8/15/2015 G.R.No.

L35645

TodayisSaturday,August15,2015

RepublicofthePhilippines
SUPREMECOURT
Manila

ENBANC

G.R.No.L35645May22,1985

UNITEDSTATESOFAMERICA,CAPT.JAMESE.GALLOWAY,WILLIAMI.COLLINSandROBERTGOHIER,
petitioners,
vs.
HON.V.M.RUIZ,PresidingJudgeofBranchXV,CourtofFirstInstanceofRizalandELIGIODEGUZMAN
&CO.,INC.,respondents.

Sycip,Salazar,Luna&Manalo&FelicianoLawforpetitioners.

Albert,Vergara,Benares,Perias&DominguezLawOfficeforrespondents.

ABADSANTOS,J.:

Thisisapetitiontoreview,setasidecertainordersandrestraintherespondentjudgefromtryingCivilCaseNo.
779MofthedefunctCourtofFirstInstanceofRizal.

Thefactualbackgroundisasfollows:

Attimesmaterialtothiscase,theUnitedStatesofAmericahadanavalbaseinSubic,Zambales.Thebasewas
oneofthoseprovidedintheMilitaryBasesAgreementbetweenthePhilippinesandtheUnitedStates.

SometimeinMay,1972,theUnitedStatesinvitedthesubmissionofbidsforthefollowingprojects

1.Repairoffendersystem,AlavaWharfattheU.S.NavalStationSubicBay,Philippines.

2. Repair typhoon damage to NAS Cubi shoreline repair typhoon damage to shoreline revetment, NAVBASE
SubicandrepairtoLeyteWharfapproach,NAVBASESubicBay,Philippines.

EligiodeGuzman&Co.,Inc.respondedtotheinvitationandsubmittedbids.Subsequentthereto,thecompany
receivedfromtheUnitedStatestwotelegramsrequestingittoconfirmitspriceproposalsandforthenameofits
bonding company. The company complied with the requests. [In its complaint, the company alleges that the
UnitedStateshadaccepteditsbidsbecause"Arequesttoconfirmapriceproposalconfirmstheacceptanceofa
bid pursuant to defendant United States' bidding practices." (Rollo, p. 30.) The truth of this allegation has not
beentestedbecausethecasehasnotreachedthetrialstage.]

InJune,1972,thecompanyreceivedaletterwhichwassignedbyWilhamI.Collins,Director,ContractsDivision,
Naval Facilities Engineering Command, Southwest Pacific, Department of the Navy of the United States, who is
oneofthepetitionersherein.Thelettersaidthatthecompanydidnotqualifytoreceiveanawardfortheprojects
becauseofitspreviousunsatisfactoryperformanceratingonarepaircontractfortheseawallattheboatlandings
oftheU.S.NavalStationinSubicBay.Theletterfurthersaidthattheprojectshadbeenawardedtothirdparties.
In the abovementioned Civil Case No. 779M, the company sued the United States of America and Messrs.
James E. Galloway, William I. Collins and Robert Gohier all members of the Engineering Command of the U.S.
Navy.Thecomplaintistoorderthedefendantstoallowtheplaintifftoperformtheworkontheprojectsand,inthe
eventthatspecificperformancewasnolongerpossible,toorderthedefendantstopaydamages.Thecompany
also asked for the issuance of a writ of preliminary injunction to restrain the defendants from entering into
contractswiththirdpartiesforworkontheprojects.

Thedefendantsenteredtheirspecialappearanceforthepurposeonlyofquestioningthejurisdictionofthiscourt
overthesubjectmatterofthecomplaintandthepersonsofdefendants,thesubjectmatterofthecomplaintbeing
acts and omissions of the individual defendants as agents of defendant United States of America, a foreign
sovereignwhichhasnotgivenherconsenttothissuitoranyothersuitforthecausesofactionassertedinthe
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complaint."(Rollo,p.50.)

Subsequentlythedefendantsfiledamotiontodismissthecomplaintwhichincludedanoppositiontotheissuance
of the writ of preliminary injunction. The company opposed the motion. The trial court denied the motion and
issuedthewrit.Thedefendantsmovedtwicetoreconsiderbuttonoavail.Hencetheinstantpetitionwhichseeks
torestrainperpetuallytheproceedingsinCivilCaseNo.779Mforlackofjurisdictiononthepartofthetrialcourt.

