26. Republic of Indonesia V.

Vinzon
[G.R. No. 154705. June 26, 2003]
FACTS:
Petitioner, Republic of Indonesia entered into a maintenance agreement with
Vinzon Trade and Services. Stated in the agreement that it shall be effective for 4 years
and will renew itself automatically unless cancelled by either party.
Petitioner claim that prior to the date of expiration, they informed respondent that
the renewal of the agreement shall be at the discretion of the incoming Chief of
administration, Minister Counselor Azhuri Kasim. Hence, Indonesian embassy
terminated the agreement.
On the other hand, respondent claims that the aforesaid termination was arbitrary
and unlawful. . respondent filed a complaint before the RTC of Makati. Petitioners filed a
motion to dismiss alleging that Republic of Indonesia, as a foreign sovereign state have
sovereign immunity from suit and that the Ambassador and Minister Counsellor are
diplomatic agent defined by the Viena Convention and therefore enjoy a diplomatic
immunity.
In turn, respondent filed an opposition alleging that petitioner have expressly
waived its immunity from suit upon following provisions in the maintenance agreement
which specifically indicates that any legal action arising out of the agreement shall be
settled according to Philippine laws and by proper court. It further alleged that
Ambassador and Minister can be suit in their capacities for acts done with bad faith.
After hearing, the trial court denied herein petitioners motion to dismiss and its
motion for reconsideration. On appeal C.A. denied also the petition for lack of merits.
Hence, this petition was filed before the SC.
ISSUE:
W/N C.A. erred in sustaining the trial courts decision that petitioners have
waived their immunity from suit by using as its basis the provision in the maintenance
agreement.
HELD:
The State may enter into contract with private entities to maintain the premises,
furnishing and equipment of the embassy and the living quarters of its agent 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 and
maintenance of the air conditioning generator set, and water motor pump of the
Indonesian Embassy and the official residence of the Indonesian ambassador.