INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS VS

QUISUMBING (2000)

4 Feb 2018

INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE) vs.

HON. LEONARDO A. QUISUMBING as the Secretary of Labor and Employment;
HON. CRESENCIANO B. TRAJANO as the Acting Secretary of Labor and
Employment; DR. BRIAN MACCAULEY as the Superintendent of International School-
Manila; and INTERNATIONAL SCHOOL, INC.

[G.R. No. 128845; June 1, 2000] Constitutional Law| Equal Protection Clause
FACTS:
Private respondent International School, Inc. is a domestic educational institution
established primarily for dependents of foreign diplomatic personnel and other
temporary residents. To enable the School to continue carrying out its educational
program and improve its standard of instruction, the School hires both foreign and local
teachers as members of its faculty, classifying the same into two: (1) foreign-hires and
(2) local-hires.

The School grants foreign-hires certain benefits not accorded local-hires. These include
housing, transportation, shipping costs, taxes, and home leave travel allowance.
Foreign-hires are also paid a salary rate twenty-five percent (25%) more than local-hires.
Petitioner claims that the point-of-hire classification employed by the School is
discriminatory to Filipinos and that the grant of higher salaries to foreign-hires
constitutes racial discrimination.

ISSUE:
Whether there is indeed a discrimination thus a violation of Equal Protection Clause.

HELD:
Public policy abhors inequality and discrimination. The Constitution directs the State to
promote “equality of employment opportunities for all.” Similarly, the Labor Code provides
that the State shall “ensure equal work opportunities regardless of sex, race or creed.”
Discrimination, particularly in terms of wages, is frowned upon by the Labor Code.
Article 135, for example, prohibits and penalizes the payment of lesser compensation to
a female employee as against a male employee for work of equal value. Article 248
declares it an unfair labor practice for an employer to discriminate in regard to wages in
order to encourage or discourage membership in any labor organization. The foregoing
provisions impregnably institutionalize in this jurisdiction the long honored legal
truism of “equal pay for equal work.” Persons who work with substantially equal
qualifications, skill, effort and responsibility, under similar conditions, should be paid
similar salaries. This rule applies to the School, its “international character”

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notwithstanding. In this case, employees should be given equal pay for work of equal
value. That is a principle long honored in this jurisdiction. That is a principle that rests
on fundamental notions of justice. That is the principle we uphold today.

Full text:

G.R. No. 128845 June 1, 2000

INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE), petitioner,

vs.
HON. LEONARDO A. QUISUMBING in his capacity as the Secretary of Labor and
Employment; HON. CRESENCIANO B. TRAJANO in his capacity as the Acting
Secretary of Labor and Employment; DR. BRIAN MACCAULEY in his capacity as the
Superintendent of International School-Manila; and INTERNATIONAL SCHOOL,
INC., respondents.

KAPUNAN, J.:

Receiving salaries less than their counterparts hired abroad, the local-hires of private
respondent School, mostly Filipinos, cry discrimination. We agree. That the local-hires
are paid more than their colleagues in other schools is, of course, beside the point. The
point is that employees should be given equal pay for work of equal value. That is a
principle long honored in this jurisdiction. That is a principle that rests on fundamental
notions of justice. That is the principle we uphold today.1âwphi1.nêt

Private respondent International School, Inc. (the School, for short), pursuant to
Presidential Decree 732, is a domestic educational institution established primarily for
dependents of foreign diplomatic personnel and other temporary residents.1 To enable
the School to continue carrying out its educational program and improve its standard of
instruction, Section 2(c) of the same decree authorizes the School to employ its own
teaching and management personnel selected by it either locally or abroad, from
Philippine or other nationalities, such personnel being exempt from otherwise
applicable laws and regulations attending their employment, except laws that have
been or will be enacted for the protection of employees.

Accordingly, the School hires both foreign and local teachers as members of its faculty,
classifying the same into two: (1) foreign-hires and (2) local-hires. The School employs
four tests to determine whether a faculty member should be classified as a foreign-hire
or a local hire:

a. What is one's domicile?

b. Where is one's home economy?

