Case Summary (G.R. No. 148208)
Petitioner’s Challenge: Invidious Discrimination
• Two classes of BSP personnel:
- Officers (positions SG 20 and above) – exempt from the Salary Standardization Law
- Rank-and-file (positions SG 19 and below) – subject to the Salary Standardization Law
• Petitioner’s arguments:
– Classification is not based on “substantial distinctions” among BSP personnel.
– It “defeats the purpose” of establishing professionalism and excellence.
– Subsequent amendments of seven other GOCC/GFI charters exempt their rank-and-file entirely from RA 6758, whereas BSP rank-and-file remain bound.
– The continued operation of the proviso therefore violates equal protection.
Response of BSP and Executive Secretary
• BSP: The classification was a legislative policy choice to ensure competitiveness for key executive posts, consistent with fiscal/administrative autonomy. BSP’s own system remains subject to “prevailing laws and policies.”
• Executive Secretary: The distinction is rationally based on real differences between managerial and rank-and-file levels, and harmonizes with BSP’s mandate.
Applicable Equal Protection Standards
• Rational-Basis Test (ordinary economic/social legislation):
– Presumes statute’s validity; classification upheld if any rational basis exists.
• Strict Scrutiny (suspect classifications or fundamental rights):
– Requires “compelling” state interest and narrow tailoring. Not invoked here because neither fundamental rights nor suspect classes are at issue.
Classification of BSP Executives vs. Rank-and-File Is Valid
• The executive corps (SG 20+) perform high-level, specialized, decision-making functions distinct from rank-and-file duties.
• Exemption of SG 20+ from RA 6758 is rationally related to BSP’s need to attract and retain qualified top-level personnel.
• The legislative record confirms BSP’s competitiveness concerns at the managerial level.
Subsequent Exemptions of Other GFIs
Between 1995 and 2004, Congress amended the charters of LBP, SSS, SBGFC, GSIS, DBP, HGC and PDIC, granting blanket exemption of all their employees (officers and rank-and-file) from the Salary Standardization Law.
Doctrine of Relative Constitutionality
• A statute valid at enactment may become invalid later if “changed circumstances” undermine its reasonableness.
• Applying the doctrine, the Court recognized that later exemptions for other GFIs altered the constitutional landscape.
Effect of Subsequent Exemptions on BSP Proviso
• Originally, the BSP proviso addressed only internal distinctions between managerial and rank-and-file personnel.
• Later, Congress granted full exemption to rank-and-file of other GFIs.
• Under equal protection, similarly situated groups must be treated alike; BSP rank-and-file then suffered unjust disparity.
Supreme Court Ruling: Proviso Unconstitutional in Its Continued Operation
• The Court held that while
Case Syllabus (G.R. No. 148208)
Facts
- Republic Act No. 7653 (The New Central Bank Act) took effect on July 3, 1993, abolishing the old Central Bank and creating the Bangko Sentral ng Pilipinas (BSP).
- Section 15(c) of R.A. 7653 authorizes the Monetary Board to institute its own compensation and position classification system, subject to the principles of R.A. 6758 (the Salary Standardization Law, SSL).
- A last proviso in Section 15(c) provides that BSP employees in Salary Grades 19 and below remain under SSL rates, while those in Salary Grades 20 and above are exempt.
- On June 8, 2001, the Central Bank Employees Association filed a petition for prohibition to declare the proviso unconstitutional. About 2,994 rank-and-file employees (SG 19 and below) are affected.
- Meanwhile, charters of seven other government financial institutions (LBP, SSS, SBGFC, GSIS, DBP, HGC, PDIC) enacted between 1995 and 2004 exempted all their employees—officers and rank-and-file—from SSL coverage.
Statutory Background
- Republic Act No. 6758 (Salary Standardization Law) establishes a unified compensation classification system for all government positions (including GOCCs/GFIs), assigning each class to a Salary Grade (1–33) based on duties, responsibilities and qualifications, with periodic review.
- Presidential Decree No. 985 (1976) similarly required equal pay for equal work and comparability with the private sector for all government employees, but many exemptions were granted by charter amendments.
- Sections 2 and 16 of P.D. 985, along with all later laws or charters inconsistent with the new unified system, were repealed by R.A. 6758. A severability clause and non-diminution clause preserve higher rates where already enjoyed.
Petitioner’s Contentions
- The SG 19/SG 20 cutoff is an arbitrary classification lacking substantial distinctions to justify different pay schemes.
- The last proviso is not germane to the purpose of Section 15(c), which aims to foster professionalism and excellence at all levels.
- Legislative history shows the proviso was inserted late without rational basis.
- After seven other GFIs exempted all their employees from SSL, continuing to subject BSP rank-and-file employees to