G.R. No. L-22784. March 28, 1969
INSURANCE COMPANY OF NORTH AMERICA, PLAINTIFF-APPELLANT, VS. OSAKA SHOSEN KAISHA (O.S.K-LINE), AND/OR AMERICAN STEAMSHIP AGENCIES, INC., BUREAU OF CUSTOMS AND/OR CUSTOMS ARRASTR…
BARREDO, J.:
Appeal from the order of the Court of First Instance of Manila
dated February 17, 1964 dismissing its Civil Case No. 55836 as to therein
defendants Bureau of Customs and/or Customs Arrastre
Service upon a motion to dismiss filed by said defendants before answer, under
Rule 8 of the Rules of Court of 1940. (Rule 16 of the present Rules.)
On December 27, 1963,
plaintiff-appellant Insurance Company of North America
instituted the action above-mentioned before the a
quo against defendants-appellees Osaka Shosen Kaisha (O.S.K.-Line) and/or American Steamship
Agencies, Inc., and Bureau of Customs and/or Customs Arrastre
Service. The complaint filed therein
alleged, that: On or about October 29, 1962, the SS “HAGUE MARU” took
on board at the port or Hamburg, Germany, 22 cases of carpenter’s and
mechanic’s tools, valued at $3,648.92 C & F Manila, shipped by H. Beutler & Co. of Germany to the consignee of the goods,
Solex Tool Corporation, Manila; in Japan, the said
cargo was transhipped from the SS “HAGUE
MARU” on board the SS “KIKUKO MARU” which supposedly discharged
the same in Manila in good order condition with the exception of three(3) cases
which were landed in bad order, unto the custody of defendant Bureau of Customs
and/or Customs Arrastre Service; the latter thereafter
failed to deliver (to the consignee) portion of the goods, and claims for the
value of the lost goods, in the amount of P1,279.49, were filed against both defendants
Osaka Shosen Kaisha (O.S.K.-Line) and/or American
Steamship Agencies, Inc., as owners and/or operators of the above-named vessels
and as agent and/or representative of said owners, respectively, defendants
Bureau of Customs, operator of the arrastre service
at the port of Manila and its subsidiary, Customs Arrastre
Service, as well as against plaintiff Insurance Company of North America, as
insurer of the said goods; said defendants failed and refused to pay; herein
plaintiff was compelled to pay the value of the lost goods and was thereby subrogated
to the rights of the owners thereof; the loss occurred while defendant carrier
had custody of the cargo and failed to discharge the same or, after discharge
of the cargo, while defendant Customs Arrastre
Service had custody of the goods, in either of which case, there was violation
of the duty to properly and safely carry and discharge, the goods on the part
of the carrier or, in the alternative, to make delivery of the goods on the
part of defendant Customs Arrastre Service after discharge;
demands for reimbursement were duly made by plaintiff but defendants refused;
plaintiff was thereupon compelled to obtain the services of counsel incurring
thereby further damages as or by way of attorney’s fees; and plaintiff is at
present uncertain against whom of defendants it is entitled to relief.
As to the personality of the defendants Bureau of Customs and/or
Customs Arrastre Service, the allegation in said
complaint reads:
“3. Defendant Bureau of
Customs is to the best information, knowledge and belief of plaintiff, a government office
organized under the Customs Law, the operator of the arrastre
service at the Port of Manila since November 21, 1962 through its Branch
office/subsidiary, defendant Customs Arrastre
Service, charged with the duty of receiving imported cargo discharged from
ocean vessels and of safekeeping the same for delivery to consignees or owners
thereof upon delivery being authorized by defendant Bureau of Customs and upon
the arrastre fee being paid, with office address at
the Terminal Building, Port Area,. Manila, where it may be served with
summons.” (Record on Appeal, p. 3)
On these premises, plaintiff prayed for judgment ordering
defendants to pay, inter alia, “jointly and
severally or whichever of defendants may be found liable to pay
plaintiff”, the value of the lost goods.
