GR L 26237; (July, 1967) (Digest)
G.R. No. L-26237 July 10, 1967
NORTH BRITISH and MERCANTILE INSURANCE, CO., LTD., plaintiff-appellant, vs. ISTHMIAN LINES, INC., INTERNATIONAL HARVESTER MACLEOD, INC., REPUBLIC OF THE PHILIPPINES and/or BUREAU OF CUSTOMS, defendants-appellees.
FACTS
Sixty-one packages of medicine were shipped from New York to Manila aboard the SS “Steel Recorder” operated by Isthmian Lines, Inc. Fifty-nine packages were delivered to the Customs Arrastre Service, which then delivered them to the consignee, Squibb-Mathieson International Corporation. Two packages were overcarried to Singapore and later re-shipped to Manila. Upon arrival, these two packages were delivered to the Customs Arrastre Service—one in good order and one in bad order. The Arrastre Service failed to deliver these two packages to the consignee. The consignee filed a claim for the loss, valued at P4,474.71, against the Customs Arrastre Service and its insurer, North British & Mercantile Insurance Company, Ltd. After paying the claim, the insurance company was subrogated to the consignee’s rights and filed an amended complaint in the Court of First Instance of Manila against Isthmian Lines, Inc. (through its agent International Harvester Macleod, Inc.) and the Republic of the Philippines and/or the Bureau of Customs as the arrastre operator, seeking recovery of P4,474.41 plus attorney’s fees. The other defendants (Isthmian Lines and its agent) later settled amicably with the plaintiff, leaving the Republic of the Philippines and/or the Bureau of Customs as the sole defendant. The trial court dismissed the complaint, ruling that the Republic cannot be sued without its consent and that the Bureau of Customs, as a government agency, lacks the capacity to sue or be sued.
ISSUE
Whether the Republic of the Philippines and/or the Bureau of Customs, in its capacity as an arrastre operator, may be sued for damages arising from its arrastre operations.
RULING
No. The Supreme Court affirmed the trial court’s dismissal of the complaint. Citing its precedent in Mobil Philippines Exploration, Inc. v. Customs Arrastre Service and/or Bureau of Customs (L-23139, Dec. 17, 1966), the Court held that the Bureau of Customs, as an instrumentality of the national government performing arrastre functions, is immune from suit for damages. This immunity applies regardless of the merits of the claim and is based on reasons of public policy. Therefore, the Republic of the Philippines, through the Bureau of Customs, cannot be sued without its consent.