UNION INSURANCE SOCIETY OF CANTON, LTD., PLAINTIFF-APPELLANT, VS. REPUBLIC OF THE PHILIP­PINES, ET A.L., DEFENDANTS-APPELLEES.

Union Insurance Society of Canton versus Republic of the Philippines

The Case

This is an appeal by Union Insurance Society of Canton, Limited against the Republic of the Philippines and the Bureau of Customs Arrastre Service. The insurer, having paid the consignee for cargo it says was lost while in the custody of the arrastre service, stepped into the consignee's shoes and sued to recover the value of that cargo. The defendants moved to dismiss on the ground that the Republic cannot be sued without its consent. The case matters because it applies, to a claim arising from the arrastre operations of the Bureau of Customs, the settled rule of state immunity from suit, and it reminds the Bar candidate that neither the Bureau of Customs nor its arrastre service is a juridical person that may be haled into court in its own name.

Procedural History

The action was commenced before the Court of First Instance of Manila. The defendants filed a motion to dismiss, pleading the non-suability of the Republic and the absence of juridical personality on the part of the Bureau of Customs and the Customs Arrastre Service. The trial court granted the motion and dismissed the complaint. The plaintiff insurance company then brought a direct appeal to the Supreme Court. The Supreme Court affirmed the order of dismissal.

Facts

The plaintiff, Union Insurance Society of Canton, Limited, was subrogated to the rights of the consignee, Sillicons Manufacturing Company. On 27 September 1964, 135 coils of copper wire were unloaded from the vessel Eastern Star. The complaint alleged that these goods were lost while in the possession of the Customs Arrastre Service, and that the loss was caused by the negligence of that service. The insurer sought to recover 42,370 pesos and 30 centavos as the value of the coils.

The defendants answered with two defenses. First, they pleaded that the complaint was in truth a money claim against the Republic, which is immune from suit without its consent, and that neither the Bureau of Customs nor the Customs Arrastre Service is a juridical person capable of being a party to any suit, both being mere dependencies of the Republic. Second, they invoked the Tariff and Customs Code, which provides that the Government assumes no legal responsibility for the safekeeping of articles stored in any customs or bonded warehouse.

The trial court upheld the motion to dismiss on the ground of non-suability. The insurer appealed directly to the Supreme Court.

Issues

• Whether or not the Republic of the Philippines may be sued for the acts of the personnel of the Customs Arrastre Service without its consent.
• Whether or not the Bureau of Customs and the Customs Arrastre Service are juridical persons that may be parties to a suit.
• Whether or not the dismissal of the complaint on the ground of non-suability should be affirmed.

Applicable Provisions

Section 902 of the Tariff and Customs Code, as invoked by the defendants, provides:

The Government assumes no legal responsibility in respect to the safekeeping of articles stored in any customs or bonded warehouse.

This provision reinforces the defense that the Government has not assumed liability for goods stored in customs custody, and it bears directly on the claim for the lost copper wire.

Ruling

On the first issue, the Court held that the Republic's non-suability for the acts of the Customs Arrastre personnel is not a new question. It had been extensively considered and discussed in Mobil Philippines Exploration, Incorporated versus Customs Arrastre Service, decided on 17 December 1966, where the Republic's immunity was upheld, and the doctrine had been uniformly reiterated in the cases that followed. The Court likewise cited Caltex Philippines Incorporated versus Customs Arrastre Service, decided on 26 December 1967, and the numerous cases cited therein.

On the second issue, the Court accepted the defendants' position that neither the Bureau of Customs nor the Customs Arrastre Service is a juridical person that can be a party to any suit, both being mere dependencies of the Republic.

On the third issue, the Court held that the principles and rulings of the previous cases equally govern the case at bar. There was nothing in the record that would justify a deviation from a doctrine so uniformly and firmly established. Accordingly, the order of dismissal was affirmed.

Doctrine

The Republic cannot be sued without its consent for the acts of the personnel of the Customs Arrastre Service. This immunity is settled and has been uniformly applied since the Mobil Philippines Exploration case.

Neither the Bureau of Customs nor the Customs Arrastre Service is a juridical person. They are mere dependencies of the Republic and cannot be parties to any suit in their own name.

Under Section 902 of the Tariff and Customs Code, the Government assumes no legal responsibility for the safekeeping of articles stored in any customs or bonded warehouse. A claim for goods lost in arrastre custody therefore cannot be maintained against the Republic without its consent.

Disposition

The Supreme Court affirmed the order of dismissal, with costs against the appellant, Union Insurance Society of Canton, Limited.

Remember This

The single line to memorize is that the Republic is immune from suit for the acts of the Customs Arrastre Service, which, like the Bureau of Customs, is not a juridical person but a mere dependency of the State. Examiners use this case to test state immunity from suit and the rule that an unincorporated government agency cannot be sued in its own name.