Mobil Philippines Exploration Inc.

, plaintiff-appellant v
Customs Arrastre Service and Bureau of Customs, defendants-appellees
GR No: L-23139. December 17, 1966

Facts:
On November of 1962, four cases of rotary drill parts were shipped from abroad on S.S. “Leoville”. It is
consigned to the petitioner, Mobil Philippines Exploration, Inc., Manila. The said goods arrived at the Port of Manila
on April 10, 1963 and was discharged to the custody of the Customs Arrastre Service, a unit in Bureau of Customs.
Arrastre Service delivered the goods to the broker of the consignee ONLY THREE CASES of the shipment.

At first instance in April 4, 1964, petitioner sued in the court against the Customs Arrastre Service and the
BOC to recover the value of the undelivered good in the amount of P18,493.37 plus damages. On rebuttal, the
defendants filed a motion to dismiss, on April 20, 1964, the case on the ground that defendants are not persons
hence it cannot be sued. The said dismissal of the complaint was approved by the court on April 25, 1964, agreeing
on the fact that defendant is not suable. In view of this, plaintiff appealed to the Supreme Court from the order of
dismissal of the complaint.

Petitioner claims:

• Not all government entities are immune from suit

• Defendant, as an operator of arrastre service at Port of Manila, is discharging proprietary functions,
thus can be sued by private individuals.
• Under the Rules of Court, in Sec 1, Rule 3 that a party must be only natural or juridical or entities
authorized by law under a civil suit
• Petitioner claimed that the since defendant engage in an arrastre service, nature of which is
proprietary not governmental, thus it would put under the third category of the above mentioned law
“entities authorized by law”.
• Petitioner strongly contended that there is now law expressly authorizing BOC to sue or be sued
because its capacity to be sued lies on its very power to render an arrastre service that tantamount
to a private business.

Issues:

• W/N tboth Customs Arrastre Service and the BOC can invoke state immunity under the constitution.

Held:

The Bureau of Customs is part of Department of Finance, with no personality of its own apart from the
National Government. Defendants primary function is assessing and collecting lawful revenues from imported articles
and all other tariff and customs duties, fees, charges, fines and penalties. In line with this, arrastre service is a
necessary incident of the BOC to perform its duties and functions. It is true that arrastre function may be deemed
proprietary in nature, but it is a necessary incident of the primary and governmental function of the defendant.
Rendering the said service to a public or private entity does not make the defendant liable for suit. If it does, it could
not perform its governmental function.

Sovereign immunity is granted at the end of this case. The statutory provisions waiving State immunity from
suit are strictly construed and that waiver of immunity will not be granted. Regardless of the merits of the plaintiff’s
claims, BOC being part of the State cannot be sued. It is for the obvious reasons of public policy that the State cannot
be sued without its consent. To reiterate, BOC being part of the national government and in performance of its
arrastre service, as mandated by the legislative and an incident of its function, is immune from suit, therefore the said
appeal is dismissed. Plaintiff should have filed its present claim against the BOC with the General Auditing Office in
order to claim the said liability of the defendant. Under the provisions of Commonwealth Act 327, which states the
conditions the money claims against the government may be filed, would be of help in order to deliver the said goods
or claim the liability.
Cases mentioned:

Associated Workers Union, et al v Bureau of Customs. L-21397. August 6, 1963

Under this case, it was held that the foregoing statutory provisions authorizing the grant by contract to any private
party of the right to render arrastre services necessarily imply it is proprietary or non-governmental function. However,
the issue in this case is regarding the laborers engaged in the said service fall under the concept of employees in the
government employed in governmental fuctions are not allowed to strike or to join strike but may belong to any labor
organization. The only resolution stated in this case is: (walang kinalaman sa case assigned)

“the issue on the personality or lack of personality of the Bureau of Customs to be sued does not affect the jurisdiction of
the lower court over the subject matter of the case, aside from the fact that amendment may be made in the pleadings by the
inclusion as respondents of the public officers deemed responsible for the unfair labor practice acts charged by petitioning Unions"

Bureau of Printing et al., vs. Bureau of Printing Employees Association, et al., L-15751, January 25, 1961:

Since a non-corporate government entity performs a proprietary in nature does not necessarily result in being suable.
If the said function is an incident to its governmental function, there is no waiver of sovereign immunity from suit to
the said government entity.

Bureau of Printing is an office of the Government created by the Admin Code of 1916 (AC No. 2657). Its function is to
meet the printing needs of the government, primarily a service bureau and obviously not engage in business or for
profit.

Held for the said case:

". . . Clearly, while the Bureau of Printing is allowed to undertake private printing jobs, it cannot be pretended that it is thereby an
industrial or business concern. The additional work it executes for private parties is merely incidental to its function, and although
such work may be deemed proprietary in character, there is no showing that the employees performing said proprietary function are
separate and distinct from those employed in its general governmental functions.

"Indeed, as an office of the Government, without any corporate or judicial personality, the Bureau of Printing cannot be sued. (Sec.
1, Rule 3, Rules of Court.) Any suit, action or proceeding against it, if it were to produce any effect, would actually be a suit, action or
proceeding against the Government itself, and the rule is settled that the Government cannot be sued without its consent much less
over its objection.

Point: NO JURIDICAL PERSONALITY ANG BUREAU OF PRINTING HENCE NOT SUABLE.

Contrary to the current case:

National Airports Corporation v Teodoro, 91 Phil., 203

The Civil Aeronautics Administration for the prime reason of its existence is not governmental but a proprietary
function, not an incidental function. The said functions as stated in Civil Aeronautics Administration are:

• to execute contracts of any kind

• to purchase property
• to grant concession rights
• to charge landing fees, royalties on sales to aircraft of aviation gasoline, accessories and supplies, and
rentals for the use of any property under its management.