Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 128845 June 1, 2000
INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE), petitioner,
vs.
HON. LEONARDO A. UISU!"ING #n $#% &'('&#)* '% )$e Se&+e)'+* o, L'-o+ 'n.
E/(0o*/en)1 HON. CRESENCIANO ". TRAJANO #n $#% &'('&#)* '% )$e A&)#n2
Se&+e)'+* o, L'-o+ 'n. E/(0o*/en)1 DR. "RIAN !ACCAULE3 #n $#% &'('&#)* '%
)$e Su(e+#n)en.en) o, In)e+n')#on'0 S&$oo04!'n#0'1 'n. INTERNATIONAL
SCHOOL, INC., respondents.

5A6UNAN, 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 wor of equal value. That is a
principle long honored in this !urisdiction. That is a principle that rests on fundamental
notions of !ustice. That is the principle we uphold today.1wphi1.nt
"rivate respondent #nternational School, #nc. $the School, for short%, pursuant to
"residential &ecree '(), is a domestic educational institution established primarily for
dependents of foreign diplomatic personnel and other temporary residents.
1
To enable
the School to continue carrying out its educational program and improve its standard of
instruction, Section )$c% of the same decree authori*es the School to
employ its own teaching and management personnel selected by it either locally or
abroad, from "hilippine or other nationalities, such personnel being e+empt from
otherwise applicable laws and regulations attending their employment, e+cept laws that
have been or will be enacted for the protection of employees.
,ccordingly, the School hires both foreign and local teachers as members of its faculty,
classifying the same into two- $.% foreign-hires and $)% 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 domicile0
b. Where is one/s home economy0
c. To which country does one owe economic allegiance0
d. Was the individual hired abroad specifically to wor in the School and
was the School responsible for bringing that individual to the "hilippines0
2
Should the answer to any of these queries point to the "hilippines, the faculty
member is classified as a local hire1 otherwise, he or she is deemed a foreign-
hire.
The School grants foreign-hires certain benefits not accorded local-hires. These include
housing, transportation, shipping costs, ta+es, and home leave travel allowance.
Foreign-hires are also paid a salary rate twenty-five percent $)23% more than local-
hires. The School !ustifies the difference on two 4significant economic disadvantages4
foreign-hires have to endure, namely- $a% the 4dislocation factor4 and $b% limited tenure.
The School e+plains-
, foreign-hire would necessarily have to uproot himself from his home country, leave his
family and friends, and tae the ris of deviating from a promising career path 5 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 and6or 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 salary6retirement compensation.
7ecause 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.
7
When negotiations for a new collective bargaining agreement were held on 8une .992,
petitioner #nternational School ,lliance of :ducators, 4a legitimate labor union and the
collective bargaining representative of all faculty members4
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 deadloc between the parties.
;n September ', .992, petitioner filed a notice of strie. The failure of the <ational
=onciliation and >ediation 7oard to bring the parties to a compromise prompted the
&epartment of ?abor and :mployment $&;?:% to assume !urisdiction over the dispute.
;n 8une .@, .99A, the &;?: ,cting Secretary, =rescenciano 7. Tra!ano, issued an
;rder resolving the parity and representation issues in favor of the School. Then &;?:
Secretary ?eonardo ,. Buisumbing subsequently denied petitioner/s motion for
reconsideration in an ;rder dated >arch .9, .99'. "etitioner now sees relief in this
=ourt.
"etitioner 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 breadown of its faculty members,
numbering (C in all, with nationalities other than Filipino, who have been hired locally
and classified as local hires.
5
The ,cting Secretary of ?abor found that these non-
Filipino local-hires received the same benefits as the Filipino local-hires.
The compensation pacage 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.
8
The ,cting secretary upheld the point-of-hire classification for the distinction in salary
rates-
The "rinciple 4equal pay for equal wor4 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 tae cogni*ance of the e+istence of a system of salaries and benefits accorded
to foreign hired personnel which system is universally recogni*ed. We agree that certain
amenities have to be provided to these people in order to entice them to render their
services in the "hilippines and in the process remain competitive in the international
maret.
Furthermore, we too note of the fact that foreign hires have limited contract of
employment unlie the local hires who en!oy 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.
