Providence Washington v. Republic

5/22/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 029
598 SUPREME COURT REPORTS ANNOTATED

Providence Washington Insurance Co. vs. Republic
No. L-26386. September 30, 1969.
PROVIDENCE WASHINGTON INSURANCE CO.,

plaintiff-appellant, vs. REPUBLIC OF THE PHILIPPINES
and BUREAU OF CUSTOMS, defendants-appellees.
Political law; Government immunity from suit; Bureau of

Customs is performing governmental function.—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.
Same; Same; Doctrine is not unjust.—The doctrine of
nonsuability of the government without its consent, as it has
operated in practice, hardly lends itself to the charge that it could
be the fruitful parent of injustice, considering the best and
599
VOL. 29. SEPTEMBER 30, 1969 599
ever-widening scope of state activities at present being

undertaken. Whatever difficulties for private claimants may still
exist is, from an objective appraisal of all factors, minimal. In the
balancing of interests, so unavoidable in the determination of
what principles must prevail if government is to satisfy the public
weal, the verdict must be, as it has been these se many years, for
its continuing' recognition as a fundamental postulate of
constitutional law.
APPEAL from an order of dismissal of the Court of First

Instance of Manila. Montesa, J.
www.central.com.ph/sfsreader/session/000001723b9c57dc4db9627a003600fb002c009e/t/?o=False 1/20
The facts are stated in the opinion of the Court.

Quasha, Asperilla, Blanco, Zafra & Tayag for
plaintiff-appellant.
Solicitor General Antonio P. Barredo, Assistant
Solicitor General Antonio G. Ibarra, Trial Attorney
Herminio Z. Florendo and Felipe T, Cuison for defendants-
appellees,
FERNANDO, J.:
Providence Washington Insurance Co, filed, on October 21,

1966, its brief as appellant against an order of the lower
court dismissing its suit for the non-delivery of thirty cases
of steel files, which cargo was insured by it against loss and
damage, naming as defendants the Republic of the
Philippines and the Bureau of Customs as the operator of
the arrastre service, thus rendering unavoidable the
invocation of the well-settled doctrine of non-suability of
the government. Less than two months later. on December
17, 1966. our decision in Mobil Philippines Exploration. 1
Inc. v. Customs Arrastre Service was promulgated. We
there explicitly held: "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."
As of this date, thirty-six subsequent cases, certainly a
figure far from unimpressive, have been similarly decided.
_______________
1 18 SCRA 1120,
600

expressly reaffirming the above ruling 2

of governmental
immunity from suit without its consent. The futility of this
appeal is quite apparent. We affirm the lower court order of
dismissal.
________________
2 Insurance Company of North America v. Republic, 20 SCRA 648

(1967); Insurance Company of North America v. Republic, 20 SCRA 699
(1967); Manila Electric Co. v. Customs Arrastre Service, 20 SCRA 767

(1967); The Shell Refining Co. (Phil.) Inc. v. Manila Port Service, 20 SCRA
919 (1967); Equitable Insurance & Casualty Co., Inc. v. Smith, Bell & Co.,
20 SCRA 1121 (1967); Insurance Company of North America v. Republic;
20 SCRA 1159 (1967); Insurance Company of North America v. Republic,
21 SCRA to (1967); Philippine First Ins. Co., Inc. v. Customs Arrastre
Service, 21 SCRA 49 (1967); Insurance Company of North America v.
Republic, 21 SCRA 125 (1967); Hartford Fire Insurance Co. v. Customs
Arrastre Service, 21 SCRA 461 (1967); American Insurance Co., Ltd. v.
Republic. 21 SCRA 464 (1967) ; Northern Assurance Co., Ltd. v. Republic,
21 SCRA 476 (1967); Insurance Company of North America v. Republic,
21 SCRA 463 (1967) ; American Insurance Co. v. Republic, 21 SCRA 466
(1967) ; Fireman's Fund Insurance Co. v. Republic, 21 SCRA 474 (1967);
Champion Auto Supply Co. v. Bureau of Customs, 21 SCRA 460 (1967);
Fireman's Fund Insurance Co. v. Republic, 21 SCRA 470 (1967);
Insurance Company of North America v. Republic, 21 SCRA 472 (1967);
Insurance Company of North America v. Warner, Barnes & Co., Ltd., 21
SCRA 765 (1967); American Insurance Co. v. Republic, 21 SCRA 854
(1967); Home Insurance Co, v. U.S. lines Co., 21 SCRA 863 (1967), Royal
Insurance Co. v. American Pioneer Line, 21 SCRA 847 (1967); Hartford
Fire Ins. Co. v. P.D. Marchessini & Co. (New York), 21 SCRA 860 (1967):
Insurance Company of North America v. Republic, 21 SCRA 887 (1967) ;
Atlantic Mutual Insurance Co. v. Republic, 21 SCRA 869 (1967); Domestic
Insurance Co. of the Phil. v. Barber Lines, 21 SCRA 961 (1967); Philippine
Postal Savings Bank v. Court of lndustrial Relations, 21 SCRA 1331
(1967); Caltex (Phil.) Inc. v. Customs Arrastre Service, 21 SCRA 1390
(1967); The London Assurance v. Republic, 22 SCRA 513 (1968); Domestic
Insurance Co. of the Phil. v. American Pioneer Line, 22 SCRA 831 (1968);
Domestic Insurance Co. of the Phil. v. Republic, 25 SCRA 231 (1968);
Insurance Co. of North America v. Osaka Shosen Kaisha, 27 SCRA .780
(1969); Union Insurance Society of Canton, Ltd. v. Republic, 27 SCRA 446
(1969); Rizal Surety and Ins. Co. v. Customs Arrastre Service, 27 SCRA
1016 (1969); Insurance Company of North America v. Republic, L-26979,
May 29, 1969, and Insurance Company of North America v. Republic, L-
27188, May 29, 1969.
601
VOL. 29, SEPTEMBER 30, 1969 601

