Farolan v. CTA, G.R. No.

42204 January 21, 1993

FACTS:

Bagong Buhay Trading imported 80 bales of screen net. The importation was declared through a
customs broker as 80 bales of screen net of 500 rolls with a gross weight of 12,777 kilograms
valued at $3,750.00 and classified under Tariff Heading No. 39.06-B of the Tariff and Customs
Code at 35% ad valorem. Since the customs examiner found the subject shipment reflective of
the declaration, Bagong Buhay paid the duties and taxes due in the amount of P11,350.00 which
was paid through the Bank of Asia under Official Receipt No. 042787 dated February 1, 1972.
Thereafter, the customs appraiser made a return of duty.

Acting on the strength of an information that the shipment consisted of "mosquito net" made of
nylon dutiable under Tariff Heading No. 62.02 of the Tariff and Customs Code, the Office of the
Collector of Customs ordered a re-examination of the shipment. A report on the re-examination
revealed that the shipment consisted of 80 bales of screen net, each bale containing 20 rolls or a
total of 1,600 rolls. Re-appraised, the shipment was valued at $37,560.00 or $10.15 per yard
instead of $.075 per yard as previously declared. Furthermore, the Collector of Customs
determined the subject shipment as made of synthetic (polyethylene) woven fabric classifiable
under Tariff Heading No. 51.04-B at 100% ad valorem. Thus, Bagong Buhay Trading was
assessed P272,600.00 as duties and taxes due on the shipment in question. Since the shipment
was also misdeclared as to quantity and value, the Collector of Customs forfeited the subject
shipment in favor of the government.

Bagong Buhay filed a petition asking for the release of the questioned goods which this Court
denied. After several motions for the early resolution of this case and for the release of goods and
in view of the fact that the goods were being exposed to the natural elements, we ordered the
release of the goods on June 2, 1986. Consequently, on July 26, 1986, Bagong Buhay posted a
cash bond of P149,443.36 to secure the release of 64 bales out of the 80 bales originally delivered
on January 30, 1972. Sixteen bales remain missing.

Bagong Buhay alleges that of the 143,454 yards (64 bales) released to Bagong Buhay, only
116,950 yards were in good condition and the 26,504 yards were in bad condition. Consequently,
it demands that the Bureau of Customs be ordered to pay for damages for the 43,050 yards it
actually lost.

ISSUE: May the Collector of Customs be held liable for actual damages that Bagong Buhay
sustained?

RESOLUTION: No, the Collector of Customs cannot be held liable for actual damages that
Bagong Buhay sustained with regard to its goods. Otherwise, to permit Bagong Buhay’s claim to
prosper would violate the doctrine of sovereign immunity. Since it demands that the
Commissioner of Customs be ordered to pay for actual damages it sustained, for which ultimately
liability will fall on the government, it is obvious that this case has been converted technically into
a suit against the state.

On this point, the political doctrine that "the state may not be sued without its consent,"
categorically applies. As an unincorporated government agency without any separate juridical
personality of its own, the Bureau of Customs enjoys immunity from suit. Along with the Bureau
of Internal Revenue, it is invested with an inherent power of sovereignty, namely, taxation. As an
agency, the Bureau of Customs performs the governmental function of collecting revenues which
is definitely not a proprietary function.

Thus, private respondent's claim for damages against the Commissioner of Customs must fail.