You are on page 1of 22

STAR PAPER CORPORATION

,
JOSEPHINE ONGSITCO &
SEBASTIAN CHUA,
Petitioners,

-versus-

G.R. No. 164774
Present:
PUNO, J., Chairman,
SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
GARCIA, JJ.

Promulgated:
RONALDO D. SIMBOL,
April 12, 2006
WILFREDA N. COMIA &
LORNA E. ESTRELLA,
Respondents.
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION
PUNO, J.:
We are called to decide an issue of first impression: whether the policy of the
employer banning spouses from working in the same company violates the rights
of the employee under the Constitution and the Labor Code or is a valid exercise of
management prerogative.
At bar is a Petition for Review on Certiorari of the Decision of the Court of
Appeals dated August 3, 2004 in CA-G.R. SP No. 73477 reversing the decision of
the National Labor Relations Commission (NLRC) which affirmed the ruling of
the Labor Arbiter.
Petitioner Star Paper Corporation (the company) is a corporation engaged in
trading – principally of paper products. Josephine Ongsitco is its Manager of the
Personnel and Administration Department while Sebastian Chua is its Managing
Director.

The evidence for the petitioners show that respondents Ronaldo D. Simbol
(Simbol), Wilfreda N. Comia (Comia) and Lorna E. Estrella (Estrella) were all
regular employees of the company.[1]
Simbol was employed by the company on October 27, 1993. He met
Alma Dayrit, also an employee of the company, whom he married on June 27,
1998. Prior to the marriage, Ongsitco advised the couple that should they decide to
get married, one of them should resign pursuant to a company policy promulgated
in 1995,[2] viz.:
1.
New applicants will not be allowed to be hired if in case he/she has
[a] relative, up to [the] 3rd degree of relationship, already employed by the
company.
2.
In case of two of our employees (both singles [sic], one male and
another female) developed a friendly relationship during the course of their
employment and then decided to get married, one of them should resign to
preserve the policy stated above.[3]

Simbol resigned on June 20, 1998 pursuant to the company policy.[4]
Comia was hired by the company on February 5, 1997. She met Howard
Comia, a co-employee, whom she married on June 1, 2000. Ongsitco likewise
reminded them that pursuant to company policy, one must resign should they
decide to get married. Comia resigned on June 30, 2000.[5]
Estrella was hired on July 29, 1994. She met Luisito Zuñiga (Zuñiga), also a
co-worker. Petitioners stated that Zuñiga, a married man, got Estrella pregnant. The
company allegedly could have terminated her services due to immorality but she
opted to resign on December 21, 1999.[6]
The respondents each signed a Release and Confirmation Agreement. They
stated therein that they have no money and property accountabilities in the
company and that they release the latter of any claim or demand of whatever
nature.[7]
Respondents
offer
a
different
version
of
their
dismissal. Simbol and Comia allege that they did not resign voluntarily; they were
compelled to resign in view of an illegal company policy. As to respondent

an employer is free to regulate. However. working method. [8] Respondents later filed a complaint for unfair labor practice. she met an accident and was advised by the doctor at the Orthopedic Hospital to recuperate for twenty-one (21) days. viz. according to his own discretion and judgment all the aspects of employment. processes to be followed. lay-off of workers and the discipline. tools to be used. after submission of the explanation. On November 30.[9] (Citations omitted. She returned to work on December 21. She refused to sign the memorandum because she was on leave for twenty-one (21) days and has not been given a chance to explain. 1999 but she found out that her name was on-hold at the gate. work assignment. she was nonetheless dismissed by the company. She was directed to proceed to the personnel office where one of the staff handed her a memorandum. After he got her pregnant. working regulations. The memorandum stated that she was being dismissed for immoral conduct. This management prerogative is quite broad and encompassing for it covers hiring. On May 31. place and manner of work.) On appeal to the NLRC. 1999. she alleges that she had a relationship with co-worker Zuñiga who misrepresented himself as a married but separated man. 2002. 2001. Labor Arbiter Melquiades Sol del Rosario dismissed the complaint for lack of merit. [10] Respondents filed a Motion for Reconsideration but was denied by the NLRC in a Resolution[11] dated August 8. she severed her relationship with him to avoid dismissal due to the company policy. work supervision. They appealed to respondent court via Petition for Certiorari.: [T]his company policy was decreed pursuant to what the respondent corporation perceived as management prerogative. .Estrella. Due to her urgent need for money. transfer of employees. 2002. supervision of workers. constructive dismissal. The management asked her to write an explanation. Thus. Except as provided for or limited by special law. separation pay and attorney’s fees. she later submitted a letter of resignation in exchange for her thirteenth month pay. They also contended that they were dismissed due to their union membership. They averred that the aforementioned company policy is illegal and contravenes Article 136 of the Labor Code. time. she discovered that he was not separated. the Commission affirmed the decision of the Labor Arbiter on January 11. dismissal and recall of workers. She was denied entry.