The doctrine of non-suability thus holds undisputed sway.

Its primacy appears to be undeniable. For a suit of this
character to prosper, there must be a showing of consent
either in express terms or by implication through the one of
statutory language too plain to be misinterpreted. Its
absence being obvious, the lower court acted correctly.
Nor did the Mobil decision blaze a new trail. So it has

been from the time the Constitution took effect in 1935.
Bull v. Yatco, a 1939 3
decision during the Commonwealth,
spoke to that effect. Adherence to such a view is reflected
in the various cases decided
4
after Independence before the
Mobil Exploration case. The classic formula-tion of Holmes
of this doctrine of non-suability thus bears restatement: "A
sovereign is exempt from suit, not be-cause of any formal
conception or obsolete theory, but on the logical and
practical ground that there can be no legal right as against
the authority
5
that makes the law on which the right
depends."
This is not to deny that while indeed logical and far from
impractical the doctrine does give rise to problems
considering how widely immersed in matters hitherto
deemed outside its sphere the government is at present,
Nor is it likely considering its expanding role, demanded by
the times and warranted by the Constitution, that a halt
would be called to many of its activities, at times
unavoidably adversely affecting private rights.
Nonetheless, a continued adherence to the doctrine of non-
suability is not to be deplored for as against the
inconvenience that may be caused private parties, the loss
of governmental efficiency and the obstacle to the
performance of its multifarious functions are far greater if
such a fun-damental principle were abandoned and the
availability of
________________
3 67 Phil. 728.
4 Cf. Metran v. Paredes, 79 Phil. 819 (1948); Treasurer of the
Philippines v. Encarnacion, 93 Phil. 610 (1953); Angat River Irrigation
System v. Angat River Workers' Union, 102 Phil. 789 (1967); Bureau of
Printing v. Bureau of Printing Employees Asso., 1 SCRA 340 (1961).
5 Kawananakoa v. Polyblank, 206 U.S. 349 (1907).
602

judicial remedy were not thus restricted. With the well

known propensity on the part of our people to go to court,
at the least provocation, the loss of time and energy
required to defend against law suits, in the absence of such
a basic principle that constitutes such an effective obstacle,
could very well be imagined.
At any rate, in case of a money claim arising from

contract, express or implied, which could serve as a basis
for civil action between private parties, such a consent has
been given by a statute enacted by the Philippine
legislature, even before the 6
Constitution took effect and
still applicable at7 present. The procedure provided for in
such a statute was made more expeditious by a
Commonwealth Act, enabling the party or entity, who feels
aggrieved by the final decision of the Auditor General
required to decide the claim within sixty days, 8
having the
right to go to this Court for final adjudication.
________________
6 Act No. 3083, An Act defining the conditions under which the
Government of the Philippine Islands may be sued (1923).
7 Ibid., Sections 2 and 3.
8 Commonwealth Act No. 327 reads thus: "An Act Fixing the Time
Within Which the Auditor General Shall Render His Decisions and
Prescribing the Manner of Appeal Therefrom. Be it enacted by the
National Assembly of the Philippines; Section 1. In all cases involving the
settlement of accounts or claims, other than those of accountable officers,
the Auditor General shall act and decide the same within sixty days,
exclusive of Sundays and holidays, after their presentation. If said
accounts or claims need reference to other persons, office or offices, or to a
party interested, the period aforesaid shall be counted from the time the
last comment necessary to a proper decision is received by him. With
respect to the accounts of accountable officers, the Auditor General shall
act on the same within one hundred days after their submission, Sundays
and holidays excepted. In case of accounts or claims already submitted to
but still pending decision by the Auditor General on or before the approval
of this Act, the periods provided in this section shall commence from the
date of such approval. Sec. 2. The party aggrieved by the final decision of
the Auditor General in the settlement of an account or claim, may within
thirty days from receipt of .the decision, take an appeal in writing: (a) To
the President of the United States, pending the final and complete
withdrawal of her sovereignty over the Philippines, or (b) To
603
VOL. 29, SEPTEMBER 30, 1969 603

