[Geelyn C]

Case for State Immunity

United States of America vs. Hon. Ruiz May 22, 1985

136 SCRA 487

FACTS

BACKGROUNDER. The United States of America had a naval base in Subic,

Zambales which was provided in the Military Bases Agreement between the
Philippines and the United States.

o Sometime in May 1972, the US opened the submission of bids for the
following projects:

Repair offender system

Repair typhoon damage to certain parts of the base
o Eligio de Guzman & Co., Inc. submitted bids. Subsequent thereto, the
company received two telegrams from the US requesting it to confirm its
price proposals and the name of its bonding company. The company in turn
complied with such request.
o In June 1972, the company received a letter signed by William Collins
(director, contracts Division, Naval Facilities engineering Command,
Southwest Pacific, Dept. of the Navy of the US) that says that the company
did not qualify to receive an award for the projects due to its previous
unsatisfactory performance on a repair contract for the sea wall at the boat
landings of the US Naval Station in Subic Bay.
o Then the projects were awarded to third parties
o The company Eligio de Guzman & Co., Inc. then sued the USA and the
members of the Engineering Command of the US Navy for the following:
To order the US Navy to allow them to do the project, and if that
were no longer possible, to order them to pay damages. They
assumed that the project was awarded to them when the US Navy
asked them earlier to confirm the price proposals to perform the
works on the projects and the event that specific performance was no
longer possible, to order the defendants to pay damages.
For the court to issue a writ of preliminary injunction to restrain the
US Navy from entering into contracts with third parties.
 o The defendants entered their special appearance for the purpose only of
questioning the jurisdiction of this court over the subject matter of the
complaint and the persons of defendants, the subject matter of the complaint
being acts and omissions of the individual defendants as agents of defendant
United States of America, a foreign sovereign which has not given her
consent to this suit or any other suit for the causes of action asserted in the
complaint."
Subsequently the defendants filed a motion to dismiss the complaint
which included an opposition to the issuance of the writ of
preliminary injunction. The company opposed the motion. The trial
court denied the motion and issued the writ. The defendants moved
twice to reconsider but to no avail.
o Judge Ruiz of the CRI denied the two motions of the US and instead, he
issued the write of preliminary injuction. Hence, this petition for review.

ISSUE

Whether or not the US Navy can invoke State Immunity [from

the suit filed by Eligio de Guzman & Co]

HELD

YES. The traditional role of the state immunity exempts a state

from being sued in the courts of another state without its consent
or waiver. This rule is necessary consequence of the principle of
independence and equality of states. However, the rules of
international law are not petrified; they are continually and
evolving and 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 sovereign and governmental acts. A state
may be 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
contracts relates the exercise of its sovereign function.
 In this case, the projects are integral part of the naval base
which is devoted to the defense of both US and the
Philippines indisputably, a function of the government of
highest order, they are not utilized for , nor dedicated to
commercial or business purposes.