file:central bank employees assn vs bangko sentral ng pilipinas 148208 december 15, 2004 j_ puno.htm

EN BANC

[G.R. No.148208.  December 15, 2004]

CENTRAL BANK (now Bangko Sentral ng Pilipinas) EMPLOYEES
ASSOCIATION, INC., petitioner, vs. BANGKO SENTRAL NG PILIPINAS and the
EXECUTIVE SECRETARY, respondents.

D E C I S I O N

PUNO, J.:

Can a provision of law, initially valid, become subsequently
unconstitutional, on the ground that its continued operation
would violate the equal protection of the law?  We hold that with the
passage of the subsequent laws amending the charter of seven (7) other
governmental financial institutions (GFIs), the continued operation of the last
proviso of Section 15(c), Article II of Republic Act (R.A.) No. 7653,
constitutes invidious discrimination on the 2,994 rank-and-file employees
of the Bangko Sentral ng Pilipinas (BSP).

I.

The Case

First the facts.

On July 3, 1993, R.A. No. 7653 (the New Central Bank Act) took
effect.  It abolished the old Central Bank of the Philippines, and created
a new BSP.

On June 8, 2001, almost eight years after the effectivity
of R.A. No. 7653, petitioner Central Bank (now BSP) Employees Association,
Inc., filed a petition for prohibition against BSP and the Executive Secretary
of the Office of the President, to restrain respondents from further
implementing the last proviso in Section 15(c), Article II of R.A. No.
7653, on the ground that it is unconstitutional.

Article II, Section 15(c) of R.A. No. 7653 provides:

Section 15. Exercise of Authority –
In the exercise of its authority, the Monetary Board shall:

xxx   
xxx       xxx

(c) establish a human
resource management system which shall govern the selection, hiring,
appointment, transfer, promotion, or dismissal of all personnel.  Such
system shall aim to establish professionalism and excellence at all levels of
the Bangko Sentral in accordance with sound principles of management.

A compensation
structure, based on job evaluation studies and wage surveys and subject to the
Board’s approval, shall be instituted as an integral component of the Bangko
Sentral’s human resource development program: Provided, That the
Monetary Board shall make its own system conform as closely as possible with
the principles provided for under Republic Act No. 6758 [Salary Standardization
Act].  Provided, however, That compensation and wage structure
of employees whose positions fall under salary grade 19 and below shall be in
accordance with the rates prescribed under Republic Act No. 6758. [emphasis
supplied]

The thrust of petitioner’s challenge is that the above proviso
makes an unconstitutional cut between two classes of
employees in the BSP, viz:  (1) the BSP officers or those
exempted from the coverage of the Salary Standardization Law (SSL) (exempt
class); and (2) the rank-and-file (Salary Grade [SG] 19 and below), or
those not exempted from the coverage of the SSL (non-exempt class).  It is
contended that this classification is “a classic case of class legislation,”
allegedly not based on substantial distinctions which make real differences,
but solely on the SG of the BSP personnel’s position.  Petitioner also
claims that it is not germane to the purposes of Section 15(c), Article II of
R.A. No. 7653, the most important of which is to establish professionalism and
excellence at all levels in the BSP.[1] Petitioner offers the following sub-set
of arguments:

a.  the legislative history of R.A. No. 7653 shows that the
questioned proviso does not appear in the original and amended versions
of House Bill No. 7037, nor in the original version of Senate Bill No. 1235; [2]

b.  subjecting the compensation of the BSP rank-and-file
employees to the rate prescribed by the SSL actually defeats the purpose of the
law[3]
of establishing professionalism and excellence at all levels in the BSP; [4](emphasis
supplied)

c.  the assailed proviso was the product of amendments
introduced during the deliberation of Senate Bill No. 1235, without showing its
relevance to the objectives of the law, and even admitted by one senator as
discriminatory against low-salaried employees of the BSP;[5]

d.  GSIS, LBP, DBP and SSS personnel are all exempted from
the coverage of the SSL; thus within the class of rank-and-file personnel of
government financial institutions (GFIs), the BSP rank-and-file are also
discriminated upon;[6]
and

e.  the assailed proviso has caused the demoralization
among the BSP rank-and-file and resulted in the gross disparity between their
compensation and that of the BSP officers’.[7]

In sum, petitioner posits that the classification is not
reasonable but arbitrary and capricious, and violates the equal protection
clause of the Constitution.[8]
Petitioner also stresses: (a) that R.A. No. 7653 has a separability clause,
which will allow the declaration of the unconstitutionality of the proviso
in question without affecting the other provisions; and (b) the urgency and
propriety of the petition, as some 2,994 BSP rank-and-file employees
have been prejudiced since 1994 when the proviso was
implemented.  Petitioner concludes that: (1) since the inequitable proviso
has no force and effect of law, respondents’ implementation of such amounts to
lack of jurisdiction; and (2) it has no appeal nor any other plain, speedy and
adequate remedy in the ordinary course except through this petition for
prohibition, which this Court should take cognizance of, considering the
transcendental importance of the legal issue involved.[9]

Respondent BSP, in its comment,[10]
contends that the provision does not violate the equal protection clause and
can stand the constitutional test, provided it is construed in harmony with
other provisions of the same law, such as “fiscal and administrative autonomy
of BSP,” and the mandate of the Monetary Board to “establish professionalism
and excellence at all levels in accordance with sound principles of
management.”

The Solicitor General, on behalf of respondent Executive
Secretary, also defends the validity of the provision. Quite simplistically, he
argues that the classification is based on actual and real differentiation,
even as it adheres to the enunciated policy of R.A. No. 7653 to establish
professionalism and excellence within the BSP subject to prevailing laws and
policies of the national government.[11]

II.

Issue

Thus, the sole – albeit significant – issue to be
resolved in this case is whether the last paragraph of Section 15(c), Article
II of R.A. No. 7653, runs afoul of the constitutional mandate that "No
person shall be. . . denied the equal protection of the laws."[12]

III.

Ruling

A.       
UNDER THE PRESENT STANDARDS OF EQUAL

PROTECTION,
SECTION 15(c), ARTICLE II OF R.A. NO. 7653

IS VALID.

Jurisprudential standards for equal protection challenges
indubitably show that the classification created by the questioned proviso,
on its face and in its operation, bears no constitutional infirmities.

It is settled in constitutional law that the "equal
protection" clause does not prevent the Legislature from establishing
classes of individuals or objects upon which different rules shall operate – so
long as the classification is not unreasonable. As held in Victoriano v.
Elizalde Rope Workers’ Union,[13]
and reiterated in a long line of cases:[14]

The guaranty of equal protection of the
laws is not a guaranty of equality in the application of the laws upon all
citizens of the state. It is not, therefore, a requirement, in order to avoid
the constitutional prohibition against inequality, that every man, woman and
child should be affected alike by a statute. Equality of operation of statutes
does not mean indiscriminate operation on persons merely as such, but on
persons according to the circumstances surrounding them. It guarantees
equality, not identity of rights. The Constitution does not require that things
which are different in fact be treated in law as though they were the same. The
equal protection clause does not forbid discrimination as to things that are
different. It does not prohibit legislation which is limited either in the
object to which it is directed or by the territory within which it is to
operate.

The equal protection of the laws clause of
the Constitution allows classification. Classification in law, as in the other
departments of knowledge or practice, is the grouping of things in speculation
or practice because they agree with one another in certain particulars. A law is
not invalid because of simple inequality. The very idea of classification is
that of inequality, so that it goes without saying that the mere fact of
inequality in no manner determines the matter of constitutionality. All that is
required of a valid classification is that it be reasonable, which means that
the classification should be based on substantial distinctions which make for
real differences, that it must be germane to the purpose of the law; that it
must not be limited to existing conditions only; and that it must apply equally
to each member of the class. This Court has held that the standard is satisfied
if the classification or distinction is based on a reasonable foundation or
rational basis and is not palpably arbitrary.