Providence Washington Insurance Co, vs. Republic
It is worthy of note likewise that in the pursuit of its

activities affecting business, the government has
increasingly relied on private
9
corporations possessing the
power to sue and he sued.
Thus the doctrine of non-suability of the government

without its consent, as it has operated in practice, hardly
lends itself to the charge that it could be the fruitful parent
of injustice, considering the vast and ever-widening scope
of state activities at present being undertaken. Whatever
difficulties for private claimants may still exist, is, from an
objective appraisal of all factors, minimal. In the balancing
of interests, so unavoidable in the determination of what
principles must prevail if government is to satisfy the
public weal, the verdict must be, as it has been these so
many years, for its continuing recognition as a
fundamental postulate of constitutional law.
WHEREFORE, the order of dismissal of the lower court
of May 23, 1966 is affirmed. With costs against plain tiff-
appellant.
Concepcion, C.J., Dizon, Makalintal, Zaldivar,

Sanchez, Castro, Capistrano and Teehankee, JJ., concur.
Barredo, J., did not take part.
Reyes, J.B.L., J., is on official trip.
Order affirmed.
________________
the President of the Philippines, or (c) To the Supreme Court of the

Philippines if the appellant is a private person or entity. If there are more
than one appellant, all appeals shall be taken to the same authority
resorted to by the first appellant. From a decision adversely affecting the
interests of the Government, the appeal may be taken by the proper head
of the department or in case of local governments by the head of the office
or branch of the Government immediately concerned. The appeal shall
specifically set forth the particular action of the Auditor General to which
exception is taken with the reasons and authorities relied on for reversing
such decision. Sec. 3. This Act shall take effect upon its approval." (June
18, 1938).
9 Cf. Manila Hotel Employees Association v. Manila Hotel Company, 73
Phil. 374 (1941); National Airports Corporation v. Teodoro, 91 Phil. 203
(1952),
604

ANNOTATION
ARRASTRE SERVICE
A. Generally
B. Management Contract
See also Constitutional Law; Tariff and Customs Code.
A. GENERALLY
1. The relationship between the consignee and common

carrier is similar to that of the consignee and
arrastre operator.—Northern Motors, Inc. vs. Prince
Line, 107 Phil. 253.
2. The arrastre operator has the burden of proving the
the cause of damages of goods.—Jose Bernabe &
Co., Inc. vs. Delgado Brothers, Inc., 107 Phil. 679.
3. The arrastre operator is duty-bound to take good
care of goods.—Macondray & Company. Inc. vs.
Delgado Brothers, Inc., 107 Phil. 779.
4. Admiralty or maritime law is not applicable to work
of arrastre operator.—Delgado Brothers, Inc. vs.
Home Insurance Company, 1 SCRA 853; Insurance
Company of North America vs. Manila Port Service,
3 SCRA 553.
5. Nature of maritime contract.—To give admiralty
jurisdiction over a contract as maritime, such
contract must relate to the trade and business of
sea; it must be essentially and fully maritime in its
character; it must provide for maritime services,
maritime transactions, or maritime casualties.
Insurance Co. of North America vs. Manila Port
Service, 3 SCRA 553.
6. Maritime contract should be essentially and fully
maritime in character.—Insurance Co, of North
America vs. Delgado Brothers, Inc., 4 SCRA 691.
7. When suit to recover amount due to shortage and
damages on goods shipped from abroad is not
admiralty in
605
VOL. 29, SEPTEMBER 30, 1969 605

nature.—Atlantic Mutual Insurance Co. vs. Manila

Port Terminal, 4 SCRA 1226.
8. When arrival of shipments is deemed admitted by

al-legation of delivery to consignee.—State Bonding
& Insurance Co., Inc. vs. Manila Port Service, 11
SCRA 400.
9. Non-representation of short-landing certificate by
arrastre operator renders unnecessary evidence of
quantity of goods short-delivered.—Id.
10. Offer of settlement of the case and conditional
acceptance of the same is not a waiver of action.—
Switzerland General Insurance Co,, Ltd. vs. Java
Pacific & Hoegh Lines, 16 SCRA 916.
11. It is the bounded duty of arrastre operator to
'present tally receipts in complaints for short
delivery.—State Bonding & Insurance Co., Inc. vs.
Manila Port Service, 11 SCRA 400.
12. Functions performed by the Manila, Port Service are
proprietary in nature.—Philippine Manufacturing
Co, vs. Manila Port Service, 16 SCRA 916.
13. Arrastre operator should refund checking charges to
importer.—Id.
14. No protest is necessary in the payment of checking
charges in order that they may be recovered.—Id.
15. When liability of the arrastre operator should not be
limited to P500.00 and should include the marginal
fee.—Caltex (Phil), Inc. vs. Manila Port Service, 17
SCRA 1073.
16. Allegations of complaint should be read together.—
Insurance Company of North America vs. Sharp &
Company, Inc., 18 SCRA 462.
17. The suit against the carrier, being predicated upon a
contract of carriage by sea, is one in admiralty, and
this falls within the Court of First Instance's
jurisdiction.—
606

18. Where the Customs Arrastre Service did not deliver

all the landed cargo to the consignee, the latter's
remedy is to file a money claim with the General
Auditing Office pursuant to Commonwealth Act No.
327—Mobil Philippines Exploration, Inc. vs.
Customs Arrastre Service, 18 SCRA 1120.
The legal relationship between. an arrastre operator