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 c. To which country does one owe economic allegiance?

d. Was the individual hired abroad specifically to work in the School and was the
School responsible for bringing that individual to the Philippines?2

Should the answer to any of these queries point to the Philippines, the faculty member
is classified as a local hire; otherwise, he or she is deemed a foreign-hire.

The School grants foreign-hires certain benefits not accorded local-hires.1avvphi1 These
include housing, transportation, shipping costs, taxes, and home leave travel allowance.
Foreign-hires are also paid a salary rate twenty-five percent (25%) more than local-hires.
The School justifies the difference on two "significant economic disadvantages" foreign-
hires have to endure, namely: (a) the "dislocation factor" and (b) limited tenure. The
School explains:

A foreign-hire would necessarily have to uproot himself from his home country,
leave his family and friends, and take the risk of deviating from a promising
career path — all for the purpose of pursuing his profession as an educator, but
this time in a foreign land. The new foreign hire is faced with economic realities:
decent abode for oneself and/or for one's family, effective means of
transportation, allowance for the education of one's children, adequate insurance
against illness and death, and of course the primary benefit of a basic
salary/retirement compensation.

Because of a limited tenure, the foreign hire is confronted again with the same
economic reality after his term: that he will eventually and inevitably return to
his home country where he will have to confront the uncertainty of obtaining
suitable employment after along period in a foreign land.

The compensation scheme is simply the School's adaptive measure to remain

competitive on an international level in terms of attracting competent
professionals in the field of international education.3

When negotiations for a new collective bargaining agreement were held on June 1995,
petitioner International School Alliance of Educators, "a legitimate labor union and the
collective bargaining representative of all faculty members"4 of the School, contested the
difference in salary rates between foreign and local-hires. This issue, as well as the
question of whether foreign-hires should be included in the appropriate bargaining
unit, eventually caused a deadlock between the parties.

On September 7, 1995, petitioner filed a notice of strike. The failure of the National
Conciliation and Mediation Board to bring the parties to a compromise prompted the
Department of Labor and Employment (DOLE) to assume jurisdiction over the dispute.

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On June 10, 1996, the DOLE Acting Secretary, Crescenciano B. Trajano, issued an Order
resolving the parity and representation issues in favor of the School. Then DOLE
Secretary Leonardo A. Quisumbing subsequently denied petitioner's motion for
reconsideration in an Order dated March 19, 1997. Petitioner now seeks relief in this
Court.

Petitioner claims that the point-of-hire classification employed by the School is

discriminatory to Filipinos and that the grant of higher salaries to foreign-hires
constitutes racial discrimination.

The School disputes these claims and gives a breakdown of its faculty members,
numbering 38 in all, with nationalities other than Filipino, who have been hired locally
and classified as local hires.5 The Acting Secretary of Labor found that these non-
Filipino local-hires received the same benefits as the Filipino local-hires.

The compensation package given to local-hires has been shown to apply to all,
regardless of race. Truth to tell, there are foreigners who have been hired locally
and who are paid equally as Filipino local hires.6

The Acting secretary upheld the point-of-hire classification for the distinction in salary
rates:

The Principle "equal pay for equal work" does not find applications in the
present case. The international character of the School requires the hiring of
foreign personnel to deal with different nationalities and different cultures,
among the student population.

We also take cognizance of the existence of a system of salaries and benefits

accorded to foreign hired personnel which system is universally recognized. We
agree that certain amenities have to be provided to these people in order to entice
them to render their services in the Philippines and in the process remain
competitive in the international market.

Furthermore, we took note of the fact that foreign hires have limited contract of
employment unlike the local hires who enjoy security of tenure. To apply parity
therefore, in wages and other benefits would also require parity in other terms
and conditions of employment which include the employment which include the
employment contract.

A perusal of the parties' 1992-1995 CBA points us to the conditions and

provisions for salary and professional compensation wherein the parties agree as
follows:

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 All members of the bargaining unit shall be compensated only in
accordance with Appendix C hereof provided that the Superintendent of
the School has the discretion to recruit and hire expatriate teachers from
abroad, under terms and conditions that are consistent with accepted
international practice.

Appendix C of said CBA further provides:

The new salary schedule is deemed at equity with the Overseas Recruited
Staff (OSRS) salary schedule. The 25% differential is reflective of the
agreed value of system displacement and contracted status of the OSRS as
differentiated from the tenured status of Locally Recruited Staff (LRS).

