[G.R. No. 162994.

  September 19, 2005]

DUNCAN ASSOCIATION vs. GLAXO

SECOND DIVISION

Sirs/Mesdames:

Quoted hereunder, for your information, is a resolution of this Court dated SEP 19 2005.

G.R. No. 162994 (Duncan Association Of Detailman-PTGWO and Pedro A. Tecson vs. Glaxo
Wellcome Philippines, Inc.)

For resolution is a Motion for Reconsideration dated 8 October 2004, filed by petitioners who
seek the reversal of the Court's Resolution1 dated 17 September 2004 denying the
instant Petition for Review.

A brief recapitulation of the facts is in order. Petitioner Pedro Tecson ("Tecson") was employed
in 1995 by respondent Glaxo Wellcome Philippines, Inc. ("Glaxo") as a medical representative.
He was assigned to market Glaxo's products in the Camarines Sur-Camarines Norte sales area.
Upon his employment, Tecson signed an employment contract, wherein he agreed, among
others, to study and abide by existing company rules; to disclose to management any existing or
future relationship by consanguinity or affinity with co-employees or employees of competing
drug companies; and if management found that such relationship posed a possible conflict of
interest, to resign from the company.

Nonetheless, Tecson became romantically involved with Bettsy, an employee of a rival

pharmaceutical firm Astra Pharmaceuticals ("Astra"). The two eventually married in September
of 1998. The relationship, including the subsequent marriage, was cause for consternation to
Glaxo. On January 1999, Tecson's superiors informed him that his marriage to Bettsy had given
rise to a conflict of interest. Negotiations ensued, with Tecson adverting to his wife's possible
resignation from Astra, and Glaxo making it known that they preferred to retain his services
owing to his good performance. Yet no resolution came to pass. In September 1999, Tecson
applied for a transfer to Glaxo's milk division, but his application was denied in view of Glaxo's
"least-movement-possible" policy. Then in November 1999, Glaxo transferred Tecson to the
Butuan City-Surigao City-Agusan del Sur sales area. Tecson asked Glaxo to reconsider its
decision, but his request was denied.

The matter was then brought to the Glaxo Grievance Committee, and subsequently to a
voluntary arbitrator. On 15 November 2000, the National Conciliation and Mediation Board

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(NCMB) rendered its Decision declaring as valid Glaxo's policy on relationships between its
employees and persons employed with competitor companies, and affirming Glaxo's right to
transfer Tecson to another sales territory. This Decision was assailed by petitioners before the
Court of Appeals and this Court, but for naught.

The present Motion for Reconsideration advances four main arguments: that the Court
erroneously relied on a conjectural presumption that Tecson's relationship might compromise
the interest of the company or allow a competitor to gain access to Glaxo's secrets and
procedures; that Glaxo's policy regarding the marriage of its employees to employees of rival
companies is contrary to public policy, morals and good customs; that Glaxo violated its own
policy which authorized the transfer of the subject employee to another department when it
denied Tecson's application to transfer to the milk division; and that Tecson was constructively
dismissed when he was transferred to the Butuan City-Surigao City-Agusan del Sur sales area.

One of the central anchors of the assailed Resolution was the holding that Glaxo's policy on
marriage did not violate the equal protection clause of the Constitution,2 as the constitutional
guarantee does not encompass discriminatory behavior engaged by private
individuals.3 Petitioners do not challenge this holding of the Court, and we see no reason to
revisit this issue.

But before we engage in a renewed discussion on the validity of Glaxo's policy itself, we should
examine the claim that Tecson was constructively dismissed. After all, assuming that the policy
itself were declared invalid, a finding nonetheless that Tecson was not constructively dismissed
would still render this petition futile. The Court has ruled Tecson was not actually dismissed, and
the Motion for Reconsideration adduces no substantial reasons why this holding should be
reversed.