, perusal of the parties/ .99)-.992 =7, points us to the conditions and provisions for
salary and professional compensation wherein the parties agree as follows-
,ll members of the bargaining unit shall be compensated only in
accordance with ,ppendi+ = hereof provided that the Superintendent of
the School has the discretion to recruit and hire e+patriate teachers from
abroad, under terms and conditions that are consistent with accepted
international practice.
,ppendi+ = of said =7, further provides-
The new salary schedule is deemed at equity with the ;verseas
Recruited Staff $;SRS% salary schedule. The )23 differential is reflective
of the agreed value of system displacement and contracted status of the
;SRS as differentiated from the tenured status of ?ocally Recruited Staff
$?RS%.
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 Dnion cannot also invoe the equal protection clause to !ustify its claim of parity. #t 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.
, classification is reasonable if it is based on substantial distinctions and apply to all
members of the same class. Eerily, there is a substantial distinction between foreign hires
and local hires, the former en!oying only a limited tenure, having no amenities of their
own in the "hilippines and have to be given a good compensation pacage in order to
attract them to !oin the teaching faculty of the School.
9
We cannot agree.
That public policy abhors inequality and discrimination is beyond contention. ;ur
=onstitution and laws reflect the policy against these evils. The =onstitution
8
in the
,rticle on Social 8ustice and Fuman Rights e+horts =ongress to 4give 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.4 The very broad ,rticle .9 of
the =ivil =ode requires every person, 4in the e+ercise of his rights and in the
performance of his duties, GtoH act with !ustice, give everyone his due, and observe
honesty and good faith.
#nternational law, which springs from general principles of law,
:
liewise proscribes
discrimination. Ieneral principles of law include principles of
equity,
10
i.e., the general principles of fairness and !ustice, based on the test of what is
reasonable.
11
The Dniversal &eclaration of Fuman Rights,
12
the #nternational =ovenant
on :conomic, Social, and =ultural Rights,
17
the #nternational =onvention on the
:limination of ,ll Forms of Racial &iscrimination,
14
the =onvention against
&iscrimination in :ducation,
15
the =onvention $<o. ...% =oncerning &iscrimination in
Respect of :mployment and ;ccupation
18
5 all embody the general principle against
discrimination, the very antithesis of fairness and !ustice. The "hilippines, through its
=onstitution, has incorporated this principle as part of its national laws.
#n the worplace, where the relations between capital and labor are often sewed in
favor of capital, inequality and discrimination by the employer are all the more
reprehensible.
The =onstitution
19
specifically provides that labor is entitled to 4humane conditions of
wor.4 These conditions are not restricted to the physical worplace 5 the factory, the
office or the field 5 but include as well the manner by which employers treat their
employees.
The =onstitution
18
also directs the State to promote 4equality of employment
opportunities for all.4 Similarly, the ?abor =ode
1:
provides that the State shall 4ensure
equal wor opportunities regardless of se+, race or creed.4 #t 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
&iscrimination, particularly in terms of wages, is frowned upon by the ?abor =ode.
,rticle .(2, for e+ample, prohibits and penali*es
21
the payment of lesser compensation
to a female employee as against a male employee for wor of equal value. ,rticle )JC
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 organi*ation.
<otably, the #nternational =ovenant on :conomic, Social, and =ultural Rights, supra, in
,rticle ' thereof, provides-
The States "arties to the present =ovenant recogni*e the right of everyone to the
en!oyment of !ust and favourable conditions of wor, which ensure, in particular-
a. Remuneration which provides all worers, as a minimum, with-
$i% Fair wages and equal remuneration for wor of equal
value without distinction of any ind, in particular women
being guaranteed conditions of wor not inferior to those
en!oyed by men, with equal pay for equal wor1
+++ +++ +++
The foregoing provisions impregnably institutionali*e in this !urisdiction the long honored
legal truism of 4equal pay for equal wor.4 "ersons who wor with substantially equal
qualifications, sill, effort and responsibility, under similar conditions, should be paid
similar salaries.
22
This rule applies to the School, its 4international character4
notwithstanding.
The School contends that petitioner has not adduced evidence that local-hires perform
wor equal to that of foreign-hires.
27
The =ourt finds this argument a little cavalier. #f an
employer accords employees the same position and ran, the presumption is that these
employees perform equal wor. This presumption is borne by logic and human
e+perience. #f the employer pays one employee less than the rest, it is not for that
employee to e+plain why he receives less or why the others receive more. That would
be adding insult to in!ury. The employer has discriminated against that employee1 it is for
the employer to e+plain 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 )23 more efficiently or effectively than the local-hires.
