US v. Ruiz

US v. Ruiz Case Digest

UNITED STATES OF AMERICA, CAPT. JAMES E. GALLOWAY, WILLIAM I. COLLINS and ROBERT GOHIER, petitioners,
vs.
HON. V. M. RUIZ, Presiding Judge of Branch XV, Court of First Instance of Rizal and ELIGIO DE GUZMAN & CO., INC., respondents.

136 SCRA 487
G.R. No. L-35645
May 22, 1985

FACTS:

Petitioner invited the submission of bids for repair of its wharves and shoreline in the Subic Bay Area. Eligion and Co. responded to the invitation and submitted bids. Said company was requested by telegram to confirm its price proposals and for the name of its bonding company, and from which it complied.

Later, the United States, through its agents, informed said company that it was not qualified to receive an award at the project for the poorly completed projects it awarded to third parties. The company sued petitioner for specific performance and if no longer possible, for damages. It also asked for a writ of preliminary injunction to restrain the defendants from entering into contracts with others.

The United States entered a special appearance for the purpose only of questioning the jurisdiction of the court over the subject matter of the complaint and the persons of the defendants, the subject matter of the complaint being acts and omissions of the individual defendants as agents of the defendant United States of America, a foreign sovereign which has not given its consent to this suit or any other suit for the cause of action asserted in the complaint.

US filed a motion to dismiss and opposed the writ. The trial court denied the motion and issued a writ.

ISSUE:

Whether the US may be sued?

HELD:

No. The traditional rule of State immunity exempts a State from being sued in the courts of another State without its consent or waiver. This rule is a necessary consequence of the principles of independence and equality of States. However, the rules of International Law are not petrified; they are constantly developing and evolving. In addition, because the activities of states have multiplied, it has been necessary to distinguish them — between sovereign and governmental acts (jure imperii) and private, commercial and proprietary acts (jure gestionis). The result is that State immunity now extends only to acts jure imperii. The restrictive application of State immunity is now the rule in the United States, the United Kingdom and other states in western Europe. (See Coquia and Defensor-Santiago, Public International Law, pp. 207-209 [1984].)

The restrictive application of state immunity is proper only when the proceedings arise out of commercial transactions of the foreign sovereign, its commercial activities or economic affairs. Stated differently, a state may be said to have descended to the level of an individual and can be thus deemed to have tacitly given its consent to be sued only when the contract relates to the exercise of its sovereign functions. In this case, the projects are an integral part of the naval base which is devoted to the defense of both the US and the Philippines, undisputed a function of the government of the highest order, they are not utilized for nor dedicated to commercial or business purposes.

The correct test for the application of State immunity is not the conclusion of a contract by a State but the legal nature of the act is shown in Syquia vs. Lopez, 84 Phil. 312 (1949). In that case, the plaintiffs leased three apartment buildings to the United States of America for the use of its military officials. The plaintiffs sued to recover possession of the premises on the ground that the term of the leases had expired. They also asked for increased rentals until the apartments shall have been vacated.

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