G.R. No. 113191 September 18, 1996
DEPARTMENT OF FOREIGN AFFAIRS, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR ARBITER NIEVES V. DE CASTRO and JOSE C. MAGNAYI, respondents.

FACTS

Private respondent Jose C. Magnayi filed a complaint for illegal dismissal and violation of labor laws against the Asian Development Bank (ADB). The ADB and the Department of Foreign Affairs (DFA) promptly notified the Labor Arbiter that the ADB enjoyed immunity from legal process under its Charter and the Headquarters Agreement with the Philippine Government, except in specific, enumerated cases not applicable here. Despite this notification, the Labor Arbiter proceeded, took cognizance of the complaint, and eventually rendered a decision declaring Magnayi a regular employee and ordering his reinstatement with backwages. The ADB did not appeal this decision. Instead, the DFA referred the matter to the NLRC, seeking a formal vacation of the judgment. The NLRC Chairman declined, stating the decision could only be challenged via appeal or a petition for certiorari. The DFA thus filed the instant petition for certiorari.

ISSUE

Whether the Labor Arbiter acted without or in excess of jurisdiction in taking cognizance of and deciding the complaint against the ADB, which enjoys immunity from suit.

RULING

Yes. The Supreme Court granted the petition and vacated the Labor Arbiter’s decision as a nullity. The ADB’s immunity from suit is firmly established under international agreements to which the Philippines is a party. Article 50(1) of the ADB Charter and Section 5 of the Headquarters Agreement expressly grant the Bank immunity from every form of legal process, with exceptions only for cases arising from its borrowing or financial guarantee functions. The labor complaint does not fall under these exceptions. This immunity is a settled principle, recognized in Philippine jurisprudence such as World Health Organization v. Aquino. The Court emphasized that the determination of whether an entity is entitled to diplomatic immunity is a political question, and the DFA’s affirmation of such immunity is generally conclusive. By proceeding with the case despite the ADB’s valid and timely invocation of its immunity, the Labor Arbiter acted without jurisdiction. An order or decision issued by a tribunal without jurisdiction over the person of the defendant or the subject matter is void. Consequently, the extraordinary remedy of certiorari is appropriate to annul a void judgment. The temporary restraining order was made permanent.