G.R. No. L-24106 October 31, 1967
INSURANCE COMPANY OF NORTH AMERICA, plaintiff-appellant, vs. WARNER, BARNES and CO., LTD., REPUBLIC OF THE PHILIPPINES and/or BUREAU OF CUSTOMS and/or CUSTOMS ARRASTRE SERVICE, defendants-appellees.

FACTS

On or about September 23, 1963, Ford Motor Co., Ltd., London, shipped merchandise (auto parts, bodies, chassis, frames, and other truck parts) on board the SS “Saikyo Maru,” consigned to the order of Security Bank and Trust Company, Manila, with arrival notice to Manila Trading and Supply Company. The shipment was insured with the plaintiff, Insurance Company of North America. The vessel arrived at the port of Manila on or about November 2, 1963, and the shipment was allegedly discharged into the custody of the Bureau of Customs as arrastre operator. The goods were delivered to the consignee in damaged condition. The plaintiff insurer paid the consignee the amount of P2,243.92 for the damage and, as subrogee, filed a complaint against Warner, Barnes & Co., Ltd. (operator of the vessel) and the Republic of the Philippines and/or Bureau of Customs and/or Customs Arrastre Service as alternative defendants. The defendants other than Warner, Barnes & Co., Ltd. moved to dismiss the complaint on the grounds of lack of jurisdiction over them and over the subject matter. The trial court granted the motion, holding that the Bureau of Customs, as a government agency, cannot be sued without its consent and that the amount of the claim was below the jurisdictional limit of the Court of First Instance.

ISSUE

1. Whether the trial court correctly dismissed the complaint against the Republic of the Philippines, Bureau of Customs, and Customs Arrastre Service on the ground of non-suability.
2. Whether the trial court had jurisdiction over the subject matter of the suit, considering the joinder of an admiralty claim against the vessel operator with a claim against the arrastre operator.

RULING

1. Yes, the order of dismissal against the Republic of the Philippines, Bureau of Customs, and Customs Arrastre Service is correct. The Bureau of Customs is an arm of the Department of Finance and has no separate juridical personality from the national government. While the arrastre service is a proprietary function, it is a necessary incident to the primary governmental function of assessing and collecting duties. The State has not consented to be sued in this case, and claims for money against it must be lodged with the Auditor General under Commonwealth Act 327. A long line of decisions affirms the non-suability of the Bureau of Customs in such cases.
2. The trial court has jurisdiction over the subject matter. The cause of action against Warner, Barnes & Co., Ltd., as operator of the carrying vessel, is one of admiralty, which is within the jurisdiction of the Court of First Instance. Although the claim against the Bureau of Customs as arrastre operator, if standing alone, would be an ordinary civil suit outside the Court of First Instance’s jurisdiction due to the amount involved, the two causes of action may be joined in one complaint under Section 5, Rule 2 of the Rules of Court, as they arise out of the same transaction. When causes of action are joined, and one is cognizable by the Court of First Instance, the suit should be filed in that court. Therefore, the case is remanded for further proceedings solely against Warner, Barnes & Co., Ltd.