Thepetitionishighlyimpressedwithmerit.

ThetraditionalruleofStateimmunityexemptsaStatefrombeingsuedinthecourtsofanotherStatewithoutits
consentorwaiver.ThisruleisanecessaryconsequenceoftheprinciplesofindependenceandequalityofStates.
However, the rules of International Law are not petrified they are constantly developing and evolving. And
becausetheactivitiesofstateshavemultiplied,ithasbeennecessarytodistinguishthembetweensovereignand
governmentalacts(jureimperii)andprivate,commercialandproprietaryacts(juregestionis). The result is that
StateimmunitynowextendsonlytoactsjureimperilTherestrictiveapplicationofStateimmunityisnowtherulein
theUnitedStates,theUnitedKingdomandotherstatesinwesternEurope.(SeeCoquiaandDefensorSantiago,
PublicInternationalLaw,pp.207209[1984].)

TherespondentjudgerecognizedtherestrictivedoctrineofStateimmunitywhenhesaidinhisOrderdenyingthe
defendants'(nowpetitioners)motion:"Adistinctionshouldbemadebetweenastrictlygovernmentalfunctionof
the sovereign state from its private, proprietary or non governmental acts (Rollo, p. 20.) However, the
respondent judge also said: "It is the Court's considered opinion that entering into a contract for the repair of
wharvesorshorelineiscertainlynotagovernmentalfunctionalthoitmaypartakeofapublicnatureorcharacter.
As aptly pointed out by plaintiff's counsel in his reply citing the ruling in the case of Lyons, Inc., [104 Phil. 594
(1958)],andwhichthisCourtquoteswithapproval,viz.:

Itishowevercontendedthatwhenasovereignstateentersintoacontractwithaprivateperson,the
statecanbesueduponthetheorythatithasdescendedtothelevelofanindividualfromwhichitcan
beimpliedthatithasgivenitsconsenttobesuedunderthecontract....

xxxxxxxxx

We agree to the above contention, and considering that the United States government, through its
agencyatSubicBay,enteredintoacontractwithappellantforstevedoringandmiscellaneouslabor
serviceswithintheSubicBayArea,aU.S.NavalReservation,itisevidentthatitcanbringanaction
beforeourcourtsforanycontractualliabilitythatthatpoliticalentitymayassumeunderthecontract.
Thetrialcourt,therefore,hasjurisdictiontoentertainthiscase...(Rollo,pp.2021.)

TherelianceplacedonLyonsbytherespondentjudgeismisplacedforthefollowingreasons:

InHarryLyons,Inc.vs.TheUnitedStatesofAmerica,supra,plaintiffbroughtsuitintheCourtofFirstInstanceof
Manilatocollectseveralsumsofmoneyonaccountofacontractbetweenplaintiffanddefendant.Thedefendant
filed a motion to dismiss on the ground that the court had no jurisdiction over defendant and over the subject
matter of the action. The court granted the motion on the grounds that: (a) it had no jurisdiction over the
defendantwhodidnotgiveitsconsenttothesuitand(b)plaintifffailedtoexhausttheadministrativeremedies
providedinthecontract.TheorderofdismissalwaselevatedtothisCourtforreview.

Insustainingtheactionofthelowercourt,thisCourtsaid:

ItappearinginthecomplaintthatappellanthasnotcompliedwiththeprocedurelaiddowninArticle
XXIofthecontractregardingtheprosecutionofitsclaimagainsttheUnitedStatesGovernment,or,
stated differently, it has failed to first exhaust its administrative remedies against said Government,
thelowercourtactedproperlyindismissingthiscase.(Atp.598.)

ItcanthusbeseenthatthestatementinrespectofthewaiverofStateimmunityfromsuitwaspurelygratuitous
and,therefore,obitersothatithasnovalueasanimperativeauthority.

The restrictive application of State immunity is proper only when the proceedings arise out of commercial
transactionsoftheforeignsovereign,itscommercialactivitiesoreconomicaffairs.Stateddifferently,aStatemay
besaidtohavedescendedtothelevelofanindividualandcanthusbedeemedtohavetacitlygivenitsconsent
tobesuedonlywhenitentersintobusinesscontracts.Itdoesnotapplywherethecontractrelatestotheexercise
ofitssovereignfunctions.Inthiscasetheprojectsareanintegralpartofthenavalbasewhichisdevotedtothe
defense of both the United States and the Philippines, indisputably a function of the government of the highest
ordertheyarenotutilizedfornordedicatedtocommercialorbusinesspurposes.

