You are on page 1of 15

WALTER UPRIGHT, PLAINTIFF, v.

MERCURY BUSINESS MACHINES CO.,


INC., DEFENDANT
Aug 1
This is an action brought by a plaintiff assignee on a trade acceptance drawn by its assignor on itself and accepted by
defendant, representing a balance due for machinery sold to defendant. The complaint alleges that the assignor was a
corporation organized and existing under the laws of West Germany, having its principal place of business in West
Berlin, Republic of West Germany. The motion at bar seeks an order under subdivisions 1 and 2 of rule 107 of the
Rules of Civil Practice dismissing the complaint on the grounds that the court does not have jurisdiction of the
subject matter of the action and/or plaintiff does not have legal capacity to sue.

The basis of the motion is a contention that the plaintiff’s assignor is a State-controlled enterprise of the German
Democratic Republic. In support thereof, the defendant submits a copy of a communication from the Chief of the
Economic Affairs section of the United States Mission in Berlin to the Department of State. Plaintiff’s affidavits in
opposition state that it has been advised by its assignor that it was founded by residents of the German Democratic
Republic under the Limited Liabilities Company Law of 1892 and its founding is permitted in the German
Democratic Republic; that it has no office in West Berlin but has concluded contracts with firms in that city and in
West Germany; that the negotiations with defendant were carried on in West Germany. The matter was sent to an
Official Referee to hear and report with his recommendation on this issue.

It has now been conceded that the said assignor was not a West German corporation but rather an East German
corporation. Upon such concession the court cannot recognize the existence of a juridical creature of a government
we do not recognize. The court will take judicial notice that the German Democratic Republic is not recognized by
our Government. However, even though plaintiff’s assignor would have no right to sue in this court as a corporation
since the recognition of that legal entity is barred by the foreign policy of the United States Government,
nevertheless it cannot be denied that some organization or group of persons does exist and entered into a commercial
transaction with the defendant. If it were clear that this group of people consisted of private citizens unconnected
with the unrecognized government, the court is of the opinion that no further question would exist. The foreign
policy of the United States Government does not require us to deny that there are people residing in and doing
business in a certain geographical area. No prohibition or restriction seems to have been imposed on trading in the
items which are the basis of this cause of action. Where, as here, it has received the benefits of the commercial
transaction, it would be inequitable to permit defendant to retain the fruits thereof without compensation. The point
made by defendant that it would not be able to enforce a proposed counterclaim against plaintiff’s assignor in an
East German court is not well taken. It does have an opportunity to press any claim it may deem advisable in
connection with the subject transaction in this court.
However, overriding foreign policy considerations may make necessary a denial of access to our courts in the event
it is determined that the defendant dealt in some form with the unrecognized Government of the German Democratic
Republic.

If plaintiff’s assignor is as a matter of fact wholly owned by the so-called German Democratic Republic, it would,
by that fact, have no capacity to sue in our court, regardless of its organization. Whether this be so still remains to be
determined, since the proof submitted on this issue is inconclusive.

Plaintiff’s contention that a claim of incapacity to sue cannot be set up against him, despite the refusal of
recognition, in that he is an American citizen and a resident of the State of New York, is without merit. He can have
no greater rights than his assignor.

The subject matter of the contentions urged in support of dismissal under both subdivisions 1 and 2 of rule 107 of
the Rules of Civil Practice appears to be identical. It is not that the court does not have jurisdiction of the subject
matter, but the question is whether the assignor has capacity to sue and the court will entertain the action.

It appears from defendant’s letter of December 9, 1959, that the sole issue tendered to the Official Referee was the
state of organization of the assignor corporation. It is now agreed that it is an East German corporation. Accordingly,
the motion to dismiss is denied with leave to defendant to raise the matter by defense in its answer, unless the parties
agree to a prior trial of the issues as herein stated, in which event an order will be settled.

Disposition

Accordingly, the motion to dismiss is denied with leave to defendant to raise the matter by defense in its answer,
unless the parties agree to a prior trial of the issues as herein stated, in which event an order will be settled.

Tinoco Arbitration Case (Great Britain vs.