19. and the consignee is akin to that of a depositor and
warehouseman.—Lua Kian vs. Manila Railroad
Company, 19 SCRA 6.
20. Duty of arrastre operator to follow procedure in
Warehouse Receipts Law in case there is conflict
between marking on goods and bills of lading.—Id.
21. The defense that arrastre operator is liable for
P500.00 per package cannot be raised for the first
time on appeal.—Yu Kimteng Construction
Corporation vs. Manila Railroad Company, 19
SCRA 587.
22. Verifax copies of cargo receipts are not conclusive,—
Rizal Surety & Insurance Company vs. Court of
Appeals, 20 SCRA 61.
23 . Arrastre and storage fees are, preferred credits.—
Chief of Staff, Armed Forces of the Philippines .vs.
Collector of Internal Revenue, 20 SCRA 1095.
24. Joinder of alternative causes of action.—An action
against the arrastre operator and, in the
alternative, against the carrier, for the recovery of
damages to imported goods, calls for the exercise of
admiralty jurisdiction, which municipal courts do
not have. It is within the original exclusive
competence of Courts of First Instance. Since
Section 5, Rule 2 of the Rules of Court permits the
joinder of the two causes of action, in the
alternative, it follows that the Court of First
Instance of Manila, had jurisdiction over both, even
if one of said causes of action is within the exclusive
jurisdiction of an inferior court. Firemen's
Insurance Company vs. Manila Port Service, 20
SCRA 1273.
607
VOL. 29, SEPTEMBER 30, 1969 607

Providence Washington Insurance Co, vs, Republic
25. Money claims against the government are not

unliquidated.—Insurance Company of North
America vs. Republic, 21 SCRA 125.
26. Liability of arrastre operator is not limited to in
voice value of the goods.—Philippine Education Co.,
Inc. vs. Manila Port Service, 21 SCRA 603.
27. When alternative causes of action is allowable.—A

consignee, when uncertain of the place and time of
the loss or damage to its goods, may in one case
seek relief alternatively against the arrastre
operation and the steamship company. Fulton
Insurance Co. vs. Manila Railroad Company, 21
SCRA 974
28. The amount of liability of appellant which was
raised for the first time on appeal cannot be
reviewed by the Supreme Court.—Insurance Co. of
North America vs. Manila Port Service, 23 SCRA
114.
29. Effect of provisional claim which did not specify the
value of loss of the goods.—In Domestic Insurance
Co. vs. Manila Railroad Co. (L-24066, Aug. 30,
1967), the Supreme Court explicitly declared that "x
x x the circumstances that the provisional claim did
not specify the value of the loss" does not detract
from the fact that said claim "still substantially
fulfills the requirements of the contract
aforementioned (State Bonding & Insurance Co. vs.
Manila Port Service, L-21833, Feb. 28, 1966), and is
not a defense against the claim of the consignee for
recovery after it shall have ascertained later its
actual loss or damage. Fireman's Fund & Surety
Co. vs. Manila Railroad Company, 27 SCRA 994;
Alpha Insurance & Surety Co. vs. Manila, Port
Service, 21 SCRA 701; Liverpool & London & Clove
Insurance Co. vs. Manila Port Service, 21 SCRA
951.
30. Arrastre operator who received goods delivered by
mistake has the obligation to return the same.—
Swedish East Asia Co,, Ltd. vs. Manila Port Service,
25 SCRA 633.
608

31. Remedy for recovery of claims against the Bureau of

Customs.—The remedy of the plaintiff may be
found in the provisions of Act 3083 and
Commonwealth Act 327 which (a) permit the
presentation of money, such as the one here sued on
by the plaintiff, to the Auditor General for
adjudication, (b) set forth the requisites to be
fulfilled, and (c) outline the procedure to be

followed. (Domestic Ins. Co. of the Phil. vs. Republic,
25 SCRA 231). Fireman's Fund Insurance Co. vs.
Maersk Line Far East Service, 27 SCRA 519.
32. Arrastre Service is a necessary incident to the
functions of the Bureau of Customs.—Mobil
Philippines Exploration, Inc. vs. Customs Arrastre
Service, 18 SCRA 1120; Union Insurance Society of
Canton, Ltd. vs. Republic, 27 SCRA 446; Fireman's
Fund Insurance Co. vs. Maersk Line Far East
Service, 27 SCRA 319.
33. Bureau of Customs has no personality of its own.—
American Insurance Company vs. Macondray, Inc.,
20 SCRA 1103.
34. Arrastre service is a proprietary or governmental
function:—Mobil Philippines Exploration, Inc. vs.
Customs Arrastre Service, 18 SCRA 1120,
35. The Bureau of Customs cannot be a party.—
Equitable Insurance & Casualty Company. Inc. vs.
Smith, Bell & Company (Phil), Inc., 20 SCRA 1121.
36. Bureau of Customs and Customs Arrastre Service
cannot be sued.—Mobil Philippines Exploration,
Inc. vs. Customs Arrastre Service, 18 SCRA 1120.
37. A non-corporate government entity may not be sued
without its consent.—Domestic Insurance Company
of the Philippines vs. American Pioneer Line, 22
SCRA 831; American Insurance Company vs.
Macondray, Inc., 20 SCRA 1103.
38. The Bureau of Customs, as arrastre operator,
performing a government function is immune from
suit.—
609
VOL. 29, SEPTEMBER 30, 1969 609

