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Regina M. Astorga (Astorga) was employed by respondent SMART on May 8, 1997 as District Sales Manager of the Corporate
Sales Marketing Group/ Fixed Services Division (CSMG/FSD).

In February 1998, SMART launched an organizational realignment to achieve more efficient operations. This was made known to
the employees. Part of the reorganization was the outsourcing of the marketing and sales force. Thus, SMART entered into a
joint venture agreement with NTT of Japan, and formed SMART-NTT Multimedia, Incorporated (SNMI). Since SNMI was formed
to do the sales and marketing work, SMART abolished the CSMG/FSD, Astorgas division.

To soften the blow of the realignment, SNMI agreed to absorb the CSMG personnel who would be recommended by SMART.
SMART then conducted a performance evaluation of CSMG personnel and those who garnered the highest ratings were
favorably recommended to SNMI. Astorga landed last in the performance evaluation, thus, she was not recommended by
SMART. SMART, nonetheless, offered her a supervisory position in the Customer Care Department, but she refused the offer
because the position carried lower salary rank and rate.

Despite the abolition of the CSMG/FSD, Astorga continued reporting for work. But on March 3, 1998, SMART issued a
memorandum advising Astorga of the termination of her employment on ground of redundancy, effective April 3, 1998. Astorga
received it on March 16, 1998.

The termination of her employment prompted Astorga to file a Complaint for illegal dismissal, non-payment of salaries and other
benefits with prayer for moral and exemplary damages against SMART and Ann Margaret V. Santiago (Santiago). She claimed
that abolishing CSMG and, consequently, terminating her employment was illegal for it violated her right to security of tenure.
She also posited that it was illegal for an employer, like SMART, to contract out services which will displace the employees,
especially if the contractor is an in-house agency.

SMART responded that there was valid termination. It argued that Astorga was dismissed by reason of redundancy, which is an
authorized cause for termination of employment, and the dismissal was effected in accordance with the requirements of the
Labor Code. The redundancy of Astorgas position was the result of the abolition of CSMG and the creation of a specialized and
more technically equipped SNMI, which is a valid and legitimate exercise of management prerogative.


WON the dismissal of Astorga is valid.


YES. Astorgas dismissal is founded upon authorized cause.

Astorga was terminated due to redundancy, which is one of the authorized causes for the dismissal of an employee. The nature
of redundancy as an authorized cause for dismissal is explained in the leading case of Wiltshire File Co., Inc. v. National Labor
Relations Commission, viz:

x x x redundancy in an employers personnel force necessarily or even ordinarily refers to duplication of work. That no other
person was holding the same position that private respondent held prior to termination of his services does not show that his
position had not become redundant. Indeed, in any well organized business enterprise, it would be surprising to find duplication
of work and two (2) or more people doing the work of one person. We believe that redundancy, for purposes of the Labor Code,
exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the
enterprise. Succinctly put, a position is redundant where it is superfluous, and superfluity of a position or positions may be the
outcome of a number of factors, such as overhiring of workers, decreased volume of business, or dropping of a particular product
line or service activity previously manufactured or undertaken by the enterprise.
The characterization of an employees services as superfluous or no longer necessary and, therefore, properly terminable, is an
exercise of business judgment on the part of the employer. The wisdom and soundness of such characterization or decision is
not subject to discretionary review provided, of course, that a violation of law or arbitrary or malicious action is not shown.

Astorga claims that the termination of her employment was illegal and tainted with bad faith. She asserts that the reorganization
was done in order to get rid of her. But except for her barefaced allegation , no convincing evidence was offered to prove it. This
Court finds it extremely difficult to believe that SMART would enter into a joint venture agreement with NTT, form SNMI and
abolish CSMG/FSD simply for the sole purpose of easing out a particular employee, such as Astorga. Moreover, Astorga never
denied that SMART offered her a supervisory position in the Customer Care Department, but she refused the offer because the
position carried a lower salary rank and rate. If indeed SMART simply wanted to get rid of her, it would not have offered her a
position in any department in the enterprise.

Astorga also states that the justification advanced by SMART is not true because there was no compelling economic reason for
redundancy. But contrary to her claim, an employer is not precluded from adopting a new policy conducive to a more economical
and effective management even if it is not experiencing economic reverses. Neither does the law require that the employer
should suffer financial losses before he can terminate the services of the employee on the ground of redundancy.

