THE SHELL REFINING COMPANY (PHILIPPINES) INC., PLAINTIFF-APPELLANT, VS. MANILA PORT SERVICE, NATIONAL RAILWAYS COMPANY AND/OR BUREAU OF CUSTOMS, THRU ITS CUSTOMS ARRASTRE SERVIC…

Shell Refining versus Manila Port Service

The Case

This is a civil action for the recovery of the value of merchandise allegedly lost or damaged while in the custody of the arrastre service at the Port of Manila. Shell Refining Company, the plaintiff, sued the Manila Port Service, the National Railways Company, and the Bureau of Customs through its Customs Arrastre Service. The case matters because it squarely presents the question of sovereign immunity from suit as applied to the Bureau of Customs in the operation of the arrastre service, and it is a companion to the earlier ruling in Mobil Philippines Exploration.

Procedural History

Shell Refining filed its complaint in the Court of First Instance of Manila under thirteen causes of action. The plaintiff did not prosecute its claim under the third, fifth, seventh, eighth, ninth, and tenth causes of action. On the remaining causes, the parties entered into a stipulation of facts. On July 16, 1965, the trial court rendered judgment dismissing the first, second, fourth, sixth, seventh, eleventh, and twelfth causes of action, and on the thirteenth cause of action ordered the Manila Port Service, as a subsidiary of the Manila Railroad Company, now the National Railways Company, to pay the plaintiff the sum of 257 pesos and 36 centavos, with interest at the legal rate from November 19, 1963 until full payment, without costs. Shell Refining appealed solely with respect to the portion of the judgment dismissing the first, second, fourth, sixth, seventh, eleventh, and twelfth causes of action against the Bureau of Customs and its Customs Arrastre Service. No appeal was taken by the Manila Railroad Company, and its liability is no longer involved. The case reached the Supreme Court on that appeal, and the only issue raised is whether the Bureau of Customs, in connection with its arrastre service, can be sued.

Facts

Prior to November 21, 1962, the Manila Port Service, as a subsidiary of the Manila Railroad Company, now the National Railways Company, was the contractor and operator of the arrastre service of the Port of Manila. As such operator, it was charged with the care and custody of all cargoes discharged at the government piers, and was authorized and required to deliver those cargoes to their owners or consignees upon presentation of the corresponding release papers.

On November 21, 1962, the Bureau of Customs terminated its management contract with the Manila Port Service and the Manila Railroad Company for the operation of the arrastre service, and the Bureau, through its Customs Arrastre Service, assumed the operation, control, management, and direction of the arrastre service in the Port of Manila. From November 9, 1962 to October 23, 1963, several labor unions declared a strike against the defendants at the Port of Manila.

Various shipments consigned to Shell Refining arrived at Manila on different dates and were unloaded on the government piers into the custody of the arrastre operator. For the shipments covered by the first, second, fourth, sixth, and eleventh causes of action, the cargoes were received by the Bureau of Customs through its Customs Arrastre Service, and the plaintiff presented the necessary shipping and release documents, but the Bureau failed and refused to deliver the goods, or delivered them in bad order. For the twelfth cause of action, the cargo was received by the Manila Port Service in good order, and the plaintiff received it subject to a bad order report showing that one loose furnace tube was in bad order and beyond repair. On October 14, 1963, the plaintiff wrote the Manila Port Service demanding payment, but the letter was actually received by the Customs Arrastre Service of the Bureau of Customs. On October 29, 1963, the Bureau of Customs answered, advising that there were no formal claims filed with its office.

Issues

• Whether or not the Bureau of Customs, in connection with its operation of the arrastre service, can be sued.

Applicable Provisions

The decision does not quote any specific statutory provision. Its ruling rests on the doctrine of sovereign immunity from suit as applied to the Bureau of Customs, an agency of the government rendering governmental functions. The Court relied on its earlier ruling in Mobil Philippines Exploration, Incorporated versus Customs Arrastre Service and Bureau of Customs, where it held that the Bureau of Customs, being an agency of the government rendering governmental functions, is immune from suit.

Ruling

The Court resolved the sole issue against the plaintiff. It held that the question is not new, and that in Mobil Philippines Exploration, Incorporated versus Customs Arrastre Service and Bureau of Customs, with facts similar to the instant case, it had already ruled that the Bureau of Customs, being an agency of the government rendering governmental functions, is immune from suit. The Court found no special reason to depart from that ruling. Accordingly, the decision appealed from, dismissing the complaint insofar as it referred to the first, second, fourth, sixth, seventh, eleventh, and twelfth causes of action against the Bureau of Customs, was affirmed.

Doctrine

The Bureau of Customs, being an agency of the government rendering governmental functions, is immune from suit. This immunity extends to its operation of the arrastre service through its Customs Arrastre Service. A bar candidate should retain that the doctrine of sovereign immunity applies to the Bureau of Customs in the discharge of its governmental functions, and that absent a special reason, the Court will not depart from this settled ruling.

Disposition

The Supreme Court affirmed the decision of the trial court dismissing the complaint as against the Bureau of Customs, with no costs.

Remember This

The single line worth memorizing is that the Bureau of Customs, being an agency of the government rendering governmental functions, is immune from suit, even in its operation of the arrastre service. Examiners like to use this case to test the scope of sovereign immunity as applied to government agencies performing governmental functions.