7oth groups have similar functions and responsibilities, which they perform under
similar woring conditions.
The School cannot invoe the need to entice foreign-hires to leave their domicile to
rationali*e the distinction in salary rates without violating the principle of equal wor for
equal pay.
4Salary4 is defined in 7lac/s ?aw &ictionary $2th ed.% as 4a reward or recompense for
services performed.4 Similarly, the "hilippine ?egal :ncyclopedia states that 4salary4 is
the 4GcHonsideration paid at regular intervals for the rendering of services.4 #n Songco v.
National Labor Relations Commission,
24
we said that-
4salary4 means a recompense or consideration made to a person for his pains or
industry in another man/s business. Whether it be derived from 4salarium,4 or
more fancifully from 4sal,4 the pay of the Roman soldier, it carries with it the
fundamental idea of compensation for services rendered. $:mphasis supplied.%
While we recogni*e the need of the School to attract foreign-hires, salaries should not
be used as an enticement to the pre!udice 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 4dislocation factor4 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 en!oyed by local-hires, such as housing, transportation,
shipping costs, ta+es and home leave travel allowances.
The =onstitution en!oins the State to 4protect the rights of worers and promote their
welfare,4
25
4to afford labor full protection.4
28
The State, therefore, has the right and duty
to regulate the relations between labor and capital.
29
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
strie down these stipulations.
#n this case, we find the point-of-hire classification employed by respondent School to
!ustify 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 =ourt.
We agree, however, that foreign-hires do not belong to the same bargaining unit as the
local-hires.
, bargaining unit is 4a 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.4
2:
The factors in determining the appropriate
collective bargaining unit are $.% the will of the employees $Ilobe &octrine%1 $)% affinity
and unity of the employees/ interest, such as substantial similarity of wor and duties, or
similarity of compensation and woring conditions $Substantial >utual #nterests Rule%1
$(% prior collective bargaining history1 and $J% similarity of employment status.
70
The
basic test of an asserted bargaining unit/s acceptability is whether or not it is
fundamentally the combination which will best assure to all employees the e+ercise of
their collective bargaining rights.
71
#t does not appear that foreign-hires have indicated their intention to be grouped
together with local-hires for purposes of collective bargaining. The collective bargaining
history in the School also shows that these groups were always treated separately.
Foreign-hires have limited tenure1 local-hires en!oy security of tenure. ,lthough foreign-
hires perform similar functions under the same woring conditions as the local-hires,
foreign-hires are accorded certain benefits not granted to local-hires. These benefits,
such as housing, transportation, shipping costs, ta+es, and home leave travel
allowance, are reasonably related to their status as foreign-hires, and !ustify the
e+clusion of the former from the latter. To include foreign-hires in a bargaining unit with
local-hires would not assure either group the e+ercise of their respective collective
bargaining rights.
WF:R:F;R:, the petition is I#E:< &D: =;DRS:. The petition is hereby IR,<T:&
#< ",RT. The ;rders of the Secretary of ?abor and :mployment dated 8une .@, .99A
and >arch .9, .99', are hereby R:E:RS:& and S:T ,S#&: insofar as they uphold
the practice of respondent School of according foreign-hires higher salaries than local-
hires.
S; ;R&:R:&.
Puno and Pardo, ., concur.
!avide, r., C.., on o""icial leave.
#nares$Santiago, ., is on leave.
Foo)no)e%
. #ssued on 8une .9, .9'2 $,uthori*ing #nternational School, #nc. to &onate #ts Real
"roperties to the Iovernment of the Republic of the "hilippines and Iranting #t =ertain
Rights.%
) Rollo, p. ()C.
( %d., at ()J.
J %d., at C.
2 %d., at ()2. The breadown is as follows-
,mericans 5 .'
,ustralian 5 )
7elgian 5 .
7ritish 5 )
7urmese 5 .
=anadian 5 )
=hinese 5 )
French 5 .
Ierman 5 .
#ndian 5 2
8apanese 5 .
>alaysian 5 .
<ew Kealander 5 .
Spanish 5 .
A %d., at (9.
' %d., at (C-(9.
C #n Section ., ,rticle L## thereof.