2002 (sic)[12] Decision of the National Labor Relations Commission is hereby REVERSED and SET ASIDE and a new one is entered as follows: (1) Declaring illegal. X X X THE SUBJECT 1995 POLICY/REGULATION IS VIOLATIVE OF THE CONSTITUTIONAL RIGHTS TOWARDS MARRIAGE AND THE FAMILY OF EMPLOYEES AND OF ARTICLE 136 OF THE LABOR CODE. the Court of Appeals reversed the NLRC decision. petitioners contend that the Court of Appeals erred in holding that: 1. premises considered. viz.[14] We affirm.In its assailed Decision dated August 3.: . The 1987 Constitution[15] states our policy towards the protection of labor under the following provisions. viz. and (2) Ordering private respondents to pay petitioners attorney’s fees amounting to 10% of the award and the cost of this suit. the petitioners’ dismissal from employment and ordering private respondents to reinstate petitioners to their former positions without loss of seniority rights with full backwages from the time of their dismissal until actual reinstatement.: WHEREFORE. X X X RESPONDENTS’ RESIGNATIONS WERE FAR FROM VOLUNTARY.[13] On appeal to this Court. AND 2. 2004. the May 31.

humane conditions of work. closed shop. The State shall promote the principle of shared responsibility between workers and employers. The Civil Code likewise protects labor with the following provisions: Art. discharge. In case of doubt. It shall be unlawful for an employer to require as a condition of employment or continuation of employment that a woman employee shall not get married. Section 18. It shall protect the rights of workers and promote their welfare. Therefore. 1700. wages. such contracts are subject to the special laws on labor unions. . They shall be entitled to security of tenure. and a living wage. or to actually dismiss. xxx Article XIII. hours of labor and similar subjects. The case at bar involves Article 136 of the Labor Code which provides: Art. collective bargaining and negotiations. recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns on investments. and to expansion and growth. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. Art. 3. Sec.Article II. They are so impressed with public interest that labor contracts must yield to the common good. The State shall afford full protection to labor. or to stipulate expressly or tacitly that upon getting married a woman employee shall be deemed resigned or separated. and peaceful concerted activities. It shall guarantee the rights of all workers to self-organization. collective bargaining. and promote full employment and equality of employment opportunities for all. including the right to strike in accordance with law. discriminate or otherwise prejudice a woman employee merely by reason of her marriage. local and overseas. working conditions. 136. all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer. 1702. strikes and lockouts. The relation between capital and labor are not merely contractual. The Labor Code is the most comprehensive piece of legislation protecting labor. organized and unorganized. The State affirms labor as a primary social economic force.

rather than upon their ability. Hence. it is not the marital status of the employee. It is only intended to carry out its noemployment-for-relatives-within-the-third-degree-policy which is within the ambit of the prerogatives of management. per se. The rule does not require the woman employee to resign. and those banning all immediate family members.[17] These policies focus upon the potential employment problems arising from the perception of favoritism exhibited towards relatives.[18] . Further. that is being discriminated. including spouses.[16] It is true that the policy of petitioners prohibiting close relatives from working in the same company takes the nature of an anti-nepotism employment policy. We note that two types of employment policies involve spouses: policies banning only spouses from working in the same company (no-spouse employment policies).Respondents submit that their dismissal violates the above provision. With more women entering the workforce. Petitioners allege that its policy “may appear to be contrary to Article 136 of the Labor Code” but it assumes a new meaning if read together with the first paragraph of the rule. The employee spouses have the right to choose who between them should resign. they are free to marry persons other than co-employees. from working in the same company (anti-nepotism employment policies). employers are also enacting employment policies specifically prohibiting spouses from working for the same company. Companies adopt these policies to prevent the hiring of unqualified persons based on their status as a relative.