That the correct test for the application of State immunity is not the conclusion of a contract by a State but the
legalnatureoftheactisshowninSyquiavs.Lopez,84Phil.312(1949).Inthatcasetheplaintiffsleasedthree

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apartment buildings to the United States of America for the use of its military officials. The plaintiffs sued to
recoverpossessionofthepremisesonthegroundthatthetermoftheleaseshadexpired.Theyalsoaskedfor
increasedrentalsuntiltheapartmentsshallhavebeenvacated.

The defendants who were armed forces officers of the United States moved to dismiss the suit for lack of
jurisdictioninthepartofthecourt.TheMunicipalCourtofManilagrantedthemotiontodismisssustainedbythe
CourtofFirstInstance,theplaintiffswenttothisCourtforreviewoncertiorari.Indenyingthepetition,thisCourt
said:

On the basis of the foregoing considerations we are of the belief and we hold that the real party
defendantininterestistheGovernmentoftheUnitedStatesofAmericathatanyjudgmentforback
orIncreasedrentalsordamageswillhavetobepaidnotbydefendantsMooreandTillmanandtheir
64codefendantsbutbythesaidU.S.Government.OnthebasisoftherulinginthecaseofLandvs.
Dollaralreadycited,andonwhatwehavealreadystated,thepresentactionmustbeconsideredas
oneagainsttheU.S.Government.ItisclearhatthecourtsofthePhilippinesincludingtheMunicipal
CourtofManilahavenojurisdictionoverthepresentcaseforunlawfuldetainer.Thequestionoflack
of jurisdiction was raised and interposed at the very beginning of the action. The U.S. Government
hasnot,givenitsconsenttothefilingofthissuitwhichisessentiallyagainsther,thoughnotinname.
Moreover, this is not only a case of a citizen filing a suit against his own Government without the
latter's consent but it is of a citizen filing an action against a foreign government without said
government's consent, which renders more obvious the lack of jurisdiction of the courts of his
country.Theprinciplesoflawbehindthisrulearesoelementaryandofsuchgeneralacceptancethat
wedeemitunnecessarytociteauthoritiesinsupportthereof.(Atp.323.)

In Syquia,the United States concluded contracts with private individuals but the contracts notwithstanding the
Stateswasnotdeemedtohavegivenorwaiveditsconsenttobesuedforthereasonthatthecontractswerefor
jureimperiiandnotforjuregestionis.

WHEREFORE,thepetitionisgrantedthequestionedordersoftherespondentjudgearesetasideandCivilCase
No.isdismissed.Costsagainsttheprivaterespondent.

Teehankee,Aquino,Concepcion,Jr.,MelencioHerrera,Plana,*Escolin,Relova,Gutierrez,Jr.,DelaFuente,CuevasandAlampay,
JJ.,concur.

Fernando,C.J.,tooknopart.

SeparateOpinions

MAKASIAR,J.,dissenting:

ThepetitionshouldbedismissedandtheproceedingsinCivilCaseNo.779MinthedefunctCFI(nowRTC)of
Rizalbeallowedtocontinuetherein.

InthecaseofLyonsvs.theUnitedStatesofAmerica(104Phil.593),wherethecontractenteredintobetweenthe
plaintiff(HarryLyons,Inc.)andthedefendant(U.S.Government)involvedstevedoringandlaborserviceswithin
the Subic Bay area, this Court further stated that inasmuch as ". . . the United States Government. through its
agency at Subic Bay, entered into a contract with appellant for stevedoring and miscellaneous labor services
withintheSubicBayarea,aU.S.NavyReservation,itisevidentthatitcanbringanactionbeforeourcourtsfor
anycontractualliabilitythatthatpoliticalentitymayassumeunderthecontract."

When the U.S. Government, through its agency at Subic Bay, confirmed the acceptance of a bid of a private
companyfortherepairofwharvesorshorelineintheSubicBayarea,itisdeemedtohaveenteredintoacontract
andthuswaivedthemantleofsovereignimmunityfromsuitanddescendedtotheleveloftheordinarycitizen.Its
consenttobesued,therefore,isimpliedfromitsactofenteringintoacontract(Santosvs.Santos,92Phil.281,
284).

