G.R. No. L-25871 October 23, 1967
INSURANCE COMPANY OF NORTH AMERICA, plaintiff-appellant, vs. REPUBLIC OF THE PHILIPPINES and/or BUREAU OF CUSTOMS, defendants-appellees.

FACTS

The Insurance Company of North America, a foreign corporation licensed to do business in the Philippines, insured a shipment of ten packages consigned to Ed. A. Keller & Co. Upon arrival, the cargo was discharged into the custody of the Bureau of Customs, which was then operating the arrastre service. Only four cases were delivered to the consignee. The insurer paid the consignee the value of the six lost cases, amounting to P3,718.74, and as subrogee, sought to recover this amount from the Bureau of Customs. Failing to recover, the insurer filed an action before the City Court of Manila against the Republic of the Philippines and the Bureau of Customs. The City Court ruled in favor of the plaintiff. On appeal, the Court of First Instance of Manila dismissed the case.

ISSUE

Whether the Republic of the Philippines and/or the Bureau of Customs may be sued for the value of the lost cargo handled by the Bureau in its arrastre service operation.

RULING

The Court of First Instance’s dismissal is sustained. The Bureau of Customs, performing its main governmental function of taxation and carrying out the necessary incidental function of arrastre service, cannot be sued on grounds of public policy, as allowing suits would hamper its governmental function. The Republic of the Philippines, which operates the Bureau as its agency, likewise may not be sued without its consent. Money claims against the Republic should be filed with the Office of the Auditor General pursuant to the procedure in Act 3083 as amended by C.A. 327. The appealed judgment is affirmed.