Unlike in our jurisdiction where there is no express prohibition on marital discrimination. although most employment policies do not expressly indicate which spouse will be required to transfer or leave the company. and place of employment of one's spouse. occupation.They construe marital status discrimination to include only whether a person is single. In challenging the anti-nepotism employment policies in the United States. to establish disparate impact. their decisions vary. is discriminatory on its face. divorced. For example.[23] The state courts’ rulings on the issue depend on their interpretation of the scope of marital status discrimination within the meaning of their respective civil rights acts. complainants utilize two theories of employment discrimination: the disparate treatment and thedisparate impact. or widowed reason that if the legislature intended a broader definition it would have either chosen different language or specified its intent. the complainants must prove that a facially neutral policy has a disproportionate effect on a particular class. single. single.[22] On the other hand.[19] there are twenty state statutes[20] in the United States prohibiting marital discrimination. the policy often disproportionately affects one sex. they are divided on whether the term has a broader meaning. Thus. or widowed and not the “identity. divorced. They hold that the relevant inquiry is if one is married rather than to whom one is married. For example. but not husbands of female employees.[24] The courts narrowly[25] interpreting marital status to refer only to a person's status as married. Some state courts[21] have been confronted with the issue of whether no-spouse policies violate their laws prohibiting both marital status and sex discrimination. Under the disparate treatment analysis. No-spouse employment policies requiring an employee of a particular sex to either quit. transfer.” These courts have upheld the questioned policies and ruled that they did not violate the marital status discrimination provision of their respective state statutes. the plaintiff must prove that an employment policy is discriminatory on its face. . an employment policy prohibiting the employer from hiring wives of male employees. or widowed. divorced. or be fired are facially discriminatory. married. Though they agree that the term “marital status” encompasses discrimination based on a person's status as either married.

they rule that unless the employer can prove that the reasonable demands of the business require a distinction based on marital status and there is no better available or acceptable policy which would better accomplish the business purpose. [31] This is known as the bona fide occupational qualification exception. and. (2) that there is a factual basis for believing that all or substantially all persons meeting the qualification would be unable to properly perform the duties of the job. In the recent case of Duncan Association of Detailman-PTGWO and [34] Pedro Tecson v. occupation and employment of one's spouse. They strike down the no-spouse employment policies based on the broad legislative intent of the state statute. marketing strategies and other confidential programs and information from competitors. They reason that the no-spouse employment policy violate the marital status provision because it arbitrarily discriminates against all spouses of present employees without regard to the actual effect on the individual's qualifications or work performance.[30] Thus.. [28] They hold that the absence of such a bona fide occupational qualification[29] invalidates a rule denying employment to one spouse due to the current employment of the other spouse in the same office. [32] To justify a bona fide occupational qualification. the employer must prove two factors: (1) that the employment qualification is reasonably related to the essential operation of the job involved. the exception is interpreted strictly and narrowly by these state courts. We considered the prohibition against personal or marital relationships with employees of competitor companies upon Glaxo’s employees reasonable under the circumstances because .[33] The concept of a bona fide occupational qualification is not foreign in our jurisdiction.The courts that have broadly[26] construed the term “marital status” rule that it encompassed the identity. We held that Glaxo has a right to guard its trade secrets. Inc.[27] These courts also find the no-spouse employment policy invalid for failure of the employer to present any evidence of business necessity other than the general perception that spouses in the same workplace might adversely affect the business. We employ the standard of reasonableness of the company policy which is parallel to the bona fide occupational qualification requirement. There must be a compelling business necessity for which no alternative exists other than the discriminatory practice. Glaxo WellcomePhilippines. an employer may not discriminate against an employee based on the identity of the employee’s spouse. We note that since the finding of a bona fide occupational qualification justifies an employer’s no-spouse rule. manufacturing formulas. we passed on the validity of the policy of a pharmaceutical company prohibiting its employees from marrying employees of any competitor company.