9 Statute of the #nternational =ourt of 8ustice, art. (C.
.@ >. &:F:<S;R-S,<T#,I;, #nternational ?aw '2 $.999%, citing 8udge Fudson in
River >euse =ase, $.9('% Ser. ,67 <o. '@.
.. %bid., citing Rann of Mutch ,rbitration $#ndia vs. "aistan%, 2@ #?R ) $.9AC%.
.) ,dopted by the Ieneral ,ssembly of the Dnited <ations on &ecember .@, .9JC.
,rticle . thereof states- 4,ll human beings are born free and equal in dignity and rights.
,rticle ) provides, 4.. :veryone is entitled to all the rights and freedoms set forth in this
&eclaration, without distinction of any ind, such as race, colour, se+, language, religion,
political or other opinion, national or social origin, property, birth or other status.4
.( ,dopted by the Ieneral of the Dnited <ations in Resolution ))@@ $LL#% of .A
&ecember .9AA. ,rticle ) provides- 4). The States "arties to the present =ovenant
undertae to guarantee that the rights enunciated in the present =ovenant will be
e+ercised without discrimination of any ind as to race, colour, se+, language, religion,
political or other opinion, national or social origin, property, birth or other status.4
.J ,dopted by the Ieneral assembly of the Dnited <ations in Resolution ).@A $LL% ).
&ecember .9A2. ,rticle ) of the =onvention states- 4States "arties condemn racial
discrimination and undertae to pursue by all appropriate means and without delay a
policy of eliminating racial discrimination in all its forms and promoting understanding
among all races . . . .4
.2 ,dopted at "aris, &ecember .J, .9A@. Dnder ,rticle (, the States "arties undertae,
among others, 4to abrogate any statutory provisions and any administrative instructions
and to discontinue any administrative practices which involve discrimination in
education.4 Dnder ,rticle J, 4The States "arties to this =onvention undertae further
more to formulate, develop and apply a national policy which, by methods appropriate to
the circumstances and to national usage, will tend to promote equality of opportunity and
of treatment in the matter of education . . . .4
.A ,dopted by the Ieneral =onference of the #nternational ?abor ;rgani*ation at
Ieneva, 8une )2, .92C. ,rticle ) provides that, 4:ach >ember for which this =onvention
is in force undertaes to declare and pursue a national policy designed to promote, by
methods appropriate to national condition and practice, equality of opportunity and
treatment in respect of employment and occupation, with a view to eliminating any
discrimination in respect thereof.
.' #n ,rticle L###, Section ( thereof.
.C %d.
.9 #n ,rticle ( thereof.
)@ &.g., ,rticle .(2 of the ?abor =ode declares it unlawful for the employer to require, not
only as a condition of employment, but also as a condition for the continuation of
employment, that a woman shall not get married.
). #n relation to ,rticles )CC and )C9 of the same =ode.
)) #ndeed, the government employs this rule in fi+ing the compensation of government
employees. Thus, Republic ,ct <o. A'2C $,n ,ct "rescribing a Revised =ompensation
and "osition =lassification System in the Iovernment and for ;ther "urposes% declares
it 4the policy of the State to provide equal pay for substantially equal wor and to base
differences in pay upon substantive differences in duties and responsibilities, and
qualification requirements of the positions. See also the "reamble of "residential &ecree
<o. 9C2 $, &ecree Revising the "osition =lassification and =ompensation Systems in the
<ational Iovernment, and #ntegrating the same%.1wphi1.nt
)( Rollo, p. J9..
)J .C( S=R, A.@ $.99@%.
)2 #n Section .C, ,rticle ## thereof.
)A #n Section (, ,rticle L### thereof. See also ,rticle ( of the ?abor =ode.
)' See Sec. (, ,rticle L###, =onstitution. ,rticle ( of the ?abor =ode.
)C ,rt. .'@@, =ivil =ode.
)9 Toyota >otor "hilippines =orporation vs. Toyota >otor "hilippines Federation ?abor
Dnion and the Secretary of ?abor and :mployment, )AC S=R, 2'( $.99'%1 San >iguel
=orporation vs. ?aguesma, )(A S=R, 292 $.99J%.
(@ San >iguel =orporation vs. ?aguesma, supra.
(. 7elyca =orporation vs. Ferrer-=alle!a, .CC S=R, .CJ $.9CC%.
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