To our mind, these provisions demonstrate the parties' recognition of the

difference in the status of two types of employees, hence, the difference in their
salaries.

The Union cannot also invoke the equal protection clause to justify its claim of
parity. It is an established principle of constitutional law that the guarantee of
equal protection of the laws is not violated by legislation or private covenants
based on reasonable classification. A classification is reasonable if it is based on
substantial distinctions and apply to all members of the same class. Verily, there
is a substantial distinction between foreign hires and local hires, the former
enjoying only a limited tenure, having no amenities of their own in the
Philippines and have to be given a good compensation package in order to
attract them to join the teaching faculty of the School.7

We cannot agree.

That public policy abhors inequality and discrimination is beyond contention. Our
Constitution and laws reflect the policy against these evils. The Constitution8 in the
Article on Social Justice and Human Rights exhorts Congress to "give highest priority to
the enactment of measures that protect and enhance the right of all people to human
dignity, reduce social, economic, and political inequalities." The very broad Article 19 of
the Civil Code requires every person, "in the exercise of his rights and in the
performance of his duties, [to] act with justice, give everyone his due, and observe
honesty and good faith.

International law, which springs from general principles of law,9 likewise proscribes
discrimination. General principles of law include principles of equity, 10 i.e., the general
principles of fairness and justice, based on the test of what is reasonable. 11 The
Universal Declaration of Human Rights, 12 the International Covenant on Economic,
Social, and Cultural Rights, 13 the International Convention on the Elimination of All

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Forms of Racial Discrimination, 14 the Convention against Discrimination in
Education, 15 the Convention (No. 111) Concerning Discrimination in Respect of
Employment and Occupation 16 — all embody the general principle against
discrimination, the very antithesis of fairness and justice. The Philippines, through its
Constitution, has incorporated this principle as part of its national laws.

In the workplace, where the relations between capital and labor are often skewed in
favor of capital, inequality and discrimination by the employer are all the more
reprehensible.

The Constitution 17 specifically provides that labor is entitled to "humane conditions of

work." These conditions are not restricted to the physical workplace — the factory, the
office or the field — but include as well the manner by which employers treat their
employees.

The Constitution 18 also directs the State to promote "equality of employment

opportunities for all." Similarly, the Labor Code 19 provides that the State shall "ensure
equal work opportunities regardless of sex, race or creed." It would be an affront to both
the spirit and letter of these provisions if the State, in spite of its primordial obligation
to promote and ensure equal employment opportunities, closes its eyes to unequal and
discriminatory terms and conditions of employment. 20

Discrimination, particularly in terms of wages, is frowned upon by the Labor Code.

Article 135, for example, prohibits and penalizes 21 the payment of lesser compensation
to a female employee as against a male employee for work of equal value. Article 248
declares it an unfair labor practice for an employer to discriminate in regard to wages in
order to encourage or discourage membership in any labor organization.

Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, in
Article 7 thereof, provides:

The States Parties to the present Covenant recognize the right of everyone to the
enjoyment of just and favourable conditions of work, which ensure, in particular:

a. Remuneration which provides all workers, as a minimum, with:

(i) Fair wages and equal remuneration for work of equal value
without distinction of any kind, in particular women being
guaranteed conditions of work not inferior to those enjoyed by
men, with equal pay for equal work;

xxx xxx xxx

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The foregoing provisions impregnably institutionalize in this jurisdiction the long
honored legal truism of "equal pay for equal work." Persons who work with
substantially equal qualifications, skill, effort and responsibility, under similar
conditions, should be paid similar salaries. 22 This rule applies to the School, its
"international character" notwithstanding.

The School contends that petitioner has not adduced evidence that local-hires perform
work equal to that of foreign-hires. 23 The Court finds this argument a little cavalier. If
an employer accords employees the same position and rank, the presumption is that
these employees perform equal work. This presumption is borne by logic and human
experience. If the employer pays one employee less than the rest, it is not for that
employee to explain why he receives less or why the others receive more. That would
be adding insult to injury. The employer has discriminated against that employee; it is
for the employer to explain why the employee is treated unfairly.