Justice and fairness dictate that a foreign government that commits a breach of its contractual obligation in the
caseatbarbytheunilateralcancellationoftheawardfortheprojectbytheUnitedStatesgovernment,throughits
agencyatSubicBayshouldnotbeallowedtotakeundueadvantageofapartywhomayhavelegitimateclaims
againstitbyseekingrefugebehindtheshieldofnonsuability.AcontraryviewwouldrenderaFilipinocitizen,as
in the instant case, helpless and without redress in his own country for violation of his rights committed by the
agentsoftheforeigngovernmentprofessingtoactinitsname.
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AppropriatearethewordsofJusticePerfectoinhisdissentingopinioninSyquiavs.AlmedaLopez,84Phil.312,
325:

Although, generally, foreign governments are beyond the jurisdiction of domestic courts of justice,
suchruleisinapplicabletocasesinwhichtheforeigngovernmententersintoprivatecontractswith
the citizens of the court's jurisdiction. A contrary view would simply run against all principles of
decencyandviolativeofalltenetsofmorals.

Moral principles and principles of justice are as valid and applicable as well with regard to private
individuals as with regard to governments either domestic or foreign. Once a foreign government
enters into a private contract with the private citizens of another country, such foreign government
cannot shield its nonperformance or contravention of the terms of the contract under the cloak of
nonjurisdiction.Toplacesuchforeigngovernmentbeyondthejurisdictionofthedomesticcourtsis
to give approval to the execution of unilateral contracts, graphically described in Spanish as
'contratos leoninos', because one party gets the lion's share to the detriment of the other. To give
validitytosuchcontractistosanctifybadfaith,deceit,fraud.Weprefertoadheretothethesisthatall
partiesinaprivatecontract,includinggovernmentsandthemostpowerfulofthem,areamenableto
law,andthatsuchcontractsareenforceablethroughthehelpofthecourtsofjusticewithjurisdiction
to take cognizance of any violation of such contracts if the same had been entered into only by
privateindividuals.

Constant resort by a foreign state or its agents to the doctrine of State immunity in this jurisdiction impinges
undulyuponoursovereigntyanddignityasanation.ItsapplicationwillparticularlydiscourageFilipinoordomestic
contractorsfromtransactingbusinessandenteringintocontractswithUnitedStatesauthoritiesorfacilitiesinthe
Philippines whether naval, air or ground forcesbecause the difficulty, if not impossibility, of enforcing a validly
executed contract and of seeking judicial remedy in our own courts for breaches of contractual obligation
committed by agents of the United States government, always, looms large, thereby hampering the growth of
FilipinoenterprisesandcreatingavirtualmonopolyinourowncountrybyUnitedStatescontractorsofcontracts
forservicesorsupplieswiththevariousU.S.officesandagenciesoperatinginthePhilippines.

Thesanctityofupholdingagreementsfreelyenteredintobythepartiescannotbeoveremphasized.Whetherthe
partiesarenationsorprivateindividuals,itistobereasonablyassumedandexpectedthattheundertakingsinthe
contractwillbecompliedwithingoodfaith.

Oneglaringfactofmoderndaycivilizationisthatabigandpowerfulnation,liketheUnitedStatesofAmerica,can
alwaysoverwhelmsmallandweaknations.ThedeclarationintheUnitedNationsCharterthatitsmemberstates
areequalandsovereign,becomeshollowandmeaninglessbecausebignationswieldingeconomicandmilitary
superiority impose upon and dictate to small nations, subverting their sovereignty and dignity as nations. Thus,
more often than not, when U.S. interest clashes with the interest of small nations, the American governmental
agenciesoritscitizensinvokeprinciplesofinternationallawfortheirownbenefit.

Inthecaseatbar,theefficacyofthecontractbetweentheU.S.NavalauthoritiesatSubicBayononehand,and
hereinprivaterespondentontheother,washonoredmoreinthebreachthaninthecomplianceTheopinionof
themajoritywillcertainlyopenthefloodgatesofmoreviolationsofcontractualobligations.Americanauthoritiesor
any foreign government in the Philippines for that matter, dealing with the citizens of this country, can
convenientlyseekprotectivecoverunderthemajorityopinion.TheresultisdisastroustothePhilippines.