Costa Rica) (1923)
Aug 1

Background:
 1917 – Government of Costa Rica [President Alfredo Gonzales] overthrown by Federico Tinoco.
 Tinoco assumed power & established new constitution
 During his tenure, he:
 Granted certain concession to search for oil to a British company
 Passed legislation issuing certain new currencies, and British banks [in the course of business] became holders
of much of this currency
 1919 – Tinoco retired, left the country – Government fall.
 Old constitution restored and elections were held.
 August 22, 1922, restored government passed Acts nullifying the currency laws it had made
 Consequence: Invalidated all transactions involved
 The restored government is a signatory of the treaty of arbitration.
The Claim:
 Brought by Great Britain on behalf of two British Corporations:
 Royal Bank of Canada
 Central Costa Rica Petroleum Company
 Royal Bank of Canada claimed:
 Banco Internacional of Costa Rica and the Government of Costa Rica are indebted to it proven by the holding
of 998 1000 colones bills
 Central Costa Rica Petroleum Company [CCRPC] claimed:
 It owns the rights to explore and exploit petroleum reserves in Costa Rica
 This is based on a grant issued by Tinoco
The Defense:
 Great Britain:
 On behalf of its nationals, legislation passed invalid
 Restored g’ment should recognize the concessions given to CCRPC and the validity of Tinoco’s currency held
by the Royal Bank of Canada
 During the period in question, the Tinoco Government had been the de facto and de jure government[2]
 Supported by the fact that the government was not opposed in any significant manner
 Thus giving the government legitimacy
 All its acts were valid and its successor has no right to repudiate[annul] them
 Costa Rica:
 Objected. Claimed that any acts carried out by the government were void because the Tinoco regime violated
the Costa Rican constitution.
 Because Great Britain did not recognize the Tinoco Government as legitimate, it cannot then turn around and
claim agreements with an illegitimate government as binding.
Held:
 Rejected Costa Rica arguments
 While the failure on the part of Great Britain to recognize Tinoco government was evidence to be taken into
account in deciding on the status of that government, it was not decisive as the status of the government had to be
determined in the light of all evidence
 In fact, the Tinoco g’ment had been a de facto g’ment during the period of its existence
 For the two years while in power, the Tinoco government served its role in a peaceful environment
 No objections, no revolution and no power dispute.
 The court then holds that “the Tinoco government was an actual sovereign government.”
 The court finds in favor of the Royal Bank of Canada, but finds the petroleum concession to be a violation of
the 1917 Constitution (which means Tinoco could have nullified the agreement as well).
Courts arguments which is significance to the aspect of International law:
 Scholarly writing: Dr. John Basset Moore: “Changes in the government or the international policy of a state do
not as a rule affect its position in international law.”
 States may change between forms of government without ceasing to be that state in the eyes of international law,
or in terms of its international obligations.
 “The principle of the continuity of states” = “state is bound by engagements entered into by governments that
have ceased to exist; the restored government is generally liable for the acts of the usurper.”
 Republic of the Philippines
SUPREME COURT
Manila
 SECOND DIVISION

G.R. No. 85750 September 28, 1990

INTERNATIONAL CATHOLIC IMMIGRATION COMMISSION, petitioner


vs
HON. PURA CALLEJA IN HER CAPACITY AS DIRECTOR OF THE BUREAU OF LABOR
RELATIONS AND TRADE UNIONS OF THE PHILIPPINES AND ALLIED SERVICES (TUPAS)
WFTU respondents.

G.R. No. 89331 September 28, 1990

KAPISANAN NG MANGGAGAWA AT TAC SA IRRI-ORGANIZED LABOR ASSOCIATION IN


LINE INDUSTRIES AND AGRICULTURE, petitioner,
vs
SECRETARY OF LABOR AND EMPLOYMENT AND INTERNATIONAL RICE RESEARCH
INSTITUTE, INC.,respondents.

Araullo, Zambrano, Gruba, Chua Law Firm for petitioner in 85750.

Dominguez, Armamento, Cabana & Associates for petitioner in G.R. No. 89331.

Jimenez & Associates for IRRI.

Alfredo L. Bentulan for private respondent in 85750.

MELENCIO-HERRERA, J.:

Consolidated on 11 December 1989, these two cases involve the validity of the claim of
immunity by the International Catholic Migration Commission (ICMC) and the International Rice
Research Institute, Inc. (IRRI) from the application of Philippine labor laws.

Facts and Issues

A. G.R. No. 85750 — the International Catholic Migration Commission (ICMC) Case.
As an aftermath of the Vietnam War, the plight of Vietnamese refugees fleeing from South
Vietnam's communist rule confronted the international community.

In response to this crisis, on 23 February 1981, an Agreement was forged between the
Philippine Government and the United Nations High Commissioner for Refugees whereby an
operating center for processing Indo-Chinese refugees for eventual resettlement to other
countries was to be established in Bataan (Annex "A", Rollo, pp. 22-32).

ICMC was one of those accredited by the Philippine Government to operate the refugee
processing center in Morong, Bataan. It was incorporated in New York, USA, at the request of
the Holy See, as a non-profit agency involved in international humanitarian and voluntary work. It
is duly registered with the United Nations Economic and Social Council (ECOSOC) and enjoys
Consultative Status, Category II. As an international organization rendering voluntary and
humanitarian services in the Philippines, its activities are parallel to those of the International
Committee for Migration (ICM) and the International Committee of the Red Cross (ICRC) [DOLE
Records of BLR Case No. A-2-62-87, ICMC v. Calleja, Vol. 1].

On 14 July 1986, Trade Unions of the Philippines and Allied Services (TUPAS) filed with the then
Ministry of Labor and Employment a Petition for Certification Election among the rank and file
members employed by ICMC The latter opposed the petition on the ground that it is an
international organization registered with the United Nations and, hence, enjoys diplomatic
immunity.