As already stated, upon motion of defendants Bureau of Customs
and/or Customs Arrastre Service, based on the ground
that the cause of action alleged against them did not come within the
jurisdiction of the court of first instance but within that of the City Court
of Manila, on February 17, 1964, the court a quo dismissed the
case against said defendants. Upholding
the contention of said defendants, His Honor held that “in the instant
case …. the defendant Osaka Shosen
Kaisha (O.S.K) is sued for breach of contract of carriage while the Bureau of
Customs and/or Customs Arrastre Service is sued for
breach of contract of deposit. The
contract of carriage here involved is a maritime transaction and actions
arising from it are cognizable by the local Court of First Instance. The contract of deposit, on the other hand,
is, not maritime and actions arising from it in an amount not exceeding P10,000 are cognizable by the local City Court. Section 5 of Rule 2 subjects the joinder of causes of action ‘to rules regarding
jurisdiction, venue, and joinder of parties.’ In view
of the fact that the action against movant is
cognizable by the local City Court while the action against Osaka Shosen Kaisha is cognizable by the local Court of First
Instance, permissive joinder of parties or causes of
action in the instant case cannot be properly allowed. x x x. The plaintiff must, therefore, determine for
sure which party to sue and where.” (pp. 13-14, Record
on Appeal.)
From this order of dismissal, plaintiff has appealed to this
Court assigning only two errors, namely:
I
“THE LOWER COURT
ERRED IN DISMISSING THE ACTION AS TO THE BUREAU OF CUSTOMS AND/OR CUSTOMS
ARRASTRE SERVICE ON
A FINDING THAT IT HAD NO JURISDICTION OVER THE APPELLANT’S CAUSE OF ACTION AS
TO SAID DEFENDANT FOR AN AMOUNT LESS THAN P10,000.00.
II
“THE LOWER COURT
ERRED IN FINDING THAT THE JOINDER OF PARTIES AND OF THE CAUSE OF ACTION IN THE
INSTANT SUIT CANNOT BE PROPERLY ALLOWED.”
which are
discussed together in appellant’s brief.
While the two errors thus assigned by appellant are, in view of the
majority of this Court, sustainable, considering the already existing long
line of precedents[1]
holding that the ground of dismissal invoked by the trial court, as
above-quoted, is erroneous,[2]
We are, nevertheless, of the unanimous opinion that the present appeal cannot
prosper, because the case of the plaintiff-appellant suffers from a more
obvious and indubitable fatal defect. It
is already definitely settled that herein defendants-appellees,
the Bureau of Customs and/or the Customs Arrastre
Service, being mere arms of the national government, are protected by the
non-suability of the Republic of the Philippines whenever, it has not given
its consent to be sued,[3]
particularly, where, as in this case, there is no allegation in the complaint
that said defendants, much less the Republic, has given such consent.[4]
The fact that defendants-appellees have not raised
such defense at any stage of this case is of no moment. Indeed, whether We hold that the matter of
non-suability is jurisdictional, either over the subject-matter or of the
person of the defendants, or We consider it as failure to state a cause of
action, when the consent of the State is not alleged in the complaint,[5]
as in this case, in line with the decision of this Court in American Insurance
Co. vs. Macondray & Co., (see footnote No. 4) We
are all agreed that whichever of these three views may be the most accurate
one, said defense may be invoked by the courts sua
sponte at any stage of the proceedings. Since February
27, 1968, this Court has dismissed cases similar to the one before Us now even without awaiting for the briefs of the parties,
in order to save them and this Court needless expenses of time, money and
effort.” (Domestic Ins. Co. of the Phil. vs. American Pioneer Line, supra,
and later in Firemen’s Fund Ins. Co. vs. Maersk Line
Far East Service, et al., G. R. No. L-27189, 1969).
WHEREFORE, the order of dismissal of the lower court is
affirmed, with costs against appellant.
Concepcion, C.J., Reyes, JBL, Dizon, Makalintal, Zaldivar, Sanchez, Capistrano, and Teehankee, JJ., concur.
Ruuiz Castro, Fernando, JJ., concur in the result.
[1] Rizal Surety & Insurance Company vs. MRR,
L-20875, April 30, 1966; Switzerland General Insurance Co. Ltd. vs. Java
Pacific & Hoegh Lines, et al., L-21760, April 30,
1966; The American Insurance Co. vs. Macondray
& Co., Inc., L-24031, August 19, 1967; Firemen’s Insurance Co. vs.
Manila Port Service, et al., L-22810, August 31, 1967; Hanover Insurance Co. vs.
Manila Port Service, et al., L-20976, January 23, 1967; Fulton Insurance Co. vs.
Manila Railroad, et al., L-24263, November 18, 1967; Insurance Company of North
America vs. Manila Port Service, et al., L-24887, April 22, 1968;
Insurance Company of North America vs. United States Lines Co., et al.,
L-21839, April 30, 1968.