Insurance Company of North America, 20 SCRA

627, 648, 699; North British & Mercantile Insurance
Company, Ltd. vs. Isthmian Lines, Inc., 20 SCRA
629; Manila Electric Company vs. Customs Arrastre
Service, 20 SCRA 717; Shell Refining Co. (Phil.) Inc.
vs. Manila Port Service, 20 SCRA 919; Equitable
Insurance & Casualty Company, Inc. vs. Smith, Bell
& Company, (Phil), Inc., 20 SCRA 1121; Insurance
Company of North America vs. Republic, 21 SCRA
40; Philippine First Insurance Company, Inc. vs.

Republic, 21 SCRA 49; Insurance Company of North
America vs. Republic, 21 SCRA 125; Royal
Insurance Co. vs. Republic 21 SCRA 847; American
Insurance Co. vs. Republic, 21 SCRA 854; Hartford
Fire Insurance Co. vs. P.D. Marchesini & Co,, 21
SCRA 860; Domestic Insurance Co. vs. Barber Line,
21 SCRA 961; Domestic Insurance Company of the
Philippines vs. Republic, 25 SCRA 231; Union
Insurance Society of Canton, Ltd. vs, Republic, 27
SCRA 446; Fireman's Fund Insurance Co. vs.
Maersk Line Far East Service, 27 SCRA 519;
Insurance Company of North America vs. Osaka
Shosen Kaisha, 27 SCRA 780; Rizal Surety &
Insurance Co, vs. Customs Arrastre Service, 27
SCRA 1016.
39. The limitation of arrastre operator's liability is
valid.—Jose Bernabe & Co., Inc. vs. Delgado
Brothers, Inc., 107 Phil. 679; American Machinery
& Parts Mfg., Inc. vs. Hamburg-Amerika Linie, 23
SCRA 47.
B. MANAGEMENT CONTRACT
1. Effects of acceptance of benefits by consignee.—

When a third person accepts the benefits of a
contract, he is also bound to accept the concomitant
obligations corresponding thereto. In the case at
bar, the consignee accepted the benef its under the
Management Contract between the arrastre
operator and the Bureau of Customs. Consequently,
it became liable to the obligation under the said
contract. Jose Bernabe & Co., Inc. vs. Delgado
Brothers, Inc., 107 Phil. 287.
610

Providence Washington Insurance Co, vs. Republic
2. Limitation of arrastre operator's liability.—The

limitation of the arrastre operator's liability under
paragraph 15 of the Management Contract entered
into between it and the Bureau of Customs is not
absolute or unqualified, for under the said contract,
if the value of the merchandise is specified or
manifested by the consignee, and the corresponding
arrastre charges are paid on the basis of the

declared value, the limitation does not apply.
Consequently, the provision is neither unfair nor
arbitrary, because the consignee has it in his hands
to hold the arrastre operator responsible for the full
value of his merchandise by merely specifying it in
any of the various documents required of him in
claiming the merchandise from the customs.
Northern Motors, Inc, vs. Prince Line, 107 Phil. 253;
Delgado Brothers, Inc. vs. Li Yao & Company, 107
Phil. 939; Fearnly & Eger and Macondray & Co.,
Inc. vs. Manila Railroad Company, 2 SCRA 452;
Union Assurance Co., Ltd. vs. Manila, Port Service,
3 SCRA 377; Atlantic Mutual Insurance Co. vs.
Manila, Port Service, 3 SCRA 411; Insurance
3 SCRA 576; Atlantic Mutual Insurance Company
vs. Manila Port Service, 6 SCRA 464; Lexal Pure
Drug Laboratory vs, Manila Railroad Company, 16
SCRA 867.
3. The consignee is considered party to Management
Contract although he is not signatory thereto.—Id.,
p. 253; Jose Bernabe & Co., Inc. vs. Delgado
Brothers, Inc., 107 Phil. 679.
4. Validity of paragraph 15 of Management Contract
between arrastre and Bureau of Customs.—The
validity of paragraph 15 of the Management
Contract between the arrastre operator and the
Bureau of Customs, limiting the Iiability of the
former unless the value of the cargo is specified,
cannot be assailed by an importer or consignee,
because it can adequately protect itself by simply
specifying or manifesting the actual value of the
imported cargo in the various documents required
under the law, and by paying the corresponding
arrastre charges of the same. Jose Bernabe & Co.,
Inc. vs. Delgado Brothers, Inc., 107 Phil. 287.
611
VOL. 29, SEPTEMBER 30, 1969 611

5. When the Management Contract's provision limiting

to 15 days the period within which the owners may
file their claims for lost cargo is not binding because
there was absence of notice.—Sun Brothers &

