Rizal Surety & Insurance Company v. Customs Arrastre Service
REITERATIONFacts
The Antecedents: Rizal Surety & Insurance Company, as subrogee to the rights of Acme Electrical Manufacturing, filed an action to recover the value of six (6) undelivered bags of PVC Compound out of a shipment of 1,200 bags. The shipment was covered by Bill of Lading No. YM-17 from Yokohama, Japan, to Manila, and the cargo was discharged into the custody of the defendant Customs Arrastre Service. The consignee insured the cargo with the plaintiff, which paid P190.86 for the lost bags. Procedural History: The Court of First Instance of Manila rendered a judgment against the defendants, including the Customs Arrastre Service and/or Bureau of Customs. The plaintiff sought recovery in the alternative against American Steamship Agencies, Inc., as agent of the carrier, and the Customs Arrastre Service. The Petition: The Customs Arrastre Service and/or Bureau of Customs appealed the decision, assigning errors related to their personality to sue and be sued, immunity from suit, and the dismissal of the complaint against them.
Issue(s)
Whether the Customs Arrastre Service and/or the Bureau of Customs (BOC) may be sued in a civil action for the loss of goods placed under its custody during arrastre operations.
Ruling
The judgment against the appellant Customs Arrastre Service and/or Bureau of Customs is reversed, and the complaint against it is dismissed. Costs are against the appellee Rizal Surety & Insurance Company.
Ratio Decidendi
On Issue 1: The Supreme Court held that the Customs Arrastre Service and/or the Bureau of Customs (BOC) is immune from suit. It reiterated the established principle that the Customs Arrastre Service, being an arm of the Bureau of Customs (BOC), performs services that are purely incidental to the governmental function of assessing and collecting customs duties. Applying the ruling in Domestic Insurance Company of the Philippines vs. Everett Siam Line, et al. (34 SCRA 80), the Court clarified that the Government does not shed its immunity from suit simply by engaging in such necessary incidental activities. The Court emphasized that this doctrine was first firmly established in Mobil Philippines Exploration, Inc. vs. Customs Arrastre Service (18 SCRA 1120) and has been consistently applied in over 40 subsequent cases. Therefore, the lower court erred in exercising jurisdiction over the Bureau of Customs (BOC) in a civil suit for damages. The Court concluded that the proper remedy for the plaintiff, as a subrogee, is to file an administrative claim under the provisions of Act No. 3083 and Commonwealth Act (CA) No. 327.
Main Doctrine
The Customs Arrastre Service, as an arm of the Bureau of Customs performing services incidental to the governmental function of assessing and collecting customs duties, is immune from suit.