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USA Vs Ruiz
USA Vs Ruiz
respondent judge from trying Civil Case No. 779M of the defunct
SUPREME COURT
Court of First Instance of Rizal.
Manila
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The traditional rule of State immunity exempts a State from being it can be implied that it has given its consent to be sued under the
sued in the courts of another State without its consent or waiver. contract. ...
This rule is a necessary consequence of the principles of
independence and equality of States. However, the rules of
International Law are not petrified; they are constantly developing xxx xxx xxx
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 We agree to the above contention, and considering that the United
proprietary acts (jure gestionis). The result is that State immunity States government, through its agency at Subic Bay, entered into a
now extends only to acts jure imperil The restrictive application of contract with appellant for stevedoring and miscellaneous labor
State immunity is now the rule in the United States, the United services within the Subic Bay Area, a U.S. Naval Reservation, it is
Kingdom and other states in western Europe. (See Coquia and evident that it can bring an action before our courts for any
Defensor Santiago, Public International Law, pp. 207-209 [1984].) contractual liability that that political entity may assume under the
contract. The trial court, therefore, has jurisdiction to entertain this
case ... (Rollo, pp. 20-21.)
The respondent judge recognized the restrictive doctrine of State
immunity when he said in his Order denying the defendants' (now
petitioners) motion: " A distinction should be made between a The reliance placed on Lyons by the respondent judge is misplaced
strictly governmental function of the sovereign state from its private, for the following reasons:
proprietary or non- governmental acts (Rollo, p. 20.) However, the
respondent judge also said: "It is the Court's considered opinion that
entering into a contract for the repair of wharves or shoreline is In Harry Lyons, Inc. vs. The United States of America, supra, plaintiff
certainly not a governmental function altho it may partake of a brought suit in the Court of First Instance of Manila to collect several
public nature or character. As aptly pointed out by plaintiff's counsel sums of money on account of a contract between plaintiff and
in his reply citing the ruling in the case of Lyons, Inc., [104 Phil. 594 defendant. The defendant filed a motion to dismiss on the ground
(1958)], and which this Court quotes with approval, viz.: that the court had no jurisdiction over defendant and over the
subject matter of the action. The court granted the motion on the
grounds that: (a) it had no jurisdiction over the defendant who did
It is however contended that when a sovereign state enters into a not give its consent to the suit; and (b) plaintiff failed to exhaust the
contract with a private person, the state can be sued upon the administrative remedies provided in the contract. The order of
theory that it has descended to the level of an individual from which dismissal was elevated to this Court for review.
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That 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 is
In sustaining the action of the lower court, this Court said:
shown in Syquia vs. Lopez, 84 Phil. 312 (1949). In that case the
plaintiffs leased three apartment buildings to the United States of
America for the use of its military officials. The plaintiffs sued to
It appearing in the complaint that appellant has not complied with
recover possession of the premises on the ground that the term of
the procedure laid down in Article XXI of the contract regarding the
the leases had expired. They also asked for increased rentals until
prosecution of its claim against the United States Government, or,
the apartments shall have been vacated.
stated differently, it has failed to first exhaust its administrative
remedies against said Government, the lower court acted properly in
dismissing this case.(At p. 598.)
The defendants who were armed forces officers of the United States
moved to dismiss the suit for lack of jurisdiction in the part of the
court. The Municipal Court of Manila granted the motion to dismiss;
It can thus be seen that the statement in respect of the waiver of
sustained by the Court of First Instance, the plaintiffs went to this
State immunity from suit was purely gratuitous and, therefore, obiter
Court for review on certiorari. In denying the petition, this Court
so that it has no value as an imperative authority.
said:
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essentially against her, though not in name. Moreover, this is not
only a case of a citizen filing a suit against his own Government
without the latter's consent but it is of a citizen filing an action
against a foreign government without said government's consent,
which renders more obvious the lack of jurisdiction of the courts of
Separate Opinions
his country. The principles of law behind this rule are so elementary
and of such general acceptance that we deem it unnecessary to cite
authorities in support thereof. (At p. 323.)
