Metropolitan Transportation Service (Metran) vs. Paredes

An unincorporated government office or agency without juridical personality cannot be sued in court, and any suit against it is in effect a suit against the government itself, which cannot be maintained without its consent.

Metran is a semi-governmental transportation entity organized under Executive Order No. 59, operating under the supervision and control of the Department of Public Works and Communications. It was created to provide the public with efficient, faster, and cheaper transportation and to allocate U.S. Army trucks and motor vehicles, accessories, spare parts, and supplies to private transportation companies. Executive Order No. 28, series of 1946, directed it to furnish modern transportation facilities to all bureaus and offices of the national government. The National Labor Union, claiming to be a legitimate labor organization with more than thirty affiliated members employed by Metran, sought to bring a labor dispute before the Court of Industrial Relations, a tribunal created under Commonwealth Act No. 103, as amended, denominated as a "court" and conferred with powers pertaining to a court of justice.

The National Labor Union, alleging itself to be a legitimate labor organization with more than thirty affiliated members working under the employ of Metran, filed a petition before the Court of Industrial Relations in Case No. 36-V, praying that nine labor demands be granted. The demands included the abolition of unfair labor practices such as the "Grading System" and the "Rotation System," the return of a general wage deduction of fifty centavos, one hundred percent additional compensation for work on Sundays and legal holidays, overtime pay, one day of rest in seven with pay, sick leave benefits for permanent employees, worker representation in management, and reinstatement of workers dismissed or suspended because of union activities. Metran, described as a semi-governmental transportation entity popularly known as "Metran," was organized under Executive Order No. 59 to provide the public with efficient, faster, and cheaper transportation and to allocate U.S. Army trucks, motor vehicles, accessories, spare parts, and supplies to private transportation companies. It operates under the supervision and control of the Secretary of Public Works and Communications, distributes free tickets to all government employees, and provides the transportation needs of the government.

On October 22, 1946, Metran filed an oral petition for dismissal of the case before the Court of Industrial Relations, "on the ground that the respondent belongs to the Republic of the Philippines and as such, it can not be sued." The CIR denied the motion to dismiss by its order of November 7, 1946, citing a paragraph allegedly quoted from an opinion of Justice Ozaeta in "the case of the Manila Hotel." Metran filed a motion for reconsideration, which was denied by the CIR in its resolution dated December 3, 1946. In that resolution, the CIR held that irrespective of whether Metran is a corporation or merely an entity, so long as it is engaged in business and an industrial dispute exists between it and more than thirty of its employees, the CIR is fully authorized and has complete jurisdiction to decide the dispute under Section 4 of Commonwealth Act No. 103. The CIR further declared that Metran "cannot screen itself behind the sovereign power of the state, from any legal claim which its employees or laborers or third parties may have against it."

On December 7, 1946, Metran filed a notice of appeal, and the case was submitted to the Supreme Court on appeal under the provisions of Rule 44. The Supreme Court found that Metran is not a corporation nor any of the juridical entities enumerated in Article 35 of the Civil Code, and that it is a mere office or agency of the government created by Executive Order No. 59, operating under the direct supervision and control of the Department of Public Works and Communications.

• State Immunity: Petitioner argued that as an office or agency of the Government created by the State, it cannot be sued without the government's consent, invoking U.S. authorities on sovereign immunity including Beers vs. Arkansas, U.S. vs. Lee, Kawawanakoa vs. Polybank, and Siren vs. U.S.
• Non-Suability of Government Instrumentalities: Petitioner maintained that to sue Metran is to sue the government itself, and that the public service would be rendered nugatory if the supreme authority could be subjected to suit at the instance of every citizen.

• CIR Jurisdiction: Respondent CIR judges argued that under Section 4 of Commonwealth Act No. 103, the CIR has jurisdiction over any industrial dispute involving more than thirty employees, regardless of whether the employer is a corporation or a government entity.
• Engagement in Business: Respondents maintained that Metran is engaged in business and cannot screen itself behind the sovereign power of the state from any legal claim which its employees, laborers, or third parties may have against it.
• Unregistered Union: The CIR held that the fact that the Metran Branch of the National Labor Union was still unregistered did not deprive the CIR of its right to exercise jurisdiction as provided by law.

• Juridical Personality: Whether Metran, as an unincorporated government office, possesses juridical personality to be sued as a party in a civil action.
• State Immunity: Whether a suit against Metran, a mere office or agency of the government, is in effect a suit against the government itself, requiring the government's consent to be sued.
• CIR Jurisdiction: Whether the Court of Industrial Relations had jurisdiction to take cognizance of the labor dispute filed by the National Labor Union against Metran.

