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USA Vs Ruiz G.R. No. L-35645 Case Digest

The United States Navy invited bids for repair projects at its Subic Bay naval base in the Philippines. Eligio de Guzman & Co. submitted bids and was later told by the Navy that it did not receive the contracts. Eligio sued the US for specific performance. The court ruled that the US naval base was exercising governmental functions in bidding for the repair contracts. As such, the US could invoke sovereign immunity and was exempt from being sued without its consent. Awarding contracts for repairs at a naval base devoted to defense is a sovereign governmental function, not a commercial activity, so sovereign immunity applies.

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96 views1 page

USA Vs Ruiz G.R. No. L-35645 Case Digest

The United States Navy invited bids for repair projects at its Subic Bay naval base in the Philippines. Eligio de Guzman & Co. submitted bids and was later told by the Navy that it did not receive the contracts. Eligio sued the US for specific performance. The court ruled that the US naval base was exercising governmental functions in bidding for the repair contracts. As such, the US could invoke sovereign immunity and was exempt from being sued without its consent. Awarding contracts for repairs at a naval base devoted to defense is a sovereign governmental function, not a commercial activity, so sovereign immunity applies.

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G.R. No.

L-35645 May 22, 1985

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.

FACTS:

The United States of America had a naval base in Subic, Zambales. The base was one of those
provided in the Military Bases Agreement between the Philippines and the United States. Sometime
in May, 1972, the United States invited the submission of bids for a couple of repair projects. Eligio
de Guzman land Co., Inc. responded to the invitation and submitted bids. Subsequent thereto, the
company received from the US two telegrams requesting it to confirm its price proposals and for the
name of its bonding company. The company construed this as an acceptance of its offer so they
complied with the requests. The company received a letter which was signed by William I. Collins of
Department of the Navy of the United States, also one of the petitioners herein informing that the
company did not qualify to receive an award for the projects because of its previous unsatisfactory
performance rating in repairs, and that the projects were awarded to third parties. For this reason, a
suit for specific performance was filed by him against the US.

ISSUE:

Whether the United States Naval Base in bidding for said contracts exercise governmental functions
to be able to invoke state immunity.

RULING:

Yes. 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. And because the activities of states have multiplied, it has
been necessary to distinguish them between sovereign and governmental acts and private,
commercial and proprietary acts. The result is that state immunity now extends only to sovereign
and governmental acts. 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. A state may be said to have descended to the level of an individual and can
thus be deemed to have tacitly given its consent to be sued only when it enters into business
contracts. It does not apply where the contract relates the exercise of its sovereign function. 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, indisputably a function of the government of the highest order; they are not
utilized for nor dedicated to commercial or business purposes

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