G.R. No. 154705, 2003 June 26
FACTS
Petitioner, Republic of Indonesia, represented by its Counsellor, entered into Maintenance Agreement with respondent. The agreement stated that the respondent shall, for a consideration, maintain specified equipment at the Embassy buildings and the official residence of petitioner. Petitioners claim that sometime prior to the date of expiration of the said argument, they informed respondent that the renewal of the agreement shall be of the discretion of the incoming Chief of Administration, Minister Consellor Azhari Kasim. When the latter assumed the position, 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, The respondent claims that the aforesaid termination was arbitrary and unlawful, hence, filing a complaint before the RTC.
ISSUE
1. Whether the petitioners have waived their immunity from suit by using as its basis the Maintenance Agreement
2. Whether the actual physic maintenance of the premises of the diplomatic mission is no longer a sovereign function of the State
3. Whether the petitioners may be sued herein in their private capacities
RULING
1. No. 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. 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 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 tot he laws of the Philippines and by a specified court is not necessarily a waiver of sovereign immunity from suit. Submission of a foreign state must be clear and equivocal. It must be given explicitly or by necessary implication, The Court finds no such waiver herein.
2. No. There is no dispute that the establishment of a diplomatic mission is an act jure imperii. A sovereign State establishes a diplomatic mission which necessarily include its maintenance and upkeep. Hence, the State may enter into contracts with private entities for the same purpose. It is therefore clear that the petitioner was acting in pursuit of a sovereign activity when it entered into contract with respondent.
3. Under Article 31 of the Vienna Convention on Diplomatic Relations, a diplomat shall enjoy immunity from criminal jurisdiction, except in case of: (a) a real action relating to private immovable property situated in the territory of the recovering State; (b) an action relating to succession which the diplomatic agent is involved as executor, administrator, heir or legatee as a private person; or (c) action relating to any professional or commercial activity exercised by the diplomatic agent in the receiving State outside his official functions. The act of the petitioners in terminating the Maintenance Agreement is not covered by the exceptions.
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