36. JUSMAG PHIL VS.

NLRC 239 SCRA 224

FACTS:

JUSMAG was a United States Agency established in the Philippines pursuant to the Military Assistance Agreement between the
Philippine and US governments. It consisted of Air, Naval and Army group, and was primarily tasked to advise and assist the
Philippines on air force, army and naval matters.

Initially, as agreed upon in the agreement, the cost of all services required by the Group, except cost on personal servants, shall be
borne by the Philippines. Until later in 1991, the US Government had manifested its preparedness to provide funds to cover, among
other, the salaries of Security Assistance Support Personnel (SASP), under which private respondent had been employed for almost
three years prior to his dismissal on April 27, 1992. Accordingly, the reason for the termination of his employment was the abolition
of his position as “Illustrator II”.

Private respondent then filed a complaint for illegal dismissal with the Department of Labor and Employment against petitioner, and
prayed for his immediate reinstatement. A motion to dismiss the petition was made by petitioner invoking its immunity from suit as
an agency of the United States. Finding merit thereof, Labor Arbiter dismissed the case which was subsequently appealed by private
respondent to NLRC who reversed the decision of the Arbiter. Hence, this case.

ISSUE:
WON JUSMAG is under the protective mantle of the Doctrine of State Immunity as firmly established by principles of International
law; and therefore, cannot be sued for dismissing private respondent off his employment.

HELD: Yes.

JUSMAG, being an agency of a foreign State as it was clearly manifested to have been performing governmental function when it
took the services of private respondent on behalf of the United States pursuant to the existing Military Assistance Agreement,
cannot be sued when it terminated the employment of Sacramento.

The Court adopts the generally accepted principles of International Laws, as in this case the Immunity of State. This principle is
anchored on the principle of the sovereign equality of States, under which, one State cannot assert jurisdiction over another in
violation of the maxim “par in parem non habet imperium” which means “an equal has no power over an equal”.

Although State Immunity may be impliedly waived when a State enters into contracts for economic affairs and commercial activities,
and thereby deemed to have descended to the level of an individual and can therefore be sued, this is not so if entering into
contract by a State is incidental to its pursuit of governmental functions especially when it has not expressly waived so.