Republic Of Indonesia Vs Vinzon.docx

Republic of Indonesia vs. Vinzon [G.R. No. 154705. June 26, 2003] FACTS: 1. ROI entered into a Maintenance Agreement with respondent James Vinzon, sole proprietor of Vinzon Trade and Services. 2. Petitioners: prior to the date of expiration, informed respondent that the renewal shall be at the discretion of the incoming Chief of Administration, Minister Counsellor Azhari Kasim. i. Minister Counsellor Kasim terminated the agreement because he allegedly found respondents work and services unsatisfactory and not in compliance with the standards set in the Maintenance Agreement. ii. Petitioners claim, moreover, that they had earlier verbally informed respondent of their decision to terminate the agreement. 3. Respondent filed a complaint against petitioners in the RTC of Makati 4. Petitioner: MTD: i. ROI, as a foreign sovereign State, has sovereign immunity from suit and cannot be sued as a party-defendant in the Philippines. ii. That Ambassador Soeratmin and Minister Counsellor Kasim are diplomatic agents as defined under the Vienna Convention on Diplomatic Relations and therefore enjoy diplomatic immunity. 5. Respondent: Opposition, ROI has expressly waived its immunity from suit. He based this claim upon 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.” 6. Respondents 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. 7. RTC ruled in favor of the Respondent. 8. CA affirmed. ISSUE: WON the CA erred in sustaining the trial court’s decision that petitioners have waived their immunity from suit by using as its basis the abovementioned provision in the Maintenance Agreement. HELD: NO. 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. As enunciated in Sanders v. Veridiano II, 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.

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 On the matter of whether or not petitioners Ambassador Soeratmin and Minister Counsellor Kasim may be sued herein in their private capacities, Article 31 of the Vienna Convention on Diplomatic Relations provides: xxx 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. xxx 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. LYONS vs.USA G.R. No. L-11786, September 26, 1958 Complaint: action to collect several sums of money from a contract Contract: stevedoring service at the U.S. Naval Base, Subic Bay, Philippines Plaintiff: USA Facts: 1. Plaintiff : CFI Manila: action to collect several sums of money from a contract entered into between plaintiff and defendant - This contract was entered provisions of Section 2 (c) (1) of the Armed Services Procurement Act of 1947 of the United States of America (Public Law 413, 80th Congress). 2. Defendant: MTD: court has no jurisdiction over defendant and over the subject matter of the action. 3. CFI: sustained MTD: grounds (a) the court lacks jurisdiction over defendant, it being a sovereign state which cannot be sued without its consent; and (b) plaintiff failed to exhaust the administrative remedies provided for in Article XXI of the contract. Issue: WON USA, being a sovereign state, cannot be sued without its consent.

Held: NO. It is however contended that when a sovereign state enters into a contract with a private person the state can be sued upon the theory that it has descended to the level of an individual from which it can be implied that it has given its consent to be sued under the contract. Thus, appellant cites the case of Santos vs. Santos, 92 Phil. 281; 48 Off. Gaz., 4815, wherein this Court made the following pronouncement: ... If, where and when the state or its government enters into a contract, through its officers or agents, in furtherance of a legitimate aim and purpose and pursuant to constitutional legislative authority, whereby mutual or reciprocal benefits accrue and rights and obligations arise therefrom, and if the law granting the authority to enter into such contract does not provide for or name the officer against whom action may be brought in the event of a breach thereof, the state itself may be sued even without its consent, because by entering into a contract the sovereign state has descended to the level of the citizen and consent to be sued is implied from the very act entering into such contract. If the dignity of the state, the sacredness of the institution, the respect for the government are to be preserved and the dragging of its name in a suit to be prevented, the legislative department should name the officer or agent against whom the action may be brought in the event of breach of the contract entered into under its name and authority. And the omission or failure of the legislative department to do so is no obstacle or impediment for an individual or citizen, who is aggrieved by the breach of the contract, to bring an action against the state itself for the reasons already adverted to, to wit: the descent of the sovereign state to the level of the individual or citizen with whom it entered into a contract and its consent to be sued implied from the act of entering into such contract. Considering that the United States Government, through its agency at Subic Bay, entered into a contract with appellant for stevedoring and miscellaneous labor services within the Subic Bay area, a U. S. Navy Reservation, it is evident that it can bring an action before our court for any contractual liability that political entity may assume under the contract. The trial court, therefore, has jurisdiction to entertain this case in so far as appellee is concerned.