U.S.

A vs Ruiz
Facts:Sometime in May, 1972, the United States invited the submission of
bidsfor the following projects
1. Repair offender system, Alava Wharf at the U.S. Naval Station SubicBay,
Philippines.
2. Repair typhoon damage to NAS Cubi shoreline; repair typhoon damageto
shoreline revetment, NAVBASE Subic; and repair to Leyte Wharf approach,
NAVBASE Subic Bay, Philippines.Eligio de Guzman & Co., Inc. responded to
the invitation and submittedbids. Subsequent thereto, the company received
from the United Statestwo telegrams requesting it to confirm its price
proposals and for thename of its bonding company. The company complied
with the requests.The company received a letter which was signed by
Wilham
I. Collins,Director, Contracts
Division,
Naval Facilities
Engineering Command,Southwest Pacific, Department of the Navy of the
United States, who isone of the petitioners stating that the company did not
qualify to receivean award for the projects because of its previous
unsatisfactoryperformance rating on a repair contract for the sea wall at the
boatlandings of the U.S. Naval Station in Subic Bay. The letter further said
thatthe projects had been awarded to third partiesThe said company filed a
suit against United States of America andMessrs. James E. Galloway, William
I. Collins and Robert Gohier allmembers of the Engineering Command of the
U.S. Navy to order thelatter to allow the company to perform the work on the
projects and, inthe event that specific performance was no longer possible,
to order thedefendants to pay damages. The company also asked for the
issuance of a writ of preliminary injunction to restrain the defendants from
enteringinto contracts with third parties for work on the projects.Herein
petitioner raised the question of jurisdiction for the subject matterof the
complaint being acts and omissions of the individual defendants asagents of
defendant United States of America, a foreign sovereign whichhas not given
her consent to this suit or any other suit for the causes of action asserted in
the complaint. They also filed a motion to dismiss thecase.The lower court
denied the motion and issued the writ prayed by edigiode Guzman & Co.,
inc.Issue:Whether or not the defendant-appellant U.S.A has immunityfrom
suit.Ruling: Yes, the U.S.A has immunity from suit in the said
case.Rationale:The traditional rule of State immunity exempts a State
frombeing sued in the courts of another State without its consent or
waiver.This rule is a necessary consequence of the principles of
independenceand equality of States. However, the rules of International Law
are notpetrified; they are constantly developing and evolving. And
because theactivities of states have multiplied, it has been necessary to
distinguishthem-between sovereign and governmental acts (
jure imperii
) andprivate, commercial and proprietary acts (
jure

gestionis
). The result isthat State immunity now extends only to acts jure imperil
The restrictiveapplication of State immunity is now the rule in the United
States, theUnited Kingdom and other states in western Europe.The restrictive
application of State immunity is proper only when theproceedings arise out
of commercial transactions of the foreign sovereign,its commercial activities
or economic affairs. Stated differently, a Statemay be said to have
descended to the level of an individual and can thusbe deemed to have
tacitly given its consent to be sued only when itenters into business
contracts. It does not apply where the contractrelates to the exercise of its
sovereign functions. In this case the projectsare an integral part of the naval
base which is devoted to the defense of both the United States and the
Philippines, indisputably a function of thegovernment of the highest order;
they are not utilized for nor dedicatedto commercial or business
purposes.That the correct test for the application of State immunity is not
theconclusion of a contract by a State but the legal nature of the
actJudgment of lower court is reversed and set aside.