GR L 28651; (February, 1968) (Digest)

FACTS

Eight cases of truck replacement parts consigned to Silvertown Auto Supply were discharged from the vessel “SS Pioneer Ming” into the custody of the Customs Arrastre Service of the Republic of the Philippines. Upon delivery to the consignee’s broker, one case was found empty. The plaintiff, Domestic Insurance Company of the Philippines, as insurer, indemnified the consignee and was subrogated to its rights. After a demand for payment was refused by the Customs Arrastre Service, the plaintiff filed an action in the Court of First Instance of Manila to recover the indemnity paid, with interest, attorney’s fees, and costs. The lower court rendered judgment in favor of the plaintiff against the Republic of the Philippines. The Republic appealed.

ISSUE

Whether or not the Republic of the Philippines, in the operation of the arrastre service through the Bureau of Customs, may be sued without its consent.

RULING

No. The Republic of the Philippines, operating the arrastre service through the Bureau of Customs, is immune from suit without its consent. The Court applied the doctrine established in Mobil Philippines Exploration, Inc. vs. Customs Arrastre Service and Bureau of Customs. The Bureau of Customs is a part of the national government with a primary governmental function of assessing and collecting revenues. Although the arrastre service may be proprietary in nature, it is a necessary incident to this primary governmental function. Engaging in such an incident does not render the Bureau liable to suit, as sovereign immunity extends to the necessary means to achieve a governmental end. Statutory provisions waiving state immunity are strictly construed, and no such waiver can be inferred from the authority of the Bureau to lease arrastre operations. The plaintiff’s proper remedy is to present its money claim to the Auditor General under Act 3083 and Commonwealth Act 327. Accordingly, the judgment of the lower court was set aside and the case was dismissed.