G.R. No. L-25476 November 15, 1967
AMERICAN INSURANCE COMPANY, plaintiff-appellant, vs. REPUBLIC OF THE PHILIPPINES and BUREAU OF CUSTOMS, defendants-appellees.

FACTS

The American Insurance Company, subrogated to the rights of consignee San Miguel Brewery, filed a case against the Republic of the Philippines and the Bureau of Customs. The claim was for P3,243.23 with legal interest due to the Bureau of Customs’ failure to deliver one case of steel transmission chains imported from England, which had been delivered into its custody by SS “Demodocus”. The City Court of Manila ordered the defendants to pay. On appeal, the Court of First Instance of Manila dismissed the case. It held that the Bureau of Customs has no juridical capacity to sue or be sued, and that the Republic of the Philippines may not be sued without its consent. The American Insurance Company appealed directly to the Supreme Court on this point of law.

ISSUE

Whether the Republic of the Philippines and the Bureau of Customs may be sued for claims arising from the arrastre operations conducted by the Bureau of Customs.

RULING

No. The Supreme Court affirmed the dismissal of the case. The Bureau of Customs, in carrying out arrastre service, does so only as an incident to its prime governmental function of assessing and collecting revenues from imported articles and all other tariff and customs duties, fees, charges, fines and penalties. Such operations do not render the Republic of the Philippines or its involved agencies subject to suit without its consent. The Court cited the precedent set in Mobil Philippines Exploration v. Customs Arrastre Service. The judgment appealed from was affirmed without costs.