• Juridical Personality: No. Metran is not a corporation nor any juridical entity under Article 35 of the Civil Code and cannot be a party under Rule 3, Section 1, which allows only natural or juridical persons to be parties in a civil action.
• State Immunity: Yes. A suit against Metran is in effect a suit against the government, which cannot be sued without its consent under the well-settled rule in Merritt vs. Government of the Philippine Islands, and no consent was shown.
• CIR Jurisdiction: No. Since Metran could not be sued and the CIR could not render any decision against it, all proceedings before the CIR were null and void.

• Juridical Personality: Metran is not a corporation nor any of the juridical entities enumerated in Article 35 of the Civil Code. Rule 3, Section 1 provides that only natural or juridical persons may be parties in a civil action. Under the doctrine in Health vs. Steamer "San Nicolas" (7 Phil. 532), an action cannot be maintained against an entity that is neither a natural nor juridical person; it was absolutely indispensable under the law in force prior to 1898 to have as defendant some natural or juridical person, and no provision of the Code of Civil Procedure authorized an action against a non-juridical entity. Therefore, Metran could not be sued in the Court of Industrial Relations, and no award, order, or decision could be rendered against it. The CIR, while a "court of justice" within the meaning of Rule 2, Section 1 — as evidenced by its denomination as a "court" under Commonwealth Act No. 103, its powers and duties, its incidental powers, the provision for appeal to the Supreme Court, and its power to adopt rules of procedure and exercise such other powers as generally pertain to a court of justice — could not exercise jurisdiction over a party incapable of being sued.

• State Immunity: Metran is an office created by Executive Order No. 59, operating under the direct supervision and control of the Department of Public Works and Communications, as admitted by all parties. Being not a juridical person, any suit against it would in practice be a suit against the government itself, of which Metran is a mere office or agency. Any award, order, or decision granting the Union's demands, if executed, would necessarily operate against the government, which is the entity actually rendering the services through its office. This case is different from government corporations such as the Philippine National Bank, National Development Company, and the Manila Hotel, which have been duly incorporated under the Corporation Law or special charters, one of whose powers is "to sue and be sued in any court" (Corporation Law, Section 13[a]), and which actually engage in business. In rendering the services here involved, the government has never engaged in business nor intends to do so. The well-settled rule is that the government cannot be sued without its consent (Merritt vs. Government of the Philippine Islands, 34 Phil. 311), and no consent was shown. This is not a case governed by Act No. 3083, which specifies instances where the government has consented to be sued (Compaña General de Tabacos de Filipinas vs. Government of the Philippine Islands, 45 Phil. 663). The Manila Hotel case relied upon by the CIR is inapplicable because Metran is not a corporation or any kind of juridical person. It would be sophistical to say that a suit against a government office is not a suit against the government on the ground that the prohibition covers only suits against the government as a whole; the analogy of a man being attacked when a blow is inflicted upon any part of his body demonstrates the fallacy of such reasoning. The immunity is grounded upon the sovereignty of the people and the necessity of protecting governmental functions from being harassed by private suits.

• CIR Jurisdiction: Since Metran could not be sued and the CIR could not render any decision, judgment, award, or order against it, all proceedings before the CIR were null and void. The case of Salgado vs. Ramos (64 Phil. 724, 727) was cited as analogous, where a claim against the Director of Lands was held to be juridically against the government. The CIR's order of November 7, 1946, and its resolution of December 3, 1946, were nullified, and the CIR was enjoined from taking further action inconsistent with the decision. The Court treated the instant proceedings as having been instituted by the government itself, since Metran is a mere office or agency without juridical personality, incapable of being sued but capable of suing under Rule 3, Section 1. The real party in interest was the government, and applying the principle that "the law considers that as done which ought to have been done," the petition was entertained notwithstanding the procedural defect.

• State Immunity from Suit — The government cannot be sued in its own courts without its consent. This immunity extends to suits against unincorporated government offices or agencies without juridical personality, because any suit against such an office is in effect a suit against the government itself. The doctrine does not apply to government corporations duly incorporated under the Corporation Law or special charters, which possess the power to sue and be sued and which actually engage in business. The immunity is derived from the sovereignty of the people, who have freely created a representative government and surrendered certain private rights in favor of higher collective interests, and is grounded upon the necessity of protecting the performance of governmental and public functions from being harassed by private suits.

• Juridical Personality as Requisite for Party Capacity — Only natural or juridical persons may be parties in a civil action (Rule 3, Section 1). An entity that is neither a natural nor juridical person cannot be sued, and no action can be maintained against it. An unincorporated government office created by executive order lacks juridical personality under Article 35 of the Civil Code and therefore cannot be named as a party defendant.

• Distinction Between Government Corporations and Unincorporated Government Offices — Government corporations such as the Philippine National Bank, National Development Company, and the Manila Hotel have been duly incorporated under the Corporation Law or special charters and possess the power "to sue and be sued in any court" (Corporation Law, Section 13[a]); they actually engage in business. Unincorporated government offices, by contrast, lack juridical personality, do not engage in business, and any suit against them operates against the government itself, triggering the doctrine of state immunity.

