G.R.No.128845.June1,2000.

INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS(ISAE),petitioner, vs.HON.LEONARDOA. QUISUMBING in his capacity as the Secretary of Labor andEmployment;HON.CRESENCIANOB.TRAJANOin his capacity as the Acting Secretary of Labor and Employment;DR.BRIANMACCAULEYinhiscapacityas the Superintendent of International SchoolManila; and INTERNATIONALSCHOOL,INC.,respondents.
Labor Law; Constitutional Law; That public policy abhors inequality and discrimination is beyond contention.That public policy abhors inequality and discrimination is beyond contention. OurConstitutionandlawsreflectthepolicyagainsttheseevils.The Constitution in the Article on Social Justice and Human Rights exhorts Congress to give highest priority to the enactment of measuresthatprotectandenhancetherightofallpeopletohuman dignity,reducesocial,economic,andpoliticalinequalities.Thevery 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. Same; Same; International law, which springs from general principles of law, likewise proscribes discrimination.International law, which springs from general principles of law, likewise proscribes discrimination. General principles of law include principles of equity, i.e., the general principles of fairness and justice, based on the test of what is reasonable. The Universal Declaration of Human Rights, the International Covenant on Economic, Social, and Cultural Rights, the International Convention on the Elimination of All Forms of Racial Discrimination, the Convention against Discrimination in Education,theConvention (No. 111) Concerning Discrimination in Respect of Employment and Occupationall embody the general principleagainstdiscrimination,theveryantithesisoffairnessand justice. The Philippines, through its Constitution, has incorporated thisprincipleaspartofitsnationallaws.

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* FIRSTDIVISION.

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Same; Same; State directed to promoteequality of employment opportunities for all.The Constitution also directs the State to promote equality of employment opportunities for all. Similarly, the Labor Code provides that the State shall ensure equal work opportunitiesregardlessofsex,raceorcreed.Itwouldbeanaffront toboththespiritandletteroftheseprovisionsiftheState,inspite ofitsprimordialobligationtopromoteandensureequalemployment opportunities, closes its eyes to unequal and discriminatory terms andconditionsofemployment. Same; Same; Discrimination, particularly in terms of wages, is frowned upon by the Labor Code.Discrimination, particularly in termsofwages,isfrowneduponbytheLaborCode.Article135,for example, prohibits and penalizes the payment of lesser compensationtoafemaleemployeeasagainstamaleemployeefor workofequalvalue.Article248declaresitanunfairlaborpractice for an employer to discriminate in regard to wages in order to encourageordiscouragemembershipinanylabororganization. Same; Same; If an employer accords employees the same position and rank, the presumption is that these employees perform equal work.TheSchool contends that petitioner has not adduced evidencethatlocalhiresperformworkequaltothatofforeignhires. The Court finds this argument a little cavalier. If an employer accords employees the same position and rank, the presumption is thattheseemployeesperformequalwork.Thispresumptionisborne bylogicandhumanexperience.Iftheemployerpaysoneemployee less than the rest, it is not for that employee to explain why he receiveslessorwhytheothersreceivemore.Thatwouldbeadding insult to injury. The employer has discriminated against that employee; it is for the employer to explain why the employee is treatedunfairly. Same; Same; The State has the right and duty to regulate the relations between labor and capital.TheConstitution enjoins the State to protect the rights of workers and promote their welfare,

to afford labor full protection. The State, therefore, has the right anddutytoregulatetherelationsbetweenlaborandcapital.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. Should such contracts contain stipulations that are contrary to public policy, courtswillnothesitatetostrikedownthesestipulations.
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International School Alliance of Educators vs. Quisumbing SPECIALCIVILACTIONintheSupremeCourt. Certiorari. ThefactsarestatedintheopinionoftheCourt. Azcuna, Yorac, Sarmiento, Arroyo and Chua Law Officesforpetitioner. Bernas Law Officesforprivaterespondents. KAPUNAN,J.: Receiving salaries less than their counterparts hired abroad,thelocalhiresofprivaterespondentSchool,mostly Filipinos,crydiscrimination.Weagree.Thatthelocalhires are paid more than their colleagues in other schools is, of course,besidethepoint.Thepointisthatemployeesshould be given equal pay for work of equal value. That is a principle long honored in this jurisdiction. That is a principlethatrestsonfundamentalnotionsofjustice.That istheprincipleweupholdtoday. Private respondent International School, Inc. (the School,forshort),pursuanttoPresidentialDecree732,isa domestic educational institution established primarily for dependents of foreign diplomatic personnel and other 1 temporary residents. To enable the School to continue carrying out its educational program and improve its standard of instruction, Section 2(c) of the same decree authorizestheSchoolto 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,exceptlawsthathavebeenorwillbeenacted

fortheprotectionofemployees. Accordingly, the School hires both foreign and local teachersasmembersofitsfaculty,classifyingthesameinto two:
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1 Issued on June 19, 1975 (Authorizing International School, Inc. to