This opinion of the majority manifests a neocolonial mentality. It fosters economic imperialism and foreign
politicalascendancyinourRepublic.

Thedoctrineofgovernmentimmunityfromsuitcannotandshouldnotserveasaninstrumentforperpetratingan
injustice on a citizen (Amigable vs. Cuenca, L26400, February 29, 1972, 43 SCRA 360 Ministerio vs. Court of
FirstInstance,L31635,August31,1971,40SCRA464).

Under the doctrine of implied waiver of its nonsuability, the United States government, through its naval
authoritiesatSubicBay,shouldbeheldamenabletolawsuitsinourcountrylikeanyotherjuristicperson.

The invocation by the petitioner United States of America is not in accord with paragraph 3 of Article III of the
original RPUS Military Bases Agreement of March 14, 1947, which states that "in the exercise of the above
mentionedrights,powersandauthority, the United States agrees that the powers granted to it will not be used
unreasonably..."(Emphasissupplied).

NorissuchpostureofthepetitionershereininharmonywiththeamendmentdatedMay27,1968totheaforesaid
RPUS Military Bases Agreement, which recognizes "the need to promote and maintain sound employment
practiceswhichwillassureequalityoftreatmentofallemployees...andcontinuingfavorableemployeremployee
relations ..." and "(B)elieving that an agreement will be mutually beneficial and will strengthen the democratic
institutions cherished by both Governments, ... the United States Government agrees to accord preferential
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employment of Filipino citizens in the Bases, thus (1) the U.S. Forces in the Philippines shall fill the needs for
civilianemploymentbyemployingFilipinocitizens,etc."(Par.1,Art.IoftheAmendmentofMay27,1968).

Neitherdoestheinvocationbypetitionersofstateimmunityfromsuitexpressfidelitytoparagraph1ofArticleIV
of the aforesaid amendment of May 2 7, 1968 which directs that " contractors and concessionaires performing
workfortheU.S.ArmedForcesshallberequiredbytheircontractorconcessionagreementsto comply with all
applicablePhilippinelaborlawsandregulations, " even though paragraph 2 thereof affirms that "nothing in this
AgreementshallimplyanywaiverbyeitherofthetwoGovernmentsofsuchimmunityunderinternationallaw."

Reliance by petitioners on the nonsuability of the United States Government before the local courts, actually
clasheswithNo.IIIonrespectforPhilippinelawoftheMemorandumofAgreementsignedonJanuary7,1979,
also amending RPUS Military Bases Agreement, which stresses that "it is the duty of members of the United
StatesForces,theciviliancomponentandtheirdependents,torespectthelawsoftheRepublicofthePhilippines
andtoabstainfromanyactivityinconsistentwiththespiritoftheMilitaryBasesAgreementand,inparticular,from
anypoliticalactivityinthePhilippines.TheUnitedStatesshagtakeallmeasureswithinitsauthoritytoinsurethat
theyadheretothem(Emphasissupplied).

The foregoing duty imposed by the amendment to the Agreement is further emphasized by No. IV on the
economic and social improvement of areas surrounding the bases, which directs that "moreover, the United
States Forces shall procure goods and services in the Philippines to the maximum extent feasible" (Emphasis
supplied).

UnderNo.VIonlaborandtaxationofthesaidamendmentofJanuary6,1979inconnectionwiththediscussions
onpossiblerevisionsoralterationsoftheAgreementofMay27,1968,"thediscussionsshallbeconductedonthe
basisoftheprinciplesofequalityoftreatment,therighttoorganize,andbargaincollectively,andrespectforthe
sovereigntyoftheRepublicofthePhilippines"(Emphasissupplied)

Themajorityopinionseemstomocktheprovisionofparagraph1ofthejointstatementofPresidentMarcosand
VicePresidentMondaleoftheUnitedStatesdatedMay4,1978that"theUnitedStatesreaffirmsthatPhilippine
sovereignty extends over the bases and that Its base shall be under the command of a Philippine Base
Commander,"whichissupposedtounderscorethejointCommuniqueofPresidentMarcosandU.S.President
Ford of December 7, 1975, under which "they affirm that sovereign equality, territorial integrity and political
independenceofallStatesarefundamentalprincipleswhichbothcountriesscrupulouslyrespectandthat"they
confirmthatmutualrespectforthedignityofeachnationshallcharacterizetheirfriendshipaswellasthealliance
betweentheirtwocountries."