On 5 February 1987, Med-Arbiter Anastacio L. Bactin sustained ICMC and dismissed the petition
for lack of jurisdiction.

On appeal by TUPAS, Director Pura Calleja of the Bureau of Labor Relations (BLR), reversed
the Med-Arbiter's Decision and ordered the immediate conduct of a certification election. At that
time, ICMC's request for recognition as a specialized agency was still pending with the
Department of Foreign Affairs (DEFORAF).

Subsequently, however, on 15 July 1988, the Philippine Government, through the DEFORAF,
granted ICMC the status of a specialized agency with corresponding diplomatic privileges and
immunities, as evidenced by a Memorandum of Agreement between the Government and ICMC
(Annex "E", Petition, Rollo, pp. 41-43), infra.

ICMC then sought the immediate dismissal of the TUPAS Petition for Certification Election
invoking the immunity expressly granted but the same was denied by respondent BLR Director
who, again, ordered the immediate conduct of a pre-election conference. ICMC's two Motions for
Reconsideration were denied despite an opinion rendered by DEFORAF on 17 October 1988
that said BLR Order violated ICMC's diplomatic immunity.

Thus, on 24 November 1988, ICMC filed the present Petition for Certiorari with Preliminary
Injunction assailing the BLR Order.

On 28 November 1988, the Court issued a Temporary Restraining Order enjoining the holding of
the certification election.

On 10 January 1989, the DEFORAF, through its Legal Adviser, retired Justice Jorge C. Coquia
of the Court of Appeals, filed a Motion for Intervention alleging that, as the highest executive
department with the competence and authority to act on matters involving diplomatic immunity
and privileges, and tasked with the conduct of Philippine diplomatic and consular relations with
foreign governments and UN organizations, it has a legal interest in the outcome of this case.

Over the opposition of the Solicitor General, the Court allowed DEFORAF intervention.

On 12 July 1989, the Second Division gave due course to the ICMC Petition and required the
submittal of memoranda by the parties, which has been complied with.

As initially stated, the issue is whether or not the grant of diplomatic privileges and immunites to
ICMC extends to immunity from the application of Philippine labor laws.

ICMC sustains the affirmative of the proposition citing (1) its Memorandum of Agreement with the
Philippine Government giving it the status of a specialized agency, (infra); (2) the Convention on
the Privileges and Immunities of Specialized Agencies, adopted by the UN General Assembly on
21 November 1947 and concurred in by the Philippine Senate through Resolution No. 91 on 17
May 1949 (the Philippine Instrument of Ratification was signed by the President on 30 August
1949 and deposited with the UN on 20 March 1950) infra; and (3) Article II, Section 2 of the 1987
Constitution, which declares that the Philippines adopts the generally accepted principles of
international law as part of the law of the land.

Intervenor DEFORAF upholds ICMC'S claim of diplomatic immunity and seeks an affirmance of
the DEFORAF determination that the BLR Order for a certification election among the ICMC
employees is violative of the diplomatic immunity of said organization.

Respondent BLR Director, on the other hand, with whom the Solicitor General agrees, cites
State policy and Philippine labor laws to justify its assailed Order, particularly, Article II, Section
18 and Article III, Section 8 of the 1987 Constitution, infra; and Articles 243 and 246 of the Labor
Code, as amended, ibid. In addition, she contends that a certification election is not a litigation
but a mere investigation of a non-adversary, fact-finding character. It is not a suit against ICMC
its property, funds or assets, but is the sole concern of the workers themselves.

B. G.R. No. 89331 — (The International Rice Research Institute [IRRI] Case).

Before a Decision could be rendered in the ICMC Case, the Third Division, on 11 December
1989, resolved to consolidate G.R. No. 89331 pending before it with G.R. No. 85750, the lower-
numbered case pending with the Second Division, upon manifestation by the Solicitor General
that both cases involve similar issues.

The facts disclose that on 9 December 1959, the Philippine Government and the Ford and
Rockefeller Foundations signed a Memorandum of Understanding establishing the International
Rice Research Institute (IRRI) at Los Baños, Laguna. It was intended to be an autonomous,
philanthropic, tax-free, non-profit, non-stock organization designed to carry out the principal
objective of conducting "basic research on the rice plant, on all phases of rice production,
management, distribution and utilization with a view to attaining nutritive and economic
advantage or benefit for the people of Asia and other major rice-growing areas through
improvement in quality and quantity of rice."

Initially, IRRI was organized and registered with the Securities and Exchange Commission as a
private corporation subject to all laws and regulations. However, by virtue of Pres. Decree No.
1620, promulgated on 19 April 1979, IRRI was granted the status, prerogatives, privileges and
immunities of an international organization.
The Organized Labor Association in Line Industries and Agriculture (OLALIA), is a legitimate
labor organization with an existing local union, the Kapisanan ng Manggagawa at TAC sa IRRI
(Kapisanan, for short) in respondent IRRI.

