GR 26811; (July, 1970) (Digest)
G.R. No. L-26811 July 31, 1970
GLOREN, INC., doing business as CORTAN MANUFACTURING COMPANY, plaintiff-appellee, vs. REPUBLIC OF THE PHILIPPINES, defendant-appellant.
FACTS
On December 15, 1962, merchandise identified as “6 Skids Tin Plate Waste” arrived in Manila aboard the S.S. President Wilson, was discharged without damage, and delivered in good order to the Customs Arrastre Service. The cargo, consigned to Cortan Manufacturing Company (whose successor is plaintiff Gloren, Inc.), was never delivered to the consignee and was admittedly lost while in the possession of the Customs Arrastre Service. The Court of First Instance of Manila rendered judgment on September 30, 1966, sentencing the Republic of the Philippines to pay the plaintiff P3,570, representing the value of the lost merchandise.
ISSUE
The sole issue is one of law: whether the State is immune from suit (non-suability of the State) for the loss of cargo while in the possession of the Customs Arrastre Service.
RULING
The Supreme Court reversed the judgment of the lower court and dismissed the complaint, holding that the State is immune from suit. The Court ruled that the Bureau of Customs, which operates the Customs Arrastre Service, is a non-corporate government entity and part of the Department of Finance, with no separate personality from the national government. Its primary function is governmental—assessing and collecting lawful revenues from imported articles and other tariff and customs duties. The arrastre service is a necessary incident to this primary governmental function. Engaging in such a proprietary function as an incident to a governmental function does not waive the sovereign immunity from suit. Statutory provisions waiving State immunity are strictly construed, and waiver will not be lightly inferred. The Court cited the controlling precedent in Mobil Philippines Exploration, Inc. vs. Customs Arrastre Service and Bureau of Customs. The proper remedy for the plaintiff is to present the money claim to the Auditor General for adjudication under the provisions of Act 3083 and Commonwealth Act 327. No costs were awarded.