In the exercise of its power to make
classifications for the purpose of enacting laws over matters within its
jurisdiction, the state is recognized as enjoying a wide range of discretion.
It is not necessary that the classification be based on scientific or marked
differences of things or in their relation. Neither is it necessary that the
classification be made with mathematical nicety. Hence, legislative
classification may in many cases properly rest on narrow distinctions, for the
equal protection guaranty does not preclude the legislature from recognizing
degrees of evil or harm, and legislation is addressed to evils as they may
appear. (citations omitted)

Congress is allowed a wide leeway in providing for a valid
classification.[15]
The equal protection clause is not infringed by legislation which applies only
to those persons falling within a specified class.[16]
If the groupings are characterized by substantial distinctions that make real
differences, one class may be treated and regulated differently from another.[17]
The classification must also be germane to the purpose of the law and must
apply to all those belonging to the same class.[18]

In the case at bar, it is clear in the legislative deliberations
that the exemption of officers (SG 20 and above) from the SSL was intended to
address the BSP’s lack of competitiveness in terms of attracting competent
officers and executives. It was not intended to discriminate against the
rank-and-file. If the end-result did in fact lead to a disparity of treatment
between the officers and the rank-and-file in terms of salaries and benefits,
the discrimination or distinction has a rational basis and is not palpably,
purely, and entirely arbitrary in the legislative sense. [19]

That the provision was a product of amendments introduced during
the deliberation of the Senate Bill does not detract from its validity. 
As early as 1947 and reiterated in subsequent cases,[20]
this Court has subscribed to the conclusiveness of an enrolled bill to refuse
invalidating a provision of law, on the ground that the bill from which it
originated contained no such provision and was merely inserted by the bicameral
conference committee of both Houses.

Moreover, it is a fundamental and familiar teaching that all
reasonable doubts should be resolved in favor of the constitutionality of a statute.[21]
An act of the legislature, approved by the executive, is presumed to be within
constitutional limitations.[22]
To justify the nullification of a law, there must be a clear and unequivocal
breach of the Constitution, not a doubtful and equivocal breach.[23]

B.       
THE ENACTMENT, HOWEVER, OF SUBSEQUENT LAWS –

EXEMPTING ALL
OTHER RANK-AND-FILE EMPLOYEES

OF GFIs FROM THE
SSL – RENDERS THE CONTINUED

APPLICATION OF
THE CHALLENGED PROVISION

A VIOLATION OF THE EQUAL PROTECTION
CLAUSE.

While R.A. No. 7653 started as a valid measure well within the
legislature’s power, we hold that the enactment of subsequent laws exempting
all rank-and-file employees of other GFIs leeched all validity out of the
challenged proviso.

1.        
The concept of relative constitutionality.

The constitutionality of a statute cannot, in every instance, be
determined by a mere comparison of its provisions with applicable provisions of
the Constitution, since the statute may be constitutionally valid as applied to
one set of facts and invalid in its application to another.[24]

A statute valid at one time may become void at another time
because of altered circumstances.[25]
Thus, if a statute in its practical operation becomes arbitrary or
confiscatory, its validity, even though affirmed by a former adjudication, is
open to inquiry and investigation in the light of changed conditions.[26]

Demonstrative
of this doctrine is Vernon Park Realty v. City of Mount Vernon,[27] where the Court of Appeals
of New York declared as unreasonable and arbitrary a zoning ordinance which
placed the plaintiff’s property in a residential district, although it was
located in the center of a business area. Later amendments to the ordinance
then prohibited the use of the property except for parking and storage of
automobiles, and service station within a parking area. The Court found the
ordinance to constitute an invasion of property rights which was contrary to
constitutional due process.  It ruled:

While the common council has the
unquestioned right to enact zoning laws respecting the use of property in
accordance with a well-considered and comprehensive plan designed to promote
public health, safety and general welfare, such power is subject to the
constitutional limitation that it may not be exerted arbitrarily or
unreasonably and this is so whenever the zoning ordinance precludes the use of
the property for any purpose for which it is reasonably adapted.  By
the same token, an ordinance valid when adopted will nevertheless be stricken
down as invalid when, at a later time, its operation under changed conditions
proves confiscatory such, for instance, as when the greater part of its
value is destroyed, for which the courts will afford relief in an appropriate
case.[28]
(citations omitted, emphasis supplied)

In the Philippine setting, this Court declared the
continued enforcement of a valid law as unconstitutional as a consequence of significant
changes in circumstances. Rutter v. Esteban[29]
upheld the constitutionality of the moratorium law – its enactment and
operation being a valid exercise by the State of its police power[30]
– but also ruled that the continued enforcement of the otherwise valid law
would be unreasonable and oppressive.  It noted the subsequent
changes in the country’s business, industry and agriculture.  Thus,
the law was set aside because its continued operation would be grossly
discriminatory and lead to the oppression of the creditors.  The landmark
ruling states:[31]

The question now to be determined is, is
the period of eight (8) years which Republic Act No. 342 grants to
debtors of a monetary obligation contracted before the last global war and who
is a war sufferer with a claim duly approved by the Philippine War Damage Commission
reasonable under the present circumstances?

It should be noted that Republic Act No.
342 only extends relief to debtors of prewar obligations who suffered from the
ravages of the last war and who filed a claim for their losses with the
Philippine War Damage Commission. It is therein provided that said obligation
shall not be due and demandable for a period of eight (8) years from and after
settlement of the claim filed by the debtor with said Commission.  The
purpose of the law is to afford to prewar debtors an opportunity to
rehabilitate themselves by giving them a reasonable time within which to pay
their prewar debts so as to prevent them from being victimized by their
creditors.  While it is admitted in said law that since liberation conditions
have gradually returned to normal, this is not so with regard to those who have
suffered the ravages of war and so it was therein declared as a policy that as
to them the debt moratorium should be continued in force (Section 1).

But we should not lose sight of the fact
that these obligations had been pending since 1945 as a result of the issuance
of Executive Orders Nos. 25 and 32 and at present their enforcement is still
inhibited because of the enactment of Republic Act No. 342 and would continue
to be unenforceable during the eight-year period granted to prewar debtors to
afford them an opportunity to rehabilitate themselves, which in plain language
means that the creditors would have to observe a vigil of at least twelve (12)
years before they could effect a liquidation of their investment dating as far
back as 1941.  his period seems to us unreasonable, if not oppressive.
While the purpose of Congress is plausible, and should be commended, the relief
accorded works injustice to creditors who are practically left at the mercy of
the debtors.  Their hope to effect collection becomes extremely remote,
more so if the credits are unsecured.  And the injustice is more patent
when, under the law, the debtor is not even required to pay interest during the
operation of the relief, unlike similar statutes in the United States.

xxx   
xxx       xxx

In the face of the foregoing observations,
and consistent with what we believe to be as the only course dictated by
justice, fairness and righteousness, we feel that the only way open to us under
the present circumstances is to declare that the continued operation and
enforcement of Republic Act No. 342 at the present time is unreasonable and
oppressive, and should not be prolonged a minute longer, and, therefore, the
same should be declared null and void and without effect.  (emphasis
supplied, citations omitted)

2.        
Applicability of the equal protection clause.

In
the realm of equal protection, the U.S. case of Atlantic Coast Line R. Co. v.
Ivey[32] is illuminating.  The
Supreme Court of Florida ruled against the continued application of statutes
authorizing the recovery of double damages plus attorney’s fees against
railroad companies, for animals killed on unfenced railroad right of way
without proof of negligence.  Competitive motor carriers, though creating
greater hazards, were not subjected to similar liability because they were not
yet in existence when the statutes were enacted.  The Court ruled that
the statutes became invalid as denying “equal protection of the law,” in view
of changed conditions since their enactment.

In another U.S. case, Louisville & N.R. Co. v. Faulkner,[33]
the Court of Appeals of Kentucky declared unconstitutional a provision of a
statute which imposed
a duty upon a railroad company of proving that it was free from negligence in
the killing or injury of cattle by its engine or cars.  This,
notwithstanding that the constitutionality of the statute, enacted in 1893, had
been previously sustained.  Ruled the Court:

The constitutionality of such legislation
was sustained because it applied to all similar corporations and had for its
object the safety of persons on a train and the protection of property…. Of
course, there were no automobiles in those days. The subsequent inauguration
and development of transportation by motor vehicles on the public highways by
common carriers of freight and passengers created even greater risks to the
safety of occupants of the vehicles and of danger of injury and death of
domestic animals.  Yet, under the law the operators of that mode of
competitive transportation are not subject to the same extraordinary legal
responsibility for killing such animals on the public roads as are railroad
companies for killing them on their private rights of way.

