of a cook in the recreation center catering to
American servicemen and the general public at the John Hay Air Station in
Baguio City, as well as the bidding for the operation of barber shops in Clark
Air Base in Angeles City.
Apropos the present
case, the mere entering into a contract by a foreign State with a private party
cannot be construed as the ultimate test of whether or not it is an act jure
imperii or jure gestionis. Such act is
only the start of the inquiry. Is the
foreign State engaged in the regular conduct of a business? If the foreign State is not engaged regularly
in a business or commercial activity, and in this case it has not been shown to
be so engaged, 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.
Hence, the
existence alone of a paragraph in a contract stating that any legal action
arising out of the agreement shall be settled according to the laws of the
Philippines and by a specified court of the Philippines is not necessarily a
waiver of sovereign immunity from suit. The aforesaid provision contains
language not necessarily inconsistent with sovereign immunity. On the other hand, such provision may also be
meant to apply where the sovereign party elects to sue in the local courts, or
otherwise waives its immunity by any subsequent act. The applicability of Philippine laws must be
deemed to include Philippine laws in its totality, including the principle
recognizing sovereign immunity. Hence,
the proper court may have no proper action, by way of settling the case, except
to dismiss it.
Submission by a
foreign state to local jurisdiction must be clear and unequivocal. It
must be given explicitly or by necessary implication. We find no such waiver in this case.
Respondent concedes
that the establishment of a diplomatic mission is a sovereign function. On the other hand, he argues that the actual
physical maintenance of the premises of the diplomatic mission, such as the
upkeep of its furnishings and equipment, is no longer a sovereign function of
the State.
We disagree. There is no dispute that the establishment
of a diplomatic mission is an act jure imperii. A sovereign State does not merely establish a
diplomatic mission and leave it at that; the establishment of a diplomatic
mission encompasses its maintenance and upkeep. Hence, the State may enter into contracts
with private entities to maintain the premises, furnishings and equipment of
the embassy and the living quarters of its agents and officials. It is therefore clear that petitioner
Republic of Indonesia was acting in pursuit of a sovereign activity when it
entered into a contract with respondent for the upkeep or maintenance of the
air conditioning units, generator sets, electrical facilities, water heaters,
and water motor pumps of the Indonesian Embassy and the official residence of
the Indonesian ambassador.
The Solicitor
General, in his Comment, submits the view that, “the Maintenance Agreement was
entered into by the Republic of Indonesia in the discharge of its governmental
functions. In such a case, it cannot be
deemed to have waived its immunity from suit.” As to the paragraph in the
agreement relied upon by respondent, the Solicitor General states that it “was
not a waiver of their immunity from suit but a mere stipulation that in the
event they do waive their immunity, Philippine laws shall govern the resolution
of any legal action arising out of the agreement and the proper court in Makati
City shall be the agreed venue thereof.
2. No. Article 31 of
the Vienna Convention on Diplomatic Relations provides:
1. A diplomatic agent
shall enjoy immunity from the criminal jurisidiction of the receiving
State. He shall also enjoy immunity from
its civil and administrative jurisdiction, except in the case of:
(a) a real action
relating to private immovable property situated in the territory of the
receiving State, unless he holds it on behalf of the sending State for the
purposes of the mission;
(b) an action
relating to succession in which the diplomatic agent is involved as executor,
administrator, heir or legatee as a private person and not on behalf of the
sending State;
(c) an action
relating to any professional or commercial activity exercised by the diplomatic
agent in the receiving State outside his official functions.
x
x x
The act of
petitioners Ambassador Soeratmin and Minister Counsellor Kasim in terminating
the Maintenance Agreement is not covered by the exceptions provided in the
abovementioned provision.
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