The Resolution cited Abbott Laboratories (Phils.), Inc. v. NLRC4 wherein the Court upheld the

prerogative of a drug company to reassign a medical representative under its employ to a new
territory. In the same vein, the Court has consistently affirmed as a valid prerogative of the
employer the reasonable reassignment or transfer of an employee. As held in Philippine Japan
Active Carbon Corp. v. NLRC:5

It is the employer's prerogative, based on its assessment and perception of its employees'
qualifications, aptitudes, and competence, to move them around in the various areas of its
business operations in order to ascertain where they will function with maximum benefit to the
company. An employee's right to security of tenure does not give him such a vested right in his
position as would deprive the company of its prerogative to change his assignment or transfer
him where he will be most useful. When his transfer is not unreasonable, nor inconvenient, nor
prejudicial to him, and it does not involve a demotion in rank or a diminution of his salaries,
benefits, and other privileges, the employee may not complain that it amounts to a constructive
dismissal.6

In Philippine Telegraph and Telephone Corp. v. Laplana,7 the Court again upheld the
prerogative of management to reassign an employee to a different locality, despite the "personal

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inconvenience or hardship that will be caused to the employee by reason of the transfer."

Tecson was not relieved of his employment with Glaxo. Neither was he transferred to a different
position of lower rank or remuneration. The alleged constructive dismissal pertained to his
transfer to Butuan from Naga City, a reassignment that would fall within the ambit of
management's prerogative to transfer employees.

Petitioners, in their Motion for Reconsideration, purport that constructive dismissal was proved
by the allegation that Tecson's commissions for January and February were withheld from him,
and that he was forced to surrender his sales paraphernalia. Yet the veracity of these factual
allegations were not acknowledged by either the voluntary arbitrator or the Court of Appeals.
This Court, which is not a trier of facts, could not very well at this late stage reverse the
established factual conclusions on the basis of mere allegations which have not been previously
substantiated but which in fact have been consistently rebutted by the respondents.8

In case of a constructive dismissal, the employer has the burden of proving that the transfer and
demotion of an employee are for valid and legitimate grounds, i.e., that the transfer is not
unreasonable, inconvenient, or prejudicial to the employee; nor does it involve a demotion in
rank or a diminution of his salaries, privileges and other benefits.9 In this case, Glaxo did not opt
to terminate or demote Tecson, but transferred him to a sales region that included the
respective home provinces of himself and his wife, and offered monetary assistance to shoulder
his family's relocation.10. Certainly, the choice of location was not selected with petty malice
aforethought, but even designed for the easier palatability of the employee.

The fact that the employee may be displaced from established roots by reason of the transfer is
not sufficient to deny the valid management prerogative to transfer its employees. Tecson
himself had acknowledged this prerogative when he signed the contract of employment which
expressly agreed "to be assigned any work or work station for such periods as may be
determined by the company and whenever the operations require such assignment."

This finding that Tecson was not actually dismissed is determinative of this case, especially
considering that his transfer by Glaxo from Naga to Butuan would have been a valid exercise of
an employer's prerogative, whether or not the company policy on marriage subsists.
Nonetheless, it would be specious to assume that Tecson's transfer had nothing to do with his
marriage to an employee from a rival drug company. Moreover, questions on the validity, if not
appropriateness of Glaxo's policy itself, has attracted comment on the various triers of this case,
as well as the public at large.

May an employer impose conditions, restrictions or consequences on an employee by reason of

the latter's choice to marry or choice of spouse? The answer would really all depend on the
particular circumstances in each case.

The governing legal framework should be established. Under Article 136 of the Labor Code, it is
illegal for an employer to prohibit a female employee from getting married or to actually dismiss,
discharge, discriminate or otherwise prejudice a woman employee merely by reason of her
marriage. This provision addresses a concern, particularly gender discrimination, with no direct

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relevance to this case. Nonetheless, it can be invoked by a female employee who finds herself
prohibited by her employer from contracting marriage, or otherwise dismissed or discriminated
upon by reason of her marriage, and the employer faces the unenviable burden of establishing
the inapplicability of Article 136.11

Of more general application is Article 282 of the Labor Code, which governs the termination by
employers for "just causes." Had Tecson been actually terminated in this case, Article 282
would have necessarily found application, since Articles 282 to 284 stand as the only basis in
law for the valid termination of an employee by an employer.12