The Supreme Court, speaking through
Justice Brandeis in Nashville, C. & St. L. Ry. Co. v. Walters, 294 U.S.
405, 55 S.Ct. 486, 488, 79 L.Ed. 949, stated, “A statute valid when enacted
may become invalid by change in the conditions to which it is applied. 
The police power is subject to the constitutional limitation that it may not be
exerted arbitrarily or unreasonably.” A number of prior opinions of that court
are cited in support of the statement.  The State of Florida for many
years had a statute, F.S.A. § 356.01 et seq. imposing extraordinary and special
duties upon railroad companies, among which was that a railroad company was
liable for double damages and an attorney’s fee for killing livestock by a
train without the owner having to prove any act of negligence on the part of
the carrier in the operation of its train. In Atlantic Coast Line Railroad Co.
v. Ivey, it was held that the changed conditions brought about by motor vehicle
transportation rendered the statute unconstitutional since if a common carrier
by motor vehicle had killed the same animal, the owner would have been required
to prove negligence in the operation of its equipment.  Said the court,
“This certainly is not equal protection of the law.”[34] (emphasis
supplied)

Echoes of these rulings resonate in
our case law, viz:

[C]ourts are not confined to the language
of the statute under challenge in determining whether that statute has any
discriminatory effect.  A statute nondiscriminatory on its face may be
grossly discriminatory in its operation.  Though the law itself be
fair on its face and impartial in appearance, yet, if it is applied and
administered by public authority with an evil eye and unequal hand, so as
practically to make unjust and illegal discriminations between persons in
similar circumstances, material to their rights, the denial of equal justice is
still within the prohibition of the Constitution.[35]
(emphasis supplied, citations omitted)

[W]e see no difference between a law
which denies equal protection and a law which permits of such denial. 
A law may appear to be fair on its face and impartial in appearance, yet, if it
permits of unjust and illegal discrimination, it is within the constitutional
prohibition….. In other words, statutes may be adjudged unconstitutional
because of their effect in operation…. If a law has the effect of denying the
equal protection of the law it is unconstitutional. ….[36]
(emphasis supplied, citations omitted

3.        
Enactment of R.A. Nos. 7907 + 8282 + 8289 + 8291 + 8523 + 8763

+ 9302 = consequential unconstitutionality
of challenged proviso.

According to petitioner, the last proviso of Section
15(c), Article II of R.A. No. 7653 is also violative of the equal protection
clause because after it was enacted, the charters of the GSIS, LBP, DBP and SSS
were also amended, but the personnel of the latter GFIs were all exempted from
the coverage of the SSL.[37]
Thus, within the class of rank-and-file personnel of GFIs, the BSP
rank-and-file are also discriminated upon.

Indeed, we take judicial notice that after the new BSP charter
was enacted in 1993, Congress also undertook the amendment of the charters of
the GSIS, LBP, DBP and SSS, and three other GFIs, from 1995 to 2004, viz:

1.  R.A. No. 7907 (1995) for Land Bank of the Philippines
(LBP);

2.  R.A. No. 8282 (1997) for Social Security System (SSS);

3.  R.A. No. 8289 (1997) for Small Business Guarantee and
Finance Corporation, (SBGFC);

4.  R.A. No. 8291 (1997) for Government Service Insurance
System (GSIS);

5.  R.A. No. 8523 (1998) for Development Bank of the
Philippines (DBP);

6.  R.A. No. 8763 (2000) for Home Guaranty Corporation (HGC);[38]
and

7.  R.A. No. 9302 (2004) for Philippine Deposit Insurance
Corporation (PDIC).

It is noteworthy, as petitioner points out, that the
subsequent charters of the seven other GFIs share this common proviso:
a blanket exemption of all their employees from the coverage of
the SSL, expressly or impliedly, as illustrated below:

1.  LBP (R.A. No. 7907)

Section 10. Section 90 of [R.A. No. 3844] is hereby amended to read
as follows:

Section 90. Personnel. –

xxx   
xxx      xxx

All positions in the Bank shall be governed by a compensation,
position classification system and qualification standards approved by the
Bank’s Board of Directors based on a comprehensive job analysis and audit of
actual duties and responsibilities.  The compensation plan shall be
comparable with the prevailing compensation plans in the private sector and
shall be subject to periodic review by the Board no more than once every two
(2) years without prejudice to yearly merit reviews or increases based on
productivity and profitability.  The Bank shall therefore be exempt
from existing laws, rules and regulations on compensation, position
classification and qualification standards.  It shall however endeavor
to make its system conform as closely as possible with the principles under
Republic Act No. 6758. (emphasis supplied)

xxx   
xxx      xxx

2.  SSS (R.A. No. 8282)

Section 1. [Amending R.A. No. 1161, Section 3(c)]:

xxx   
xxx       xxx

(c)The Commission, upon the recommendation
of the SSS President, shall appoint an actuary and such other personnel as may
[be] deemed necessary; fix their reasonable compensation, allowances and other
benefits; prescribe their duties and establish such methods and procedures as
may be necessary to insure the efficient, honest and economical administration
of the provisions and purposes of this Act: Provided, however, That the
personnel of the SSS below the rank of Vice President shall be appointed by the
SSS President: Provided, further, That the personnel appointed by the
SSS President, except those below the rank of assistant manager, shall be
subject to the confirmation by the Commission; Provided further, That
the personnel of the SSS shall be selected only from civil service eligibles
and be subject to civil service rules and regulations: Provided, finally,
That the SSS shall be exempt from the provisions of Republic Act No. 6758
and Republic Act No. 7430. (emphasis supplied)

3.  SBGFC (R.A. No. 8289)

Section 8. [Amending R.A. No. 6977, Section 11]:

xxx   
xxx       xxx

The Small Business Guarantee and Finance Corporation shall:

xxx   
xxx       xxx

(e) notwithstanding the provisions of
Republic Act No. 6758, and Compensation Circular No. 10, series of 1989
issued by the Department of Budget and Management, the Board of Directors of
SBGFC shall have the authority to extend to the employees and personnel thereof
the allowance and fringe benefits similar to those extended to and currently
enjoyed by the employees and personnel of other government financial
institutions.  (emphases supplied)

4.  GSIS (R.A. No. 8291)

Section 1. [Amending Section 43(d)].

xxx   
xxx       xxx

Sec. 43. Powers and Functions of the Board of Trustees. – The
Board of Trustees shall have the following powers and functions:

xxx    xxx
      xxx

(d) upon the recommendation of the
President and General Manager, to approve the GSIS’ organizational and administrative
structures and staffing pattern, and to establish, fix, review, revise and
adjust the appropriate compensation package for the officers and employees of
the GSIS with reasonable allowances, incentives, bonuses, privileges and other
benefits as may be necessary or proper for the effective management, operation
and administration of the GSIS, which shall be exempt from Republic Act No.
6758, otherwise known as the Salary Standardization Law and Republic Act No.
7430, otherwise known as the Attrition Law. (emphasis supplied)

xxx   
xxx      xxx

5.  DBP (R.A. No. 8523)

Section 6. [Amending E.O. No. 81, Section 13]:

Section 13. Other Officers and Employees. – The Board of
Directors shall provide for an organization and staff of officers and employees
of the Bank and upon recommendation of the President of the Bank, fix their
remunerations and other emoluments. All positions in the Bank shall be governed
by the compensation, position classification system and qualification standards
approved by the Board of Directors based on a comprehensive job analysis of
actual duties and responsibilities.  The compensation plan shall be
comparable with the prevailing compensation plans in the private sector and
shall be subject to periodic review by the Board of Directors once every two
(2) years, without prejudice to yearly merit or increases based on the Bank’s
productivity and profitability.  The Bank shall, therefore, be exempt
from existing laws, rules, and regulations on compensation, position
classification and qualification standards.  The Bank shall however,
endeavor to make its system conform as closely as possible with the principles
under Compensation and Position Classification Act of 1989 (Republic Act No.
6758, as amended). (emphasis supplied)

