5.

DEPARTMENT OF FOREIGN AFFAIRS, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR ARBITER NIEVES
V. DE CASTRO and JOSE C. MAGNAYI, respondents.

The questions raised in the petition for certiorari are a few coincidental matters relative to the
diplomatic immunity extended to the Asian Development Bank ("ADB").

FACTS:

Private respondent NLRC initiated a case against for an alleged illegal dismissal by ADB and the
latter's violation of the "labor-only" contracting law. Two summonses were served, one sent
directly to the ADB and the other through the Department of Foreign Affairs (DFA), both with a
copy of the complaint.

Forthwith, the ADB and the DFA notified respondent Labor Arbiter that the ADB, as well as its
President and Officers, were covered by an immunity from legal process except for borrowings,
guaranties or the sale of securities pursuant to Article 50(1) and Article 55 of the Agreement
Establishing the Asian Development Bank (the "Charter") in relation to Section 5 and Section 44
of the Agreement Between The Bank And The Government Of The Philippines Regarding The
Bank's Headquarters (the "Headquarters Agreement").

The Labor Arbiter took cognizance of the complaint on the impression that the ADB had waived
its diplomatic immunity from suit and rendered his decision declaring the complainant as a
regular employee of respondent ADB and his termination was illegal.

The ADB did not appeal the decision but instead, the DFA referred the matter to the National
Labor Relations Commission seeking a formal vacation of the void judgment. Dissatisfied by the
NLRC’s response, the DFA lodged the instant petition for certiorari.

ISSUES:

1. Whether ADB is immune from suit.

2. Whether by entering into service contracts with different private companies, ADB has
descended to the level of an ordinary party to a commercial transaction giving rise to a waiver of
its immunity from suit.

HELD:

1. Under the Charter and Headquarters Agreement, the ADB enjoys immunity from legal
process of every form, except in the specified cases of borrowing and guarantee operations,
as well as the purchase, sale and underwriting of securities. The Bank’s officers, on their
part, enjoy immunity in respect of all acts performed by them in their official capacity. The
Charter and the Headquarters Agreement granting these immunities and privileges are treaty
covenants and commitments voluntarily assumed by the Philippine government which must be
respected.
  
Being an international organization that has been extended a diplomatic status, the ADB is
independent of the municipal law. "One of the basic immunities of an international
organization is immunity from local jurisdiction, i.e., that it is immune from the legal writs and
processes issued by the tribunals of the country where it is found.  The obvious reason for this is
that the subjection of such an organization to the authority of the local courts would afford a
convenient medium thru which the host government may interfere in their operations or even
influence or control its policies and decisions of the organization; besides, such subjection to
local jurisdiction would impair the capacity of such body to discharge its responsibilities
impartially on behalf of its member-states."

2.  No.

The ADB didn't descend to the level of an ordinary party to a commercial transaction, which
should have constituted a waiver of its immunity from suit, by entering into service contracts
with different private companies. “There are two conflicting concepts of sovereign immunity,
each widely held and firmly established. According to the classical or absolute theory, a
sovereign cannot, without its consent, be made a respondent in the Courts of another sovereign.
According to the newer or restrictive theory, the immunity of the sovereign is recognized
only with regard to public acts or acts jure imperii of a state, but not with regard to private
act or acts jure gestionis.

 “Certainly, the mere entering into a contract by a foreign state with a private party cannot be the
ultimate test. Such an act can only be the start of the inquiry. The logical question is whether the
foreign state is engaged in the activity in the regular course of business. If the foreign state is not
engaged regularly in a business or trade, the particular act or transaction must then be tested by
its nature. If the act is in pursuit of a sovereign activity, or an incident thereof, then it is an act
jure imperii, especially when it is not undertaken for gain or profit.”

The service contracts referred to by private respondent have not been intended by the ADB for
profit or gain but are official acts over which a waiver of immunity would not attach.

Petition for certiorari is GRANTED, and the decision of the Labor Arbiter, dated 31 August
1993 is VACATED for being NULL AND VOID.  
12/14. E. MERRITT, plaintiff-appellant, vs. GOVERNMENT OF THE PHILIPPINE
ISLANDS, defendant-appellant.