Under Article 282, the employer may dismiss the employee for any of the following causes: (a)
serious misconduct or willful disobedience by the employee of the lawful order of his employer
or representative in connection with his work; (b) gross and habitual neglect by the employee of
his duties; (c) fraud or willful breach by the employee of the trust reposed in him by his employer
or duly authorized representative; (d) commission of a crime or offense against the person of his
employer or any immediate member of his family or his duly authorized representative; and (e)
other causes analogous to the foregoing. Assuming that there is a company policy allowing the
dismissal, constructive13 or otherwise, of an employee by reason of the employee's marriage or
choice of spouse, such policy alone cannot justify the dismissal. The employer will have to
establish not only the existence of the policy, but the presence of any of the grounds
enumerated in Article 282. Our Constitution and Labor Code guarantee an employee's security
of tenure. For regular employees as defined under the Labor Code, security of tenure is assured
by the prohibition against termination except for the causes enumerated under Articles 282 to
284.

Thus, the validity of a company policy on marriage such as that maintained by Glaxo would not
necessarily be determinative of the question of whether an employee who violated such policy
may be terminated. Still, there may be instances wherein the validity of the policy, whether
standing by itself or as incorporated into an employment contract, would be the decisive factor.
Such may arise if for example, the employee is sought to be dismissed on the ground of loss of
confidence,14 and such loss of confidence developed due to the marriage to an employee from
a rival company. In such cases wherein it is necessary to pass judgment on the employer's
policy itself, the following points should be considered.

Both the Constitution and our body of statutory laws accord special status and protection to the
contract of marriage. Our Constitution recognizes that "marriage, as an inviolable social
institution, is the foundation of the family, and shall be protected by the State,"15 and our Family
Code acknowledges that marriage is "a special contract of permanent union ... an inviolable
social institution whose nature, consequences and incidents are governed by law."16 It may be
debatable whether these provisions, by themselves, may be the source of operative and
executory rights, but at the very least, they establish a pervasive public policy that frowns upon
acts that encumber any person's freedom to marry.

Moreover, if such encumbrance is contained in an employment contract, the stipulation can be

declared void under Article 1409(1) of the Civil Code, which provides that a contract whose
cause, object or purpose is contrary to law, morals, good customs, public order or public policy

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is inexistent and void from the beginning.17 The standard is of great utility, as it allows a
measure of relief for persons laboring under private contractual obligations that, while
insusceptible to the traditional constitutional challenge under the Bill of Rights, nonetheless
stand as onerous to the obligor and noxious to our general body of laws.

Still, it would be injudicious, if not irresponsible, to judicially enforce a universal position that
disencumbers marriage from adverse consequences, if the encumbrance stands to protect third
persons inevitably affected by an act of marital union. For much as we may want to see and
regard marriage in a vestal state, it may be a source of negativity for third persons, and not just
the jilted. This is apparent even on the most visceral level, as anybody who dislikes an
immediate family member's choice of bride or groom can attest to. The statutory protections
accorded to marriage do not translate to a legal compulsion on people to favor another person's
choice in spouse.

The thesis is harmless enough if the consequence of such disapproval extends merely into the
personal sphere and not the legal. Yet, such as in this case, the consequences may be
economic as well. For example, an aunt who voluntarily extends regular financial benefits to a
nephew may refuse to continue the doleout by reason of the relative's marriage or choice of
wife. In such a case, the nephew would have no cause of action to compel his aunt to continue
the remuneration, even if the aunt's reasons for disliking the new wife are noxious, such as
bigotry. The invocation of the inviolability of marriage or its protection under law will not suffice
to legally compel the aunt to extend her largesse to her nephew, for this act of charity arises
solely from private volition. The State may protect marriage, but it cannot compel private
persons to give away money out of their pockets to the bride and groom.

If the prohibitions or restrictions are contained in a private employment policy or contract, the
norms that would govern their review are such as those contained in the Labor Code, and to an
extent, the "public policy" clauses of the Civil Code.18 However, the sanctity of the marital vow
should not be the only relevant consideration at hand. The considerations which may have
impelled the employer to impose such conditions on the employee's absolute right to marry
warrant examination as well.

