Lance Corporal Joseph Scott Pemberton was convicted of homicide for the killing of Jennifer Laude in a motel in October 2014, after they met in a bar following joint US-Philippine military exercises near the city of Olongapo.
Judge Roline Jinez Jabalde sentenced Pemberton to six to 12 years in jail -- after the charge was reduced from murder which carries a heavier penalty -- citing mitigating circumstances, including the fact that Laude had not revealed her gender identity.
He acted out of "passion and obfuscation", the court said, adding that "in the heat of passion, he arm-locked the deceased, and dunked his (her) head in the toilet".
"The killing of Laude amounted only to homicide" and did not have the legal elements of murder, the court ruled.
A lawyer for the Laude family, Harry Roque, expressed outrage that the sentence was reduced on those grounds.
"We are very angry that the court considered these mitigating circumstances," he said, pounding a table while addressing journalists.
"The important thing is he will be jailed. My daughter did not die in vain," she added.
Another family lawyer, Virgie Suarez, said Pemberton would serve at least six years and authorities would have the option of holding him longer, depending on his behaviour.
Lawyers at the court in Olongapo City, 79 kilometres northwest of Manila, said a black-suited Pemberton showed no reaction when the verdict was read.
Burly American guards shielded him from cameras as they escorted Pemberton to an upper floor, away from journalists.
However shortly afterwards, the Justice Department issued a statement saying Pemberton would be held at the Philippine military headquarters in Manila until a court decides with finality on his appeal to the decision.