Crossfield and O'Brien for plaintiff.

Attorney-General Avanceña for defendant..

FACTS:

Plaintiff Merritt Merritt was riding a motorcycle along Padre Faura Street when he was bumped
by the ambulance of the General Hospital. He sustained severe injuries rendering him unable to
return to work.

The legislature later enacted Act 2457* authorizing Merritt to file a suit against the Government
in order to fix the responsibility for the collision between his motorcycle and the ambulance of
the General Hospital, and to determine the amount of the damages, if any, to which he is entitled.
After trial, the lower court held that the collision was due to the negligence of the driver of the
ambulance. It then determined the amount of damages and ordered the government to pay the
same. 

 (*Act No. 2457 was enacted in his favor which reads: "An act authorizing E. Merritt to bring suit against
the Government of the Philippine Islands and authorizing the Attorney-General of said Islands to appear
in said suit. "Whereas a claim has been filed against the Government of the Philippine Islands by Mr. E.
Merritt, of Manila, for damages resulting from a collision between his motorcycle and the ambulance of
the General Hospital on March twenty-fifth, nineteen hundred and thirteen; 
 
"Whereas it is not known who is responsible for the accident nor is it possible to determine the amount of
damages, if any, to which the claimant is entitled; and 
"Whereas the Director of Public Works and the Attorney-General recommend that an act be passed by
the Legislature authorizing Mr. E. Merritt to bring suit in the courts against the Government, in order
that said questions may be decided: Now, therefore, 
 
"By authority of the United States, be it enacted by the Philippine Legislature, that: 

"SECTION 1. E. Merritt is hereby authorized to bring suit in the Court of First Instance of the city of
Manila against the Government of the Philippine Islands in order to fix the responsibility for the collision
between his motorcycle and the ambulance of the General Hospital, and to determine the amount of the
damages, if any, to which Mr. E. Merritt is entitled on account of said collision, and the attorney-General
of the Philippine Islands is hereby authorized and directed to appear at the trial on the behalf of the
Government of said Islands, to defend said Government at the same. 
 
"SEC. 2. This Act shall take effect on its passage. 
Merritt vs. Government of the Philippine Islands
"Enacted, February 3, 1915.")
 
ISSUE:
Whether the State is immune from suit.
 

HELD:

The accident was due to the negligence of the ambulance’s chauffeur. As the negligence was
committed by an agent or employee of the government involving tort, the inquiry arises whether
the government is legally liable for damages.
 
The State is not liable for the torts committed by its officers or agents whom it employs,
except when expressly made so by legislative enactment.
The government does not undertake to guarantee to any person the fidelity of the officers or
agents whom it employs since that would involve it in all its operations in endless
embarrassments, difficulties and losses, which would be subversive of the public interest. By
consenting to be sued, a state simply waives its immunity from suit.

It does not thereby concede its liability or create any cause of action in his favor, or extend his
liability to any cause not previously recognized. It merely gives a remedy to enforce a
preexisting liability and submits itself to the jurisdiction of the court, subject to its right to
interpose any lawful defense.

The State is not responsible for the damages suffered by private individuals in consequence
of acts performed by its employees in the discharge of the functions pertaining to their
office, because neither fault nor negligence can be presumed on the part of the state in the
organization of branches in the public service and in the appointment of its agents.
 
The responsibility of the State is limited to that which it contracts through a special agent, duly
empowered by a definite order or commission to perform some act or charged with some definite
purpose which gives rise to the claim.
20. MOST REV. PEDRO ARIGO, et. al., Petitioners, vs. SCOTT H. SWIFT, et. al.,
Respondents.

FACTS:
In 1988, Tubbataha was declared a National Marine Park by virtue of Proclamation No. 306
issued by President Corazon C. Aquino. In 1993, Tubbataha was inscribed by the United Nations
Educational Scientific and Cultural Organization (UNESCO) as a World Heritage Site.

