Carried Lumber Company v United States of America
| Jurisdiction | Filipinas |
| Date | 24 September 1974 |
| Court | Court of Appeals (Philippines) |
(Leuterio, Lim and Tantuico JJ.)
Sovereign immunity Foreign State Extent of immunity Restrictive theory Commercial transaction Contract for the supply of lumber to United States Air Force base State acting in capacity of private person The law of the Philippines
Summary: The facts:The plaintiff company entered into a contract with the defendant for the supply of lumber to a United States Air Force Base in the Philippines. The defendant refused to pay a sum claimed by the plaintiff under this contract on the ground that, following an investigation, the defendant's officials had concluded that the plaintiff was acting fraudulently by using false invoices. The trial Court gave judgment in favour of the plaintiff. The defendant appealed, inter alia, on the ground that it was entitled to sovereign immunity.
Held:The appeal was dismissed and the judgment of the trial Court modified. A foreign State was not entitled to sovereign immunity when, as in the present case, it acted in a commercial and purely private capacity. The Court also rejected other grounds of appeal. It reduced the damages awarded by the trial Court for alleged damage to the plaintiff's business on the ground that it was not sufficiently proved that this damage was due to the defendant's acts and because it rejected the finding that the defendant had acted in bad faith.
The text of the judgment of the Court, delivered by Leuterio J., commences on the following page.
On 8 February 1955, the plaintiff, a registered partnership, and the defendant, entered into a contract for the supply and delivery by plaintiff-partnership to the appellant at Clark Air Force Base in Pampanga, and at Camp John Hay in Baguio, of lumber of specified sizes, in quantities and at unit prices set forth in the schedule attached to the contract, for the total contract price not exceeding $293,035.54, payable in Philippine peso currency at the United States legal rate of exchange existing at the time payment was made. A supplemental agreement increased the contract by $1,805.50. Actual delivery began in February 1955, although the contract took effect on 21 March 1955. Pursuant to the contract, plaintiff made deliveries of lumber to the defendant until September 1955. Before the completion of delivery in September 1955, a letter was received by the Honorable Homer Ferguson, United States Ambassador to the Philippines, at the embassy in Manila, dated 22 August 1955, and signed by Dominador T. Parayno and Pedro Cuison, drivers of the plaintiff, and Silvino P. Flores, a helper, denouncing plaintiff for fraud committed against the appellant in the delivery of the lumber. The perpetration of the fraud is stated in the letter, Exhibits 28 and 28-A, as follows:
This letter was referred to the 13th Air Force, at Clark...
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