DEPARTMENT OF FOREIGN AFFAIRS VS.

NATIONAL LABOR RELATIONS

BOARD
G.R. No. 113191, 1996 September 18

FACTS

On January 27, 1993, private respondent initiated NLRC-NCR Case for his alleged illegal
dismissal by Asian Development Bank and the latter's violation of the "labor-only" contracting
law. Two summonses were served, one to the ADB and the other through the DFA. Forthwith,
the ADB and the DFA notified respondent Labor Arbiter that the ADB, as well as its President
and Office, were covered by an immunity from legal processes except for borrowing, guaranties
or the sale of securities pursuant to the Agreement Establishing the Asian Development Bank
(the "Charter") and the Agreement Between the Bank and the Government of the Philippines
regarding the Banker'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. The ADB did not appeal the decision. Instead, the DFA referred the matter to the
NLRC; in its referral, the DFA sought a "formal vacation of the void jugdgment".

ISSUES

1. Whether the ADB is correct in invoking its immunity from suit

2. Whether the ADB has descended to the level of an ordinary party to a commercial transaction
giving rise to a waiver of its immunity from suit

3. Whether the DFA has the legal standing

RULING
1. Yes. The stipulations of both the Charter and the Headquarter's Agreement establish that,
except in the specified cases of borrowing and guarantee operations, as well as the purchase, sale
and underwriting of securities, the ADB enjoys immunity from legal process of every form. The
Bank's officers, on their part, enjoy immunity in respect of all acts performed by them in their
official capacity. The granting of these immunities and privileges are treaty covenants ans
commitments voluntarily assumed by the Philippine Government. Being an international
organization that has been extended diplomatic status, the ADB is independent of the municipal
law.
2. No. 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 attack.
3. Yes. The DFA's function includes the determination of persons and institutions covered by
diplomatic immunities, a determination which, when challenged, entitles it to seek relief from the
court so as not to seriously impair the conduct of the country's foreign relations. The DFA must
be allowed to plead its case whenever necessary or advisable to enable it to help to keep the
credibility of the Philippine government before the international community.