CALTEX (PHILIPPINES), INC., PLAINTIFF-APPELLEE, VS. CUSTOMS ARRASTRE SERVICE AND/OR BUREAU OF CUSTOMS AND/OR REPUBLIC OF THE PHILIPPINES, DEFENDANTS-APPELLANTS.

In this appeal by the State from the adverse judgment of the
Court of First Instance of Manila, we reaffirm the doctrine of the State’s
immunity from suit with respect to its operation of the customs arrastre service in the Port
of Manila.

Plaintiff, as consignee, filed this action on March 31, 1965 in the Court of First
Instance of Manila against defendants for the recovery of the value of eleven
packages of assorted goods which were discharged from the vessel to the custody
of the customs arrastre service then operated by the
Bureau of Customs, in the amount of P10,682.66. 
Plaintiff alleged that the eleven packages were missing, but after the
filing of its complaint in the case below, subsequent deliveries were made to
it, thereby reducing the total of non-delivered packages to only three, with an
aggre­gate value of P795.67.  The Court
below rendered judgment in favor
of plaintiff for this latter amount, with interest at the legal rate,
notwithstanding defendants’ plea of the State’s immunity from suit.  Hence, this appeal.

The sole issue of non-suability of the Republic with res­pect to
its operation through the Bureau of Customs of the Arrastre Service in the Port
of Manila has already been settled in the case of Mobil Philippines
Exploration, Inc. vs. Customs Arrastre Service, et al.^[1]
decided by this Court on December 17, 1966 and in a long line of subsequent
decisions, reiterating the doctrine first enunciated in the Mobil case.^[2]
By virtue thereof, the judgment appealed from must be reversed.  The decision in the Mobil case
indicates the remedy available to plaintiff-appellee
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 non­governmental
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 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

“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 denied as to the necessary means to that end.

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 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.”

ACCORDINGLY, the judgment appealed from is reversed and
the complaint is dismissed, with­out pronouncement as to costs.

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

Barredo, J., no part.

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

^[2]
Providence Washington Ins. Co. vs. Republic. L-26386, Sept. 30, 1969 lists thirty-six of
such cases.