GR 25087; (July, 1978) (Digest)
G.R. No. L-25087 July 21, 1978
THE SHELL COMPANY OF THE PHILIPPINES LIMITED, plaintiff-appellant, vs. THE NEDLLOYD LINES and/or COLUMBIAN PHILIPPINES, INC. and/or REPUBLIC OF THE PHILIPPINES, defendants-appellees.
FACTS
The Shell Company of the Philippines imported cargo, consisting of twenty-three drums of luboil and additive, which was shipped via the M/S “NEDER RIJN.” Upon arrival in the Philippines, the cargo was discharged and received by the Customs Arrastre Service, an instrumentality of the Republic of the Philippines. When the arrastre service subsequently delivered the cargo to Shell, a shortage of three drums valued at P1,154.40 was discovered.
To recover the loss, Shell filed a complaint for sum of money against the carrier, its agent, and the Republic of the Philippines as alternative defendants, alleging negligence. The Republic, through the Bureau of Customs operating the arrastre service, moved to dismiss the complaint against it on the ground of state immunity from suit. The trial court granted the motion, dismissing the case against the Republic while allowing it to proceed against the private carrier defendants.
ISSUE
Whether the Republic of the Philippines, through the Bureau of Customs operating the Customs Arrastre Service, may be sued in court without its consent for damages arising from its arrastre operations.
RULING
The Supreme Court affirmed the trial court’s order of dismissal, ruling that the Republic of the Philippines is immune from suit in this instance. The Court clarified that the Bureau of Customs, and its functional unit the Customs Arrastre Service, are not juridical persons but integral parts of the national government machinery. The operation of the arrastre service, even if proprietary in nature, is undertaken as a necessary incident to the Bureau’s prime governmental function of customs administration, pursuant to the legislative mandate under the Tariff and Customs Code.
Consequently, performing such a non-governmental function as an incident to a sovereign function does not constitute a waiver of sovereign immunity. The Court, citing precedents like Mobil Philippine Exploration Inc. v. Customs Arrastre Service and Wise and Company, Inc. v. The Customs Arrastre Service, held that the state’s immunity from suit without its consent remains intact. The proper remedy for the consignee is not a court action against the state but to file a money claim with the Commission on Audit as provided by law.