relationships of that nature might compromise the interests of Glaxo. NLRC.[35] The requirement that a company policy must be reasonable under the circumstances to qualify as a valid exercise of management prerogative was also at issue in the 1997 case of Philippine Telegraph and Telephone Company v. the employee was dismissed in violation of petitioner’s policy of disqualifying from work any woman worker who contracts marriage. then an employee of the Repacking Section. where the particular requirements of the job would justify the same. Petitioners failed to show how the marriage of Simbol. That the second paragraph was meant to give teeth to the first paragraph of the questioned rule[39] is evidently not the valid reasonable business necessity required by the law.: [A] requirement that a woman employee must remain unmarried could be justified as a “bona fide occupational qualification. Petitioners’ sole contention that “the company did not just want to have two (2) or more of its employees related between the third degree by affinity and/or consanguinity”[38] is lame.[36] In said case. . but established a permissible exception. In laying down the assailed company policy. then a Sheeting Machine Operator. we recognized that Glaxo only aims to protect its interests against the possibility that a competitor company will gain access to its secrets and procedures. A requirement of that nature would be valid provided it reflects an inherent qualityreasonably necessary for satisfactory job performance. respondents were hired after they were found fit for the job. It is significant to note that in the case at bar.” or BFOQ.) The cases of Duncan and PT&T instruct us that the requirement of reasonableness must be clearly established to uphold the questioned employment policy. such as the desirability of spreading work in the workplace. We held that the company policy violates the right against discrimination afforded all women workers under Article 136 of the Labor Code.[37] (Emphases supplied. but not on the ground of a general principle. to Alma Dayrit. but were asked to resign when they married a coemployee. viz. We do not find a reasonable business necessity in the case at bar. The employer has the burden to prove the existence of a reasonable business necessity. The burden was successfully discharged in Duncan but not in PT&T.

If we uphold the questioned rule without valid justification. the Labor Arbiter and the NLRC based their ruling on the singular fact that her resignation letter was written in her own handwriting.[40] Lastly. Estrella claims that she was pressured to submit a resignation letter because she was in dire need of money. As to respondent Estrella. The questioned policy may not facially violate Article 136 of the Labor Code but it creates a disproportionate effect and under the disparate impact theory. then a Production Helper in the Selecting Department. albeit disproportionate. for failure of petitioners to present undisputed proof of a reasonable business necessity. The failure of petitioners to prove a legitimate business concern in imposing the questioned policy cannot prejudice the employee’s right to be free from arbitrary discrimination based upon stereotypes of married persons working together in one company. we rule that the questioned policy is an invalid exercise of management prerogative. the employer can create policies based on an unproven presumption of a perceived danger at the expense of an employee’s right to security of tenure. Petitioners contend that their policy will apply only when one employee marries a co-employee. the issue as to whether respondents Simbol and Comia resigned voluntarily has become moot and academic. who married Howard Comia.could be detrimental to its business operations. effect. Thus. but they are free to marry persons other than coemployees. The protection given to labor in our jurisdiction is vast and extensive that we cannot prudently draw inferences from the legislature’s silence[41] that married persons are not protected under our Constitution and declare valid a policy based on a prejudice or stereotype. Both ruled that her resignation was voluntary and thus valid. the absence of a statute expressly prohibiting marital discrimination in our jurisdiction cannot benefit the petitioners. The respondent court failed to categorically rule whether Estrella voluntarily resigned but ordered that she be reinstated along with Simbol and Comia. then a helper in the cutter-machine. The policy is premised on the mere fear that employees married to each other will be less efficient. Neither did petitioners explain how this detriment will happen in the case of Wilfreda Comia. Corollarily. We examined the records of the case and . the only way it could pass judicial scrutiny is a showing that it is reasonable despite the discriminatory.

If she really wanted to avoid embarrassment and humiliation. respondent. IN VIEW WHEREOF. [44] Thus. 2004] DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A. it is illogical for Estrella to resign and then file a complaint for illegal dismissal.[42] as in the case at bar. at times. We have held that in voluntary resignation.find Estrella’scontention to be more in accord with the evidence. Nor would she have filed a suit for illegal dismissal and pleaded for reinstatement. this rule admits of exceptions. No. 2004 is AFFIRMED. finality. The contention of petitioners that Estrella was pressured to resign because she got impregnated by a married man and she could not stand being looked upon or talked about as immoral[43] is incredulous. TECSON. accompanied by the act of abandonment. At first.R. petitioners. GLAXO WELLCOME PHILIPPINES. the employee is compelled by personal reason(s) to dissociate himself from employment. Given the lack of sufficient evidence on the part of petitioners that the resignation was voluntary. 1999 but was dismissed due to her alleged immoral conduct. It is done with the intention of relinquishing an office. While findings of fact by administrative tribunals like the NLRC are generally given not only respect but. SP No. [G. 73477 dated August 3. Estrella avers that she went back to work on December 21. RESOLUTION .R. Estrella’s dismissal is declared illegal. vs. SO ORDERED. September 17. the Decision of the Court of Appeals in CA-G. INC. she would not have gone back to work at all. she did not want to sign the termination papers but she was forced to tender her resignation letter in exchange for her thirteenth month pay. 162994.

