Mobil Philippines Exploration, Inc. v. Customs

TOPIC: If a non-governmental function or proprietary act is undertaken as an incident to its governmental function, there is no waiver thereby of the sovereign immunity from suit extended to such government entity.

FACTS:

Mobil Philippines Exploration, Inc., filed a suit against the Customs Arrastre Service and the Bureau of Customs to recover the value of the undelivered case of rotary drill parts amounting to over 18K. 

The lower court dismissed the complaint as neither the Customs Arrastre Service nor the Bureau of Customs is suable. 

The Plaintiff argued that not all government entities are immune from suit especially when government entities are discharging proprietary functions such as engaging in arrastre service.  

ISSUE:

WON the Customs Arrastre Service of the Bureau of Customs is immune from suit.

RULING:

Yes. 

If a proprietary function is undertaken as an incident to its governmental function, there is no waiver thereby of the sovereign immunity from suit extended to such government entity. 

In this case, the Bureau of Customs is part of the Department of Finance. Its primary function is governmental, that is, assessing and collecting lawful revenues from imported articles and all other tariff and customs duties, fees, charges, fines and penalties. The arrastre function may be deemed proprietary, but it is a necessary incident of the primary and governmental function of the Bureau of Customs. Hence, engaging in the arraste service does not necessarily render said Bureau liable to suit.

Therefore, the Bureau of Customs, acting as part of the machinery of the national government in the operation of the arrastre service, pursuant to express legislative mandate and as a necessary incident of its prime governmental function, is immune from suit, there being no statute to the contrary.

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DISCUSSION:

Why is arrastre service deemed as an incident to the governmental function of the Bureau of Customs?

For practical reasons said revenues and customs duties can not be assessed and collected by simply receiving the importer's or ship agent's or consignee's declaration of merchandise being imported and imposing the duty provided in the Tariff law. Customs authorities and officers must see to it that the declaration tallies with the merchandise actually landed. And this checking up requires that the landed merchandise be hauled from the ship's side to a suitable place in the customs premises to enable said customs officers to make it, that is, it requires arrastre operation.

What should be done by the Plaintiff?

Plaintiff should have filed its present claim with the General Auditing Office, it being for money, under the provisions of Commonwealth Act 327, which state the conditions under which money claims against the Government may be filed.