Tuesday, February 21, 2012

US vs. Ruiz

Facts: Petitioner invited the submission of bids for repair of its wharves and shoreline in the Subic Bay Area. Eligion and Co. responded to the invitation and submitted bids. Said company was requested by telegram to confirm its price proposals and for the name of its bonding company, and from which it complied. Later, the United States, through its agent, informed said company that it was not qualified to receive an award at the project for the poorly completed projects it awarded to third parties. The company sued petitioner for specific performance and if no longer possible, for damages. It also asked for a writ of preliminary injunction to restrain the defendants from entering into contracts with others. The United States entered a special appearance for the purpose only of questioning the jurisdiction of the Court over the subject matter of the complaint and the persons of the defendants, the subject matter of the complaint being acts and omissions of the individual defendants as agents of the defendant United States of America, a foreign sovereign which has not given its consent to this suit or any other suit for the cause of action asserted in the complaint. U.S. filed a motion to dismiss and opposed the writ. The Trial Court denied the motion and issued a writ.

Issue: Whether United States may be sued

Held: No. 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. Stated differently, a state may be said to have descended to the level of an individual can be thus deemed to have tacitly given its consent to be sued only when 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 U.S. and the Philippines, undisputed 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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