Case Summary (G.R. No. 108813)
Procedural History
Labor Arbiter Daniel C. Cueto (Order dated July 30, 1991) dismissed Sacramento’s complaint for lack of jurisdiction. Sacramento appealed to the NLRC. On January 29, 1993 the NLRC reversed the Labor Arbiter, ruling JUSMAG lost its immunity and remanded for reception of evidence on illegal dismissal. JUSMAG petitioned this Court for certiorari alleging grave abuse of discretion by the NLRC; the petition was granted and the NLRC resolution was reversed and set aside.
Relevant Dates and Employment Facts
Sacramento was employed by JUSMAG from December 18, 1969 until his termination on April 27, 1992, when he held the position of Illustrator 2 and was JPFCEA president. He alleged suspension and dismissal due to abolition of his position and filed a complaint with the Department of Labor and Employment on March 31, 1992 seeking reinstatement. JUSMAG moved to dismiss asserting immunity from suit and lack of employer‑employee relationship and juridical personality to be sued.
Documentary Framework: Agreements and Notes
Primary source: Military Assistance Agreement between the Philippines and the United States dated March 21, 1947, which contemplated locally employed interpreters, clerks, laborers and other personnel funded by the Philippines. Subsequent diplomatic notes (U.S. Embassy Note No. 22, Jan. 23, 1991; DFA Note No. 911725, Apr. 18, 1991) and a May 21, 1991 Memorandum of Agreement (MOA) between the Armed Forces of the Philippines (AFP) and JUSMAG clarified funding and administrative arrangements for SASP. The MOA provided that SASP are AFP employees, that AFP would appoint up to 74 personnel for service with JUSMAG, that SASP are under the operational control of the Chief, JUSMAG, and that JUSMAG would pay payroll costs during an exceptional funding period.
NLRC’s Grounds for Reversal
The NLRC reversed the Labor Arbiter on two principal grounds: (1) estoppel — that JUSMAG failed to refute the existence of an employer‑employee relationship under the control test; and (2) waiver of immunity — relying on Harry Lyons v. United States (1958) to find that the United States waived immunity by entering into contractual and commercial relationships that submitted it to local jurisdiction.
Petitioner's Arguments to this Court
JUSMAG argued that the NLRC committed grave abuse of discretion by reversing the Labor Arbiter and finding waiver of immunity; that the suit is effectively against the United States which had not consented to be sued; and that the NLRC erred in finding an employer‑employee relationship and in applying estoppel against JUSMAG.
Applicable Constitutional and International Law Basis
Because the decision postdates 1990, the Court employed the 1987 Philippine Constitution. The decision also invoked Section 2, Article II (recognition and adoption of generally accepted principles of international law). The doctrine of state immunity from suit under international law — the principle that one sovereign cannot subject another to its courts without consent (par in parem non habet imperium) — is treated as part of the law of the land.
Legal Doctrine: State Immunity and Its Exceptions
The Court synthesized prior jurisprudence showing the evolution from absolute to restrictive state immunity. Under the restrictive theory, immunity protects sovereign acts (jure imperii) but not commercial or proprietary acts (jure gestionis). Precedents noted: Santos v. Santos recognized an exception where a state entering into contracts may be sued (consent implied), Harry Lyons held that contracting with a private party can imply consent to suit, United States v. Ruiz later clarified that Harry Lyons’ waiver discussion was obiter and adopted a restrictive approach, and United States v. Hon. Rodrigo (Genove) applied the restrictive doctrine to proprietary/ commercial activities (restaurant open to the public) whereby immunity is not available.
Application to JUSMAG: Governmental vs Proprietary Nature
The Court concluded that when JUSMAG employed Sacramento in 1969 it was performing a governmental function on behalf of the United States under the 1947 Military Assistance Agreement. Subsequent funding arrangements (U.S. offers to fund SASP salaries in 1991‑1992 and the AFP–JUSMAG MOA) did not change the legal character of JUSMAG’s activities from governmental to proprietary. Because the disputed activities involved governmental functions, the United States had not impliedly waived immunity, and by extension JUSMAG could invoke immunity from suit in Philippine courts.
Estoppel and Employer‑Employee Relationship Analysis
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...continue readingCase Syllabus (G.R. No. 108813)
Case Caption, Citation and Decision Author
- Citation: 309 Phil. 213, SECOND DIVISION, G.R. No. 108813, December 15, 1994.
- Parties: JUSMAG Philippines (petitioner) v. The National Labor Relations Commission (Second Division) and Florencio Sacramento, Union President, JPFCEA (respondents).
- Decision by: Justice Puno (PUNO, J.).
- Concurrence: Narvasa, C.J. (Chairman), Regalado, and Mendoza, JJ., concur.
- Final disposition line in the decision: "SO ORDERED."
