U.S. v.

Ruiz (1985)
Summary
Eligio de Guzman & Co., Inc. sued the United States (US) in a Philippine court after the US,
through its officers, rejected the Companys bid for certain repair works in the US naval base
in Subic. Claiming the rule on State immunity, the US sought the dismissal of the case due
to lack of jurisdiction of the court since the US, as a foreign sovereign, has not given consent
to the suit. Considering that the repairs of the naval base pertain to the defense of the US
and the Philippines, a sovereign function (jure imperii), the Supreme Court ruled that the US
cannot be sued without its consent under the rule on State immunity.
Facts
US had a naval base in Subic, Zambales. In 1972, it invited bidders for the repair of
wharves or shoreline in the naval station.
Eligio de Guzman & Co., Inc. (the Company) submitted bids but the US Dept. of Navy
rejected said bids because of the Companys previous unsatisfactory performance on
a repair contract with the US Naval Station. Also, the projects had been awarded to
third parties.
The Company filed a complaint against the US and members of the Engineering
Command of the US Navy for specific performance or damages.
The defendants moved to dismiss the complaint for lack of jurisdiction because the
subject matter is the acts and omissions of the individual defendants as agents of US,
a foreign sovereign which has not given her consent to the suit.
Issue: Whether or not the US may be sued without its consent
Held/Ratio: NO.

The traditional rule of State immunity exempts a State from being sued in the courts
of another State without its consent or waiver. Due to the constantly developing and
evolving activities of states, it has been necessary to distinguish 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.
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 (jure gestionis). It does not apply where 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, 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.
In Syquia vs. Lopez (1949),
where the plaintiffs leased apartment buildings to the US for the use of its military
officials and later on sued for unlawful detainer, it was held that the real party
defendant is the US Government since any judgment for back rentals or damages will
have to be paid not by individual defendants but by the US Government. The US
concluded contracts with private individuals but the contracts notwithstanding the US
was not deemed to have given or waived its consent to be sued for the reason that
the contracts were for jure imperii and not for jure gestionis.