If management perceives a conflict of interest or a potential conflict between such relationship and the employee’s employment with the company. Inc. involving the validity of the policy of a pharmaceutical company prohibiting its employees from marrying employees of any competitor company. the management and the employee will explore the possibility of a “transfer to another department in a non-counterchecking position” or preparation for employment outside the company after six months. Tecson signed a contract of employment which stipulates. Thereafter. J. Subsequently. among others.: Confronting the Court in this petition is a novel question.R. She supervised the district [3] . to disclose to management any existing or future relationship by consanguinity or affinity with co-employees or employees of competing drug companies and should management find that such relationship poses a possible conflict of interest. Tecson (Tecson) was hired by respondent Glaxo Wellcome Philippines. 62434. an employee of Astra Pharmaceuticals (Astra). Bettsy was Astra’s Branch Coordinator in Albay. Tecson entered into a romantic relationship with Bettsy. that he agrees to study and abide by existing company rules. 1995. The Employee Code of Conduct of Glaxo similarly provides that an employee is expected to inform management of any existing or future relationship by consanguinity or affinity with co-employees or employees of competing drug companies. 2003 and the Resolution dated March 26. (Glaxo) as medical representative on October 24. to resign from the company. This is a Petition for Review on Certiorari assailing the Decision dated May 19. SP No.TINGA. after Tecson had undergone training and orientation. a competitor of Glaxo. 2004 of the Court of Appeals in CA-G. with constitutional overtones. Tecson was initially assigned to market Glaxo’s products in the Camarines Sur-Camarines Norte sales area. [1] [2] Petitioner Pedro A.

Glaxo transferred Tecson to the Butuan City-Surigao City-Agusan del Sur sales area. Tecson sought Glaxo’s reconsideration regarding his transfer and brought the matter to Glaxo’s Grievance Committee. In November 1999. . Tecson’s superiors informed him that his marriage to Bettsy gave rise to a conflict of interest. In September 1999. however. He explained that Astra. Tecson received several reminders from his District Manager regarding the conflict of interest which his relationship with Bettsy might engender. Even before they got married. another drug company. In January 1999. Tecson requested for time to comply with the company policy against entering into a relationship with an employee of a competitor company. In August 1999. the potential conflict of interest would be eliminated. 2000 to comply with the transfer order. Tecson again requested for more time resolve the problem. love prevailed. Tecson asked Glaxo to reconsider its decision. although they told him that they wanted to retain him as much as possible because he was performing his job well. Tecson’s superiors reminded him that he and Bettsy should decide which one of them would resign from their jobs. At the same time. Glaxo. Tecson applied for a transfer in Glaxo’s milk division. was planning to merge with Zeneca. His application was denied in view of Glaxo’s “least-movement-possible” policy.managers and medical representatives of her company and prepared marketing strategies for Astra in that area. With Bettsy’s separation from her company. Still. Bettsy’s employer. Tecson defied the transfer order and continued acting as medical representative in the Camarines Sur-Camarines Norte sales area. the potential conflict of interest would be eliminated. thinking that since Astra did not have a milk division. remained firm in its decision and gave Tescon until February 7. and Bettsy was planning to avail of the redundancy package to be offered by Astra. they would be able to avail of the attractive redundancy package from Astra. and Tecson married Bettsy in September 1998. but his request was denied.

[6] Petitioners contend that Glaxo’s policy against employees marrying employees of competitor companies violates the equal protection clause of . The appellate court held that Glaxo’s policy prohibiting its employees from having personal relationships with employees of competitor companies is a valid exercise of its management prerogatives.During the pendency of the grievance proceedings. and (ii) the Court of Appeals also erred in not finding that Tecson was constructively dismissed when he was transferred to a new sales territory. 2003. Aggrieved.000. but was not issued samples of products which were competing with similar products manufactured by Astra. arguing therein that (i) the Court of Appeals erred in affirming the NCMB’s finding that the Glaxo’s policy prohibiting its employees from marrying an employee of a competitor company is valid. and deprived of the opportunity to attend products seminars and training sessions. On May 19. Because the parties failed to resolve the issue at the grievance machinery level. they submitted the matter for voluntary arbitration. the Court of Appeals promulgated its Decision denying the Petition for Review on the ground that the NCMB did not err in rendering its Decision.00 but he declined the offer. 2000. or a total of P50. Glaxo offered Tecson a separation pay of one-half (½) month pay for every year of service. Tecson filed a Petition for Review with the Court of Appeals assailing the NCMB Decision. and affirming Glaxo’s right to transfer Tecson to another sales territory. but the motion was denied by the appellate court in its Resolution dated March 26. 2004. [4] Tecson filed a Motion for Reconsideration of the appellate court’s Decision. the National Conciliation and Mediation Board (NCMB) rendered its Decisiondeclaring as valid Glaxo’s policy on relationships between its employees and persons employed with competitor companies. [5] Petitioners filed the instant petition. He was also not included in product conferences regarding such products. On November 15. Tecson was paid his salary.