On 20 April 1987, the Kapisanan filed a Petition for Direct Certification Election with Region IV,
Regional Office of the Department of Labor and Employment (DOLE).

IRRI opposed the petition invoking Pres. Decree No. 1620 conferring upon it the status of an
international organization and granting it immunity from all civil, criminal and administrative
proceedings under Philippine laws.

On 7 July 1987, Med-Arbiter Leonardo M. Garcia, upheld the opposition on the basis of Pres.
Decree No. 1620 and dismissed the Petition for Direct Certification.

On appeal, the BLR Director, who is the public respondent in the ICMC Case, set aside the Med-
Arbiter's Order and authorized the calling of a certification election among the rank-and-file
employees of IRRI. Said Director relied on Article 243 of the Labor Code, as amended, infra and
Article XIII, Section 3 of the 1987 Constitution, 1 and held that "the immunities and privileges
granted to IRRI do not include exemption from coverage of our Labor Laws." Reconsideration sought
by IRRI was denied.

On appeal, the Secretary of Labor, in a Resolution of 5 July 1989, set aside the BLR Director's
Order, dismissed the Petition for Certification Election, and held that the grant of specialized
agency status by the Philippine Government to the IRRI bars DOLE from assuming and
exercising jurisdiction over IRRI Said Resolution reads in part as follows:

Presidential Decree No. 1620 which grants to the IRRI the status, prerogatives, privileges and
immunities of an international organization is clear and explicit. It provides in categorical terms
that:

Art. 3 — The Institute shall enjoy immunity from any penal, civil and administrative proceedings,
except insofar as immunity has been expressly waived by the Director-General of the Institution
or his authorized representative.

Verily, unless and until the Institute expressly waives its immunity, no summons, subpoena,
orders, decisions or proceedings ordered by any court or administrative or quasi-judicial agency
are enforceable as against the Institute. In the case at bar there was no such waiver made by
the Director-General of the Institute. Indeed, the Institute, at the very first opportunity already
vehemently questioned the jurisdiction of this Department by filing an ex-parte motion to dismiss
the case.

Hence, the present Petition for Certiorari filed by Kapisanan alleging grave abuse of discretion
by respondent Secretary of Labor in upholding IRRI's diplomatic immunity.

The Third Division, to which the case was originally assigned, required the respondents to
comment on the petition. In a Manifestation filed on 4 August 1990, the Secretary of Labor
declared that it was "not adopting as his own" the decision of the BLR Director in the ICMC Case
as well as the Comment of the Solicitor General sustaining said Director. The last pleading was
filed by IRRI on 14 August 1990.

Instead of a Comment, the Solicitor General filed a Manifestation and Motion praying that he be
excused from filing a comment "it appearing that in the earlier case of International Catholic
Migration Commission v. Hon. Pura Calleja, G.R. No. 85750. the Office of the Solicitor General
had sustained the stand of Director Calleja on the very same issue now before it, which position
has been superseded by respondent Secretary of Labor in G.R. No. 89331," the present case.
The Court acceded to the Solicitor General's prayer.

The Court is now asked to rule upon whether or not the Secretary of Labor committed grave
abuse of discretion in dismissing the Petition for Certification Election filed by Kapisanan.

Kapisanan contends that Article 3 of Pres. Decree No. 1620 granting IRRI the status, privileges,
prerogatives and immunities of an international organization, invoked by the Secretary of Labor,
is unconstitutional in so far as it deprives the Filipino workers of their fundamental and
constitutional right to form trade unions for the purpose of collective bargaining as enshrined in
the 1987 Constitution.

A procedural issue is also raised. Kapisanan faults respondent Secretary of Labor for
entertaining IRRI'S appeal from the Order of the Director of the Bureau of Labor Relations
directing the holding of a certification election. Kapisanan contends that pursuant to Sections 7,
8, 9 and 10 of Rule V 2 of the Omnibus Rules Implementing the Labor Code, the Order of the BLR
Director had become final and unappeable and that, therefore, the Secretary of Labor had no more
jurisdiction over the said appeal.

On the other hand, in entertaining the appeal, the Secretary of Labor relied on Section 25 of
Rep. Act. No. 6715, which took effect on 21 March 1989, providing for the direct filing of appeal
from the Med-Arbiter to the Office of the Secretary of Labor and Employment instead of to the
Director of the Bureau of Labor Relations in cases involving certification election orders.

III

Findings in Both Cases.

There can be no question that diplomatic immunity has, in fact, been granted ICMC and IRRI.

Article II of the Memorandum of Agreement between the Philippine Government and ICMC
provides that ICMC shall have a status "similar to that of a specialized agency." Article III,
Sections 4 and 5 of the Convention on the Privileges and Immunities of Specialized Agencies,
adopted by the UN General Assembly on 21 November 1947 and concurred in by the Philippine
Senate through Resolution No. 19 on 17 May 1949, explicitly provides:

Art. III, Section 4. The specialized agencies, their property and assets, wherever located and by
whomsoever held, shall enjoy immunity from every form of legal process except insofar as in any
particular case they have expressly waived their immunity. It is, however, understood that no
waiver of immunity shall extend to any measure of execution.