Donate Its Real Properties to the Government of the Republic of the PhilippinesandGrantingItCertainRights). 16

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SUPREMECOURTREPORTSANNOTATED

International School Alliance of Educators vs. Quisumbing (1)foreignhiresand(2)localhires.TheSchoolemploysfour tests to determine whether a faculty member should be classifledasaforeignhireoralocalhire:
a. Whatisonesdomicile? b. Whereisoneshomeeconomy? c. Towhichcountrydoesoneoweeconomicallegiance? d. Was the individual hired abroad specifically to work in the School and was the School responsible for bringing that 2 individualtothePhilippines?

Should the answer to any of these queries point to the Philippines,thefacultymemberisclassifiedasalocalhire; otherwise,heorsheisdeemedaforeignhire. The School grants foreignhires certain benefits not accordedlocalhires.Theseincludehousing,transportation, shipping costs, taxes, and home leave travel allowance. Foreignhiresarealsopaidasalaryratetwentyfivepercent (25%) more than localhires. The School justifies the difference on two significant economic disadvantages foreignhires have to endure, namely: (a) the dislocation factorand(b)limitedtenure.TheSchoolexplains:
A foreignhire 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 pathall 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 ones family, effective means of

transportation allowance for the education of ones children, adequate insurance against illness and death, and of course the primarybenefitofabasicsalary/retirementcompensation. Becauseofalimitedtenure,theforeignhireisconfrontedagain with the same economic reality after his term: that he will eventuallyandinevitablyreturntohishomecountrywherehewill havetoconfronttheuncertaintyofobtainingsuitable employment afteralongperiodinaforeignland.
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2Rollo,p.328.

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International School Alliance of Educators vs. Quisumbing

Thecompensation scheme is simply the Schools adaptive measure to remain competitive on an international level in terms of attracting competent professionals in the field of international 3 education.

When negotiations for a new collective bargaining agreementwereheldonJune1995,petitionerInternational SchoolAllianceofEducators,alegitimatelaborunionand the collective bargaining representative of all faculty 4 members of the School, contested the difference in salary ratesbetweenforeignandlocalhires.Thisissue,aswellas thequestionofwhetherforeignhiresshouldbeincludedin the appropriate bargaining unit, eventually caused a deadlockbetweentheparties. OnSeptember7,1995,petitionerfiledanoticeofstrike. 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 jurisdictionoverthedispute.OnJune10,1996,theDOLE ActingSecretary,CrescencianoB.Trajano,issuedanOrder resolving the parity and representation issues in favor of theSchool.ThenDOLESecretaryLeonardoA.Quisumbing subsequentlydeniedpetitionersmotionforreconsideration in an Order dated March 19, 1997. Petitioner now seeks reliefinthisCourt. Petitioner claims that the pointofhire classification employed by the School is discriminatory to Filipinos and

thatthegrantofhighersalariestoforeignhiresconstitutes racialdiscrimination. TheSchooldisputestheseclaimsandgivesabreakdown of its faculty members, numbering 38 in all, with nationalities other than Filipino, who have been hired 5 locallyandclassifiedaslocalhires. TheActingSecretaryof Laborfoundthatthese
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3 Id.,at.324. 4 Id.,at.8. 5 Id., at.325.Thebreakdownisasfollows:

18

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SUPREMECOURTREPORTSANNOTATED

International School Alliance of Educators vs. Quisumbing nonFilipino localhires received the same benefits as the Filipinolocalhires: Thecompensationpackagegiventolocalhireshasbeen showntoapplytoall,regardlessofrace.Truthtotell,there areforeignerswhohavebeenhiredlocallyandwhoarepaid 6 equallyasFilipinolocalhires. The Acting Secretary upheld the pointofhire classificationforthedistinctioninsalaryrates: The principle equal pay for equal work does not find applicationinthepresentcase.Theinternationalcharacter oftheSchoolrequiresthehiringofforeignpersonneltodeal with different nationalities and different cultures, among thestudentpopulation. Wealso 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 internationalmarket. Furthermore,wetooknoteofthefactthatforeignhires havelimitedcontractofemploymentunlikethelocalhires who enjoy security of tenure. To apply parity therefore, in wagesandother
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Americans Australian Belgian British Burmese Canadian Chinese French German Indian Japanese Malaysian NewZealander Spanish
6 Id., at.39.