We agree with the CA that the organizational realignment introduced by SMART, which culminated in the abolition of CSMG/FSD
and termination of Astorgas employment was an honest effort to make SMARTs sales and marketing departments more efficient
and competitive. As the CA had taken pains to elucidate:

x x x a careful and assiduous review of the records will yield no other conclusion than that the reorganization undertaken by
SMART is for no purpose other than its declared objective as a labor and cost savings device. Indeed, this Court finds no fault in
SMARTs decision to outsource the corporate sales market to SNMI in order to attain greater productivity. [Astorga] belonged to
the Sales Marketing Group under the Fixed Services Division (CSMG/FSD), a distinct sales force of SMART in charge of selling
SMARTs telecommunications services to the corporate market. SMART, to ensure it can respond quickly, efficiently and flexibly
to its customers requirement, abolished CSMG/FSD and shortly thereafter assigned its functions to newly-created SNMI
Multimedia Incorporated, a joint venture company of SMART and NTT of Japan, for the reason that CSMG/FSD does not have
the necessary technical expertise required for the value added services. By transferring the duties of CSMG/FSD to SNMI,
SMART has created a more competent and specialized organization to perform the work required for corporate accounts. It is
also relieved SMART of all administrative costs management, time and money-needed in maintaining the CSMG/FSD. The
determination to outsource the duties of the CSMG/FSD to SNMI was, to Our mind, a sound business judgment based on
relevant criteria and is therefore a legitimate exercise of management prerogative.

Indeed, out of our concern for those lesser circumstanced in life, this Court has inclined towards the worker and upheld his cause
in most of his conflicts with his employer. This favored treatment is consonant with the social justice policy of the Constitution.
But while tilting the scales of justice in favor of workers, the fundamental law also guarantees the right of the employer to
reasonable returns for his investment. In this light, we must acknowledge the prerogative of the employer to adopt such
measures as will promote greater efficiency, reduce overhead costs and enhance prospects of economic gains, albeit always
within the framework of existing laws. Accordingly, we sustain the reorganization and redundancy program undertaken by

However, as aptly found by the CA, SMART failed to comply with the mandated one (1) month notice prior to termination. The
record is clear that Astorga received the notice of termination only on March 16, 1998 or less than a month prior to its effectivity
on April 3, 1998. Likewise, the Department of Labor and Employment was notified of the redundancy program only on March 6,

Article 283 of the Labor Code clearly provides:

Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any
employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation
of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title,
by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended
date thereof x x x.
SMARTs assertion that Astorga cannot complain of lack of notice because the organizational realignment was made known to all
the employees as early as February 1998 fails to persuade. Astorgas actual knowledge of the reorganization cannot replace the
formal and written notice required by the law. In the written notice, the employees are informed of the specific date of the
termination, at least a month prior to the effectivity of such termination, to give them sufficient time to find other suitable
employment or to make whatever arrangements are needed to cushion the impact of termination. In this case, notwithstanding
Astorgas knowledge of the reorganization, she remained uncertain about the status of her employment until SMART gave her
formal notice of termination. But such notice was received by Astorga barely two (2) weeks before the effective date of
termination, a period very much shorter than that required by law.

Be that as it may, this procedural infirmity would not render the termination of Astorgas employment illegal. The validity of
termination can exist independently of the procedural infirmity of the dismissal.

The CA, therefore, committed no reversible error in sustaining Astorgas dismissal and at the same time, awarding indemnity for
violation of Astorga's statutory rights.

However, we find the need to modify, by increasing, the indemnity awarded by the CA to Astorga, as a sanction on SMART for
non-compliance with the one-month mandatory notice requirement, in light of our ruling in Jaka Food Processing Corporation v.
Pacot, viz.:

[I]f the dismissal is based on a just cause under Article 282 but the employer failed to comply with the notice requirement, the
sanction to be imposed upon him should be tempered because the dismissal process was, in effect, initiated by an act imputable
to the employee, and (2) if the dismissal is based on an authorized cause under Article 283 but the employer failed to comply
with the notice requirement, the sanction should be stiffer because the dismissal process was initiated by the employers exercise
of his management prerogative.

We deem it proper to increase the amount of the penalty on SMART to P50,000.00.

As provided in Article 283 of the Labor Code, Astorga is, likewise, entitled to separation pay equivalent to at least one (1) month
salary or to at least one (1) months pay for every year of service, whichever is higher. The records show that Astorgas length of
service is less than a year. She is, therefore, also entitled to separation pay equivalent to one (1) month pay.

However, the award of backwages to Astorga by the CA should be deleted for lack of basis. Backwages is a relief given to an
illegally dismissed employee. Thus, before backwages may be granted, there must be a finding of unjust or illegal dismissal from
work. Since Astorgas dismissal is for an authorized cause, she is not entitled to backwages. The CAs award of backwages is
totally inconsistent with its finding of valid dismissal



Petitioner Tecson was hired by respondent Glaxo Wellcome Phils. as medical representative. Tecson signed a contract of
employment, which stipulates among others, that he agrees to disclose existing or future relationship with co-employees and
employees of competing companies that should such relationship poses a conflict of interest, to resign from the company.
Despite repeated warnings, Tecson and Bettsy, an employee of a competing company, got married. Glaxo transferred Tecson to
Butuan, but he defied such orders and continued acting as medical representative in Camarines area. The National Conciliation
and Mediation board rendered as valid the policy and the right to transfer.


Whether or not the policy constitutes a prohibition against marriage.

