GR L 25709; (April, 1969) (Digest)
G.R. No. L-25709; April 25, 1969
RIZAL SURETY & INSURANCE COMPANY, plaintiff-appellant, vs. CUSTOMS ARRASTRE SERVICE and/or BUREAU OF CUSTOMS, defendants-appellees.
FACTS
Plaintiff Rizal Surety & Insurance Company filed an action originally in the City Court of Manila for recovery against the defendants Customs Arrastre Service and/or Bureau of Customs. The claim was for the insurance value of cargo consigned to Edward Manufacturing Corporation, which the plaintiff had insured against loss for P2,535.39. The cargo arrived in Manila on December 8, 1962, and was discharged into the custody of the defendant Customs Arrastre Service, then operated by the Bureau of Customs. The cargo was not delivered to the consignee because it was burned in a fire that gutted Shed B, Pier 9, on December 22, 1962. The consignee filed a formal claim for non-delivery with the Customs Arrastre Service. The plaintiff, as insurer, paid the consignee the full insurable value of the lost cargo and subsequently filed the case as subrogee of the consignee. The City Court ruled in favor of the plaintiff. On appeal, the Court of First Instance of Manila dismissed the complaint, holding that the defendants’ obligation to deliver the cargo was extinguished by the fire, which was not shown to be due to the defendants’ negligence, and that the action was barred by the State’s immunity from suit, as it was directed against the Republic of the Philippines, of which the Bureau of Customs and its arrastre service is a mere arm or agency.
ISSUE
The principal issues are: (1) Whether the defendants’ obligation was extinguished by the fire absent a showing of their negligence; and (2) Whether the action against the Customs Arrastre Service and/or Bureau of Customs is barred by the doctrine of state immunity from suit.
RULING
The Supreme Court affirmed the decision of the Court of First Instance dismissing the complaint. The Court held that the ruling in Mobil Philippines Exploitation, Inc. vs. Customs Arrastre Service and Bureau of Customs is controlling. The Bureau of Customs, being part of the Department of Finance with no separate personality from the national government, performs arrastre service as a necessary incident to its primary governmental function of assessing and collecting customs duties. Engaging in such proprietary activity does not render the Bureau liable to suit, as sovereign immunity extends to the necessary means to perform its governmental function. The Court reiterated that the State cannot be sued without its consent, and statutory provisions waiving such immunity are strictly construed. The plaintiff should have filed its money claim with the General Auditing Office under the provisions of Commonwealth Act 327. Accordingly, the complaint was dismissed.