GLOREN, INC., DOING BUSINESS AS CORTAN MANUFACTURING COMPANY, PLAINTIFF-APPELLEE, VS. REPUBLIC OF THE PHILIPPINES, DEFENDANT-APPELLANT.

On December 15, 1962 merchandise identified as “6 Skids Tin
Plate Waste Waste” arrived in Manila on board
the S.S. President Wilson, was discharged without damage, and delivered
in good order to the Customs Arrastre Service.  This cargo was never delivered to the
consignee, the Cortan Manufacturing Company, nor to
its successor, the plaintiff Gloren, Inc.  The cargo was admittedly lost while in the
possession of the Customs Arrastre Service.  The judgment of the Court of First Instance
of Manila rendered on September 30,
1966, on suit by the Gloren, Inc.
sentenced the Republic of the Philippines
to pay to the plaintiff P3,570 which sum represents the value of the lost merchandise.

The sole issue posed is one
of law – non-suability of the State.  The
pronouncements in Mobil Philippines Exploration, vs. Customs Arrastre
Service and Bureau of Customs^[1]
which were subsequently affirmed and
re-affirmed in no less than thirty cases, are controlling in the case at
bar.  We quote from Mobil:

“The fact that a non-corporate government entity performs a
function proprietary in nature does not necessarily result in its being suitable.  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.

*        *           *           *

“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.

*        *           *           *

“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 necessarily 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 means to that end.

*        *           *           *

“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. … From 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.”

The remedy of the plaintiff may be found in the provisions Act
3083 and Commonwealth Act 327 which (a) permit the presentation of money
claims, such as the one here sued on by the plaintiff, to the Auditor General
for adjudication, (b) set forth the requisites to be fulfilled, and (c) outline
the procedure to be followed.

ACCORDINGLY, the judgment a quo is reversed, and the complaint is
hereby dismissed.  No pronouncement as to
costs.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Fernando, Teehankee, and Villamor, JJ., concur.

Barredo, J., did not take part.

^[1]
L-23139, December 17, 1966, 18 SCRA 1120.