The effect of the holding in the
above-cited cases was stated in Fulton Insurance Co. vs. Manila Railroad
Co., supra, in the following language:
“The prevailing
rule is that a consignee when uncertain of the place and time of the loss or
damage to its goods, may in one case seek relief
alternatively, against the arrastre operators under a
contract of deposit and the steamship company under a contract of carriage by
sea. The action calls for the exercise of admiralty jurisdiction, which
municipal courts do not have, and is within the original exclusive jurisdiction
of courts of first instance; ….. and since section 5,
Rule 2 of the Rules of Court permits the joinder of
causes of action in the alternative, it follows that even if one of the causes
of action were within the exclusive jurisdiction of a lower court by reason of
the amount of the demand involved, the Court of First Instance ….. has jurisdiction over both.”
[2]
True it is that section 5 of Rule 2 of the Revised Rules of Court provides
that:
“SEC. 5.
Joinder of causes of action.-
Subject to rules regarding jurisdiction, venue and joinder
of parties, a party may in one pleading state, in the alternative or
otherwise, as many causes of action as he may have against an opposing party
(a) if the said causes of action arise out of the same contract, transaction
or relation between the parties, or (b) if the causes of action are for demands
for money, or are of the same nature and character.
In the cases falling under clause
(a) of the preceding paragraph, the action shall be filed in the inferior
court unless any of the causes joined falls within the jurisdiction of the
Court of First Instance, in which case it shall be filed in the latter court.
In the cases falling under clause
the jurisdiction shall be determined by the aggregate amount of the demands, if
for money, or by their nature and character, if otherwise.”
and that under the second paragraph
of this provision, it is permissible to join in a single action in the Court of
First Instance a cause of action which per se is within the
exclusive original jurisdiction of the inferior court with another cause of
action coming under the exclusive original jurisdiction of the court of first
instance, provided that both causes arise out of the same contract, transaction
or relation between the parties or are for demands for money.
My doubt is as to the power of this
Court to promulgate such a rule as this. Indisputably, jurisdiction can be
conferred only by, a law of Congress, not by a rule of court, even as this
Court has constitutional powers of rule-making. Matters of jurisdiction involve
the conferment of power to act and are definitely substantive in character. On
the other hand, the constitutional inhibition is unequivocal: ” Said rule
… shall not diminish, increase or modify substantive rights.” (sec. 13, Art. VIII, Constitution of the Philippines.)
Only the other day, precisely on
this point, the Chief Justice spoke for the Court in the case of Makati Development Corporation vs. Pedro C. Tanjuatco, et al., G. R. No. L-26443 1969, thiswise:
x x x To begin with, the
jurisdiction of our courts over the subject-matter of justiciable
controversies is governed by Rep. Act No. 296, as amended, pursuant to which
(Sec. 7 of Republic Act No. 3828) municipal courts shall have exclusive
original jurisdiction in all civil cases in which the demand, exclusive of
interest, or the value of the property in controversy’ amounts to not more than
‘ten thousand pesos.’ Secondly, ‘the power to define, prescribe, and apportion
the jurisdiction of the various courts’ belongs to Congress (Sec. 2, Art. VIII
of the Constitution) and is beyond the rule-making power of the Supreme Court,
which is limited to matters ‘concerning pleading, practice, and procedure in
all courts, and the admission to the practice of law.’(Sec.
13, Art VIII of the Constitution) x x x.”
Can this Court declare by the
exercise of its rule-making power, not by jurisprudential interpretation, that
a case may be filed in a certain court, when the Judiciary Act or any other law
vests jurisdiction over said case in another court? And when We do it by interpretation, would
that not amount to unconstitutional judicial legislation, considering that the
Constitution gives this Court the rule-making only as to matters of pleading,
practice and procedure and the admission of members of the bar? Until these questions are properly and
definitely resolved, I will choose to dispose of cases of the nature of the
present one by invoking non-suability of the Bureau of Customs and/or the
Customs Arrastre Service, the adjective aspects of
which, I have also discussed in another footnote to this decision.
[3]
Equitable Insurance & Casualty Co., Inc. vs. Smith Bell & Co.,
(Phil.), Inc., L-24388, August 26, 1967; Insurance Company of North America vs.
Republic of the Philippines, et al., L-27515, September 5, 1967; Philippine
First Insurance Company vs. Customs Arrastre
Service, L-26951, September 12, 1967; Caltex (Phil.),
Inc. vs. Customs Arrastre Service, L-26947,
December 26, 1967; Domestic Insurance Company of the Philippines vs.
American Pioneer Line, L-28651, February 27, 1968; Domestic Insurance Company
of the Philippines vs. Republic of the Philippines, L- 29362, September
27, 1968.
[4] American Insurance Company vs. Macondray
& Company, Inc., supra.