Company vs. Manila Port Service, 107 Phil. 988.
6. Time to file claim for losses.—The provision in the
Management Contract of the arrastre service to the
effect that claims for losses must be filed with the
contractor within 15 days from the date of arrival of
the goods before an action may be brought against
it in court for recovery of the value of the losses, is
in consonance with the provisions of the enabling
Act, intended undoubtedly to afford contractor the
opportunity to check up the claims for losses which.
verification would be more difficult if a longer
period of the time be allowed to pass. Tomas
Grocery vs. Delgado Brothers, Inc., 105 Phil. 549;
State Bonding & Insurance Co., Inc. -vs. Manila
Port Service, 16 SCRA 324; Atlantic Mutual
Insurance Co. vs. United Philippine Lines, 16 SCRA
521; Atlantic Mutual Insurance Co. vs. Manila Port
Service, 16 SCRA 698; State Bonding Insurance Co.,
Inc. vs. Manila Port Service, 21 SCRA 595;
Philippine Education Co., Inc. vs. Manila Port
Service, 21 SCRA 603; Caltex (Phil.), Inc. vs. Manila
Port Service, 22 SCRA 628; Alpha Insurance &
Surety Co. vs. Manila Port Service, 21 SCRA 701.
7. When consignee and insurer are bound by the
provisions of the Management Contract.—A
consignee who avails himself of the services of the
arrastre operator and takes delivery of the goods
therefrom in pursuance of a permit and a pass
issued by the latter, which are "subject to all the
terms and conditions" of the Management Contract
between the operator and the Bureau of Customs,
including the requirement thereof that "a claim is
filed with the company within 15 days from the
date of the arrival of the goods", is bound by the
provisions of the said Management Contract. The
insurer, as successor-ininterest of the consignee, is
likewise bound by said contractual provisions.
Government Service Insurance System vs. Manila
Railroad Company, 1 SCRA 553; Domestic
612

Insurance Company of the Philippines vs, Manila,

Port Service, 4 SCRA 179.
8. Provisions in Management Contract which are in
nature of stipulations "pour autrui".—Section 15 of
the arrastre Management Contract containing
provisions, which are in the nature of stipulation
"pour autrui" entered into by and between the
Manila Port Service and the Bureau of Customs on
29 February 1956 pursuant to the provisions of Act
No. 3002, as amended by Act No. 3851,
Commonwealth Act No. 285 and Republic Act No.
140, limiting the former's liability for loss,
destruction or damage to any cargo while under its
custody or control to P500.00 for each package,
unless the value be otherwise specified or
manifested and the corresponding arrastre charges
have been paid, is binding upon the consignee who
was not a party thereto or signatory thereof. Smith,
Bell & Co., Ltd, vs. Manila Port Service, 1 SCRA
1007.
9. Nature of arrastre service.—Under the Management
Contract, the functions of an arrastre operator are
(1) to receive, handle, care for, and deliver all
merchandise im-ported and exported, upon or
passing over Government-owned wharves and piers
in the Port of Manila, (2) as well as to record or
check all merchandise which may be delivered to
said port at shipside, and (3) in general, to furnish
light and water services and other incidental
services in order to undertake its arrastre service.
There is nothing in these functions which relate to
the trade and business of navigation or to the use or
operation of vessels. Delgado Brothers, Inc. vs,
Home Insurance Company, 1 SCRA 853.
10. Filing of provisional claim within 15 days from the
discharge of goods from carrier is sufficient
compliance with Section 15 of the Management
Contract.—Parsons Hardware Co., Inc. vs. De la
Rama Steamship Co., Inc., 2 SCRA 213; American
Machinery & Parts Mfg. Co., Inc. vs. Manila
Railroad Company, 16 SCRA 899; Switzer-land
General Insurance Co., Ltd. vs. Java Pacific &
Hough Lines, 16 SCRA 916; State Bonding &
Insurance Co., Inc vs. Manila Port Service, 16 SCRA
324; Conti
613
VOL. 29, SEPTEMBER 30, 1969 613