Sec. 5. — The premises of the specialized agencies shall be inviolable. The property and assets
of the specialized agencies, wherever located and by whomsoever held shall be immune from
search, requisition, confiscation, expropriation and any other form of interference, whether by
executive, administrative, judicial or legislative action. (Emphasis supplied).

IRRI is similarly situated, Pres. Decree No. 1620, Article 3, is explicit in its grant of immunity,
thus:
Art. 3. Immunity from Legal Process. — The Institute shall enjoy immunity from any penal, civil
and administrative proceedings, except insofar as that immunity has been expressly waived by
the Director-General of the Institute or his authorized representatives.

Thus it is that the DEFORAF, through its Legal Adviser, sustained ICMC'S invocation of
immunity when in a Memorandum, dated 17 October 1988, it expressed the view that "the Order
of the Director of the Bureau of Labor Relations dated 21 September 1988 for the conduct of
Certification Election within ICMC violates the diplomatic immunity of the organization." Similarly,
in respect of IRRI, the DEFORAF speaking through The Acting Secretary of Foreign Affairs, Jose
D. Ingles, in a letter, dated 17 June 1987, to the Secretary of Labor, maintained that "IRRI enjoys
immunity from the jurisdiction of DOLE in this particular instance."

The foregoing opinions constitute a categorical recognition by the Executive Branch of the
Government that ICMC and IRRI enjoy immunities accorded to international organizations, which
determination has been held to be a political question conclusive upon the Courts in order not to
embarrass a political department of Government.

It is a recognized principle of international law and under our system of separation of powers that
diplomatic immunity is essentially a political question and courts should refuse to look beyond a
determination by the executive branch of the government, and where the plea of diplomatic
immunity is recognized and affirmed by the executive branch of the government as in the case at
bar, it is then the duty of the courts to accept the claim of immunity upon appropriate suggestion
by the principal law officer of the government . . . or other officer acting under his direction.
Hence, in adherence to the settled principle that courts may not so exercise their jurisdiction . . .
as to embarrass the executive arm of the government in conducting foreign relations, it is
accepted doctrine that in such cases the judicial department of (this) government follows the
action of the political branch and will not embarrass the latter by assuming an antagonistic
jurisdiction. 3

A brief look into the nature of international organizations and specialized agencies is in order.
The term "international organization" is generally used to describe an organization set up by
agreement between two or more states. 4 Under contemporary international law, such organizations
are endowed with some degree of international legal personality 5 such that they are capable of
exercising specific rights, duties and powers. 6 They are organized mainly as a means for conducting
general international business in which the member states have an interest. 7 The United Nations, for
instance, is an international organization dedicated to the propagation of world peace.

"Specialized agencies" are international organizations having functions in particular fields. The
term appears in Articles 57 8 and 63 9 of the Charter of the United Nations:

The Charter, while it invests the United Nations with the general task of promoting progress and
international cooperation in economic, social, health, cultural, educational and related matters,
contemplates that these tasks will be mainly fulfilled not by organs of the United Nations itself but
by autonomous international organizations established by inter-governmental agreements
outside the United Nations. There are now many such international agencies having functions in
many different fields, e.g. in posts, telecommunications, railways, canals, rivers, sea transport,
civil aviation, meteorology, atomic energy, finance, trade, education and culture, health and
refugees. Some are virtually world-wide in their membership, some are regional or otherwise
limited in their membership. The Charter provides that those agencies which have "wide
international responsibilities" are to be brought into relationship with the United Nations by
agreements entered into between them and the Economic and Social Council, are then to be
known as "specialized agencies." 10
The rapid growth of international organizations under contemporary international law has paved
the way for the development of the concept of international immunities.

It is now usual for the constitutions of international organizations to contain provisions conferring
certain immunities on the organizations themselves, representatives of their member states and
persons acting on behalf of the organizations. A series of conventions, agreements and
protocols defining the immunities of various international organizations in relation to their
members generally are now widely in force; . . . 11

There are basically three propositions underlying the grant of international immunities to
international organizations. These principles, contained in the ILO Memorandum are stated thus:
1) international institutions should have a status which protects them against control or
interference by any one government in the performance of functions for the effective discharge
of which they are responsible to democratically constituted international bodies in which all the
nations concerned are represented; 2) no country should derive any national financial advantage
by levying fiscal charges on common international funds; and 3) the international organization
should, as a collectivity of States members, be accorded the facilities for the conduct of its official
business customarily extended to each other by its individual member States. 12 The theory
behind all three propositions is said to be essentially institutional in character. "It is not concerned with
the status, dignity or privileges of individuals, but with the elements of functional independence
necessary to free international institutions from national control and to enable them to discharge their
responsibilities impartially on behalf of all their members. 13 The raison d'etre for these immunities is
the assurance of unimpeded performance of their functions by the agencies concerned.