the prohibition is based on valid grounds. Tecson’s marriage to Bettsy. posed a real and potential conflict of interest. and that Tecson’s reassignment from the Camarines Norte-Camarines Sur sales area to the Butuan City-Surigao City and Agusan del Sur sales area does not amount to constructive dismissal. It maintains that considering the nature of its business. They claim that the policy restricts the employees’ right to marry. Glaxo argues that the company policy prohibiting its employees from having a relationship with and/or marrying an employee of a competitor company is a valid exercise of its management prerogatives and does not violate the equal protection clause. it expects its employees to avoid having personal or family interests in any competitor company which may influence their actions and decisions and consequently deprive Glaxo of legitimate profits. [10] It likewise asserts that the policy does not prohibit marriage per se but only proscribes existing or future relationships with employees of competitor companies. and (4) he was prohibited from promoting respondent’s products which were competing with Astra’s products. [8] In its Comment on the petition. relationship or interest that may conflict with their responsibilities to the company. Thus. The policy is also aimed at preventing a competitor company from gaining access to its secrets. an employee of Astra. [11] According to Glaxo. [7] They also argue that Tecson was constructively dismissed as shown by the following circumstances: (1) he was transferred from the Camarines SurCamarines Norte sales area to the Butuan-Surigao-Agusan sales area. (2) he suffered a diminution in pay.the Constitution because it creates invalid distinctions among employees on account only of marriage. it has a genuine interest in ensuring that its employees avoid any activity. [9] Glaxo insists that as a company engaged in the promotion and sale of pharmaceutical products. Astra’s products were in direct . (3) he was excluded from attending seminars and training sessions for medical representatives. and is therefore not violative of the equal protection clause. procedures and policies.

[14] Glaxo likewise insists that Tecson’s reassignment to another sales area and his exclusion from seminars regarding respondent’s new products did not amount to constructive dismissal. Glaxo assumed that his transfer from the Bicol region to the Butuan City sales area would be favorable to him and his family as he would be relocating to a familiar territory and minimizing his travel expenses. Glaxo avers that Tecson’s exclusion from the seminar concerning the new anti-asthma drug was due to the fact that said product was in direct competition with a drug which was soon to be sold by Astra. It claims that in view of Tecson’s refusal to resign. Hence. he was aware that such policy was stipulated therein. Glaxo’s enforcement of the foregoing policy in Tecson’s case was a valid exercise of its management prerogatives. Since Tecson’s hometown was in Agusan del Sur and his wife traces her roots to Butuan City. In said contract. would pose a potential conflict of interest for him. [15] In addition.competition with 67% of the products sold by Glaxo. and hence. he was relocated from the Camarines Sur-Camarines Norte sales area to the Butuan CitySurigao City and Agusan del Sur sales area. In any case. and was even encouraged not to resign but to ask his wife to resign from Astra instead. Tecson was given several months to remedy the situation. it also considered the welfare of Tecson’s family. [16] The Court is tasked to resolve the following issues: (1) Whether the Court of Appeals erred in ruling that Glaxo’s policy against its employees marrying . the delay in Tecson’s receipt of his sales paraphernalia was due to the mix-up created by his refusal to transfer to the Butuan City sales area (his paraphernalia was delivered to his new sales area instead of Naga City because the supplier thought he already transferred to Butuan). he also agreed to resign from respondent if the management finds that his relationship with an employee of a competitor company would be detrimental to the interests of Glaxo. Lastly. Glaxo asserts that in effecting the reassignment. [12] [13] Glaxo also points out that Tecson can no longer question the assailed company policy because when he signed his contract of employment.