Themajorityopinionnegatesthestatementonthedelineationofthepowers,dutiesandresponsibilitiesofboth
the Philippine and American Base Commanders that "in the performance of their duties, the Philippine Base
CommanderandtheAmericanBaseCommandershallbeguidedbyfullrespectforPhilippinesovereigntyonthe
one hand and the assurance of unhampered U.S. military operations on the other hand and that "they shall
promotecooperationunderstandingandharmoniousrelationswithintheBaseandwiththegeneralpublicinthe
proximate vicinity thereof" (par. 2 & par. 3 of the Annex covered by the exchange of notes, January 7, 1979,
betweenAmbassadorRichardW.MurphyandMinisterofForeignAffairsCarlosP.Romulo,Emphasissupplied).

SeparateOpinions

MAKASIAR,J.,dissenting:

ThepetitionshouldbedismissedandtheproceedingsinCivilCaseNo.779MinthedefunctCFI(nowRTC)of
Rizalbeallowedtocontinuetherein.

InthecaseofLyonsvs.theUnitedStatesofAmerica(104Phil.593),wherethecontractenteredintobetweenthe
plaintiff(HarryLyons,Inc.)andthedefendant(U.S.Government)involvedstevedoringandlaborserviceswithin
theSubicBayarea,thisCourtfurtherstatedthatinasmuchas"...theUnitedStatesGovernment.throughits
agencyatSubicBay,enteredintoacontractwithappellantforstevedoringandmiscellaneouslaborservices
withintheSubicBayarea,aU.S.NavyReservation,itisevidentthatitcanbringanactionbeforeourcourtsfor
anycontractualliabilitythatthatpoliticalentitymayassumeunderthecontract."

WhentheU.S.Government,throughitsagencyatSubicBay,confirmedtheacceptanceofabidofaprivate
companyfortherepairofwharvesorshorelineintheSubicBayarea,itisdeemedtohaveenteredintoacontract
andthuswaivedthemantleofsovereignimmunityfromsuitanddescendedtotheleveloftheordinarycitizen.Its
consenttobesued,therefore,isimpliedfromitsactofenteringintoacontract(Santosvs.Santos,92Phil.281,
284).

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Justiceandfairnessdictatethataforeigngovernmentthatcommitsabreachofitscontractualobligationinthe
caseatbarbytheunilateralcancellationoftheawardfortheprojectbytheUnitedStatesgovernment,throughits
agencyatSubicBayshouldnotbeallowedtotakeundueadvantageofapartywhomayhavelegitimateclaims
againstitbyseekingrefugebehindtheshieldofnonsuability.AcontraryviewwouldrenderaFilipinocitizen,as
intheinstantcase,helplessandwithoutredressinhisowncountryforviolationofhisrightscommittedbythe
agentsoftheforeigngovernmentprofessingtoactinitsname.

AppropriatearethewordsofJusticePerfectoinhisdissentingopinioninSyquiavs.AlmedaLopez,84Phil.312,
325:

Although,generally,foreigngovernmentsarebeyondthejurisdictionofdomesticcourtsofjustice,
suchruleisinapplicabletocasesinwhichtheforeigngovernmententersintoprivatecontractswith
thecitizensofthecourt'sjurisdiction.Acontraryviewwouldsimplyrunagainstallprinciplesof
decencyandviolativeofalltenetsofmorals.

Moralprinciplesandprinciplesofjusticeareasvalidandapplicableaswellwithregardtoprivate
individualsaswithregardtogovernmentseitherdomesticorforeign.Onceaforeigngovernment
entersintoaprivatecontractwiththeprivatecitizensofanothercountry,suchforeigngovernment
cannotshielditsnonperformanceorcontraventionofthetermsofthecontractunderthecloakof
nonjurisdiction.Toplacesuchforeigngovernmentbeyondthejurisdictionofthedomesticcourtsis
togiveapprovaltotheexecutionofunilateralcontracts,graphicallydescribedinSpanishas
'contratosleoninos',becauseonepartygetsthelion'ssharetothedetrimentoftheother.Togive
validitytosuchcontractistosanctifybadfaith,deceit,fraud.Weprefertoadheretothethesisthatall
partiesinaprivatecontract,includinggovernmentsandthemostpowerfulofthem,areamenableto
law,andthatsuchcontractsareenforceablethroughthehelpofthecourtsofjusticewithjurisdiction
totakecognizanceofanyviolationofsuchcontractsifthesamehadbeenenteredintoonlyby
privateindividuals.