The grant of immunity from local jurisdiction to ICMC and IRRI is clearly necessitated by their
international character and respective purposes. The objective is to avoid the danger of partiality
and interference by the host country in their internal workings. The exercise of jurisdiction by the
Department of Labor in these instances would defeat the very purpose of immunity, which is to
shield the affairs of international organizations, in accordance with international practice, from
political pressure or control by the host country to the prejudice of member States of the
organization, and to ensure the unhampered performance of their functions.

ICMC's and IRRI's immunity from local jurisdiction by no means deprives labor of its basic rights,
which are guaranteed by Article II, Section 18, 14 Article III, Section 8, 15 and Article XIII, Section 3
(supra), of the 1987 Constitution; and implemented by Articles 243 and 246 of the Labor
Code, 16 relied on by the BLR Director and by Kapisanan.

For, ICMC employees are not without recourse whenever there are disputes to be settled.
Section 31 of the Convention on the Privileges and Immunities of the Specialized Agencies of
the United Nations 17 provides that "each specialized agency shall make provision for appropriate
modes of settlement of: (a) disputes arising out of contracts or other disputes of private character to
which the specialized agency is a party." Moreover, pursuant to Article IV of the Memorandum of
Agreement between ICMC the the Philippine Government, whenever there is any abuse of privilege
by ICMC, the Government is free to withdraw the privileges and immunities accorded. Thus:

Art. IV. Cooperation with Government Authorities. — 1. The Commission shall cooperate at all
times with the appropriate authorities of the Government to ensure the observance of Philippine
laws, rules and regulations, facilitate the proper administration of justice and prevent the
occurrences of any abuse of the privileges and immunities granted its officials and alien
employees in Article III of this Agreement to the Commission.

2. In the event that the Government determines that there has been an abuse of the privileges
and immunities granted under this Agreement, consultations shall be held between the
Government and the Commission to determine whether any such abuse has occurred and, if so,
the Government shall withdraw the privileges and immunities granted the Commission and its
officials.

Neither are the employees of IRRI without remedy in case of dispute with management as, in
fact, there had been organized a forum for better management-employee relationship as
evidenced by the formation of the Council of IRRI Employees and Management (CIEM) wherein
"both management and employees were and still are represented for purposes of maintaining
mutual and beneficial cooperation between IRRI and its employees." The existence of this Union
factually and tellingly belies the argument that Pres. Decree No. 1620, which grants to IRRI the
status, privileges and immunities of an international organization, deprives its employees of the
right to self-organization.

The immunity granted being "from every form of legal process except in so far as in any
particular case they have expressly waived their immunity," it is inaccurate to state that a
certification election is beyond the scope of that immunity for the reason that it is not a suit
against ICMC. A certification election cannot be viewed as an independent or isolated process. It
could tugger off a series of events in the collective bargaining process together with related
incidents and/or concerted activities, which could inevitably involve ICMC in the "legal process,"
which includes "any penal, civil and administrative proceedings." The eventuality of Court
litigation is neither remote and from which international organizations are precisely shielded to
safeguard them from the disruption of their functions. Clauses on jurisdictional immunity are said
to be standard provisions in the constitutions of international Organizations. "The immunity
covers the organization concerned, its property and its assets. It is equally applicable to
proceedings in personam and proceedings in rem." 18

We take note of a Manifestation, dated 28 September 1989, in the ICMC Case (p. 161, Rollo),
wherein TUPAS calls attention to the case entitled "International Catholic Migration Commission
v. NLRC, et als., (G.R. No. 72222, 30 January 1989, 169 SCRA 606), and claims that, having
taken cognizance of that dispute (on the issue of payment of salary for the unexpired portion of a
six-month probationary employment), the Court is now estopped from passing upon the question
of DOLE jurisdiction petition over ICMC.

We find no merit to said submission. Not only did the facts of said controversy occur between
1983-1985, or before the grant to ICMC on 15 July 1988 of the status of a specialized agency
with corresponding immunities, but also because ICMC in that case did not invoke its immunity
and, therefore, may be deemed to have waived it, assuming that during that period (1983-1985)
it was tacitly recognized as enjoying such immunity.

Anent the procedural issue raised in the IRRI Case, suffice it to state that the Decision of the
BLR Director, dated 15 February 1989, had not become final because of a Motion for
Reconsideration filed by IRRI Said Motion was acted upon only on 30 March 1989 when Rep.
Act No. 6715, which provides for direct appeals from the Orders of the Med-Arbiter to the
Secretary of Labor in certification election cases either from the order or the results of the
election itself, was already in effect, specifically since 21 March 1989. Hence, no grave abuse of
discretion may be imputed to respondent Secretary of Labor in his assumption of appellate
jurisdiction, contrary to Kapisanan's allegations. The pertinent portion of that law provides:

Art. 259. — Any party to an election may appeal the order or results of the election as
determined by the Med-Arbiter directly to the Secretary of Labor and Employment on the ground
that the rules and regulations or parts thereof established by the Secretary of Labor and
Employment for the conduct of the election have been violated. Such appeal shall be decided
within 15 calendar days (Emphasis supplied).