We can surmise that if the restrictions or conditions on the employee's right to marry bear no
relevance to any interests that the employer should be concerned with, then they should be
voided if they are of obligatory import. In that regard, it is difficult to foresee an instance wherein
an absolute prohibition on any marriage imposed on the employees may be sanctioned.19 Even
if the prohibition is premised on the belief that a married employee would be able to devote less
time to the job, whatever causal economic concerns hardly outweigh the right of an individual to
get married. Employees this day and age have long transcended the yoke of serfdom and
absolute fealty to master and the expense of the marital bind.

If the prohibition or restriction pertains to the choice of spouse, rather than the choice to marry
at all, there should be an examination of the rationale behind the constraint. Again, if the
restrictions or conditions bear no relevance to any interests that the employer should be
concerned with, then they should not be upheld. Restrictions that are nothing more than the
enforcement of personal biases, such as prohibitions on marrying members of a particular race

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or ethnic group, may be struck down.

Nonetheless, while generalities may be sufficient to strike down the most obnoxious of
prohibitions, those restrictions that are geared towards maintaining valid economic concerns of
the employer have to be assessed on a case to case basis. Our fundamental law respects 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.20

If the rationale in question relates to a consideration so vital to the interests of the employer as
to warrant legal protection, it should then be determined whether the means employed by the
employer are reasonable enough as to allow a measure of balance between these key interests
of the employer and the fundamental right of the employee to marry.

Let us pay particular attention to Glaxo's policy. As noted in the Resolution, Glaxo belongs to
the highly competitive pharmaceutical industry. The competitive nature of the business is further
highlighted by the fact that pharmaceutical drugs are indispensable to modern society, and that
the rival companies tend to produce drugs of like effect but marketed under respective brand
names. Thus, within the pharmaceutical industry, the hazard of industrial espionage looms
largely, more so than most other competitive industries. To that end, Glaxo is entitled to guard
its trade secrets, manufacturing formulas, marketing strategies and other confidential programs
and information from competitors, concomitant to its right to protect its own economic interests.

This in mind, it is but reasonable for Glaxo to be cautious about the social interaction of its
employees with those of companies which it directly competes with. If the employee goes as far
as sharing hearth and home with the employee of the rival company, there is greater cause of
concern on the part of Glaxo. The fear may not so much arise from the possibility of willful
betrayal by its employees of trade secrets, but from the myriad opportunities in the course of
shared lives that one may inadvertently divulge to the spouse confidential information that the
rival drug company may benefit from. After all, the employer has no control over pillow talk.
Neither could it be expected that the employee maintain a higher fidelity to the employer than to
the spouse.

It may be so, as petitioners argue, much of the fear is hypothetical in nature. Yet Glaxo, as with
any other industry, is allowed to take reasonable steps in order to prevent potential damage
from becoming actual, especially if the economic consequences are substantial. Glaxo is hardly
a small-scale industry, and the pharmaceutical business seldom characterized by old-fashioned
rectitude.

Still, these concerns aside, the steps that Glaxo may employ to avoid the undue divulgence of
its trade secrets should be within reason. If termination is to be considered as an option, it
should be only as a final resort, if there is no other way to avoid the conflict of interest.

In this case, Glaxo's assailed policy does not call for automatic termination, providing as it does
a process that allows for all the opportunities for a mutually agreeable solution. Per the
Employee Handbook, "every effort shall be made, together by management and the employee,
to arrive at a solution within six (6) months, either by transfer to another department in a non-

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counter checking position, or by career preparation toward outside employment after Glaxo
Wellcome. Employees must be prepared for possible resignation within six (6) months, if no
other solution is feasible."21

This procedure is extremely reasonable under the circumstances, and we have no problems in
upholding its validity. As noted in the Resolution: "[i]n any event, from the wordings of the
contractual provision and the policy in its employee handbook, 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 and marry persons
of their own choosing."22 It recognizes the concern arising from the possible conflict of interest,
yet dissuades the enforcement of a hasty, unilateral solution. It appears from the record of this
case that such a procedure was adopted in good faith by both parties. Tecson may find fault
with the fact that Glaxo refused his request for transfer to the milk division, a step which, if
resorted to, may have resolved the perceived conflict of interest. Yet the procedure involved
allows the transfer only if mutually agreed upon, and besides, employees cannot generally
compel the employer to transfer them from one division to another, this being a management
prerogative.

