THE NORTHERN ASSURANCE COMPANY, LTD., PLAINTIFF-APPELLEE, VS. REPUBLIC OF THE PHILIPPINES, ET AL., DEFENDANTS-APPELLANTS.

Allan Export Co. of New York shipped on May 8, 1964 to Manila 175 bundles of axle
shafts and one pallet containing 10 cartons of auto ball bearings, consigned to
shipper’s order, with Central Auto Supply, Inc., Manila as notify party.  SS “Pioneer Moon”, which carried
it, arrived in Manila on June 8, 1964
and thereafter fully discharged the shipment in good order condition to the
Customs Arrastre. 
Service of the Bureau of Customs then handling arrastre operations in the port afore-stated.

The Customs Arrastre Service failed to
deliver 28 bundles of axle shaft to the consignee.  As a result,
Northern Assurance Co., Ltd., insurer of the shipment, paid the consignee P3,724.34 for the undelivered 28 bundles of axle shafts.

Suit was then filed by said insurance company against the
Republic of the Philippines,
Bureau of Customs and the Customs Arrastre Service to
recover said amount as subrogee to the
consignee.  It was dismissed by the City
Court of Manila, on the ground of non-suability of defendants.  Appeal by plaintiff to the Court of First
Instance of Manila caused reversal of the inferior court.  Defendants were, after trial, ordered to pay
P2,274.07 – the C.I.F. value of the undelivered
shipment – without costs.  Defendants
took the present appeal.

The point at issue, whether defendants may be sued in this case,
has been decided by Us in the negative, in numerous cases starting with Mobil Philippines Exploration vs. Customs Arrastre Service, L-23139, December 17, 1966. 
For this reason, appellee, instead of filing
its brief, submitted the case for decision in light of said ruling.  Applying this doctrine, We
hold that defendants herein may not be sued, without their consent, for directly
engaging in arrastre operations, necessarily incidental
to the prime governmental function of taxation.

WHEREFORE, the judgment appealed from is reversed and plaintiff’s complaint
dismissed, for reason defendants’ non-suability herein, without costs.

SO ORDERED.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles, and Fernando, JJ., concur.