6.  HGC (R.A. No. 8763)

Section 9. Powers, Functions and Duties of the Board of
Directors. – The Board shall have the following powers, functions and
duties:

xxx   
xxx       xxx

(e) To create offices or positions
necessary for the efficient management, operation and administration of the
Corporation: Provided, That all positions in the Home Guaranty
Corporation (HGC) shall be governed by a compensation and position
classification system and qualifications standards approved by the
Corporation’s Board of Directors based on a comprehensive job analysis and
audit of actual duties and responsibilities: Provided, further, That
the compensation plan shall be comparable with the prevailing compensation
plans in the private sector and which shall be exempt from Republic Act No.
6758, otherwise known as the Salary Standardization Law, and from other laws,
rules and regulations on salaries and compensations; and to establish a
Provident Fund and determine the Corporation’s and the employee’s contributions
to the Fund; (emphasis supplied)

xxx   
xxx       xxx

7.  PDIC (R.A. No. 9302)

Section 2. Section 2 of [Republic Act No. 3591, as amended] is
hereby further amended to read:

xxx   
xxx       xxx

3.

xxx   
xxx       xxx

A compensation structure, based on job
evaluation studies and wage surveys and subject to the Board’s approval, shall
be instituted as an integral component of the Corporation’s human resource
development program: Provided, That all positions in the Corporation
shall be governed by a compensation, position classification system and
qualification standards approved by the Board based on a comprehensive job
analysis and audit of actual duties and responsibilities.  The
compensation plan shall be comparable with the prevailing compensation plans of
other government financial institutions and shall be subject to review by
the Board no more than once every two (2) years without prejudice to yearly
merit reviews or increases based on productivity and profitability.  The
Corporation shall therefore be exempt from existing laws, rules and regulations
on compensation, position classification and qualification standards.
 It shall however endeavor to make its system conform as closely as
possible with the principles under Republic Act No. 6758, as amended. (emphases
supplied)

Thus, eleven years after the amendment of the BSP charter, the
rank-and-file of seven other GFIs were granted the exemption that was
specifically denied to the rank-and-file of the BSP.  And as if to add
insult to petitioner’s injury, even the Securities and Exchange Commission
(SEC) was granted the same blanket exemption from the SSL in 2000![39]

The prior view on the constitutionality of R.A. No. 7653 was confined
to an evaluation of its classification between the rank-and-file and the
officers of the BSP, found reasonable because there were substantial
distinctions that made real differences between the two classes.

The above-mentioned subsequent enactments, however, constitute
significant changes in circumstance that considerably alter the reasonability
of the continued operation of the last proviso of Section 15(c), Article
II of Republic Act No. 7653, thereby exposing the proviso to more
serious scrutiny.  This time, the scrutiny relates to the
constitutionality of the classification – albeit made indirectly as a
consequence of the passage of eight other laws – between the rank-and-file
of the BSP and the seven other GFIs.  The classification must not only
be reasonable, but must also apply equally to all members of the class. 
The proviso may be fair on its face and impartial in appearance but
it cannot be grossly discriminatory in its operation, so as practically to
make unjust distinctions between persons who are without differences.[40]

Stated differently, the second level of inquiry deals with the
following questions: Given that Congress chose to exempt other GFIs (aside the
BSP) from the coverage of the SSL, can the exclusion of the rank-and-file
employees of the BSP stand constitutional scrutiny in the light of the fact
that Congress did not exclude the rank-and-file employees of the other GFIs? 
Is Congress’ power to classify so unbridled as to sanction unequal and
discriminatory treatment, simply because the inequity manifested itself, not
instantly through a single overt act, but gradually and progressively, through
seven separate acts of Congress?  Is the right to equal protection of the
law bounded in time and space that: (a) the right can only be invoked against a
classification made directly and deliberately, as opposed to a discrimination that
arises indirectly, or as a consequence of several other acts; and (b) is the
legal analysis confined to determining the validity within the parameters of
the statute or ordinance (where the inclusion or exclusion is articulated),
thereby proscribing any evaluation vis-à-vis the grouping, or the lack
thereof, among several similar enactments made over a period of time?

In this second level of scrutiny, the inequality of
treatment cannot be justified on the mere assertion that each exemption
(granted to the seven other GFIs) rests “on a policy determination by the
legislature.” All legislative enactments necessarily rest on a policy
determination – even those that have been declared to contravene the
Constitution.  Verily, if this could serve as a magic wand to sustain the
validity of a statute, then no due process and equal protection challenges
would ever prosper.  There is nothing inherently sacrosanct in a policy
determination made by Congress or by the Executive; it cannot run riot and
overrun the ramparts of protection of the Constitution.

In fine, the “policy determination” argument may
support the inequality of treatment between the rank-and-file and the officers
of the BSP, but it cannot justify the inequality of treatment between BSP
rank-and-file and other GFIs’ who are similarly situated.  It fails to
appreciate that what is at issue in the second level of scrutiny is not
the declared policy of each law per se, but the oppressive
results of Congress’ inconsistent and unequal policy towards the BSP
rank-and-file and those of the seven other GFIs.  At bottom, the second
challenge to the constitutionality of Section 15(c), Article II of Republic Act
No. 7653 is premised precisely on the irrational discriminatory policy
adopted by Congress in its treatment of persons similarly situated. In the
field of equal protection, the guarantee that "no person shall be … denied
the equal protection of the laws” includes the prohibition against enacting
laws that allow invidious discrimination, directly or indirectly. If a
law has the effect of denying the equal protection of the law, or permits such
denial, it is unconstitutional.[41]

It is against this standard that the disparate treatment of the
BSP rank-and-file from the other GFIs cannot stand judicial scrutiny.  For
as regards the exemption from the coverage of the SSL, there exist no
substantial distinctions so as to differentiate, the BSP rank-and-file from the
other rank-and-file of the seven GFIs.  On the contrary, our legal
history shows that GFIs have long been recognized as comprising one distinct
class, separate from other governmental entities.

Before the SSL, Presidential Decree (P.D.) No. 985
(1976) declared it as a State policy (1) to provide equal pay for
substantially equal work, and (2) to base differences in pay upon substantive
differences in duties and responsibilities, and qualification requirements of
the positions. P.D. No. 985 was passed to address disparities in pay among
similar or comparable positions which had given rise to dissension among
government employees.  But even then, GFIs and government-owned and/or
controlled corporations (GOCCs) were already identified as a distinct class
among government employees.  Thus, Section 2 also provided, “[t]hat
notwithstanding a standardized salary system established for all employees,
additional financial incentives may be established by government corporation
and financial institutions for their employees to be supported fully from their
corporate funds and for such technical positions as may be approved by the
President in critical government agencies.”[42]

The same favored treatment is made for the GFIs and the GOCCs
under the SSL. Section 3(b) provides that one of the principles governing the
Compensation and Position Classification System of the Government is that:
“[b]asic compensation for all personnel in the government and government-owned
or controlled corporations and financial institutions shall generally be
comparable with those in the private sector doing comparable work, and must be
in accordance with prevailing laws on minimum wages.”

Thus, the BSP and all other GFIs and GOCCs were under the unified
Compensation and Position Classification System of the SSL,[43]
but rates of pay under the SSL were determined on the basis of, among others,
prevailing rates in the private sector for comparable work. Notably, the
Compensation and Position Classification System was to be governed by the
following principles: (a) just and equitable wages, with the ratio of
compensation between pay distinctions maintained at equitable levels;[44]
and (b) basic compensation generally comparable with the private sector, in
accordance with prevailing laws on minimum wages.[45]
Also, the Department of Budget and Management was directed to use, as guide for
preparing the Index of Occupational Services, the Benchmark Position Schedule, and the
following factors:[46]

(1)           
the education and experience required to perform the duties and
responsibilities of the positions;

(2)                       
the nature and complexity of the work to be performed;

(3)                       
the kind of supervision received;

(4)                       
mental and/or physical strain required in the completion of the work;

(5)                       
nature and extent of internal and external relationships;

(6)                       
kind of supervision exercised;

(7)                       
decision-making responsibility;

(8)                       
responsibility for accuracy of records and reports;

(9)                       
accountability for funds, properties and equipment; and

(10)         
hardship, hazard and personal risk involved in the job.