No. Glaxos policy prohibiting an employee from having a relationship is a valid exercise of management prerogatives as
relationships of that nature might compromise the interests of the company. Glaxo has a right to guard its trade secrets,
manufacturing formulas, marketing strategies and other confidential programs and information for competitors. The right to
protect its economic interests is recognized by the constitution which recognizes the right of enterprises to adopt and enforce
such a policy to protect its right to reasonable returns on investments and for expansion and growth. Indeed, while our laws
endeavor to give life to the constitutional policy on social justice and the protection of labor, it does not mean that every labor
dispute will be decided in favor of the workers. The law also recognized that management has rights which are also entitled to
respect and enforcement in the interest of fair play. The challenged company policy does not violate the equal protection clause
of the constitution as such clause is addressed only to the state or those acting under color of its authority. The policy being
questioned is not a policy against marriage. An employee of the company remains free to marry anyone of his or her choosing.
The policy is aimed at restricting a personal prerogative that belongs only to the individual. However, an employees personal
decision does not detract the employer from exercising management prerogatives to ensure maximum profit and business

STAr paper vs symbol


According to the respondents, 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 Estrella, she alleges that she had a relationship with co-worker Zuiga who
misrepresented himself as a married but separated man. After he got her pregnant, she discovered that he was not separated.
Thus, she severed her relationship with him to avoid dismissal due to the company policy. On November 30, 1999, she met an
accident and was advised by the doctor at the Orthopedic Hospital to recuperate for twenty-one (21) days. She returned to work
on December 21, 1999 but she found out that her name was on-hold at the gate. She was denied entry. She was directed to
proceed to the personnel office where one of the staff handed her a memorandum. The memorandum stated that she was being
dismissed for immoral conduct. 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. The management asked her to write an explanation. However, after submission of the
explanation, she was nonetheless dismissed by the company. Due to her urgent need for money, she later submitted a letter of
resignation in exchange for her thirteenth month pay.

Respondents later filed a complaint for unfair labor practice, constructive dismissal, separation pay and attorneys fees. They
averred that the aforementioned company policy is illegal and contravenes Article 136 of the Labor Code.


Whether or not the 1995 Policy/Regulation of the company is violative of the Constitutional rights towards marriage and the
family of employees and of article 136 of the Labor Code.


The Supreme Court held that The 1987 Constitution under Article II, Section 18; Article XIII, Section 3 state our policy towards
the protection of labor under the following provisions. The Civil Code likewise protects labor with the following provisions such as
articles 1700 and 1702.

The Labor Code is the most comprehensive piece of legislation protecting labor. The case at bar involves Article 136 of the
Labor Code which provides:

Art. 136. 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, or to stipulate expressly or tacitly that upon getting married a woman employee shall be
deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely
by reason of her marriage.

In denying the contention of the petitioner company, the SC applied the two factors to justify a bona fide occupational

Since the finding of a bona fide occupational qualification justifies an employers no-spouse rule, the exception is interpreted
strictly and narrowly. There must be a compelling business necessity for which no alternative exists other than the discriminatory
practice. 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; 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.

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. NLRC. In said
case, the employee was dismissed in violation of petitioners policy of disqualifying from work any woman worker who contracts
marriage. We held that the company policy violates the right against discrimination afforded all women workers under Article 136
of the Labor Code, but established a permissible exception, viz.:

A requirement that a woman employee must remain unmarried could be justified as a bona fide occupational qualification, or
BFOQ, where the particular requirements of the job would justify the same, but not on the ground of a general principle, such as
the desirability of spreading work in the workplace. A requirement of that nature would be valid provided it reflects an inherent
quality reasonably necessary for satisfactory job performance.

The cases of Duncan and PT&T instruct us that the requirement of reasonableness must be clearly established to uphold the
questioned employment policy. 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.

The SC does not find a reasonable business necessity in the case at bar.

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 is lame. That the second paragraph was meant to give teeth to the first paragraph
of the questioned rule is evidently not the valid reasonable business necessity required by the law.

It is significant to note that in the case at bar, respondents were hired after they were found fit for the job, but were asked to
resign when they married a co-employee. Petitioners failed to show how the marriage of Simbol, then a Sheeting Machine
Operator, to Alma Dayrit, then an employee of the Repacking Section, could be detrimental to its business operations. Neither
did petitioners explain how this detriment will happen in the case of Wilfreda Comia, then a Production Helper in the Selecting
Department, who married Howard 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. If we uphold the questioned rule without valid justification, the employer
can create policies based on an unproven presumption of a perceived danger at the expense of an employees right to security
of tenure.

Petitioners contend that their policy will apply only when one employee marries a co-employee, but they are free to marry
persons other than co-employees. 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, the only way it could pass judicial scrutiny is a showing that it is
reasonable despite the discriminatory, albeit disproportionate, effect. The failure of petitioners to prove a legitimate business
concern in imposing the questioned policy cannot prejudice the employees right to be free from arbitrary discrimination based
upon stereotypes of married persons working together in one company. Decision of the CA affirmed.