Facts:
The International School Manila (ISM), under Presidential Decree 732, 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, 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.
The local-hires union of the ISM were crying foul over the disparity in wages that they got compared to that of their foreign teaching counterparts.
These questions are asked to qualify a teacher into a local or foreign hire.
a.....What is one's domicile?
b.....Where is one's home economy?
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?
Should any answer point to Philippines, the person is a local hire. The School grants foreign-hires certain benefits to the foreign hires such as housing, transportation, and 25% more pay than locals under the theory of (a) the "dislocation factor" and (b) limited tenure. The first was grounded on leaving his home country, the second was on the lack of tenure when he returns home.
The negotiations between the school and the union caused a deadlock between the parties. The DOLE resolved in favor of the school, while Dole Secretary Quisumbing denied the union’s motion for reconsideration He said, “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.”
The union appealed to the Supreme Court. The petitioner called the hiring system discriminatory and racist. The school alleged that some local hires were in fact of foreign origin. They were paid local salaries.
Issue:
Whether or not the hiring system is violative of the equal protection clause.
Held:
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 opportunities regardless of sex, race or creed. 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.
In this jurisdiction, there is the term “equal pay for equal work”, pertaining to persons being paid with equal salaries and have similar skills and similar conditions. There was no evidence here that foreign-hires perform 25% more efficiently or effectively than the local-hires.
The State, therefore, has the right and duty to regulate the relations between labor and capital. 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.
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.
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 order of the Secretary of DOLE was reversed in sofar as giving foreign-hires higher salary.
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