17 2 1 2 1 2 2 1 1 5 1 1 1 1

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International School Alliance of Educators vs. Quisumbing benefits would also require parity in other terms and conditions of employment which include the employment contract.
Aperusaloftheparties19921995CBApointsustotheconditions and provisions for salary and professional compensation wherein thepartiesagreeasfollows:
All members of the bargaining unit shall be compensated only in accordancewithAppendixChereofprovidedthattheSuperintendentof 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 RecruitedStaff(LRS).

To our mind, these provisions demonstrate the parties recognitionofthedifferenceinthestatusoftwotypesofemployees, hence,thedifferenceintheirsalaries.

The Union cannot also invoke the equal protection clause to justify its claim of parity. It is an established principle of constitutionallawthattheguaranteeofequalprotectionofthelaws 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,thereisasubstantialdistinctionbetweenforeignhires and local hires, the former enjoying only a limited tenure, having noamenitiesoftheirowninthePhilippinesandhavetobegivena good compensation package in order to attract them to join the 7 teachingfacultyoftheSchool.

Wecannotagree. Thatpublicpolicyabhorsinequalityanddiscrimination isbeyondcontention.OurConstitutionandlawsreflectthe 8 policy against these evils.TheConstitution in the Article on Social Justice and Human Rights exhorts Congress to give
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7 Id., at3839. 8InSection1,ArticleXIIIthereof.

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International School Alliance of Educators vs. Quisumbing highest priority to the enactment of measures that protect and enhance the right of all people to human dignity, reducesocial,economic,andpoliticalinequalities.Thevery broadArticle19oftheCivilCoderequireseveryperson,in the exercise of his rights and in the performance of his duties, [to] act with justice, give everyone his due, and observehonestyandgoodfaith. Internationallaw,whichspringsfromgeneralprinciples 9 of law, likewise proscribes discrimination. General 10 principles of law include principles of equity, i.e., the generalprinciplesoffairnessandjustice,basedonthetest 11 of what is reasonable. The Universal Declaration of 12 HumanRights, theInternationalCovenantonEconomic, 13 Social,andCulturalRights, theInternationalConvention 14 ontheEliminationofAllFormsofRacialDiscrimination, theConventionagainstDiscrimi

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9StatuteoftheInternationalCourtofJustice,Art.38. 10

M. DEFENSORSANTIAGO, International Law 75 (1999), citing of Kutch Arbitration(India vs. Pakistan), 50 ILR

JudgeHudsoninRiver Meuse Case,(1937)Ser.A/BNo.70.

11 Ibid., citing Rann

2(1968).
12

Adopted by the General Assembly of the United Nations on

December10,1948.Article1thereofstates:Allhumanbeingsareborn freeandequalindignityandrights.Article2provides,1.Everyoneis entitled to all the rights and freedoms set forth in this Declaration, without distinction of any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birthorotherstatus.
13 Adopted by the General of the United Nations in Resolution 2200

(XXI)of16December1966.Article2provides:2.TheStatesPartiesto the present Covenant undertake to guarantee that the rights enunciated in the present Covenant will be exercised without discrimination of any kind as to race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or otherstatus.
14

Adopted by the General assembly of the United Nations in

Resolution 2106 (XX) 21 December 1965. Article 2 of the Convention states: States Parties condemn racial discrimination and undertake to pursuebyallappropriatemeansandwithoutdelayapolicyof 21

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International School Alliance of Educators vs. Quisumbing nationinEducation, theConvention(No.111)Concerning Discrimination in Respect of Employment and 16 Occupation all embody the general principle against discrimination, the very antithesis of fairness and justice. ThePhilippines,throughitsConstitution,hasincorporated thisprincipleaspartofitsnationallaws. 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. 17 The Constitution specifically provides that labor is entitled to humane conditions of work. These conditions arenotrestrictedtothephysicalworkplacethefactory,the officeorthefieldbutincludeaswellthemannerbywhich
15

employerstreattheiremployees. 18 The Constitution also directs the State to promote equality of employment opportunities for all. Similarly, 19 theLaborCode providesthattheStateshallensureequal workopportunitiesregardlessofsex,raceorcreed.Itwould bean
_______________ eliminating racial discrimination in all its forms and promoting understandingamongallracesxxx.
15 Adopted at Paris, December 14, 1960. Under Article 3, the States