The Benchmark Position Schedule enumerates the position titles
that fall within Salary Grades 1 to 20.

Clearly, under R.A. No. 6758, the rank-and-file of all GFIs were
similarly situated in all aspects pertaining to compensation and position
classification, in consonance with Section 5, Article IX-B of the 1997
Constitution.[47]

Then came the enactment of the amended charter of the BSP,
implicitly exempting the Monetary Board from the SSL by giving it express
authority to determine and institute its own compensation and wage
structure.  However, employees whose positions fall under SG 19 and below
were specifically limited to the rates prescribed under the SSL.

Subsequent amendments to the charters of other GFIs followed. 
Significantly, each government financial institution (GFI) was not only
expressly authorized to determine and institute its own compensation and wage
structure, but also explicitly exempted – without distinction as to salary
grade or position – all employees of the GFI from the SSL.

It has been proffered that legislative deliberations justify the
grant or withdrawal of exemption from the SSL, based on the perceived need “to
fulfill the mandate of the institution concerned considering, among others,
that: (1) the GOCC or GFI is essentially proprietary in character; (2) the GOCC
or GFI is in direct competition with their [sic] counterparts in
the private sector, not only in terms of the provisions of goods or services,
but also in terms of hiring and retaining competent personnel; and (3) the GOCC
or GFI  are or were [sic] experiencing difficulties filling
up plantilla positions with competent personnel and/or retaining these
personnel.  The need for the scope of exemption necessarily varies with
the particular circumstances of each institution, and the corresponding
variance in the benefits received by the employees is merely incidental.”

The fragility of this argument is manifest. First, the BSP is the
central monetary authority,[48]
and the banker of the government and all its political subdivisions.[49]
It has the sole power and authority to issue currency;[50]
provide policy directions in the areas of money, banking, and credit; and
supervise banks and regulate finance companies and non-bank financial
institutions performing quasi-banking functions, including
the exempted GFIs.[51]
Hence, the argument that the rank-and-file employees of the seven GFIs were
exempted because of the importance of their institution’s mandate cannot stand
any more than an empty sack can stand.

Second, it is certainly misleading to say that “the need for
the scope of exemption necessarily varies with the particular circumstances of
each institution.” Nowhere in the deliberations is there a cogent basis for
the exclusion of the BSP rank-and-file from the exemption which was granted to
the rank-and-file of the other GFIs and the SEC.  As point in fact, the
BSP and the seven GFIs are similarly situated in so far as Congress deemed it
necessary for these institutions to be exempted from the SSL.  True, the
SSL-exemption of the BSP and the seven GFIs was granted in the amended charters
of each GFI, enacted separately and over a period of time. But it bears
emphasis that, while each GFI has a mandate different and distinct from that of
another, the deliberations show that the raison d’être of the
SSL-exemption was inextricably linked to and for the most part
based on factors common to the eight GFIs, i.e., (1) the pivotal
role they play in the economy; (2) the necessity of hiring and retaining
qualified and effective personnel to carry out the GFI’s mandate; and (3) the
recognition that the compensation package of these GFIs is not competitive, and
fall substantially below industry standards.  Considering further that (a)
the BSP was the first GFI granted SSL exemption; and (b) the subsequent
exemptions of other GFIs did not distinguish between the officers and the
rank-and-file; it is patent that the classification made between the BSP
rank-and-file and those of the other seven GFIs was inadvertent, and NOT
intended, i.e., it was not based on any substantial distinction
vis-à-vis the particular circumstances of each GFI. Moreover, the exemption
granted to two GFIs makes express reference to allowance and fringe benefits
similar to those extended to and currently enjoyed by the employees and
personnel of other GFIs,[52]
underscoring that GFIs are a particular class within the realm of government
entities.

It is precisely this unpremeditated discrepancy in treatment of
the rank-and-file of the BSP – made manifest and glaring with each and every
consequential grant of blanket exemption from the SSL to the other GFIs – that
cannot be rationalized or justified. Even more so, when the SEC – which is not
a GFI – was given leave to have a compensation plan that “shall be comparable
with the prevailing compensation plan in the [BSP] and other [GFIs],”[53]
then granted a blanket exemption from the SSL, and its rank-and-file endowed a
more preferred treatment than the rank-and-file of the BSP.

The violation to the equal protection clause becomes even more
pronounced when we are faced with this undeniable truth: that if Congress had
enacted a law for the sole purpose of exempting the eight GFIs from the
coverage of the SSL, the exclusion of the BSP rank-and-file employees would
have been devoid of any substantial or material basis.  It bears no
moment, therefore, that the unlawful discrimination was not a direct result
arising from one law. “Nemo potest facere per alium quod non potest facere
per directum.” No one is allowed to do indirectly what he is prohibited to
do directly.

It has also been proffered that “similarities alone are not
sufficient to support the conclusion that rank-and-file employees of the BSP
may be lumped together with similar employees of the other GOCCs for purposes
of compensation, position classification and qualification standards.  The
fact that certain persons have some attributes in common does not automatically
make them members of the same class with respect to a legislative
classification.” Cited is the ruling in Johnson v. Robinson:[54]
“this finding of
similarity ignores that a common characteristic shared by beneficiaries and
nonbeneficiaries alike, is not sufficient to invalidate a statute when other
characteristics peculiar to only one group rationally explain the statute’s
different treatment of the two groups.”

The reference to Johnson is inapropos.  In Johnson,
the US Court sustained the validity of the classification as there were quantitative and
qualitative distinctions, expressly recognized by Congress, which formed a
rational basis for the classification limiting educational
benefits to military service veterans as a means of helping them readjust to
civilian life.  The Court listed the peculiar
characteristics as follows:

First, the disruption caused by military service is
quantitatively greater than that caused by alternative civilian service. A
conscientious objector performing alternative service is
obligated to work for two years. Service in the Armed Forces, on the other
hand, involves a six-year commitment…

xxx   
xxx       xxx

Second, the disruptions suffered by military veterans
and alternative service performers are qualitatively different. Military
veterans suffer a far greater loss of personal freedom during their service
careers. Uprooted from civilian life, the military veteran becomes part of the
military establishment, subject to its discipline and potentially hazardous
duty. Congress was acutely aware of the peculiar disabilities caused by
military service, in consequence of which military servicemen have a special
need for readjustment benefits…[55] (citations omitted)

In the case at bar, it is precisely the fact that as regards
the exemption from the SSL, there are no characteristics peculiar only to the
seven GFIs or their rank-and-file so as to justify the exemption which BSP
rank-and-file employees were denied (not to mention the anomaly of the SEC
getting one).  The distinction made by the law is not only superficial,[56]
but also arbitrary. It is not based on substantial distinctions that make real
differences between the BSP rank-and-file and the seven other GFIs.

Moreover, the issue in this case is not – as the dissenting
opinion of Mme. Justice Carpio-Morales would put it – whether “being an
employee of a GOCC or GFI is reasonable and sufficient basis for exemption”
from R.A. No. 6758.  It is Congress itself that distinguished the GFIs
from other government agencies, not once but eight times, through the
enactment of R.A. Nos. 7653, 7907, 8282, 8289, 8291, 8523, 8763, and
9302.  These laws may have created a “preferred sub-class within
government employees,” but the present challenge is not directed at the wisdom
of these laws. Rather, it is a legal conundrum involving the exercise of
legislative power, the validity of which must be measured not only by looking
at the specific exercise in and by itself (R.A. No. 7653), but also as
to the legal effects brought about by seven separate exercises – albeit
indirectly and without intent.