ConstantresortbyaforeignstateoritsagentstothedoctrineofStateimmunityinthisjurisdictionimpinges
undulyuponoursovereigntyanddignityasanation.ItsapplicationwillparticularlydiscourageFilipinoordomestic
contractorsfromtransactingbusinessandenteringintocontractswithUnitedStatesauthoritiesorfacilitiesinthe
Philippineswhethernaval,airorgroundforcesbecausethedifficulty,ifnotimpossibility,ofenforcingavalidly
executedcontractandofseekingjudicialremedyinourowncourtsforbreachesofcontractualobligation
committedbyagentsoftheUnitedStatesgovernment,always,loomslarge,therebyhamperingthegrowthof
FilipinoenterprisesandcreatingavirtualmonopolyinourowncountrybyUnitedStatescontractorsofcontracts
forservicesorsupplieswiththevariousU.S.officesandagenciesoperatinginthePhilippines.

Thesanctityofupholdingagreementsfreelyenteredintobythepartiescannotbeoveremphasized.Whetherthe
partiesarenationsorprivateindividuals,itistobereasonablyassumedandexpectedthattheundertakingsinthe
contractwillbecompliedwithingoodfaith.

Oneglaringfactofmoderndaycivilizationisthatabigandpowerfulnation,liketheUnitedStatesofAmerica,can
alwaysoverwhelmsmallandweaknations.ThedeclarationintheUnitedNationsCharterthatitsmemberstates
areequalandsovereign,becomeshollowandmeaninglessbecausebignationswieldingeconomicandmilitary
superiorityimposeuponanddictatetosmallnations,subvertingtheirsovereigntyanddignityasnations.Thus,
moreoftenthannot,whenU.S.interestclasheswiththeinterestofsmallnations,theAmericangovernmental
agenciesoritscitizensinvokeprinciplesofinternationallawfortheirownbenefit.

Inthecaseatbar,theefficacyofthecontractbetweentheU.S.NavalauthoritiesatSubicBayononehand,and
hereinprivaterespondentontheother,washonoredmoreinthebreachthaninthecomplianceTheopinionof
themajoritywillcertainlyopenthefloodgatesofmoreviolationsofcontractualobligations.Americanauthoritiesor
anyforeigngovernmentinthePhilippinesforthatmatter,dealingwiththecitizensofthiscountry,can
convenientlyseekprotectivecoverunderthemajorityopinion.TheresultisdisastroustothePhilippines.

Thisopinionofthemajoritymanifestsaneocolonialmentality.Itfosterseconomicimperialismandforeign
politicalascendancyinourRepublic.

Thedoctrineofgovernmentimmunityfromsuitcannotandshouldnotserveasaninstrumentforperpetratingan
injusticeonacitizen(Amigablevs.Cuenca,L26400,February29,1972,43SCRA360Ministeriovs.Courtof
FirstInstance,L31635,August31,1971,40SCRA464).

Underthedoctrineofimpliedwaiverofitsnonsuability,theUnitedStatesgovernment,throughitsnaval
authoritiesatSubicBay,shouldbeheldamenabletolawsuitsinourcountrylikeanyotherjuristicperson.

TheinvocationbythepetitionerUnitedStatesofAmericaisnotinaccordwithparagraph3ofArticleIIIofthe
originalRPUSMilitaryBasesAgreementofMarch14,1947,whichstatesthat"intheexerciseoftheabove
mentionedrights,powersandauthority,theUnitedStatesagreesthatthepowersgrantedtoitwillnotbeused
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unreasonably..."(Emphasissupplied).

NorissuchpostureofthepetitionershereininharmonywiththeamendmentdatedMay27,1968totheaforesaid
RPUSMilitaryBasesAgreement,whichrecognizes"theneedtopromoteandmaintainsoundemployment
practiceswhichwillassureequalityoftreatmentofallemployees...andcontinuingfavorableemployeremployee
relations..."and"(B)elievingthatanagreementwillbemutuallybeneficialandwillstrengthenthedemocratic
institutionscherishedbybothGovernments,...theUnitedStatesGovernmentagreestoaccordpreferential
employmentofFilipinocitizensintheBases,thus(1)theU.S.ForcesinthePhilippinesshallfilltheneedsfor
civilianemploymentbyemployingFilipinocitizens,etc."(Par.1,Art.IoftheAmendmentofMay27,1968).