Central Legal Issue
- Whether JUSMAG-Philippines (Joint United States Military Assistance Group to the Republic of the Philippines) is immune from suit in Philippine courts in an action for illegal dismissal filed by Florencio Sacramento.
- Whether the NLRC committed grave abuse of discretion in reversing the Labor Arbiter and finding JUSMAG had waived its immunity or was estopped from denying an employer-employee relationship.
Undisputed Facts
- Florencio Sacramento was one of seventy-four (74) Security Assistance Support Personnel (SASP) working at JUSMAG-Philippines (see Enclosure No. 3, Annex E).[1]
- Sacramento’s employment with JUSMAG commenced December 18, 1969, and ended with dismissal on April 27, 1992.
- At dismissal he held the position of Illustrator 2 and was incumbent President of JUSMAG Philippines–Filipino Civilian Employees Association (JPFCEA), a labor organization duly registered with the Department of Labor and Employment.
- He was advised that his position was abolished and that he was under administrative leave until April 27, 1992 (the leave was not charged against his leave balances). [2]
- On March 31, 1992, Sacramento filed a complaint with the Department of Labor and Employment alleging illegal suspension and dismissal and sought reinstatement. [3]
Procedural History
- JUSMAG filed a Motion to Dismiss before the Labor Arbiter asserting: immunity from suit as an agency of the United States; lack of employer-employee relationship; and lack of juridical personality to be sued. [4]
- Labor Arbiter Daniel C. Cueto dismissed the complaint for want of jurisdiction in an Order dated July 30, 1991. [5]
- Sacramento appealed to the National Labor Relations Commission (NLRC). [6]
- JUSMAG filed an Opposition reiterating immunity and related defenses. [7]
- The NLRC (Second Division) issued a Resolution dated January 29, 1993 reversing the Labor Arbiter, finding JUSMAG had lost its right not to be sued, and remanding the case to the Labor Arbiter to receive evidence on illegal dismissal. [8]
- JUSMAG sought certiorari before the Supreme Court, leading to the present decision.
NLRC’s Grounds for Reversal
- The NLRC predicated its reversal on two principal grounds:
- Estoppel: JUSMAG allegedly failed to refute the existence of an employer-employee relationship under the "control test."
- Waiver of immunity: NLRC held JUSMAG waived immunity from suit based on its hiring of Sacramento on December 18, 1969, and relied on the case of Harry Lyons v. United States of America as precedent for implied waiver when a sovereign enters into contractual relations. [9]
Petitioner’s Contentions (as framed in petition)
- I. The NLRC committed grave abuse of discretion amounting to lack and/or excess of jurisdiction:
- A. By reversing the Labor Arbiter and not affirming dismissal of the complaint as a suit against the United States of America, which had not given consent to be sued.
- B. By finding waiver by JUSMAG of immunity from suit.
- II. The NLRC committed grave abuse of discretion amounting to lack and/or excess of jurisdiction:
- A. When it found an employer-employee relationship between JUSMAG and Sacramento.
- B. When it considered JUSMAG estopped from denying that Sacramento was its employee for failure to present proof to the contrary.
Historical and Treaty Background Pertinent to Immunity
- Creation of JUSMAG: JUSMAG was established pursuant to the Military Assistance Agreement dated March 21, 1947, between the Republic of the Philippines (represented by President Manuel Roxas) and the United States (represented by Ambassador Paul McNutt). Its composition included Air, Naval and Army groups and its primary task was to advise and assist the Philippines on air force, army, and naval matters. [10][11]
- Article 14 (1947 Agreement): Provided that costs of services required by the Group, including compensation of locally employed interpreters, clerks, laborers and other personnel (except personal servants), shall be borne by the Republic of the Philippines.
- Change in funding arrangement (1991–1992):
- U.S. Embassy Note No. 22 (Jan 23, 1991) to the Department of Foreign Affairs (DFA) manifested U.S. preparedness to fund salaries of SASP and security guards, rents, and utilities. [12]
- DFA Note No. 911725 (Apr 18, 1991) accepted the U.S. offer. [13]
- A Memorandum of Agreement (May 21, 1991) between AFP and JUSMAG (General Lisandro C. Abadia and U.S. Brig. Gen. Robert G. Sausser) detailed the assistance-in-kind for 1991 and the roles, responsibilities and classifications of SASP. [14]
- U.S. Embassy Note No. 227 (Apr 8, 1992) extended funding for salaries of SASP and security guards until December 31, 1992.
Key Provisions of the 1991 Memorandum Agreement (selected and summarized as in the source)
- (a) Salaries included security guards contracted between JUSMAG and A Prime Security Services Inc., and the SASP.
- (b) SASP excluded active duty AFP members performing duty at JUSMAG.
- (c) SASP w