Thus, even if petitioner had not alleged “a comparable change in
the factual milieu as regards the compensation, position classification and
qualification standards of the employees of the BSP (whether of the executive
level or of the rank-and-file) since the enactment of the new Central Bank Act”
is of no moment. In GSIS
v. Montesclaros,[57]
this Court resolved the issue of constitutionality notwithstanding that
claimant had manifested that she was no longer interested in pursuing the case,
and even when the constitutionality of the said provision was not squarely raised
as an issue, because the issue involved not only the claimant but also others
similarly situated and whose claims GSIS would also deny based on the
challenged proviso.  The Court held that social justice and public
interest demanded the resolution of the constitutionality of the proviso.
And so it is with the challenged proviso in the case at bar.

It
bears stressing that the exemption from the SSL is a “privilege” fully
within the legislative prerogative to give or deny.  However, its subsequent
grant to the rank-and-file of the seven other GFIs and continued denial to the
BSP rank-and-file employees breached the latter’s right to equal protection. In
other words, while the granting of a privilege per se is a matter of
policy exclusively within the domain and prerogative of Congress, the
validity or legality of the exercise of this prerogative is subject to
judicial review.[58]
So when the distinction made is superficial, and not based on substantial
distinctions that make real differences between those included and excluded, it
becomes a matter of arbitrariness that this Court has the duty and the power to
correct.[59] As held in the United
Kingdom case of Hooper v. Secretary of State for Work and Pensions,[60] once the State has chosen
to confer benefits, “discrimination” contrary to law may occur where favorable
treatment already afforded to one group is refused to another, even though the
State is under no obligation to provide that favorable treatment. [61]

The disparity of treatment between BSP rank-and-file and the
rank-and-file of the other seven GFIs definitely bears the unmistakable badge
of invidious discrimination – no one can, with candor and fairness, deny the
discriminatory character of the subsequent blanket and total exemption of the seven
other GFIs from the SSL when such was withheld from the BSP.  Alikes
are being treated as unalikes without any rational basis.

Again, it must be emphasized that the equal protection clause
does not demand absolute equality but it requires that all persons shall be
treated alike, under like circumstances and conditions both as to privileges
conferred and liabilities enforced.  Favoritism and undue preference
cannot be allowed.  For the principle is that equal protection and
security shall be given to every person under circumstances which, if not
identical, are analogous. If law be looked upon in terms of burden or charges,
those that fall within a class should be treated in the same fashion; whatever
restrictions cast on some in the group is equally binding on the rest.[62]

In light of the lack of real and substantial distinctions that
would justify the unequal treatment between the rank-and-file of BSP from the
seven other GFIs, it is clear that the enactment of the seven subsequent
charters has rendered the continued application of the challenged proviso
anathema to the equal protection of the law, and the same should be declared as
an outlaw.

IV.

Equal Protection
Under

International Lens

In our jurisdiction, the standard and analysis of equal
protection challenges in the main have followed the “rational basis”
test, coupled with a deferential attitude to legislative classifications[63]
and a reluctance to invalidate a law unless there is a showing of a clear and
unequivocal breach of the Constitution. [64]

A.        Equal Protection

in
the United States

In contrast, jurisprudence in the U.S. has gone beyond the
static “rational basis” test.  Professor Gunther highlights the
development in equal protection jurisprudential analysis, to wit: [65]

Traditionally, equal protection
supported only minimal judicial intervention in most contexts. 
Ordinarily, the command of equal protection was only that government must not
impose differences in treatment “except upon some reasonable differentiation
fairly related to the object of regulation.” The old variety of equal
protection scrutiny focused solely on the means used by the
legislature: it insisted merely that the classification in the statute reasonably
relates to the legislative purpose.  Unlike substantive due
process, equal protection scrutiny was not typically concerned with identifying
“fundamental values” and restraining legislative ends.  And usually
the rational classification requirement was readily satisfied: the
courts did not demand a tight fit between classification and purpose; perfect
congruence between means and ends was not required.

xxx   
xxx       xxx

[From marginal intervention to major
cutting edge: The Warren Court’s “new equal protection” and the two-tier
approach.]

From its traditional modest role, equal
protection burgeoned into a major intervention tool during the Warren
era, especially in the 1960s.  The Warren Court did not abandon the
deferential ingredients of the old equal protection: in most areas of economic
and social legislation, the demands imposed by equal protection remained as
minimal as ever…But the Court launched an equal protection revolution by
finding large new areas for strict rather than deferential scrutiny.  A
sharply differentiated two-tier approach evolved by the late 1960s:
in addition to the deferential “old” equal protection, a “new” equal
protection, connoting strict scrutiny, arose…. The intensive review
associated with the new equal protection imposed two demands – a demand not
only as to means but also one as to ends.  Legislation qualifying for
strict scrutiny required a far closer fit between classification and statutory
purpose than the rough and ready flexibility traditionally tolerated by the old
equal protection:  means had to be shown “necessary” to achieve statutory
ends, not merely “reasonably related” ones.  Moreover, equal
protection became a source of ends scrutiny as well: legislation in the areas
of the new equal protection had to be justified by “compelling” state
interests, not merely the wide spectrum of “legitimate” state ends.

The Warren Court identified the areas
appropriate for strict scrutiny by searching for two characteristics: 
the presence of a “suspect” classification; or an impact on “fundamental”
rights or interests.  In the category of “suspect classifications,” the
Warren Court’s major contribution was to intensify the strict scrutiny in the
traditionally interventionist area of racial classifications.  But other
cases also suggested that there might be more other suspect categories as well:
illegitimacy and wealth for example.  But it was the ‘fundamental
interests” ingredient of the new equal protection that proved particularly
dynamic, open-ended, and amorphous….. [Other fundamental interests included
voting, criminal appeals, and the right of interstate travel ….]

xxx   
xxx       xxx

The Burger Court and Equal
Protection.

The Burger Court was reluctant to expand
the scope of the new equal protection, although its best established ingredient
retains vitality. There was also mounting discontent with the rigid
two-tier formulations of the Warren Court’s equal protection doctrine.  It
was prepared to use the clause as an interventionist tool without resorting to
the strict language of the new equal protection….  [Among the fundamental
interests identified during this time were voting and access to the ballot,
while “suspect” classifications included sex, alienage and illegitimacy.]

xxx   
xxx       xxx

Even while the two-tier scheme has often
been adhered to in form, there has also been an increasingly noticeable
resistance to the sharp difference between deferential “old” and
interventionist “new” equal protection.  A number of justices sought
formulations that would blur the sharp distinctions of the two-tiered approach
or that would narrow the gap between strict scrutiny and deferential
review.  The most elaborate attack came from Justice Marshall, whose
frequently stated position was developed most elaborately in his dissent in the
Rodriguez case: [66]

The Court apparently seeks to establish [that]
equal protection cases fall into one of two neat categories which dictate the
appropriate standard of review – strict scrutiny or mere rationality.
But this (sic) Court’s [decisions] defy such easy categorization. 
A principled reading of what this Court has done reveals that it has applied a
spectrum of standards in reviewing discrimination allegedly violative of the
equal protection clause.  This spectrum clearly comprehends variations in
the degree of care with which Court will scrutinize particular classification,
depending, I believe, on the constitutional and societal importance of the
interests adversely affected and the recognized invidiousness of the basis upon
which the particular classification is drawn.

