RIZAL SURETY & INSURANCE COMPANY, PLAINTIFF-APPELLANT, VS. CUSTOMS ARRASTRE SERVICE AND/OR BUREAU OF CUSTOMS, DEFENDANTS-APPELLEES.

Appeal on questions of law from the decision of the Court of
First Instance of Manila dismissing plaintiff’s complaint against defendants
Customs Arrastre Service and/or Bureau of Customs.

Plaintiff filed this action originally in the City Court of
Manila for recovery against defendants of the insurance value of certain cargo
consigned to Edward Manufacturing Corporation, which insured it against loss
with the plaintiff for the amount of P2,535.39.  The cargo arrived in Manila
on board the SS “PIONEER MING” on December 8, 1962 and was discharged into the custody of
the defendant Customs Arrastre Service which was then
operated by the Bureau of Customs.  Said
cargo, however, was not delivered to the consignee, as it was burned with other
cargo during the fire that gutted Shed B, Pier 9, on December 22, 1962.  Formal claim for non-delivery was duly filed
with the Customs Arrastre Service on behalf of the
consignee.  The consignee was paid the
full insurable value of the lost cargo in the sum of P2,535.39
by plaintiff, which then filed this case as subrogee
of the consignee.  The City Court
rendered judgment in favor of plaintiff, but on appeal, the Court of First
Instance of Manila, after trial, rendered its decision of December 2, 1965
dismissing the complaint, holding that the defendants’ obligation to deliver
the cargo had been extinguished by virtue of the fire which had not been shown
to be due to defendants’ negligence and that the action at any rate, being
directed against the Republic of the Philippines, of which the defendant Bureau
of Customs and its arrastre service is a mere arm or
agency, was barred by the State’s immunity from suit.

Plaintiff, on appeal, assigned principally these two rulings of
the trial court as being contrary to law.

It will readily be seen that the ruling first enunciated by this
Court in Mobil Philippines Exploration, Inc. vs. Customs Arrastre
Service and Bureau of Customs on December 17, 1966^[1] and subsequently affirmed and
reaffirmed in a long line of cases, most recently in Fireman’s Fund Ins. Co.
vs. Maersk Line Far East Service^[2]
and Ins. Co. North America vs. Osaka Shosen
Kaisha, et al.^[3],
both promulgated on March 28, 1969, is controlling and decisive of the present
appeal.  The decision in the Mobil case
disposes of plaintiff-appellant’s contentions and indicates the remedy
available to it and others similarly situated, as follows:

“Now, the fact that a non-corporate government entity performs
a function proprietary in nature does not necessarily result in its being suable.  If said
non-governmental function is undertaken as an incident to its governmental
function, there is no waiver thereby of the sovereign immunity from suit
extended to such government entity.  This
is the doctrine recognized in Bureau of Printing, et al. vs. Bureau of Printing
Employees Association, et al., L-15751, January 28, 1961:

x        x          x          x          x          x          x

x x x The Bureau of Customs, to repeat, is part of the
Department of Finance (Sec. 81, Rev. Adm. Code), with no personality of its own
apart from that of the national government. 
Its primary function is governmental, that of assessing and collecting
lawful revenues from impor­ted articles and all other tariff and customs
duties, fees, charges, fines and penalties (Sec. 602, R. A. 1937).  To this function, arrastre
service is a necessary incident.

x        x          x          x          x          x

“Clearly, therefore, although said arrastre
function may be deemed proprietary, it is a necessary incident of the primary
and governmental function of the Bureau of Customs, so that engaging in the
same does not necessary render said Bureau liable to suit.  For otherwise, it could not
perform its governmental function without necessarily exposing itself to suit.  Sovereign immu­nity, granted as to the end,
should not be denied as to the necessary mea n s to that end.

x        x          x          x          x          x

“Regardless of the merits of the claim against it, the State,
for obvious reasons of public policy, cannot be sued without its consent.  Plaintiff should have filed its present claim to the General
Auditing Office, it being for money under the provisions of Commonwealth Act
327, which state the conditions under which money claims against the Government
may be filed.

“It must be remembered that statutory provisions waiving State
immunity from suit are strictly construed and that waiver of immunity, being in
derogation of sovereignty, will not be lightly inferred.  x x x x Prom the provision
authorizing the Bureau of Customs to lease arrastre operations
to private parties, We see no authority to sue the
said Bureau in the instances where it undertakes to conduct said operation
itself.  The Bu­reau of Customs, acting
as part of the machinery of the national government in the operation of the arrastre service, pursuant to express legislative mandate
and as a necessary incident of its prime governmental function, is immune from
suit, there being no statute to the contrary.” (18 SCRA, pp. 1124-1127.)

ACCORDINGLY, the judgment of the court a quo
dismissing the complaint is affirmed, without pronouncement as to costs.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Fernando, and
Barredo, JJ., concur.

Castro and Capistrano, JJ., took no part.

^[1]
L-23139, 18 SCRA 1120.

^[2]
L-27189.

^[3]
L-22784.