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When the U.S. Government, through its agency at Subic Bay, Moral principles and principles of justice are as valid and applicable
confirmed the acceptance of a bid of a private company for the as well with regard to private individuals as with regard to
repair of wharves or shoreline in the Subic Bay area, it is deemed to governments either domestic or foreign. Once a foreign government
have entered into a contract and thus waived the mantle of enters into a private contract with the private citizens of another
sovereign immunity from suit and descended to the level of the country, such foreign government cannot shield its non-performance
ordinary citizen. Its consent to be sued, therefore, is implied from its or contravention of the terms of the contract under the cloak of non-
act of entering into a contract (Santos vs. Santos, 92 Phil. 281, 284). jurisdiction. To place such foreign government beyond the
jurisdiction of the domestic courts is to give approval to the
execution of unilateral contracts, graphically described in Spanish as
Justice and fairness dictate that a foreign government that commits 'contratos leoninos', because one party gets the lion's share to the
a breach of its contractual obligation in the case at bar by the detriment of the other. To give validity to such contract is to sanctify
unilateral cancellation of the award for the project by the United bad faith, deceit, fraud. We prefer to adhere to the thesis that all
States government, through its agency at Subic Bay should not be parties in a private contract, including governments and the most
allowed to take undue advantage of a party who may have powerful of them, are amenable to law, and that such contracts are
legitimate claims against it by seeking refuge behind the shield of enforceable through the help of the courts of justice with jurisdiction
non-suability. A contrary view would render a Filipino citizen, as in to take cognizance of any violation of such contracts if the same had
the instant case, helpless and without redress in his own country for been entered into only by private individuals.
violation of his rights committed by the agents of the foreign
government professing to act in its name.
Constant resort by a foreign state or its agents to the doctrine of
State immunity in this jurisdiction impinges unduly upon our
Appropriate are the words of Justice Perfecto in his dissenting sovereignty and dignity as a nation. Its application will particularly
opinion in Syquia vs. Almeda Lopez, 84 Phil. 312, 325: discourage Filipino or domestic contractors from transacting business
and entering into contracts with United States authorities or facilities
in the Philippines whether naval, air or ground forces-because the
Although, generally, foreign governments are beyond the jurisdiction difficulty, if not impossibility, of enforcing a validly executed contract
of domestic courts of justice, such rule is inapplicable to cases in and of seeking judicial remedy in our own courts for breaches of
which the foreign government enters into private contracts with the contractual obligation committed by agents of the United States
citizens of the court's jurisdiction. A contrary view would simply run government, always, looms large, thereby hampering the growth of
against all principles of decency and violative of all tenets of morals. Filipino enterprises and creating a virtual monopoly in our own
country by United States contractors of contracts for services or
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supplies with the various U.S. offices and agencies operating in the seek protective cover under the majority opinion. The result is
Philippines. disastrous to the Philippines.
The sanctity of upholding agreements freely entered into by the This opinion of the majority manifests a neo-colonial mentality. It
parties cannot be over emphasized. Whether the parties are nations fosters economic imperialism and foreign political ascendancy in our
or private individuals, it is to be reasonably assumed and expected Republic.
that the undertakings in the contract will be complied with in good
faith.
The doctrine of government immunity from suit cannot and should
not serve as an instrument for perpetrating an injustice on a citizen
One glaring fact of modern day civilization is that a big and powerful (Amigable vs. Cuenca, L-26400, February 29, 1972, 43 SCRA 360;
nation, like the United States of America, can always overwhelm Ministerio vs. Court of First Instance, L-31635, August 31, 1971, 40
small and weak nations. The declaration in the United Nations SCRA 464).
Charter that its member states are equal and sovereign, becomes
hollow and meaningless because big nations wielding economic and
military superiority impose upon and dictate to small nations, Under the doctrine of implied waiver of its non-suability, the United
subverting their sovereignty and dignity as nations. Thus, more often States government, through its naval authorities at Subic Bay,
than not, when U.S. interest clashes with the interest of small should be held amenable to lawsuits in our country like any other
nations, the American governmental agencies or its citizens invoke juristic person.
principles of international law for their own benefit.
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Nor is such posture of the petitioners herein in harmony with the laws of the Republic of the Philippines and to abstain from any
amendment dated May 27, 1968 to the aforesaid RP-US Military activity inconsistent with the spirit of the Military Bases Agreement
Bases Agreement, which recognizes "the need to promote and and, in particular, from any political activity in the Philippines. The
maintain sound employment practices which will assure equality of United States shag take all measures within its authority to insure
treatment of all employees ... and continuing favorable employer- that they adhere to them (Emphasis supplied).
employee relations ..." and "(B)elieving that an agreement will be
mutually beneficial and will strengthen the democratic institutions
cherished by both Governments, ... the United States Government The foregoing duty imposed by the amendment to the Agreement is
agrees to accord preferential employment of Filipino citizens in the further emphasized by No. IV on the economic and social
Bases, thus (1) the U.S. Forces in the Philippines shall fill the needs improvement of areas surrounding the bases, which directs that
for civilian employment by employing Filipino citizens, etc." (Par. 1, "moreover, the United States Forces shall procure goods and
Art. I of the Amendment of May 27, 1968). services in the Philippines to the maximum extent feasible"
(Emphasis supplied).
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December 7, 1975, under which "they affirm that sovereign equality,
territorial integrity and political independence of all States are
fundamental principles which both countries scrupulously respect;
and that "they confirm that mutual respect for the dignity of each
nation shall characterize their friendship as well as the alliance
between their two countries. "
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