Partiesundertake,amongothers,toabrogateanystatutoryprovisions and any administrative instructions and to discontinue any administrative practices which involve discrimination in education. Under Article 4, The States Parties to this Convention undertake furthermoretoformulate,developandapplyanationalpolicywhich,by methods appropriate to the circumstances and to national usage, will tendtopromoteequalityofopportunityandoftreatmentinthematter ofeducationxxx.
16

Adopted by the General Conference of the International Labor

Organization at Geneva, June 25, 1958. Article 2 provides that, Each MemberforwhichthisConventionisinforceundertakestodeclareand pursueanationalpolicydesignedtopromote,bymethodsappropriateto national condition and practice, equality of opportunity and treatment in respect of employment and occupation, with a view to eliminating anydiscriminationinrespectthereof.
17InArticleXIII,Section3thereof. 18 Id. 19InArticle3thereof.

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SUPREMECOURTREPORTSANNOTATED

International School Alliance of Educators vs. Quisumbing 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 20 employment. Discrimination,particularlyintermsofwages,isfrowned uponbytheLaborCode.Article135,forexample,prohibits 21 and penalizes the payment of lesser compensation to a female employee as against a male employee for work of equalvalue.Article248declaresitanunfairlaborpractice

foranemployertodiscriminateinregardtowagesinorder 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 everyonetotheenjoymentofjustandfavorableconditionsofwork, whichensure,inparticular: a. Remuneration which provides all workers, as a minimum, with: i. Fairwagesandequalremunerationforworkofequalvalue withoutdistinction of any kind, in particular women being guaranteedconditionsof work not inferior to those enjoyed bymen,withequalpayforequalwork; xxx.

The foregoing provisions impregnably institutionalize in thisjurisdictionthelonghonoredlegaltruismofequalpay forequalwork.Personswhoworkwithsubstantiallyequal qualifications,skill,effortandresponsibility,undersimilar

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20 E.g. , Article

135 of the Labor Code declares it unlawful for the

employertorequire,notonlyasaconditionofemployment,butalsoas aconditionforthe continuationofemployment,thatawomanshallnot getmarried.

21InrelationtoArticles288and289ofthesameCode.

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International School Alliance of Educators vs. Quisumbing conditions, should be paid similar salaries. This rule applies to the School, its international character notwithstanding. The School contends that petitioner has not adduced evidence that localhires perform work equal to that of 23 foreignhires. The Court finds this argument a little cavalier. If an employer accords employees the same
22

positionandrank,thepresumptionisthattheseemployees performequalwork.Thispresumptionisbornebylogicand humanexperience.Iftheemployerpaysoneemployeeless thantherest,itisnotforthatemployeetoexplainwhyhe receiveslessorwhytheothersreceivemore.Thatwouldbe addinginsulttoinjury. The employer has discriminated against that employee; itisfortheemployertoexplainwhytheemployeeistreated unfairly. The employer in this case has failed to discharge this burden. There is no evidence here that foreignhires perform 25% more efficiently or effectively than the local hires. Both groups have similar functions and responsibilities,whichtheyperformundersimilarworking conditions. TheSchoolcannotinvoketheneedtoenticeforeignhires to leave their domicile to rationalize the distinction in salaryrateswithoutviolatingtheprincipleofequalworkfor equalpay.
SalaryisdefinedinBlacksLawDictionary(5thed.)asareward or recompense for services performed. Similarly, the Philippine LegalEncyclopediastatesthatsalaryisthe
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22 Indeed, the government employs this rule in fixing the compensation of

government employees. Thus, Republic Act No. 6758 (An Act Prescribing a RevisedCompensationandPositionClassificationSystemintheGovernment andforOtherPurposes)declaresitthepolicyoftheStatetoprovideequalpay for substantially equal work and to base differences in pay upon substantive differencesindutiesandresponsibilities,andqualificationrequirementsofthe positions. See also the Preamble of Presidential Decree No. 985 (A Decree Revising the Position Classification and Compensation Systems in the NationalGovernment,andIntegratingthesame).
23Rollo,p.491.

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SUPREMECOURTREPORTSANNOTATED International School Alliance of Educators vs. Quisumbing

[c]onsideration paid at regular intervals for the rendering of 24 services. In Songco v. National Labor Relations Commission, we saidthat: salarymeans a recompense or consideration made to a person

forhispainsorindustry in another mans business. Whether it be derivedfromsalarium,ormorefancifullyfromsal,thepayofthe Roman soldier, it carries with it the fundamental idea of compensationfor services rendered.(Emphasissupplied.)