and in not holding that said policy violates the equal protection clause of the Constitution. To avoid having personal or family interest. Should it pose a possible conflict of interest in management discretion. Specifically. The stipulation in Tecson’s contract of employment with Glaxo being questioned by petitioners provides: … 10. or interest that may run counter to the responsibilities which they owe Glaxo Wellcome. . In this regard. The Court finds no merit in the petition. and to study and become acquainted with such policies. in any competitor supplier or other businesses which may consciously or unconsciously influence their actions or decisions and thus deprive Glaxo Wellcome of legitimate profit. … [17] The same contract also stipulates that Tecson agrees to abide by the existing company rules of Glaxo. this means that employees are expected: a. you agree to resign voluntarily from the Company as a matter of Company policy. financial or otherwise. (2) Whether Tecson was constructively dismissed. investment relationship. the Employee Handbook of Glaxo expressly informs its employees of its rules regarding conflict of interest: [18] 1. You agree to disclose to management any existing or future relationship you may have. either by consanguinity or affinity with co-employees or employees of competing drug companies.employees from competitor companies is valid. Conflict of Interest Employees should avoid any activity.

To avoid outside employment or other interests for income which would impair their effective job performance. that of their relatives. In laying down the assailed company policy. [19] No reversible error can be ascribed to the Court of Appeals when it ruled that Glaxo’s policy prohibiting an employee from having a relationship with an employee of a competitor company is a valid exercise of management prerogative. To refrain from using their position in Glaxo Wellcome or knowledge of Company plans to advance their outside personal interests. 1. Glaxo has a right to guard its trade secrets. marketing strategies and other confidential programs and information from competitors. especially so that it and Astra are rival companies in the highly competitive pharmaceutical industry. to arrive at a solution within six (6) months.1. together by management and the employee. d. The prohibition against personal or marital relationships with employees of competitor companies upon Glaxo’s employees is reasonable under the circumstances because relationships of that nature might compromise the interests of the company. friends and other businesses. If management perceives a conflict or potential conflict of interest. if no other solution is feasible. either by transfer to another department in a non-counter checking position. or by career preparation toward outside employment after Glaxo Wellcome. manufacturing formulas. To consult with Management on such activities or relationships that may lead to conflict of interest. .b. Employee Relationships Employees with existing or future relationships either by consanguinity or affinity with co-employees of competing drug companies are expected to disclose such relationship to the Management. c. Glaxo only aims to protect its interests against the possibility that a competitor company will gain access to its secrets and procedures. every effort shall be made. Employees must be prepared for possible resignation within six (6) months.

It is a settled principle that the commands of the equal protection clause are addressed only to the state or those acting under color of its authority. it is clear that Glaxo does not impose an absolute prohibition against relationships between its employees and those of competitor companies. Its employees are free to cultivate relationships with . it is a legitimate business practice to guard business confidentiality and protect a competitive position by evenhandedly disqualifying from jobs male and female applicants or employees who are married to a competitor.S. Corollarily. it does not mean that every labor dispute will be decided in favor of the workers. The Court pointed out that the policy was applied to men and women equally. [20] [21] As held in a Georgia. the exception is not present in this case. [24] [25] [26] [27] In any event. Supreme Court decisions that the equal protection clause erects no shield against merely private conduct. the company actually enforced the policy after repeated requests to the employee to comply with the policy. The law also recognizes that management has rights which are also entitled to respect and enforcement in the interest of fair play.That Glaxo possesses the right to protect its economic interests cannot be denied. The only exception occurs when the state in any of its manifestations or actions has been found to have become entwined or involved in the wrongful private conduct.S. the application of the policy was made in an impartial and even-handed manner. Indeed. however. while our laws endeavor to give life to the constitutional policy on social justice and the protection of labor. the court ruled than an employer that discharged an employee who was married to an employee of an active competitor did not violate Title VII of the Civil Rights Act of 1964. Significantly. [22] [23] The challenged company policy does not violate the equal protection clause of the Constitution as petitioners erroneously suggest. U.A case. Consequently. with due regard for the lot of the employee. however. Obviously. it has been held in a long array of U. Indeed. discriminatory or wrongful. and noted that the employer’s business was highly competitive and that gaining inside information would constitute a competitive advantage. from the wordings of the contractual provision and the policy in its employee handbook. No less than the Constitution recognizes the right of enterprises to adopt and enforce such a policy to protect its right to reasonable returns on investments and to expansion and growth.