Justice Marshall’s “sliding scale” approach
describes many of the modern decisions, although it is a formulation that the
majority refused to embrace.  But the Burger Court’s results indicate
at least two significant changes in equal protection law:  First,
invocation of the “old” equal protection formula no longer signals, as it did
with the Warren Court, an extreme deference to legislative classifications and
a virtually automatic validation of challenged statutes.  Instead, several
cases, even while voicing the minimal “rationality” “hands-off” standards of
the old equal protection, proceed to find the statute unconstitutional.  Second,
in some areas the modern Court has put forth standards for equal
protection review that, while clearly more intensive than the deference of the
“old” equal protection, are less demanding than the strictness of the “new”
equal protection. Sex discrimination is the best established example of an “intermediate”
level of review.  Thus, in one case, the Court said that
“classifications by gender must serve important governmental
objectives and must be substantially related to achievement of
those objectives.” That standard is “intermediate” with respect to both ends
and means: where ends must be “compelling” to survive strict scrutiny and
merely “legitimate” under the “old” mode, “important” objectives are required
here; and where means must be “necessary” under the “new” equal protection, and
merely “rationally related” under the “old” equal protection, they must be
“substantially related” to survive the “intermediate” level of review. (emphasis
supplied, citations omitted)

B.        Equal Protection

in Europe

The United Kingdom and other members of the European Community
have also gone forward in discriminatory legislation and jurisprudence. 
Within the United Kingdom domestic law, the most extensive list of protected
grounds can be found in Article 14 of the European Convention on Human
Rights (ECHR).  It prohibits discrimination on grounds such as “sex,
race, colour, language, religion, political or other opinion, national or
social origin, association with a national minority, property, birth or other
status.” This list is illustrative and not exhaustive.  Discrimination
on the basis of race, sex and religion is regarded as grounds that require
strict scrutiny.  A further indication that certain forms of
discrimination are regarded as particularly suspect under the Covenant
can be gleaned from Article 4, which, while allowing states to derogate from
certain Covenant articles in times of national emergency, prohibits derogation
by measures that discriminate solely on the grounds of “race, colour, language,
religion or social origin.”[67]

Moreover, the European Court of Human
Rights has developed a test of justification which varies with the ground
of discrimination.  In the Belgian Linguistics case[68]
the European Court set the standard of justification at a low level:
discrimination would contravene the Convention only if it had no legitimate
aim, or there was no reasonable relationship of proportionality between the means
employed and the aim sought to be realised.[69] But
over the years, the European Court has developed a hierarchy of grounds covered
by Article 14 of the ECHR, a much higher level of justification being required
in respect of those regarded as “suspect” (sex, race, nationality,
illegitimacy, or sexual orientation) than of others.  Thus, in Abdulaziz, [70]
the European Court declared that:

. . . [t]he advancement of the equality of the sexes is today a
major goal in the member States of the Council of Europe.  This means that
very weighty reasons would have to be advanced before a difference of treatment
on the ground of sex could be regarded as compatible with the Convention.

And in Gaygusuz
v. Austria,[71] the European Court held
that “very weighty reasons would have to be put
forward before the Court could regard a difference of
treatment based exclusively on the ground of nationality as compatible with the
Convention.”[72] The European Court will
then permit States a very much narrower margin of appreciation in relation
to discrimination on grounds of sex, race, etc., in the application of the
Convention rights than it will in relation to distinctions drawn by states
between, for example, large and small land-owners. [73]

C.        Equality under

International Law

The principle of equality has long been recognized under
international law. Article 1 of the Universal Declaration of Human Rights
proclaims that all human beings are born free and equal in dignity and
rights.  Non-discrimination, together with equality before the law and
equal protection of the law without any discrimination, constitutes basic
principles in the protection of human rights. [74]

Most, if not all, international human rights instruments
include some prohibition on discrimination and/or provisions about
equality.[75]
The general international provisions pertinent to discrimination and/or
equality are the International Covenant on Civil and Political Rights (ICCPR);[76]
the International Covenant on Economic, Social and Cultural Rights (ICESCR);
the International Convention on the Elimination of all Forms of Racial
Discrimination (CERD);[77]
the Convention on the Elimination of all Forms of Discrimination against Women
(CEDAW); and the Convention on the Rights of the Child (CRC).

In the broader international context, equality is also
enshrined in regional instruments such as the American Convention on Human
Rights;[78]
the African Charter on Human and People’s Rights;[79]
the European Convention on Human Rights;[80]
the European Social Charter of 1961 and revised Social Charter of 1996; and the
European Union Charter of Rights (of particular importance to European
states).  Even the Council of the League of Arab States has adopted the
Arab Charter on Human Rights in 1994, although it has yet to be ratified by the
Member States of the League.[81]

The equality provisions in these instruments do not merely
function as traditional "first generation" rights, commonly viewed as
concerned only with constraining rather than requiring State action. 
Article 26 of the ICCPR requires “guarantee[s]” of “equal and effective
protection against discrimination” while Articles 1 and 14 of the American and
European Conventions oblige States Parties “to ensure … the full and free
exercise of [the rights guaranteed] … without any discrimination” and to
“secure without discrimination” the enjoyment of the rights guaranteed.[82]
These provisions impose a measure of positive obligation on States
Parties to take steps to eradicate discrimination.

In the employment field, basic detailed minimum standards
ensuring equality and prevention of discrimination, are laid down in the ICESCR[83]
and in a very large number of Conventions administered by the International
Labour Organisation, a United Nations body. [84]
Additionally, many of the other international and regional human rights
instruments have specific provisions relating to employment.[85]

The United Nations Human Rights Committee has also gone beyond
the earlier tendency to view the prohibition against discrimination
(Article 26) as confined to the ICCPR rights.[86]
In Broeks[87]
and Zwaan-de Vries,[88]
the issue before the Committee was whether discriminatory provisions in the
Dutch Unemployment Benefits Act (WWV) fell within the scope of Article
26.  The Dutch government submitted that discrimination in social security
benefit provision was not within the scope of Article 26, as the right was
contained in the ICESCR and not the ICCPR.  They accepted that Article 26
could go beyond the rights contained in the Covenant to other civil and
political rights, such as discrimination in the field of taxation, but
contended that Article 26 did not extend to the social, economic, and cultural
rights contained in ICESCR. The Committee rejected this argument.  In its
view, Article 26 applied to rights beyond the Covenant including the rights in
other international treaties such as the right to social security found in
ICESCR:

Although Article 26 requires that
legislation should prohibit discrimination, it does not of itself contain any
obligation with respect to the matters that may be provided for by legislation.
Thus it does not, for example, require any state to enact legislation to
provide for social security.  However, when such legislation is adopted in
the exercise of a State’s sovereign power, then such
legislation must comply with Article 26 of the Covenant.[89]

Breaches of the right to equal protection occur directly or
indirectly. A classification may be struck down if it has the purpose or
effect of violating the right to equal protection. International law
recognizes that discrimination may occur indirectly, as the Human Rights
Committee[90]
took into account the definitions of discrimination adopted by CERD and CEDAW
in declaring that:

. . . “discrimination” as used in the [ICCPR] should be understood to
imply any distinction, exclusion, restriction or preference which is based
on any ground such as race, colour, sex, language, religion, political or
other opinion, national or social origin, property, birth or other status,
and which has the purpose or effect of nullifying or impairing the
recognition, enjoyment or exercise by all persons, on an equal footing, of
all rights and freedoms. [91](emphasis
supplied)

Thus, the two-tier analysis made in the case at bar of the
challenged provision, and its conclusion of unconstitutionality by subsequent
operation, are in cadence and in consonance with the progressive trend of other
jurisdictions and in international law.  There should be no hesitation
in using the equal protection clause as a major cutting edge to eliminate every
conceivable irrational discrimination in our society.  Indeed, the social
justice imperatives in the Constitution, coupled with the special status and
protection afforded to labor, compel this approach.[92]

Apropos the special protection afforded to labor under our
Constitution and international law, we held in International School Alliance
of Educators v. Quisumbing: [93]

That public policy abhors inequality and
discrimination is beyond contention. Our Constitution and laws reflect the
policy against these evils.  The Constitution 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, 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, the Convention (No. 111) Concerning
Discrimination in Respect of Employment and Occupation – 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 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 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." 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.

xxx   
xxx       xxx

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

The States Parties to the present Covenant recognize the right of
everyone to the enjoyment of just and [favorable] 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

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. (citations omitted)

Congress retains its wide discretion in providing for a valid
classification, and its policies should be accorded recognition and respect by
the courts of justice except when they run afoul of the Constitution.[94] The
deference stops where the classification violates a fundamental right, or
prejudices persons accorded special protection by the Constitution. 
When these violations arise, this Court must discharge its primary role as the
vanguard of constitutional guaranties, and require a stricter and more
exacting adherence to constitutional limitations.  Rational basis
should not suffice.

