Rizal Surety & Insurance Company v. Customs Arrastre Service
REITERATIONFacts
The Antecedents: Plaintiff-appellant Rizal Surety & Insurance Company, as subrogee, filed an action to recover the insurance value of cargo consigned to Edward Manufacturing Corporation, which was insured with the plaintiff for P2,535.39. The cargo arrived on December 8, 1962, and was discharged into the custody of the defendant Customs Arrastre Service, operated by the Bureau of Customs. The cargo was subsequently lost in a fire that gutted Shed B, Pier 9, on December 22, 1962. A formal claim for non-delivery was filed, and the plaintiff paid the consignee the full insurable value. Procedural History: The City Court of Manila rendered judgment in favor of the plaintiff. On appeal, the Court of First Instance of Manila dismissed the complaint, holding that the defendants' obligation was extinguished by the fire, which was not shown to be due to their negligence, and that the action was barred by the State's immunity from suit as the Bureau of Customs is an arm of the Republic of the Philippines. The Petition: The plaintiff appealed to the Supreme Court, assigning as error the trial court's rulings on the extinguishment of obligation and sovereign immunity.
Issue(s)
Whether the Bureau of Customs, as the operator of the Customs Arrastre Service, is immune from suit for the loss of cargo while in its custody.
Ruling
The Supreme Court affirmed the decision of the Court of First Instance of Manila dismissing the complaint.
Ratio Decidendi
On Issue 1: The Supreme Court held that the Bureau of Customs is immune from suit even when performing arrastre services. Applying the doctrine established in Mobil Philippines Exploitation, Inc. vs. Customs Arrastre Service, the Court ruled that the Bureau of Customs is a part of the Department of Finance and has no personality of its own apart from the national government. While arrastre functions may be deemed proprietary in nature, they are conducted by the Bureau as a necessary incident to its primary governmental function of assessing and collecting lawful revenues. The Court emphasized that sovereign immunity granted for a governmental end should not be denied for the necessary means utilized to achieve that end. Therefore, the performance of such incidental functions does not constitute a waiver of immunity. For money claims of this nature, the claimant's proper remedy is to file a claim with the General Auditing Office (now Commission on Audit) under the provisions of Commonwealth Act No. 327.
Main Doctrine
A non-corporate government entity performing a proprietary function as an incident to its governmental function is not suable, and claims against it must be filed with the General Auditing Office as money claims against the Government, absent a statute expressly waiving such immunity.