Background

Sacramento filed a complaint for illegal dismissal against JUSMAG. JUSMAG filed a Motion to Dismiss, invoking its immunity from suit as an agency of the United States. The Labor Arbiter dismissed the complaint for lack of jurisdiction. On appeal, the NLRC reversed this decision, holding that JUSMAG had lost its right not to be sued. JUSMAG then filed this petition with the Supreme Court.

Facts

• 1. Florencio Sacramento was one of 74 security assistance support personnel (SASP) working at JUSMAG-Philippines.
• 2. He worked at JUSMAG from December 18, 1969, until his dismissal on April 27, 1992.
• 3. At the time of dismissal, he held the position of Illustrator 2 and was the incumbent President of JUSMAG PHILIPPINES-FILIPINO CIVILIAN EMPLOYEES ASSOCIATION (JPFCEA).
• 4. His services were terminated allegedly due to the abolition of his position.
• 5. JUSMAG was created pursuant to the Military Assistance Agreement dated March 21, 1947, between the Philippines and the United States.
• 6. In 1991, the United States agreed to provide funds to cover the salaries of security assistance support personnel and other expenses.
• 7. A Memorandum of Agreement was forged between the Armed Forces of the Philippines and JUSMAG-Philippines in 1991, delineating the terms of assistance.

Arguments of the Petitioners

• 1. The suit is against the United States Government, which has not given its consent to be sued.
• 2. JUSMAG did not waive its immunity from suit.
• 3. There is no employer-employee relationship between JUSMAG and private respondent.
• 4. JUSMAG is not estopped from denying that private respondent is its employee.

Arguments of the Respondents

• 1. JUSMAG had lost its right not to be sued due to estoppel.
• 2. JUSMAG waived its right to immunity from suit when it hired Sacramento's services.

Issues

• 1. Does JUSMAG have immunity from suit?
• 2. Did JUSMAG waive its immunity from suit by entering into a contract with Sacramento?
• 3. Is there an employer-employee relationship between JUSMAG and Sacramento?

Ruling

• 1. The Supreme Court ruled in favor of JUSMAG, granting the petition for certiorari and reversing the NLRC's decision.
• 2. The Court held that JUSMAG was performing a governmental function on behalf of the United States pursuant to the Military Assistance Agreement.
• 3. The suit is effectively against the United States Government, which has not waived or consented to the suit.
• 4. The complaint against JUSMAG cannot prosper due to the principle of state immunity from suit.
• 5. The Court found no basis for the NLRC's ruling that JUSMAG is estopped from denying the existence of an employer-employee relationship with Sacramento.

Doctrines

• 1. Immunity of State from suit: A universally recognized principle in international law where a state cannot be sued in the courts of another state without its consent or waiver.
• 2. Restrictive application of State immunity: The doctrine of state immunity is restricted to sovereign or governmental activities (jure imperii) and does not extend to commercial, private, and proprietary acts (jure gestionis).
• 3. Waiver of immunity: A state may be deemed to have tacitly given its consent to be sued only when it enters into business contracts, not when the contract relates to the exercise of its sovereign functions.

Precedents Cited

• 1. Santos, et al., vs. Santos, et al.: Cited to recognize an exception to the doctrine of immunity from suit when a state enters into a contract.
• 2. Harry Lyons, Inc., vs. United States of America: Cited but clarified that its pronouncement regarding waiver of State immunity was obiter and has no value as an imperative authority.
• 3. United States of America vs. Ruiz: Used to clarify the restrictive application of the doctrine of immunity from suit.
• 4. United States vs. Hon. Rodrigo, et al.: Cited to illustrate a case where the U.S. government was deemed to have waived its immunity by entering into an employment contract in its proprietary capacity.

Statutory and Constitutional Provisions

• 1. Section 2, Article II of the 1987 Constitution: Cited to establish that the Philippines recognizes and adopts generally accepted principles of international law as part of the law of the land.