The employer in this case has failed to discharge this burden. There is no evidence here
that foreign-hires perform 25% more efficiently or effectively than the local-hires. Both
groups have similar functions and responsibilities, which they perform under similar
working conditions.

The School cannot invoke the need to entice foreign-hires to leave their domicile to
rationalize the distinction in salary rates without violating the principle of equal work
for equal pay.

"Salary" is defined in Black's Law Dictionary (5th ed.) as "a reward or recompense for
services performed." Similarly, the Philippine Legal Encyclopedia states that "salary" is
the "[c]onsideration paid at regular intervals for the rendering of services." In Songco
v. National Labor Relations Commission, 24 we said that:

"salary" means a recompense or consideration made to a person for his pains or

industry in another man's business. Whether it be derived from "salarium," or
more fancifully from "sal," the pay of the Roman soldier, it carries with it the
fundamental idea of compensation for services rendered. (Emphasis supplied.)

While we recognize the need of the School to attract foreign-hires, salaries should not be
used as an enticement to the prejudice of local-hires. The local-hires perform the same
services as foreign-hires and they ought to be paid the same salaries as the latter. For
the same reason, the "dislocation factor" and the foreign-hires' limited tenure also
cannot serve as valid bases for the distinction in salary rates. The dislocation factor and
limited tenure affecting foreign-hires are adequately compensated by certain benefits
accorded them which are not enjoyed by local-hires, such as housing, transportation,
shipping costs, taxes and home leave travel allowances.

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The Constitution enjoins the State to "protect the rights of workers and promote their
welfare," 25 "to afford labor full protection." 26 The State, therefore, has the right and duty
to regulate the relations between labor and capital. 27 These relations are not merely
contractual but are so impressed with public interest that labor contracts, collective
bargaining agreements included, must yield to the common good. 28 Should such
contracts contain stipulations that are contrary to public policy, courts will not hesitate
to strike down these stipulations.

In this case, we find the point-of-hire classification employed by respondent School to

justify the distinction in the salary rates of foreign-hires and local hires to be an invalid
classification. There is no reasonable distinction between the services rendered by
foreign-hires and local-hires. The practice of the School of according higher salaries to
foreign-hires contravenes public policy and, certainly, does not deserve the sympathy of
this Court.1avvphi1

We agree, however, that foreign-hires do not belong to the same bargaining unit as the
local-hires.

A bargaining unit is "a group of employees of a given employer, comprised of all or less
than all of the entire body of employees, consistent with equity to the employer,
indicate to be the best suited to serve the reciprocal rights and duties of the parties
under the collective bargaining provisions of the law." 29 The factors in determining the
appropriate collective bargaining unit are (1) the will of the employees (Globe
Doctrine); (2) affinity and unity of the employees' interest, such as substantial similarity
of work and duties, or similarity of compensation and working conditions (Substantial
Mutual Interests Rule); (3) prior collective bargaining history; and (4) similarity of
employment status. 30 The basic test of an asserted bargaining unit's acceptability is
whether or not it is fundamentally the combination which will best assure to all
employees the exercise of their collective bargaining rights. 31

It does not appear that foreign-hires have indicated their intention to be grouped
together with local-hires for purposes of collective bargaining. The collective bargaining
history in the School also shows that these groups were always treated separately.
Foreign-hires have limited tenure; local-hires enjoy security of tenure. Although
foreign-hires perform similar functions under the same working conditions as the local-
hires, foreign-hires are accorded certain benefits not granted to local-hires. These
benefits, such as housing, transportation, shipping costs, taxes, and home leave travel
allowance, are reasonably related to their status as foreign-hires, and justify the
exclusion of the former from the latter. To include foreign-hires in a bargaining unit
with local-hires would not assure either group the exercise of their respective collective
bargaining rights.

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WHEREFORE, the petition is GIVEN DUE COURSE. The petition is hereby GRANTED
IN PART. The Orders of the Secretary of Labor and Employment dated June 10, 1996
and March 19, 1997, are hereby REVERSED and SET ASIDE insofar as they uphold the
practice of respondent School of according foreign-hires higher salaries than local-hires.

SO ORDERED.