G.R. No. L-27019 May 6, 1977
Travelers Indemnity Company, plaintiff-appellant, vs. Barber Steamship Lines, Inc., Macondray & Co., Inc., Republic of the Philippines and Customs Arrastre Service, defendants-appellees.

FACTS

The case originated from damage to and loss of a cargo of nylon and cotton piece goods insured by Travelers Indemnity Company. The Court of First Instance of Manila found that part of the cargo was damaged before discharge from the vessel, amounting to $18.50, for which it held the vessel’s agents liable. The court also found that another portion of the cargo was not delivered by the Customs Arrastre Service, with a value of $56.23.
The trial court dismissed the claim against the Republic of the Philippines and the Customs Arrastre Service, upholding the government’s defense of state immunity from suit. It ruled that the Arrastre Service was not a juridical person and a suit against it was a suit against the State. Travelers Indemnity appealed this dismissal but, in its brief, also contested the factual finding on the extent of the loss attributable to the arrastre operator, arguing the liability should be $789.18 instead of $56.23.

ISSUE

The primary legal issue is whether the State, through the Customs Arrastre Service, can be sued for the value of the undelivered cargo. A secondary, factual issue concerns the correct valuation of the loss for which the arrastre operator could be held liable.

RULING

The Supreme Court affirmed the trial court’s decision. On the factual issue, the Court held that the appellant insurance company was bound by the trial court’s finding that the loss due to the arrastre operator’s non-delivery was only $56.23. Under the Rules of Court, questions of fact are not reviewable by the Supreme Court in an appeal by certiorari, and the appellant is precluded from raising this issue anew.
On the central legal issue of state suability, the Court ruled that the trial court correctly dismissed the claim against the Republic and the Customs Arrastre Service. The Bureau of Customs, in operating the arrastre service, performs a governmental function as part of the national administration. Consequently, it is immune from suit under the doctrine of non-suability of the State. The proper remedy for the claimant is not a judicial suit but to file a claim with the Commission on Audit as provided under Act No. 3083 and Commonwealth Act No. 327 . This ruling is consistent with established jurisprudence holding the state immune from suit for claims arising from arrastre operations.