En passant, the Court is gratified to note that the heretofore antagonistic positions assumed by
two departments of the executive branch of government have been rectified and the resultant
embarrassment to the Philippine Government in the eyes of the international community now,
hopefully, effaced.

WHEREFORE, in G.R. No. 85750 (the ICMC Case), the Petition is GRANTED, the Order of the
Bureau of Labor Relations for certification election is SET ASIDE, and the Temporary
Restraining Order earlier issued is made PERMANENT.

In G.R. No. 89331 (the IRRI Case), the Petition is Dismissed, no grave abuse of discretion
having been committed by the Secretary of Labor and Employment in dismissing the Petition for
Certification Election.

No pronouncement as to costs.

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. Nos. 109095-109107 February 23, 1995

ELDEPIO LASCO, RODOLFO ELISAN, URBANO BERADOR, FLORENTINO ESTOBIO,


MARCELINO MATURAN, FRAEN BALIBAG, CARMELITO GAJOL, DEMOSTHENES
MANTO, SATURNINO BACOL, SATURNINO LASCO, RAMON LOYOLA, JOSENIANO B.
ESPINA, all represented by MARIANO R. ESPINA,petitioner,
vs.
UNITED NATIONS REVOLVING FUND FOR NATURAL RESOURCES EXPLORATION
(UNRFNRE) represented by its operations manager, DR. KYRIACOS LOUCA, OSCAR N.
ABELLA, LEON G. GONZAGA, JR., MUSIB M. BUAT, Commissioners of National Labor
Relations Commission (NLRC), Fifth Division, Cagayan de Oro City and IRVING PETILLA,
Labor Arbiter of Butuan City, respondents.

QUIASON, J.:

This is a petition for certiorari under Rule 65 of the Revised Rules of Court to set aside the
Resolution dated January 25, 1993 of the National Labor Relations Commission (NLRC), Fifth
Division, Cagayan de Oro City.

We dismiss the petition.

I
Petitioners were dismissed from their employment with private respondent, the United Nations
Revolving Fund for Natural Resources Exploration (UNRFNRE), which is a special fund and
subsidiary organ of the United Nations. The UNRFNRE is involved in a joint project of the
Philippine Government and the United Nations for exploration work in Dinagat Island.

Petitioners are the complainants in NLRC Cases Nos. SRAB 10-03-00067-91 to 10-03-00078-91
and SRAB 10-07-00159-91 for illegal dismissal and damages.

In its Motion to Dismiss, private respondent alleged that respondent Labor Arbiter had no
jurisdiction over its personality since it enjoyed diplomatic immunity pursuant to the 1946
Convention on the Privileges and Immunities of the United Nations. In support thereof, private
respondent attached a letter from the Department of Foreign Affairs dated August 26, 1991,
which acknowledged its immunity from suit. The letter confirmed that private respondent, being a
special fund administered by the United Nations, was covered by the 1946 Convention on the
Privileges and Immunities of the United Nations of which the Philippine Government was an
original signatory (Rollo, p. 21).

On November 25, 1991, respondent Labor Arbiter issued an order dismissing the complaints on
the ground that private respondent was protected by diplomatic immunity. The dismissal was
based on the letter of the Foreign Office dated September 10, 1991.

Petitioners' motion for reconsideration was denied. Thus, an appeal was filed with the NLRC,
which affirmed the dismissal of the complaints in its Resolution dated January 25, 1993.

Petitioners filed the instant petition for certiorari without first seeking a reconsideration of the
NLRC resolution.

II

Article 223 of the Labor Code of the Philippines, as amended, provides that decisions of the
NLRC are final and executory. Thus, they may only be questioned through certiorari as a special
civil action under Rule 65 of the Revised Rules of Court.

Ordinarily, certiorari as a special civil action will not lie unless a motion for reconsideration is first
filed before the respondent tribunal, to allow it an opportunity to correct its assigned errors
(Liberty Insurance Corporation v. Court of Appeals, 222 SCRA 37 [1993]).

In the case at bench, petitioners' failure to file a motion for reconsideration is fatal to the instant
petition. Moreover, the petition lacks any explanation for such omission, which may merit its
being considered as falling under the recognized exceptions to the necessity of filing such
motion.

Notwithstanding, we deem it wise to give due course to the petition because of the implications
of the issue in our international relations.

Petitioners argued that the acts of mining exploration and exploitation are outside the official
functions of an international agency protected by diplomatic immunity. Even assuming that
private respondent was entitled to diplomatic immunity, petitioners insisted that private
respondent waived it when it engaged in exploration work and entered into a contract of
employment with petitioners.
Petitioners, likewise, invoked the constitutional mandate that the State shall afford full protection
to labor and promote full employment and equality of employment opportunities for all (1987
Constitution, Art. XIII, Sec. 3).

