G.R. No. L-26978




Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-26978 November 28, 1969 PROVIDENCE WASHINGTON INSURANCE COMPANY, plaintiff-appellee, vs. REPUBLIC OF THE PHILIPPINES and BUREAU OF CUSTOMS, defendants-appellants. William H. Quasha and Associates for plaintiff-appellee. Office of the Solicitor General Antonio P. Barredo, Assistant Solicitor General Frine' C. Zaballero, Solicitor Concepcion T. Agapunan and Felipe T. Cuison for defendants-appellants. TEEHANKEE, J.: In this appeal by the State from the adverse judgment of the Court of First Instance of Manila, we reaffirm the doctrine of the State's immunity from suit with respect to its operation of the Customs Arrastre Service in the Port of Manila. Plaintiff, as subrogee of the importer, Society of the Divine Word, filed this action originally in the City Court of Manila on May 12, 1965 against defendants for the recovery of the value of one of eight boxes of miscellaneous elevator components in the amount of P3,120.00, which was lost while in the custody of the Customs Arrastre Service then operated by the Bureau of Customs, and which plaintiff had in due course paid to the importer. The City Court, as well as the Court of First Instance of Manila, on appeal, both rendered judgment in favor of plaintiff, notwithstanding defendants' plea of the State's immunity from suit. Hence, this appeal. The sole issue of non-suability of the Republic with respect to its operation through the Bureau of Customs of the Arrastre Service in the Port of Manila has already been settled in the case of Mobil Philippines Exploration, Inc. vs. Customs Arrastre Service, et al.¹ decided by this Court on December 17, 1966 and in a long line of subsequent decisions, reiterating the doctrine first enunciated in the Mobil case.² By virtue thereof, the judgment appealed from must be reversed. The decision in the Mobil case indicates the remedy available to plaintiff-appellee and others similarly situated as follows: Now, the fact that a non-corporate government entity performs a function proprietary in nature does not necessarily result in its being suable. If said non-governmental function is undertaken as an incident to its governmental function, there is no waiver thereby of the sovereign immunity from suit extended to such government entity. This is the doctrine recognized in Bureau of Printing, et al. vs. Bureau of Printing Employees Association, et al, L-15751, January 28, 1961: xxx xxx xxx . . . . The Bureau of Customs, to repeat, is part of the Department of Finance (Sec. 81, Rev. Adm. Code), with no personality of its own apart from that of the national government. Its primary function is governmental, that of assessing and collecting lawful revenues from imported articles and all other tariff and customs duties, fees, charges, fines and penalties (Sec. 602, R. A. 1937). To this function, arrastre service is a necessary incident. xxx xxx xxx Clearly, therefore, although said arrastre function may be deemed proprietary, it is a necessary incident of the primary and governmental function of the Bureau of Customs, so that engaging in the same does not necessarily render said Bureau liable to suit. For otherwise, it could perform its governmental function without necessarily exposing itself to suit. Sovereign immunity, granted as to the end, should not be denied as to the necessary means to that end. xxx xxx xxx Regardless of the merits of the claim against it, the State, for obvious reasons of public policy, cannot be sued without its consent. Plaintiff should have filed its present claim to the General Auditing Office, it being for money under the provisions of Commonwealth Act 327, which state the conditions under which money claims against the government may be filed. It must be remembered that statutory provisions waiving State immunity from suit are strictly construed and that waiver of immunity, being in derogation of sovereignty, will not be lightly inferred. . . . . From the provision authorizing the Bureau of Customs to lease arrastre operations to private parties, We see no authority to sue the said Bureau in the instances where it undertakes to conduct said operation itself. The Bureau of Customs, acting as part of the machinery of the national government in the operation of the arrastre service, pursuant to express legislative mandate and as a necessary incident of its prime governmental function, is immune from suit, there being no statute to the contrary. ACCORDINGLY, the judgment appealed from is reversed and the complaint is dismissed, without pronouncement as to costs. Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro and Fernando, JJ., concur. Barredo, J., took no part. Footnotes ¹ L-23139, 18 SCRA 1120. ² Providence Washington Ins. Co. vs. Republic, L-16386, Sept. 30, 1969 lists thirty-six of such cases. The Lawphil Project - Arellano Law Foundation