None of these conditions are present in the instant case. such as that signed by Tecson. . [29] The Court finds no merit in petitioners’ contention that Tecson was constructively dismissed when he was transferred from the Camarines NorteCamarines Sur sales area to the Butuan City-Surigao City-Agusan del Sur sales area. thus. the stipulations therein have the force of law between them and. . The record does not show that Tecson was demoted or unduly discriminated upon by reason of such transfer. Tecson. when there is a demotion in rank or diminution in pay. or unlikely. or when a clear discrimination. was made known to him prior to his employment. unreasonable. However. and when he was excluded from attending the company’s seminar on new products which were directly competing with similar products manufactured by Astra. [28] The Court of Appeals also correctly noted that the assailed company policy which forms part of respondent’s Employee Code of Conduct and of its contracts with its employees. thus: The policy being questioned is not a policy against marriage.and marry persons of their own choosing. As found by the appellate court.” He is therefore estopped from questioning said policy. should be complied with in good faith. Since Tecson knowingly and voluntarily entered into a contract of employment with Glaxo. an involuntary resignation resorted to when continued employment becomes impossible. therefore. insensibility or disdain by an employer becomes unbearable to the employee. The policy is not aimed at restricting a personal prerogative that belongs only to the individual. What the company merely seeks to avoid is a conflict of interest between the employee and the company that may arise out of such relationships. As succinctly explained by the appellate court. was aware of that restriction when he signed his employment contract and when he entered into a relationship with Bettsy. Constructive dismissal is defined as a quitting. An employee of the company remains free to marry anyone of his or her choosing. an employee’s personal decision does not detract the employer from exercising management prerogatives to ensure maximum profit and business success. Glaxo properly exercised its management prerogative in reassigning Tecson to the Butuan City sales area: [30] .

[Management’s] appreciation of a conflict of interest is therefore not merely illusory and wanting in factual basis… [31] In Abbott Laboratories (Phils. as learning by one spouse of the other’s market strategies in the region would be inevitable. Her duties include monitoring sales of Astra products. monitoring and managing Astra’s inventory…she therefore takes an active participation in the market war characterized as it is by stiff competition among pharmaceutical companies. petitioner’s sales territory covers Camarines Sur and Camarines Norte while his wife is supervising a branch of her employer in Albay. In this case. In the case at bar. all in the same Bicol Region. establishing and furthering relationship with customers. [33] As noted earlier. the record shows that Glaxo gave Tecson several chances to eliminate the conflict of interest brought about by his relationship with Bettsy. Moreover. the challenged policy has been implemented by Glaxo impartially and disinterestedly for a long period of time. . National Labor Relations Commission. . but actual.). renders the conflict of interest not only possible. v. and thus valid…Note that [Tecson’s] wife holds a sensitive supervisory position as Branch Coordinator in her employer-company which requires her to work in close coordination with District Managers and Medical Representatives. conducting sales drives. It would be a poor drug corporation which cannot even assign its representatives or detail men to new markets calling for opening or expansion or to areas where the need for pushing its products is great. Tecson’s supervisors at Glaxo . petitioner’s transfer to another place of assignment was merely in keeping with the policy of the company in avoidance of conflict of interest. Inc. which involved a complaint filed by a medical representative against his employer drug company for illegal dismissal for allegedly terminating his employment when he refused to accept his reassignment to a new area. and this is significant. collection. quoted hereunder. a drug salesman or medical representative is expected to travel. More so if such reassignments are part of the employment contract.. The ruling of the Court therein. also finds application in the instant case: [32] By the very nature of his employment. When their relationship was still in its initial stage. the Court upheld the right of the drug company to transfer or reassign its employee in accordance with its operational demands and requirements. The proximity of their areas of responsibility. He should anticipate reassignment according to the demands of their business.

After Tecson married Bettsy. the Petition is DENIED for lack of merit. When the problem could not be resolved after several years of waiting. [34] WHEREFORE. Agusan del Sur. the foregoing dispels any suspicion of unfairness and bad faith on the part of Glaxo. was included. SO ORDERED. In effecting Tecson’s transfer. Costs against petitioners. Glaxo was constrained to reassign Tecson to a sales area different from that handled by his wife for Astra. Glaxo even considered the welfare of Tecson’s family. Clearly.constantly reminded him about its effects on his employment with the company and on the company’s interests. Glaxo likewise acceded to his repeated requests for more time to resolve the conflict of interest. Notably. the Court did not terminate Tecson from employment but only reassigned him to another area where his home province. . Glaxo gave him time to resolve the conflict by either resigning from the company or asking his wife to resign from Astra. Glaxo even expressed its desire to retain Tecson in its employ because of his satisfactory performance and suggested that he ask Bettsy to resign from her company instead.