Domestic Insurance Co. v. Republic
REITERATIONFacts
The Antecedents: Plaintiff Domestic Insurance Company of the Philippines, as subrogee of Philippine Union Commercial, filed an action against the Republic of the Philippines and/or the Bureau of Customs (BOC) for the recovery of P10,039.66, representing the value of undelivered dental merchandise from three cases handled by the BOC as arrastre operator. The plaintiff also sought P2,000 for expenses, attorney's fees, and costs. Procedural History: The Court of First Instance of Manila rendered judgment in favor of the plaintiff. The Republic of the Philippines appealed to the Court of Appeals, which elevated the case to the Supreme Court due to the sole question of law being the non-suability of the State. The Petition: The plaintiff argued that the arrastre service is proprietary and non-governmental, thus the BOC and the Republic cannot claim immunity. They also contended that Commonwealth Act 327, requiring claims to be presented to the Auditor General, is not applicable as the claim is unliquidated and requires judicial discretion.
Issue(s)
Whether the Bureau of Customs, in operating the arrastre service, is immune from suit. Whether Commonwealth Act 327, requiring claims to be presented to the Auditor General, is applicable to the instant action.
Ruling
The judgment of the Court of First Instance is reversed, and the complaint is dismissed. No pronouncement as to costs.
Ratio Decidendi
On the issue of sovereign immunity for arrastre service: The Supreme Court reiterated its ruling in Mobil Philippines Exploration, Inc. vs. Customs Arrastre Service and Bureau of Customs. It held that even if the arrastre function may be deemed proprietary, it is a necessary incident of the primary and governmental function of the Bureau of Customs, which is the assessment and collection of lawful revenues from imported articles and all other tariff and customs duties, fees, charges, fines, and penalties. Therefore, engaging in the arrastre service does not necessarily render the Bureau of Customs liable to suit. The Court emphasized that statutory provisions waiving State immunity from suit are strictly construed and will not be lightly inferred. Since there is no statute to the contrary authorizing the suit against the Bureau of Customs for arrastre operations, it remains immune from suit. On the applicability of Commonwealth Act 327: The Court found that the remedy for the plaintiff lies in the provisions of Act 3083 and Commonwealth Act 327. These laws permit the presentation of money claims against the government, such as the one in this case, to the Auditor General for adjudication. The Act sets forth the requisites to be fulfilled and outlines the procedure to be followed for such claims. Therefore, the instant action, being a money claim arising from the alleged failure of the arrastre operator to deliver merchandise, falls within the purview of these statutes, and the proper recourse is through the Auditor General, not directly through a court suit against the State.
Main Doctrine
The Bureau of Customs, when operating the arrastre service as a necessary incident to its primary governmental function of collecting customs duties and taxes, is immune from suit, as there is no statute expressly waiving such immunity. Claims against the State for such services must be filed with the Auditor General.