The Office of the Solicitor General is of the view that private respondent is covered by the mantle
of diplomatic immunity. Private respondent is a specialized agency of the United Nations. Under
Article 105 of the Charter of the United Nations:

1. The Organization shall enjoy in the territory of its Members such privileges and immunities as
are necessary for the fulfillment of its purposes.

2. Representatives of the Members of the United Nations and officials of the Organization shall
similarly enjoy such privileges and immunities as are necessary for the independent exercise of
their functions in connection with the organization.

Corollary to the cited article is the Convention on the Privileges and Immunities of the
Specialized Agencies of the United Nations, to which the Philippines was a signatory (Vol. 1,
Philippine Treaty Series, p. 621). We quote Sections 4 and 5 of Article III thereof:

Sec. 4. The specialized agencies, their property and assets, wherever located and by
whomsoever held shall enjoy immunity from every form of legal process except insofar as in any
particular case they have expressly waived their immunity. It is, however, understood that no
waiver of immunity shall extend to any measure of execution (Emphasis supplied).

Sec. 5. The premises of the specialized agencies shall be inviolable. The property and assets of
the specialized agencies, wherever located and by whomsoever held, shall be immune from
search, requisition, confiscation, expropriation and any other form of interference, whether by
executive, administrative, judicial or legislative action (Emphasis supplied).

As a matter of state policy as expressed in the Constitution, the Philippine Government adopts
the generally accepted principles of international law (1987 Constitution, Art. II, Sec. 2). Being a
member of the United Nations and a party to the Convention on the Privileges and Immunities of
the Specialized Agencies of the United Nations, the Philippine Government adheres to the
doctrine of immunity granted to the United Nations and its specialized agencies. Both treaties
have the force and effect of law.

In World Health Organization v. Aquino, 48 SCRA 242, (1972), we had occasion to rule that:

It is a recognized principle of international law and under our system of separation of powers
thatdiplomatic immunity is essentially a political question and courts should refuse to look
beyond a determination by the executive branch of the government, and where the plea of
diplomatic immunity is recognized and affirmed by the executive branch of the government as in
the case at bar, it is then the duty of the courts to accept the claim of immunity upon appropriate
suggestion by the principal law officer of the government, the Solicitor General or other officer
acting under his direction. Hence, in adherence to the settled principle that courts may not so
exercise their jurisdiction by seizure and detention of property, as to embarrass the executive
arm of the government in conducting foreign relations, it is accepted doctrine that "in such cases
the judicial department of (this) government follows the action of the political branch and will not
embarrass the latter by assuming an antagonistic jurisdiction (Emphasis supplied).

We recognize the growth of international organizations dedicated to specific universal


endeavors, such as health, agriculture, science and technology and environment. It is not
surprising that their existence has evolved into the concept of international immunities. The
reason behind the grant of privileges and immunities to international organizations, its officials
and functionaries is to secure them legal and practical independence in fulfilling their duties
(Jenks, International Immunities 17 [1961]).

Immunity is necessary to assure unimpeded performance of their functions. The purpose is "to
shield the affairs of international organizations, in accordance with international practice, from
political pressure or control by the host country to the prejudice of member States of the
organization, and to ensure the unhampered performance of their functions" (International
Catholic Migration Commission v. Calleja, 190 SCRA 130 [1990]).

In the International Catholic Migration Commission case, we held that there is no conflict
between the constitutional duty of the State to protect the rights of workers and to promote their
welfare, and the grant of immunity to international organizations. Clauses on jurisdictional
immunity are now standard in the charters of the international organizations to guarantee the
smooth discharge of their functions.

The diplomatic immunity of private respondent was sufficiently established by the letter of the
Department of Foreign Affairs, recognizing and confirming the immunity of UNRFNRE in
accordance with the 1946 Convention on Privileges and Immunities of the United Nations where
the Philippine Government was a party. The issue whether an international organization is
entitled to diplomatic immunity is a "political question" and such determination by the executive
branch is conclusive on the courts and quasi-judicial agencies (The Holy See v. Hon. Eriberto U.
Rosario, Jr., G.R. No. 101949, Dec. 1, 1994; International Catholic Migration Commission v.
Calleja, supra).

Our courts can only assume jurisdiction over private respondent if it expressly waived its
immunity, which is not so in the case at bench (Convention on the Privileges and Immunities of
the Specialized Agencies of the United Nations, Art. III, Sec. 4).

Private respondent is not engaged in a commercial venture in the Philippines. Its presence here
is by virtue of a joint project entered into by the Philippine Government and the United Nations
for mineral exploration in Dinagat Island. Its mission is not to exploit our natural resources and
gain pecuniarily thereby but to help improve the quality of life of the people, including that of
petitioners.

This is not to say that petitioner have no recourse. Section 31 of the Convention on the
Privileges and Immunities of the Specialized Agencies of the United Nations states that "each
specialized agency shall make a provision for appropriate modes of settlement of: (a) disputes
arising out of contracts or other disputes of private character to which the specialized agency is a
party."