nental Insurance Co. vs. Manila Port Service; 16

SCRA 425; Atlantic Mutual Insurance Co. vs.
United Philippine Lines, 16 SCRA 521; State
Bonding Insurance Company, Inc. vs. Manila Port
Service, 18 SCRA 1139; New Hampshire Fire
Insurance Company vs. Manila Port Service, 17
SCRA 899; Insurance Company of North America
vs. Maritime Company of the Philippines, 17 SCRA
905; Yu Kimteng Construction Corporation vs.
Manila Railroad Company, 19 SCRA 587; New
Zealand Insurance Company, Ltd. vs. Manila Port
Service, 19 SCRA 801; Rizal Surety & Insurance
Company, Inc. vs. Manila Railroad Company, 19
SCRA 870; Fireman's Insurance Company vs.
Manila Port Service, 20 SCRA 1173; Caltex (Phil.),
Inc. vs. Manila Port Service, 21 SCRA 328;
Domestic Insurance Company of the Philippines vs.
Manila Railroad Company, 20 SCRA 1190; Yek
Tong Lin Fire & Marine Insurance Co., Ltd. vs.
Manila Port Service, 21 SCRA 82; Philippine
Education Co., Inc. vs. Manila Port Service, 21
SCRA 174; Tabacalera Insurance Co. vs. Manila
Railroad Co., 21 SCRA 709; Liverpool & London &
Clove Insurance Co. vs. Manila Port Service, 21
SCRA 951; Philippine Education Co., Inc. vs.
Manila Port Service, 21 SCRA 603; Philippine
SCRA 168; Felipro, Inc. vs. Manila Port Service, 25
SCRA 457.
11. Reason for requirement of filing claims within
15day period.—The reason underlying the
requirement of filing a claim within the 15-day
period in the arrastre Management Contract (Sec.
15) is to give the arrastre contractor a reasonable
opportunity to check the validity of the claim while
the facts are still fresh in the minds of the persons
who took part in the transaction and while the
pertinent documents are still available (Consunji
vs. Manila Port Service, L-15551, Nov. 29, 1960).
State Bonding Insurance Company, Inc. vs. Manila,
12. Rules on filing claims.—A provisional claim for
damage or short delivery filed before the goods were
discharged from the carrying vessel is not the claim
contemplated in Section 15 of the Management

Contract, since
614

the same is premature and speculative (Shell

Company of the -Philippines, Ltd. vs. Compañia
General de Tabacos de Filipinas, L-20230, July 30,
1965). On the other hand, a provisional claim filed
after the discharge of the goods mentioned in
Section 15 is a sufficient compliance with the
proviso therein requiring the filing of a claim within
said fifteen days (Yu Kimteng; Construction
Corporation vs. Manila Railroad Company, L-
17027, Nov. 29, 1965). State Bonding Insurance Co.,
Inc. vs. Manila Port Service. 18 SCRA 1141.
13. Filing of provisional claim before discharge of last
package from carrying vessel is premature and
speculative.—Fireman's Fund Insurance Co, vs.
Manila Port Service, 16 SCRA 795; Insurance
21 SCRA 421; Philippine Education Co., Inc. vs.
Manila Port Service, 22 SCRA 168; St. Paul Fire &
Marine Insurance Co., Inc. vs. Macondray & Co.,
Inc., 22 SCRA 1163; Switzerland General Insurance
Co., Ltd. vs. Manila Railroad Co., 23 SCRA 111;
Domestic Insurance Company of the Philippines vs,
Manila Railroad Company, 20 SCRA 1190;
Malayan Insurance Co., Inc. vs. Manila, Port
Service, 27 SCRA 760; Republic Manufacturing
Company vs. Manila Railroad Company, 27 SCRA
1237.
14, Exception to the rule of claiming the lost goods
within. the 15 days prescribed by the Management
Contract.—Generally, the claim of the consignee or
its subrogee for loss, damage, misdelivery and/or
nondelivery of goods, must be presented to the
arrastre contractor within fifteen days from the
date of discharge of the last package from the
carrying vessel, as provided in the Management
Contract. This rule applies where, ordinarily, the
consignee or claimant has knowledge of the loss,
damage, misdelivery and/or nondelivery of the
goods before the expiration of said 15-day period.
However, when the consignee or claimant comes to

learn of the loss, damage, etc. after the 15-day
period from the discharge of the goods, the period to
file a claim should commence not from the said date
of discharge but from such date when the consignee
or claimant is informed of the loss, damage, etc.
615
VOL. 29, SEPTEMBER 30, 1969 615

of the merchandise, or from the date on which, with

the exercise of reasonable diligence, such
information could have been secured. Insurance Co.
of North America vs. Manila Port Service, 21 SCRA
421.
15. A provisional claim filed one day before the complete
discharge of the shipment is not speculative and
premature when it was filed on a date when appellee
had already been aware of the bad condition of some
of the goods.—Insurance Company of North America
vs. Manila Port Service, 23 SCRA 114.
16. When literal compliance with fifteen-day
requirement in Management Contract was not
required.—Rizal Surety & Insurance Company vs.
Manila Railroad Company, 19 SCRA 346;
Tabacalera Co. vs. Manila Railroad Co., 21 SCRA
709.
17. Effect of request for bad order examination.—The
request for, and the result of, the bad order
examination, which were filed in this case and done
within fifteen days from the haulage of the goods
from the vessel, served. the purpose of a claim,
which is to afford the carrier reasonable
opportunity to check the validity of the claims.
Fireman's Fund Insurance vs. Manila Port Service,
16 SCRA 795.
18. Absence of statement as to precise amount of loss not
fatal to the claim us long as the claim is filed within
15 days after the discharge of the cargo.—Philippine
SCRA 603.
19. Liability of arrastre operator is not limited to
invoice value of the goods.—Philippine Education
Co., Inc. 08. Manila Port Service, 27 SCRA 1031;
Liverpool & London & Clove Insurance Co. vs.

