US vs RUIZ

FACTS: This is a petition to review, set aside certain orders and restrain the respondent judge from trying CivilCase No. 779M of the defunct Court ofFirst Instance of Rizal where HON. V. M. RUIZ, Presiding Judge.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 thePhilippines and the US. TheUnited States invited the submission of bids for Repair offender system andRepair typhoon damages. Eligio de Guzman & Co., Inc. responded to the invitation, submitted bids and complied with the requests based on the letters received from the US. Eventually, letter was received by the private-respondent indicating that he company did not qualify to receiveanawardfor theprojects becauseof itsprevious unsatisfactory performance fromseveralrepairworks. The company sued the United States of America and the Heads and all members of the Engineering Command of the U.S. Navy to order to allow the plaintiff to perform the work on the projects to pay damages if the awarding of project will no longer be possible. It also prayed for the issuance of a writ ofpreliminary injunction, which was granted, to restrain the defendants from entering into contracts with third parties for work on the projects. The petitioner moved to submit instant petition which seeks to restrain perpetually the proceedings in Civil Case No.779-M for lack of jurisdiction on thepart of the trial court being the subject matter of the complaint as agents United States of America, a foreign sovereign which has not given her consent to this suit orany other suit for the causesof action asserted in the complaintIssue: Whether the United States Naval Base in bidding for said contracts exercise governmental functions to be able to invoke state immunity.

Held: 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. The restrictive application ofstateimmunity isproperonly whenthe proceedingsarise outof 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 ofits sovereign function. In this case, the projects are an integral part of thenaval 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 nordedicated to commercial or business purposes. The petition is granted; the questioned orders of the respondent judge are set aside and Civil Case No. is dismissed. Costs against the private respondent.