ISAE v Quisimbing G.R. No. 128845. June 1, 2000

J. Kapunan

Facts:

The ISM, under Presidential Decree 732, is a domestic educational institution established primarily for dependents of foreign diplomatic personnel and other temporary residents.

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 Quisimbing denied the union’s mfr.

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: Yes, Petition granted

Ratio:

Public policy abhors discrimination. 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…”

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 prohibits discrimination, such as the Universal Declaration of Human Rights and the International Covenant on Economic, Social, and Cultural Rights. The latter promises “Fair wages and equal remuneration for work of equal value without distinction of any kind.”

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 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.

Obiter:

However, foreign-hires do not belong to the same bargaining unit as the local-hires. 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. The housing and other benefits accorded foreign hires were not given to local hires, thereby such admixture will nbot assure any group the power to exercise bargaining rights.

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.

Tiu v Ca G.R. No. 127410. January 20, 1999

J. Panganiban

Facts:

On March 13, 1992, Congress, with the approval of the President, passed into law RA 7227. This was for the conversion of former military bases into industrial and commercial uses. Subic was one of these areas. It was made into a special economic zone.

In the zone, there were no exchange controls. Such were liberalized. There was also tax incentives and duty free importation policies under this law.

On June 10, 1993, then President Fidel V. Ramos issued Executive Order No. 97 (EO 97), clarifying the application of the tax and duty incentives. It said that    

On Import Taxes and Duties. — Tax and duty-free importations shall apply only to raw materials, capital goods and equipment brought in by business enterprises into the SSEZ

On All Other Taxes. — In lieu of all local and national taxes (except import taxes and duties), all business enterprises in the SSEZ shall be required to pay the tax specified in Section 12(c) of R.A. No. 7227.

Nine days after, on June 19, 1993, the President issued Executive Order No. 97-A (EO 97-A), specifying the area within which the tax-and-duty-free privilege was operative.

Section 1.1.     The Secured Area consisting of the presently fenced-in former Subic Naval Base shall be the only completely tax and duty-free area in the SSEFPZ. Business enterprises and individuals (Filipinos and foreigners) residing within the Secured Area are free to import raw materials, capital goods, equipment, and consumer items tax and duty-free.

Petitioners challenged the constitutionality of EO 97-A for allegedly being violative of their right to equal protection of the laws. This was due to the limitation of tax incentives to Subic and not to the entire area of Olongapo. The case was referred to the Court of Appeals.

The appellate court concluded that such being the case, petitioners could not claim that EO 97-A is unconstitutional, while at the same time maintaining the validity of RA 7227.

The court a quo also explained that the intention of Congress was to confine the coverage of the SSEZ to the "secured area" and not to include the "entire Olongapo City and other areas mentioned in Section 12 of the law.

Hence, this was a petition for review under Rule 45 of the Rules of Court.

Issue:

Whether the provisions of Executive Order No. 97-A confining the application of R.A. 7227 within the secured area and excluding the residents of the zone outside of the secured area is discriminatory or not owing to a violation of the equal protection clause.

Held. No. Petition dismissed.

Ratio:

Citing Section 12 of RA 7227, petitioners contend that the SSEZ encompasses (1) the City of Olongapo, (2) the Municipality of Subic in Zambales, and (3) the area formerly occupied by the Subic Naval Base. However, they claimed that the E.O. narrowed the application to the naval base only.

OSG- The E.O. Was a valid classification.

Court- The fundamental right of equal protection of the laws is not absolute, but is subject to reasonable classification. If the groupings are characterized by substantial distinctions that make real differences, one class may be treated and regulated differently from another. The classification must also be germane to the purpose of the law and must apply to all those belonging to the same class.

Inchong v Hernandez- Equal protection does not demand absolute equality among residents; it merely requires that all persons shall be treated alike, under like circumstances and conditions both as to privileges conferred and liabilities enforced.

Classification, to be valid, must (1) rest on substantial distinctions, (2) be germane to the purpose of the law, (3) not be limited to existing conditions only, and (4) apply equally to all members of the same class.

RA 7227 aims primarily to accelerate the conversion of military reservations into productive uses. This was really limited to the military bases as the law's intent provides. Moreover, the law tasked the BCDA to specifically develop the areas the bases occupied.

Among such enticements are: (1) a separate customs territory within the zone, (2) tax-and-duty-free importations, (3) restructured income tax rates on business enterprises within the zone, (4) no foreign exchange control, (5) liberalized regulations on banking and finance, and (6) the grant of resident status to certain investors and of working visas to certain foreign executives and workers. The target of the law was the big investor who can pour in capital.

Even more important, at this time the business activities outside the "secured area" are not likely to have any impact in achieving the purpose of the law, which is to turn the former military base to productive use for the benefit of the Philippine economy. Hence, there was no reasonable basis to extend the tax incentives in RA 7227.

It is well-settled that the equal-protection guarantee does not require territorial uniformity of laws.  As long as there are actual and material differences between territories, there is no violation of the constitutional clause.

Besides, the businessmen outside the zone can always channel their capital into it.

RA 7227, the objective is to establish a "self-sustaining, industrial, commercial, financial and investment center”. There will really be differences between it and the outside zone of Olongapo.

The classification of the law also applies equally to the residents and businesses in the zone. They are similarly treated to contribute to the end gaol of the law.