FACTS:

The case involves a dispute between the International School and its local-hire employees who claim discrimination due to receiving lower salaries compared to their foreign-hire counterparts. The School, established for dependents of foreign diplomatic personnel and temporary residents, hires both foreign and local teachers as faculty members. The School classifies its faculty as either foreign-hires or local-hires based on several tests, including domicile, home economy, economic allegiance, and hiring location. Foreign-hire faculty members receive certain benefits and a salary rate 25% higher than local-hires. The School justifies the difference in compensation by citing the "dislocation factor" and limited tenure that foreign-hires endure. The issue of the salary disparity and the inclusion of foreign-hires in the bargaining unit led to a deadlock between the School and the labor union. The labor union filed a notice of strike, prompting the Department of Labor and Employment (DOLE) to assume jurisdiction over the dispute. The Acting Secretary of Labor resolved the issues in favor of the School, upholding the salary classification and recognizing the international character of the School as a valid reason for the difference in compensation. The labor union then sought relief from the Supreme Court, claiming that the salary classification is discriminatory and constitutes racial discrimination.

ISSUES:

1. Whether the practice of International School, Inc. of according higher salaries to foreign-hires than local-hires constitutes discrimination.

2. Whether foreign-hires should be included in the same bargaining unit with local-hires.

RULING:

1. Discrimination in Salary Rates

   • The Supreme Court ruled that the practice of according higher salaries to foreign-hires than local-hires constitutes discrimination. The principle of equal pay for equal work should be observed, and no reasonable distinction exists between the services rendered by foreign-hires and local-hires to justify the difference in salary rates.

2. Inclusion in the Bargaining Unit

   • The Court held that foreign-hires do not belong in the same bargaining unit as local-hires. Factors such as limited tenure for foreign-hires, additional benefits they receive, and the history of separate treatment for collective bargaining purposes justify this exclusion.

PRINCIPLES:

• Equal Pay for Equal Work Employees performing work of equal value should receive equal pay, irrespective of where they were hired or their nationality.

• Reasonable Classification Classifications must be based on substantial distinctions and should apply to all members of the same class.

• Constitutional Protections Against Discrimination The Constitution and laws against discrimination in the workplace must be upheld, ensuring equitable treatment for all employees.

• Public Policy on Workers' Rights Public policy strongly abhors inequality and discrimination, especially in terms of wages, and aims to protect the rights and welfare of workers.

• Exclusion from Bargaining Unit Employees with distinct employment terms and benefits that significantly differ from the rest can be excluded from the collective bargaining unit to ensure that the collective bargaining rights are adequately protected for all groups involved.