G.R. No. L-27077 October 23, 1967
THE NORTHERN ASSURANCE COMPANY, LTD., plaintiff-appellee, vs. REPUBLIC OF THE PHILIPPINES, ET AL., defendants-appellants.

FACTS

Allan Export Co. of New York shipped goods to Manila, consigned to shipper’s order, with Central Auto Supply, Inc. as notify party. The shipment arrived and was discharged in good order to the Customs Arrastre Service of the Bureau of Customs. The Customs Arrastre Service failed to deliver 28 bundles of axle shafts to the consignee. Northern Assurance Co., Ltd., as insurer, paid the consignee for the loss and, as subrogee, filed suit against the Republic of the Philippines, the Bureau of Customs, and the Customs Arrastre Service to recover the amount. The City Court of Manila dismissed the suit on the ground of the defendants’ non-suability. The Court of First Instance of Manila reversed this decision and ordered defendants to pay. Defendants appealed.

ISSUE

Whether the defendants (the Republic of the Philippines, the Bureau of Customs, and the Customs Arrastre Service) may be sued in this case for their arrastre operations.

RULING

No. The Supreme Court, applying the doctrine established in Mobil Philippines Exploration v. Customs Arrastre Service, held that the defendants may not be sued without their consent. The Court ruled that engaging in arrastre operations is necessarily incidental to the prime governmental function of taxation. Therefore, the judgment of the Court of First Instance was reversed, and the plaintiff’s complaint was dismissed on the ground of the defendants’ non-suability.