On April 6, 2010, Congress passed Republic Act (R.A.) No. 10067, otherwise known as the
“Tubbataha Reefs Natural Park (TRNP) Act of 2009” “to ensure the protection and conservation
of the globally significant economic, biological, sociocultural, educational and scientific values
of the Tubbataha Reefs into perpetuity.”

The USS Guardian is an Avenger-class mine countermeasures ship of the US Navy.

In December 2012, the US Embassy in the Philippines requested diplomatic clearance for the
said vessel “to enter and exit the territorial waters of the Philippines and to arrive at the port of
Subic Bay for the purpose of routine ship replenishment, maintenance, and crew liberty.”

On January 15, 2013, the USS Guardian departed Subic Bay for its next port of call in Makassar,
Indonesia. On January 17, 2013 at 2:20 a.m. while transiting the Sulu Sea, the ship ran aground
on the northwest side of South Shoal of the Tubbataha Reefs, about 80 miles east-southeast of
Palawan. No one was injured in the incident, and there have been no reports of leaking fuel or
oil.

On January 20, 2013, U.S. 7th Fleet Commander, Vice Admiral Scott Swift, expressed regret for
the incident in a press statement. Likewise, US Ambassador to the Philippines Harry K. Thomas,
Jr., in a meeting at the Department of Foreign Affairs (DFA) on February 4, “reiterated his
regrets over the grounding incident and assured Foreign Affairs Secretazy Albert F. del Rosario
that the United States will provide appropriate compensation for damage to the reef caused by
the ship.”

On April 17, 2013, petitioners on their behalf and in representation of their respective
sector/organization and others, including minors or generations yet unborn, filed a petition for
the issuance of a Writ of Kalikasan with prayer for the issuance of a Temporary Environmental
Protection Order (TEPO) under Rule 7 of A.M. No. 09-6-8SC, otherwise known as the Rules of
Procedure for Environmental Cases (Rules).
Petitioners filed the petition against SCOTT H. SWIFT in his capacity as Commander of the US.
7th Fleet and MARK A. RICE in his capacity as Commanding Officer of the USS Guardian.
They were the US respondents. The Philippine respondents, meanwhile, included President
Aquino, the Secretary of the DFA, the Secretary of DND, Secretary of DENR, Commandant of
Philippines Coast Guard, et al.

Specifically, petitioners cite the following violations committed by US respondents under R.A.
No. 10067: unauthorized entry (Section 19); non-payment of conservation fees (Section 21);
obstruction of law enforcement officer (Section 30); damages to the reef (Section 20); and
destroying and disturbing resources (Section 26[g]).

Furthermore, petitioners assail certain provisions of the Visiting Forces Agreement (VFA) which
they want the SC to nullify for being unconstitutional.

Only the Philippine respondents filed their comment to the petition. The US respondents did not
submit any pleading or manifestation in this case.

ISSUE:

Whether the waiver of immunity from suit under VFA applies in this case.
 

HELD:

No.

The waiver of State immunity under the VF A pertains only to criminal jurisdiction and
not to special civil actions such as the present petition for issuance of a writ of Kalikasan. In
fact, it can be inferred from Section 17, Rule 7 of the Rules that a criminal case against a person
charged with a violation of an environmental law is to be filed separately:
SEC. 17. Institution of separate actions.-The filing of a petition for the issuance of the writ of kalikasan shall not
preclude the filing of separate civil, criminal or administrative actions. In any case, it is our considered view that a
ruling on the application or nonapplication of criminal jurisdiction provisions of the VFA to US personnel who may
be found responsible for the grounding of the USS Guardian, would be premature and beyond the province of a
petition for a writ of Kalikasan.

The Court considered a view that a ruling on the application or non-application of criminal
jurisdiction provisions of the VFA to US personnel who may be found responsible for the
grounding of the USS Guardian, would be premature and beyond the province of a petition for a
writ of Kalikasan.
               
The Court also found  unnecessary at this point to determine whether such waiver of State
immunity is indeed absolute. In the same vein, we cannot grant damages which have resulted
from the violation of environmental laws. The Rules allows the recovery of damages, including
the collection of administrative fines under R.A. No. 10067, in a separate civil suit or that
deemed instituted with the criminal action charging the same violation of an environmental law.