[5]
This footnote is purely the opinion of the writer of this decision and is not intended
to bind this Court. The chief purpose is to clarify points of procedure which
have long been assailing my mind.
In my humble opinion, the decisions
of this Court upholding the non-suability of the Bureau of Customs and/or the
Customs Arrastre Service do not reveal a uniform,
definite and concrete ruling as to the exact ground why the case against said
bureau and service have been dismissed, even when such defense was raised for
the first time only in this Court in the course of the appeal and, in fact,
even if it had not been raised at all by said entities, and what is more, even
before the parties have filed their briefs. As I see it, three approaches are
discernible from the opinions in these decided cases, albeit they are not
clearly expressed as such, namely: (1)
lack of jurisdiction over the subject matter; (2) lack of jurisdiction of the
person of the defendant; and (3) failure of the complaint to state a cause of
action, in cases where the consent of the Republic to be sued is not alleged in
the complaint. I consider it imperative that this point should be squarely
resolved, if only to erase any possible doubt as to the power of this Court to
dismiss sua sponte
cases against the Republic, filed without its consent, and at any stage the
appeals therein is found.
As We all know it, there would be
no doubt as to such power, if the real ground of such dismissal were that the
lack of consent of the state for the bringing of the suit against it is that
because of such lack of consent, the court has no jurisdiction over the subject
matter, since it is elementary that this defense con be raised at any stage of
the proceedings and may even be raised collaterally.
In American Insurance Co. vs.
Macondray, supra, (see footnote No. 4)
however, this Court held;
“Non-suability of
the State without its consent is one of the basic principles which underlie our
republican form of government. It derives its force from the will of the people
in freely creating a representative government through which they have agreed
to exercise the powers and discharge the duties of the sovereignty for the
common good and general welfare. (Metran vs. Paredes, L1232, January 12, 1948) Justice Holmes has aptly
stated the basis for the principle thus:
“A sovereign is exempt from suit, not because of any formal
conception or obsolete theory, but on the legal and practical ground that there
can be no legal right as against the authority that makes the law on which the
right depends.’ (Kawananakaoa vs. Polyblank, 206 U.S.
349) A contrary principle would dissipate the time and energy of the State in
endless suits against it, which would be subversive of the public interest.
(20 Supreme Court Reports Annotated 1108)
My considered view is that, in
effect, this ruling means that the real reason why, from the procedural point
of view, a suit against the state filed without its consent must be dismissed
is because, necessarily, any such complaint cannot state a cause of action,
since, as the above decision confirms, “there can be no legal right as
against the authority that makes the law on which the right depends.” That
a cause of action cannot exist unless the plaintiff has a legal right which the
defendant is under obligation to respect is such an unquestioned proposition
in remedial law that the citation of authorities to support it is superfluous.
The question that arises now is, may failure to state a cause of action be alleged as a
ground of dismissal for the first time on appeal? In the case of Reyes vs. Court of
Appeals, this Court did hold that this ground of dismissal or defense may not
be raised for the first time on appeal but only in the trial court, but not
without some misgivings which were expressed in the separate concurring opinion
of then Mr. Justice, now Chief Justice Roberto Concepcion,
in this succinct manner:
“Failure of
defendant lsmaela Dimagiba
to allege in the Court of First Instance that plaintiffs have no cause of
action, cannot vest one to the latter if they have none. Said admission would
not warrant, therefore, a judgment for the plaintiffs if the records do not
show that they have a cause of action against the defendant. Hence, I find
myself unable to subscribe the view expressed in the main opinion of the Court,
insofar as it might seem to justify the opposite conclusion.” (G. R. Nos.
L-5616 & 5620, July 31, 1954.)
To my mind, this
very apt observations of the Chief Justice provide the perspective for
the solution of the problem I have posed. Indeed, if a complaint suffers from
the infirmity of not stating facts sufficient to constitute a cause of action
in the trial court, how could there be a cause of action in it just because the
case is already on appeal? Again, if a
complaint should be dismissed by the trial court because it states no cause of
action, how could such a complaint be the basis of a proceeding on appeal? The answer, I submit, is found in section 2
of Rule 9 which provides:
“SEC. 2. Defenses and objections not pleaded deemed
waived.- Defenses and objections not pleaded either in a motion to dismiss or
in the answer are deemed waived; except the failure to state a cause of action
which may be alleged in a later pleading, if one is permitted, or by motion for
judgment on the pleadings, or at the trial on the merits; but in the last
instance, the motion shall be disposed of as provided in section 5 of Rule 10
in the light of any evidence which may have been received. Whenever it appears
that the court has no jurisdiction over the subject-matter, it shall dismiss
the action.”
