G.R. No. L-25477 October 23, 1967
INSURANCE COMPANY OF NORTH AMERICA, plaintiff-appellant, vs. REPUBLIC OF THE PHILIPPINES, defendant-appellee.

FACTS

The Insurance Company of North America, as insurer and subrogee of the consignee Insular Lumber Company, filed a suit against the Republic of the Philippines. The claim was for the amount of P11,355.30 due to the loss of four bundles of tractor parts from a cargo discharged from SS “Turandot” and delivered to the Customs Arrastre Service, which was not delivered to the consignee. The Republic of the Philippines, as the arrastre operator through the Customs Arrastre Service, was the defendant. The Court of First Instance of Manila dismissed the case upon the defendant’s motion.

ISSUE

Whether the Court of First Instance of Manila has jurisdiction over the suit against the Republic of the Philippines arising from the operations of the Customs Arrastre Service.

RULING

The Court of First Instance of Manila correctly dismissed the case for lack of jurisdiction. The Republic of the Philippines may not be sued without its consent. The Customs Arrastre Service performs a function that is an incident of a prime governmental function, making it part of the governmental machinery. Therefore, neither the Republic of the Philippines, the Bureau of Customs, nor the Customs Arrastre Service may be sued. Furthermore, if a claim against the government is permissible, it must follow the procedure laid down under Act 3083 as amended by Commonwealth Act 327, which requires the claim to be coursed through the General Auditing Office. The order of dismissal was affirmed.