CENTRAL BANK (now Bangko Sentral ng Pilipinas) EMPLOYEES

ASSOCIATION, INC., petitioner, vs. BANGKO SENTRAL NG PILIPINAS

and the EXECUTIVE SECRETARY, respondents.

Stat-Con Principle:

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.
A statute valid at one time may become void at another time because of altered
circumstances. 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.

The Case
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 Bangko Sentral ng Pilipinas
(BSP).
Article II, Section 15(c) of R.A. No. 7653 provides that those with Salary Grades
(SG) 20 and above are exempted from the Salary Standardization Law (SSL),
meaning their Money Board can make its own compensation structure; while those with
SG 19 and below are not exempted from SSL, such that their salary structure are
bound to the provisions of SSL.
Following the enactment of RA No. 7653, other Government Financial Institutions
(GFIs) like the GSIS, SSS, DBP and others, followed suit and changed their respective
charters. The controversial difference however is that all of its employees, regardless
of SG, are exempted from SSL.
This prompted the Central Bank Employees Association to petition, after 8 years
since its enactment, R.A. No. 7653.
The petitioners thrust for their challenge is that RA 7653 denies them the equal
protection of the law as it makes an unconstitutional cut between two classes: 1)
officers and executives (SG 20 and above), exempted from SSL; and 2) rank-in-file
(SG 19 and below), not exempted from SSL. This thus is a class legislation.
Further, one of their sub-sets of arguments is that GSIS, LBP, DBP and SSS
personnel are all exempted from the coverage of the SSL; thus within the class of rankand-file personnel of government financial institutions (GFIs), the BSP rank-and-file are
also discriminated upon.

Issue:

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.

Ruling:
A) UNDER THE PRESENT STANDARDS OF EQUAL PROTECTION, SECTION 15(c),
ARTICLE II OF R.A. NO. 7653 IS VALID.
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.
That is, the standard for classification is satisfied if it is based on reasonable
foundation and is not palpably arbitrary.
In the case at bar, exemption of SG 20 and above from SSL was reasonable as
it was intended to address the BSPs lack of competitiveness in terms of attracting
competent officers and executives. It was not intended to discriminate the rank-in-file
employees. If the discrimination of the rank-in-file employees was the end result, the
discrimination has a rational basis and is not palpably arbitrary.

B) THE ENACTMENT, HOWEVER, OF SUBSEQUENT LAWS - EXEMPTING ALL

OTHER RANK-AND-FILE EMPLOYEESOF GFIs FROM THE SSL - RENDERS THE
CONTINUED APPLICATION OF THE CHALLENGED PROVISION A VIOLATION OF
THE EQUAL PROTECTION CLAUSE. (this is where concept of Relative
Constitutionality comes in)
A statute valid when enacted may become invalid by change in the
conditions to which it is applied.
Although R.A. No. 7653 was held valid under the present standards of equal
protection, the subsequent enactments of the charters of the other GFIs which
unanimously exempted all of their employees from the SSL, including those
occupying rank-in-file positions, where now invidious to that of the rank-in-file
employees of the BSP, who are not exempted from the SSL, considering that they all
belong to the same class of GFIs.
The rights for equal protection of laws of the rank-in-file employees of the
BSP were now abridged.

Held:
The continued operation and implementation of the last proviso of Section
15(c), Article II of Republic Act No. 7653 is unconstitutional.