According to this provision, while
it is true that failure to state a cause of action may be raised at the trial
on the merits, the motion in such respect must be resolved in the light of the
evidence that the plaintiff might have already presented at the time the question
is raised, such that, if plaintiff has already cured the defect by introducing
evidence on the omitted matter without objection of the defendant, the motion
should be denied; otherwise, it should be upheld. Consequently, it follows
logically that in cases where the defect of failure to state a cause of action
is under circumstances incurable, because there is no evidence that can be
presented to establish the missing element of the purported cause of action,
there is no reason why such a defense may not be invoked for the first time on
appeal, since even by then the defect would still subsist. The requirement that
this defense should be raised at the trial is only to give the plaintiff a
chance to cure the defect of his complaint, but if, as in this case, the lack
of consent of the state cannot be cured because it is a matter of judicial
notice that there is no law allowing the present suit, (only Congress that can
give such consent) the reason for the rule cannot obtain, hence it is clear
that such non-suability may be raised even on appeal. After all, the record on
appeal can be examined to find out if the consent of the state is alleged in
the complaint.
How about lack of jurisdiction of
the person of the defendant? There are
reported cases in this jurisdiction wherein dismissal on the ground of
non-suability was premised on lack of jurisdiction of the person of the
defendant. In Merritt vs. Government, 34 Phil. 311, this Court held:
“By
consenting to be sued a state simply waives its immunity from suit. It does not
thereby concede its liability to plaintiff, or create any cause of action in
his favor, or extend its liability to any cause not previously recognized. It
merely gives a remedy to enforce a preexisting liability and submits itself to
the jurisdiction of the court, subject to its right to interpose any lawful
defense.”
Likewise, in Dizon vs. Rodriguez, G. R. Nos. L20300-01,
20355-56, April 30, 1965, a
ruling of similar view was laid down, thus:
“With
respect to the contention of the Republic of the Philippines that the order for
the reimbursement by it of such necessary expenses constitutes a judgment
against the government in a suit not consented by it, suffice it to say that
the Republic, on its own initiative, asked and was permitted to intervene in
the case and thereby submitted itself voluntarily to the jurisdiction of the
court.”
More explicitly, this Court ruled in
Salgado vs. Ramos, 64 Phil. 724, as follows:
“For the
foregoing considerations, this court is of the opinion and so holds: (1) That the Insular Government, as
principal, is the really, interested party to an action brought to recover from
the Director of Lands interest allegedly charged in excess by said official in
the performance of his duties; and (2) that the presentation of the claim to
the Insular Auditor and the disapproval thereof are indispensable requisites
for the competent courts to acquire jurisdiction over the Government of the
Philippine Islands in actions involving moneyed claims.”
So, the question that arises again
is this: May such lack of jurisdiction
of the person of the defendant be raised for the first
time on appeal? Ordinarily, once the
defendant enters his appearance or files an answer or otherwise submits
effectively to the jurisdiction of the court, he cannot later on question such
jurisdiction over his person. It is plain, however, that as far as the state is
concerned, this rule of waiver cannot apply, for the simple reason that in the
case of the state, as already stated, the waiver may not be made by anyone
other than Congress, so any appearance in any form made on its behalf would be
ineffective and invalid if not authorized by a law duly passed by Congress.
Besides, the state has to act thru subalterns who are not always prepared to act
in the premises with the necessary capability, and instances, there can be when
thru ignorance, negligence or malice, the interests of the state may not be
properly protected because of the erroneous appearance made on its behalf by
a government lawyer, or some other officer, hence, as a matter of public
policy, the law must be understood as insulating the state from such undesirable
contingencies and leaving it free to invoke its sovereign attributes at any
time and at any stage of a judicial proceeding, under the principle that the
mistakes and omissions of its officers do not bind it.
It is my hope that with this
discussion as a starting point, this Court will soon adopt what in its opinion
is the most acceptable view and thereby establish a definite, clear and uniform
line of legal reasoning in cases of this, nature. I would have wanted to ask
the Court to do it in this case, but as there are so many pending cases
awaiting our attention, and after all, the result under any of these theories I
have explained is the same and justifies the decisions I have referred to as
well as the others of similar import, I am satisfied with voicing my humble
personal observations in this footnote. I will, announce my own conclusion as
to which of the three approaches is, in my view, correct, after the Court has
had full opportunity to fully deliberate on the matter, as then my conclusion
will carry with it the benefit of a full exchange of views with the rest of the
members of the Court who, I am sure, can give me all the light I need to
arrive at a correct position.