WhilewerecognizetheneedoftheSchooltoattractforeign hires, salaries should not be used as an enticement to the prejudice of localhires. The localhires perform the same servicesasforeignhiresandtheyoughttobepaidthesame salariesasthelatter.Forthesamereason,thedislocation factor and the foreignhires limited tenure also cannot serveasvalidbasesforthedistinctioninsalaryrates.The dislocationfactorandlimitedtenureaffectingforeignhires are adequately compensated by certain benefits accorded themwhicharenotenjoyedbylocalhires,suchashousing, transportation,shippingcosts,taxesandhomeleavetravel allowances. TheConstitutionenjoinstheStatetoprotecttherights 25 ofworkersandpromotetheirwelfare, toaffordlaborfull 26 protection. TheState,therefore,hastherightanddutyto 27 regulate the relations between labor and capital. These relations are not merely contractual but are so impressed with public interest that labor contracts, collective bargainingagreementsincluded,mustyieldtothecommon 28 good. Should such contracts contain stipulations that are contrary to public policy, courts will not hesitate to strike downthesestipulations.
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24183SCRA610(1990). 25InSection18,ArticleIIthereof. 26 In Section 3, Article XIII thereof. See also Article 3 of the Labor

Code.
27SeeSec.3,ArticleXIII,Constitution.Article3oftheLaborCode. 28Article1700,CivilCode.

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International School Alliance of Educators vs. Quisumbing Inthiscase,wefindthepointofhireclassificationemployed byrespondentSchooltojustifythedistinctioninthesalary rates of foreignhires and local hires to be an invalid

classification. There is no reasonable distinction between the services rendered by foreignhires and localhires. The practiceoftheSchoolofaccordinghighersalariestoforeign hires contravenes public policy and, certainly, does not deservethesympathyofthisCourt. We agree, however, that foreignhires do not belong to thesamebargainingunitasthelocalhires. A bargaining unit is a group of employees of a given employer,comprisedofallorlessthanalloftheentirebody of employees, consistent with equity to the employer, indicatetobethebestsuitedtoservethereciprocalrights and duties of the parties under the collective bargaining 29 provisions of the law. The factors in determining the appropriatecollectivebargainingunitare(1)thewillofthe 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 30 employment status. The basic test of an asserted bargaining units acceptability is whether or not it is fundamentallythecombinationwhichwillbestassuretoall employees the exercise of their collective bargaining 31 rights. Itdoesnotappearthatforeignhireshaveindicatedtheir intention to be grouped together with localhires for purposesofcollectivebargaining.Thecollectivebargaining history in the School also shows that these groups were always treated separately. Foreignhires have limited tenure; localhires enjoy security of tenure. Although foreignhiresperform
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29 Toyota

Motor Philippines Corporation vs. Toyota Motor Philippines

Federation Labor Union and the Secretary of Labor and Employment , 268SCRA573(1997); San Miguel Corporation vs. Laguesma, 236 SCRA 595(1994).
30 San

Miguel Corporation vs. Laguesma, supra. Corporation vs. FerrerCalleja,168SCRA184(1988). 26

31 Belyca

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International School Alliance of Educators vs. Quisumbing

similarfunctionsunderthesameworkingconditionsasthe localhires, foreignhires are accorded certain benefits not granted to localhires. These benefits, such as housing, transportation,shippingcosts,taxes,andhomeleavetravel allowance,arereasonablyrelatedtotheirstatusasforeign hires,andjustifytheexclusionoftheformerfromthelatter. To include foreignhires in a bargaining unit with local hires would not assure either group the exercise of their respectivecollectivebargainingrights. WHEREFORE, the petition is GIVEN DUE COURSE. ThepetitionisherebyGRANTEDINPART.TheOrdersof the Secretary of Labor and Employment dated June 10, 1996andMarch19,1997,areherebyREVERSEDandSET ASIDE insofar as they uphold the practice of respondent Schoolofaccordingforeignhireshighersalariesthanlocal hires. SOORDERED. Puno(Actg. Chairman)andPardo, JJ.,concur. Davide, Jr.(C.J., Chairman),Onofficialleave. YnaresSantiago, J.,Onleave. Petition granted in part. Orders of June 10, 1996 and March 19, 1997 reversed and set aside. Note.The constitutional policy of providing full protection to labor is not intended to oppress or destroy management. (Capili vs. National Labor Relations Commission,270SCRA488[1997]) o0o
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