Admittedly, the view that prejudice to persons accorded special
protection by the Constitution requires a stricter judicial scrutiny finds no
support in American or English jurisprudence.  Nevertheless, these foreign
decisions and authorities are not per se controlling in this
jurisdiction.  At best, they are persuasive and have been used to support
many of our decisions.[95]
We should not place undue and fawning reliance upon them and regard them as
indispensable mental crutches without which we cannot come to our own decisions
through the employment of our own endowments.  We live in a different
ambience and must decide our own problems in the light of our own interests and
needs, and of our qualities and even idiosyncrasies as a people, and always
with our own concept of law and justice.[96]
Our laws must be construed in accordance with the intention of our own
lawmakers and such intent may be deduced from the language of each law and the
context of other local legislation related thereto. More importantly, they must
be construed to serve our own public interest which is the be-all and the
end-all of all our laws.  And it need not be stressed that our public
interest is distinct and different from others.[97]

In the 2003 case of Francisco v. House of Representatives,
this Court has stated that: “[A]merican jurisprudence and authorities, much
less the American Constitution, are of dubious application for these are no
longer controlling within our jurisdiction and have only limited persuasive
merit insofar as Philippine constitutional law is concerned….[I]n resolving
constitutional disputes, [this Court] should not be beguiled by foreign
jurisprudence some of which are hardly applicable because they have been
dictated by different constitutional settings and needs.”[98]
Indeed, although the Philippine Constitution can trace its origins to that of
the United States, their paths of development have long since diverged. [99]

Further, the quest for a better and more “equal” world calls for
the use of equal protection as a tool of effective judicial intervention.

Equality is one ideal which cries out for
bold attention and action in the Constitution.  The Preamble proclaims
“equality” as an ideal precisely in protest against crushing inequities in
Philippine society.  The command to promote social justice in Article II,
Section 10, in “all phases of national development,” further explicitated in
Article XIII, are clear commands to the State to take affirmative action in the
direction of greater equality.… [T]here is thus in the Philippine Constitution
no lack of doctrinal support for a more vigorous state effort towards achieving
a reasonable measure of equality.[100]

Our present Constitution has gone further in guaranteeing vital
social and economic rights to marginalized groups of society, including labor.[101]
Under the policy of social justice, the law bends over backward to accommodate
the interests of the working class on the humane justification that those with
less privilege in life should have more in law.[102]
And the obligation to afford protection to labor is incumbent not only on the
legislative and executive branches but also on the judiciary to translate this
pledge into a living reality.[103]
Social justice calls for the humanization of laws and the equalization of
social and economic forces by the State so that justice in its rational and
objectively secular conception may at least be approximated.[104]

V.

A Final Word

Finally, concerns have been raised as to the propriety of a
ruling voiding the challenged provision.  It has been proffered that the
remedy of petitioner is not with this Court, but with Congress, which alone has
the power to erase any inequity perpetrated by R.A. No. 7653.  Indeed, a
bill proposing the exemption of the BSP rank-and-file from the SSL has
supposedly been filed.

Under most circumstances, the Court will exercise judicial
restraint in deciding questions of constitutionality, recognizing the broad
discretion given to Congress in exercising its legislative power. 
Judicial scrutiny would be based on the “rational basis” test, and the legislative
discretion would be given deferential treatment. [105]

But if the challenge to the statute is premised on the denial
of a fundamental right, or the perpetuation of prejudice against persons
favored by the Constitution with special protection, judicial scrutiny ought to
be more strict.  A weak and watered down view would call for the
abdication of this Court’s solemn duty to strike down any law repugnant to the
Constitution and the rights it enshrines.  This is true whether the actor
committing the unconstitutional act is a private person or the government
itself or one of its instrumentalities.  Oppressive acts will be struck
down regardless of the character or nature of the actor. [106]

Accordingly, when the grant of power is
qualified, conditional or subject to limitations, the issue on whether or not
the prescribed qualifications or conditions have been met, or the limitations
respected, is justiciable or non-political, the crux of the problem being one
of legality or validity of the contested act, not its wisdom. Otherwise, said
qualifications, conditions or limitations – particularly those prescribed or
imposed by the Constitution – would be set at naught.  What is more, the
judicial inquiry into such issue and the settlement thereof are the main
functions of courts of justice under the Presidential form of government
adopted in our 1935 Constitution, and the system of checks and balances, one of
its basic predicates. As a consequence, We have neither the authority nor
the discretion to decline passing upon said issue, but are under the
ineluctable obligation – made particularly more exacting and peremptory by our
oath, as members of the highest Court of the land, to support and defend the
Constitution – to settle it.  This explains why, in Miller v. Johnson,
it was held that courts have a "duty, rather than a power", to
determine whether another branch of the government has "kept within
constitutional limits." Not satisfied with this postulate, the court went
farther and stressed that, if the Constitution provides how it may be amended –
as it is in our 1935 Constitution – "then, unless the manner is followed,
the judiciary as the interpreter of that constitution, will declare the
amendment invalid." In fact, this very Court – speaking through Justice
Laurel, an outstanding authority on Philippine Constitutional Law, as well as
one of the highly respected and foremost leaders of the Convention that drafted
the 1935 Constitution – declared, as early as July 15, 1936, that "(i)n
times of social disquietude or political excitement, the great landmarks of the
Constitution are apt to be forgotten or marred, if not entirely obliterated. In
cases of conflict, the judicial department is the only constitutional organ
which can be called upon to determine the proper allocation of powers between
the several departments" of the government.[107]
(citations omitted; emphasis supplied)

In the case at bar, the challenged proviso operates on the
basis of the salary grade or officer-employee status.  It is
akin to a distinction based on economic class and status, with the higher
grades as recipients of a benefit specifically withheld from the lower
grades.  Officers of the BSP now receive higher compensation packages that
are competitive with the industry, while the poorer, low-salaried employees are
limited to the rates prescribed by the SSL.  The implications are quite
disturbing: BSP rank-and-file employees are paid the strictly regimented rates
of the SSL while employees higher in rank – possessing higher and better
education and opportunities for career advancement – are given higher
compensation packages to entice them to stay.  Considering that
majority, if not all, the rank-and-file employees consist of people whose
status and rank in life are less and limited, especially in terms of job marketability,
it is they – and not the officers – who have the real economic and financial need
for the adjustment  This is in accord with the policy of the
Constitution "to free the people from poverty, provide adequate social
services, extend to them a decent standard of living, and improve the quality
of life for all.”[108]
Any act of Congress that runs counter to this constitutional desideratum
deserves strict scrutiny by this Court before it can pass muster.

To be sure, the BSP rank-and-file employees merit greater
concern from this Court.  They represent the more impotent
rank-and-file government employees who, unlike employees in the private sector,
have no specific right to organize as a collective bargaining unit and
negotiate for better terms and conditions of employment, nor the power to hold
a strike to protest unfair labor practices.  Not only are they impotent as
a labor unit, but their efficacy to lobby in Congress is almost nil as R.A. No.
7653 effectively isolated them from the other GFI rank-and-file in
compensation.  These BSP rank-and-file employees represent the
politically powerless and they should not be compelled to seek a political
solution to their unequal and iniquitous treatment.  Indeed, they have
waited for many years for the legislature to act.  They cannot be asked to
wait some more for discrimination cannot be given any waiting time. 
Unless the equal protection clause of the Constitution is a mere platitude, it
is the Court’s duty to save them from reasonless discrimination.

IN VIEW WHEREOF, we hold that the continued operation and
implementation of the last proviso of Section 15(c), Article II of
Republic Act No. 7653 is unconstitutional.

Davide, Jr., C.J., Quisumbing, Ynares-Santiago,
Sandoval-Gutierrez, Austria-Martinez, Azcuna, Tinga, and Chico-Nazario,
JJ., concur.

Panganiban,
Carpio,
Carpio-Morales,
and Garcia, JJ., see dissenting.

Corona, and Callejo, Sr., JJ., on leave.