• "The said office not being a juridical person, any suit, action or proceeding against it, if it were to produce any effect, would in practice be a suit, action or proceeding against the Government itself, of which the said Metropolitan Transportation Service (Metran) is a mere office or agency." — This passage states the core ratio decidendi: a suit against an unincorporated government office without juridical personality is in effect a suit against the government.

• "The case is different from those of the so-called government corporations, such as the Philippine National Bank, National Development Company, the Manila Hotel, etc., which have been duly incorporated under our corporation law or special charters, one of whose powers is 'to sue and be sued in any court' (Corporation Law, section 13 [a]), and which actually engage in business; while in rendering the services and performing the activities here involved the Government has never engaged in business nor intends to do so." — This passage articulates the distinction between suable government corporations and immune unincorporated government offices, a distinction frequently invoked in later state-immunity jurisprudence.

• "It would be sophistical to say that the suit or action against the said office or agency of the government is not a suit or action against the government itself, upon the ground that the prohibition only covers suits against the government as a whole." — This passage rejects the argument that state immunity applies only to suits against the government as a whole and not to suits against its component offices or agencies.

• Health vs. Steamer "San Nicolas," 7 Phil. 532 — Applied as controlling doctrine that an action cannot be maintained against an entity that is neither a natural nor juridical person, establishing that a defendant must be a natural or juridical person.
• Merritt vs. Government of the Philippine Islands, 34 Phil. 311 — Cited as the foundational authority for the well-settled rule that the government cannot be sued without its consent.
• Compaña General de Tabacos de Filipinas vs. Government of the Philippine Islands, 45 Phil. 663 — Cited for the proposition that Act No. 3083 specifies the instances where the government has given its consent to be sued, and this case does not fall under those instances.
• Salgado vs. Ramos, 64 Phil. 724 — Followed as an analogous case where a claim against the Director of Lands was held to be juridically against the government, the Director being a mere agent.
• Manila Hotel case (Justice Ozaeta) — Distinguished; relied upon by the CIR but found inapplicable because Metran is not a corporation or juridical person, unlike the Manila Hotel which was part of a semi-governmental corporation.

• Article 35, Civil Code — Enumerates juridical entities; Metran does not fall under any category, confirming its lack of juridical personality.
• Rule 3, Section 1, Rules of Court — Provides that only natural or juridical persons may be parties in a civil action; applied to hold that Metran cannot be sued as a party.
• Rule 2, Section 1, Rules of Court — Defines "action" as an ordinary suit in a court of justice; used to determine that the CIR is a court of justice within the meaning of the Rules.
• Commonwealth Act No. 103, as amended — Creates the Court of Industrial Relations; Section 1 denominates it as a "court," Section 20 confers powers pertaining to a court of justice, and Chapter IV provides for appeal to the Supreme Court. Used to establish that the CIR is a court of justice.
• Executive Order No. 59 — Created Metran as an office under the Department of Public Works and Communications; central to the finding that Metran is a mere government office without juridical personality.
• Section 13(a), Corporation Law — Grants corporations the power to sue and be sued in any court; distinguished as applicable to government corporations but not to Metran.
• Act No. 3083 — Specifies instances where the government has consented to be sued; held inapplicable to the present case.

Moran, C.J., Paras, Feria, Pablo, Bengzon, Hontiveros, Padilla, and Tuason, JJ., concurred.

• Perfecto, J. — Argued that Metran, as a mere office or agency, is not the "sovereign" or "the state" and cannot claim immunity from suit. Sovereignty resides in the people, not in any individual office. No officer or agency of government is above the law, and everybody subject to the law is amenable to suit. The U.S. authorities invoked by petitioner refer to the government as a whole, not to individual offices. Merritt vs. Government and Compaña vs. Government do not support petitioner's theory because they refer to the government as a whole. Denying the CIR's jurisdiction would deprive government laborers of fundamental constitutional rights and could drive them to strikes, picketing, or violence. The petition should be denied and the CIR should be allowed to proceed to trial and final decision.

• Briones, M. (J.) — Argued in Spanish that the CIR has jurisdiction and the Manila Hotel case is applicable by analogy. When the government operates public utilities through an agency created by executive order, that agency has sufficient personality to be subject to regulation by the Public Service Commission and the CIR without need of prior government consent. The Constitution (Article XIII, Section 6) authorizes the state to establish and operate industries and means of transportation. When the government intervenes in the operation of public utilities, even without profit motive as in Metran's case, it should be treated like any private entity; otherwise it would enjoy unjust advantages over private enterprises and its laborers would be deprived of the protection of industrial relations laws. Metran is also in estoppel because it voluntarily applied for affiliation with the National Labor Union through its interim General Manager, implying voluntary submission to CIR jurisdiction. The majority decision constitutes a regression in social and industrial legislation.