Neitherdoestheinvocationbypetitionersofstateimmunityfromsuitexpressfidelitytoparagraph1ofArticleIV
oftheaforesaidamendmentofMay27,1968whichdirectsthat"contractorsandconcessionairesperforming
workfortheU.S.ArmedForcesshallberequiredbytheircontractorconcessionagreementstocomplywithall
applicablePhilippinelaborlawsandregulations,"eventhoughparagraph2thereofaffirmsthat"nothinginthis
AgreementshallimplyanywaiverbyeitherofthetwoGovernmentsofsuchimmunityunderinternationallaw."

ReliancebypetitionersonthenonsuabilityoftheUnitedStatesGovernmentbeforethelocalcourts,actually
clasheswithNo.IIIonrespectforPhilippinelawoftheMemorandumofAgreementsignedonJanuary7,1979,
alsoamendingRPUSMilitaryBasesAgreement,whichstressesthat"itisthedutyofmembersoftheUnited
StatesForces,theciviliancomponentandtheirdependents,torespectthelawsoftheRepublicofthePhilippines
andtoabstainfromanyactivityinconsistentwiththespiritoftheMilitaryBasesAgreementand,inparticular,from
anypoliticalactivityinthePhilippines.TheUnitedStatesshagtakeallmeasureswithinitsauthoritytoinsurethat
theyadheretothem(Emphasissupplied).

TheforegoingdutyimposedbytheamendmenttotheAgreementisfurtheremphasizedbyNo.IVonthe
economicandsocialimprovementofareassurroundingthebases,whichdirectsthat"moreover,theUnited
StatesForcesshallprocuregoodsandservicesinthePhilippinestothemaximumextentfeasible"(Emphasis
supplied).

UnderNo.VIonlaborandtaxationofthesaidamendmentofJanuary6,1979inconnectionwiththediscussions
onpossiblerevisionsoralterationsoftheAgreementofMay27,1968,"thediscussionsshallbeconductedonthe
basisoftheprinciplesofequalityoftreatment,therighttoorganize,andbargaincollectively,andrespectforthe
sovereigntyoftheRepublicofthePhilippines"(Emphasissupplied)

Themajorityopinionseemstomocktheprovisionofparagraph1ofthejointstatementofPresidentMarcosand
VicePresidentMondaleoftheUnitedStatesdatedMay4,1978that"theUnitedStatesreaffirmsthatPhilippine
sovereigntyextendsoverthebasesandthatItsbaseshallbeunderthecommandofaPhilippineBase
Commander,"whichissupposedtounderscorethejointCommuniqueofPresidentMarcosandU.S.President
FordofDecember7,1975,underwhich"theyaffirmthatsovereignequality,territorialintegrityandpolitical
independenceofallStatesarefundamentalprincipleswhichbothcountriesscrupulouslyrespectandthat"they
confirmthatmutualrespectforthedignityofeachnationshallcharacterizetheirfriendshipaswellasthealliance
betweentheirtwocountries."

Themajorityopinionnegatesthestatementonthedelineationofthepowers,dutiesandresponsibilitiesofboth
thePhilippineandAmericanBaseCommandersthat"intheperformanceoftheirduties,thePhilippineBase
CommanderandtheAmericanBaseCommandershallbeguidedbyfullrespectforPhilippinesovereigntyonthe
onehandandtheassuranceofunhamperedU.S.militaryoperationsontheotherhandandthat"theyshall
promotecooperationunderstandingandharmoniousrelationswithintheBaseandwiththegeneralpublicinthe
proximatevicinitythereof"(par.2&par.3oftheAnnexcoveredbytheexchangeofnotes,January7,1979,
betweenAmbassadorRichardW.MurphyandMinisterofForeignAffairsCarlosP.Romulo,Emphasissupplied).

Footnotes

*Hesignedbeforeheleft.

TheLawphilProjectArellanoLawFoundation

http://www.lawphil.net/judjuris/juri1985/may1985/gr_l35645_1985.html 7/7