Manila Port Service, 21 SCRA 951.
20. Failure of the arrastre contractor to act on claim
within one year period means that claim was
rejected:—Continental Insurance Co. vs. Manila
Port Service, 16 SCRA 425; Delgado Brothers, Inc,
vs. Manila Port Service 17 SCRA 471; Fireman's
Fund Insurance Company vs.
616

Manila Port Service, 18 SCRA 150; American

Insurance Company vs, Manila Port Service, 21
SCRA 79; Yek Tong Lin Fire & Marine Insurance
Co., Ltd. vs, Manila Port Service, 21 SCRA 82;
Philippine Education Co., Inc. vs. Manila Port
Service, 21 SCRA 174; Alpha Insurance & Surety
Co. vs. Manila Port Service, 21 SCRA 701; Ang
Ching Gi vs. Delgado Brothers, Inc., 22 SCRA 598;
Villaruel vs. Manila Port Service, 22 SCRA 1328;
Manila Port Service vs. Court of Appeals, 22 SCRA
1364,
21. An action to recover value of missing goods delivered
by mistake filed less than four years has not
prescribed.—Swedish East Asia Co., Ltd. vs. Manila
22. A claim for loss although not stating the exact value
of the missing or damaged merchandise constitutes
substantial compliance with the requirement of
paragraph 15 of the Management Contract.—Yap
Teck Suy vs. Manila Port Service, 23 SCRA 940.
23. Management Contract is binding on parties who
availed themselves of benefits thereof.—Domestic
Insurance Company of the Philippines vs. Manila,
Railroad Company, 20 SCRA 1190.
24. A decision based upon a stipulation of facts cannot
alter the terms in the Management Contract.—
Philippine Education Co, vs. Manila Port Service,
23 SCRA 557.
25. When third parties are not bound by the
Management Contract for they did not avail
themselves of the services of the arrastre operator.—
Swedish East Asia Co,, Ltd. vs. Manila Port Service,

25 SCRA 633.
26. Where a party is not bound by the Management
Contract, its right to bring action to recover the
value of the missing goods cannot be limited by the
preconditions set forth in the said contract.—Id.
—JOJO MA. LACSON

617
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5/22/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 029

598 SUPREME COURT REPORTS ANNOTATED

No. L-26386. September 30, 1969.

PROVIDENCE WASHINGTON INSURANCE CO.,

Political law; Government immunity from suit; Bureau of

VOL. 29. SEPTEMBER 30, 1969 599

Providence Washington Insurance Co. vs. Republic

ever-widening scope of state activities at present being

APPEAL from an order of dismissal of the Court of First

The facts are stated in the opinion of the Court.

Providence Washington Insurance Co, filed, on October 21,

600 SUPREME COURT REPORTS ANNOTATED

expressly reaffirming the above ruling 2

2 Insurance Company of North America v. Republic, 20 SCRA 648

(1967); Manila Electric Co. v. Customs Arrastre Service, 20 SCRA 767

VOL. 29, SEPTEMBER 30, 1969 601

The doctrine of non-suability thus holds undisputed sway.

Nor did the Mobil decision blaze a new trail. So it has

602 SUPREME COURT REPORTS ANNOTATED

judicial remedy were not thus restricted. With the well

At any rate, in case of a money claim arising from

VOL. 29, SEPTEMBER 30, 1969 603

It is worthy of note likewise that in the pursuit of its

Thus the doctrine of non-suability of the government

Concepcion, C.J., Dizon, Makalintal, Zaldivar,

the President of the Philippines, or (c) To the Supreme Court of the

604 SUPREME COURT REPORTS ANNOTATED

See also Constitutional Law; Tariff and Customs Code.

1. The relationship between the consignee and common

VOL. 29, SEPTEMBER 30, 1969 605

nature.—Atlantic Mutual Insurance Co. vs. Manila

8. When arrival of shipments is deemed admitted by

606 SUPREME COURT REPORTS ANNOTATED

18. Where the Customs Arrastre Service did not deliver

The legal relationship between. an arrastre operator

VOL. 29, SEPTEMBER 30, 1969 607

25. Money claims against the government are not

27. When alternative causes of action is allowable.—A

608 SUPREME COURT REPORTS ANNOTATED

31. Remedy for recovery of claims against the Bureau of

fulfilled, and (c) outline the procedure to be

VOL. 29, SEPTEMBER 30, 1969 609

Insurance Company of North America, 20 SCRA

40; Philippine First Insurance Company, Inc. vs.

1. Effects of acceptance of benefits by consignee.—

610 SUPREME COURT REPORTS ANNOTATED

2. Limitation of arrastre operator's liability.—The

arrastre charges are paid on the basis of the

VOL. 29, SEPTEMBER 30, 1969 611

5. When the Management Contract's provision limiting

there was absence of notice.—Sun Brothers &

612 SUPREME COURT REPORTS ANNOTATED

Insurance Company of the Philippines vs, Manila,

VOL. 29, SEPTEMBER 30, 1969 613

nental Insurance Co. vs. Manila Port Service; 16

contemplated in Section 15 of the Management

614 SUPREME COURT REPORTS ANNOTATED

the same is premature and speculative (Shell

However, when the consignee or claimant comes to