And finally, if no mutual resolution is arrived at, termination and voluntary resignation remain as
viable options. Neither obtained in this case, and we have already ruled that the transfer was
valid and did not constitute constructive dismissal. If Glaxo, or any employer with a similarly
drawn-out procedure, were to ultimately resort to termination, the burden would still fall upon it
to establish that such termination is in accordance with the just causes as provided in Article
282 of the Labor Code. Without such linkage, the termination would be invalid.

The fact that there was no actual termination in this case obviates the need for us to further
apply Article 282 or the jurisprudential rules on illegal termination to this case.

Still, should Glaxo retain the said policy, and another employee trek the same trail as Tecson
did, it cannot be foreordained that the Court would similarly rule for Glaxo and against the said
employee. As repeatedly emphasized, it all depends on the particular circumstances of each
case. And ultimately, if dismissal, constructive or otherwise, is resorted to, the standards for
termination set by the Labor Code must still be complied with.

WHEREFORE, petitioner's Motion for Reconsideration is DENIED WITH FINALITY.

Very truly yours,

(Sgd.) LUDICHI YASAY-NUNAG
Clerk of Court

Endnotes:

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1 G.R. No. 162994, 17 September 2004, 438 SCRA 343.

2 See Section 1, Article III, Constitution.

3 "The challenged company policy does not violate the equal protection clause of the
Constitution as petitioners erroneously suggest. 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. Corollarily, it has been held in a long array of U.S. Supreme Court decisions that the
equal protection clause erects no shield against merely private conduct, however discriminatory
or wrongful. 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. Obviously,
however, the exception is not present in this case. Significantly, the company actually enforced
the policy after repeated requests to the employee to comply with the policy. Indeed, the
application of the policy was made in an impartial and even-handed manner, with due regard for
the lot of the employee." Duncan Association v. Glaxo, supra note 1 at 354-355.

4 G.R. No. L-76959, 12 October 1987, 154 SCRA 713.

5 G.R. No. 83239, 8 March 1989, 171 SCRA 164.

6 Ibid.

7 G.R. No. 76645, 23 July 1991, 199 SCRA 485.

8 See Rollo, pp. 76-77.

9 Castillo v. NLRC, 367 Phil. 605 (1999).

10 Rollo, p. 210.

11 We have held that a company policy prohibiting female employees from contracting marriage
during their employment is void for violating Article 136 of the Labor Code. See PT&T v. NLRC,
338 Phil. 1093 (1997). However, the American case of Emory v. Georgia Hospital Service
Association, previously cited in our Decision, is also worth noting. Therein, a female employee
was discharged by her employer, a health insurance firm, for having married a salesman from a
rival insurance company. The discharged employee brought suit under the Civil Rights Act of
1964, alleging unlawful discrimination against her because of her sex. However, the Georgia
District Court ruled that plaintiff was validly terminated, as her termination was occasioned not
by reason of her sex, but by her violation of company policy prohibiting marriage to employees
of directly competing insurance businesses. Emory v. Georgia Hospital Service Association
(1971), DC Ga., 4 CCH EPD 7785, 4 BNA FEP Cas 891, affd (CA5) 446 F2d 897, 4 CCH EPD
7786; Cited 45 Am Jur 2d Sec. 469.

12 In this case, Articles 283 (governing dismissals for authorized causes), and 284 (on
dismissals on the ground of disease) would not have found application.

13 "In constructive dismissal, the employer has the burden of proving that the transfer and
demotion of an employee are for just and valid grounds such as genuine business necessity.

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The employer must be able to show that the transfer is not unreasonable, inconvenient, or
prejudicial to the employee. It must not involve a demotion in rank or a diminution of salary and
other benefits. If the employer cannot overcome this burden of proof, the employee's demotion
shall be tantamount to unlawful constructive dismissal." Globe Telecom v. Florendo-Flores, 438
Phil. 756 (2002).

14 "Loss of confidence, as a just cause for termination of employment, is premised on the fact
that the employee concerned holds a position of responsibility, trust and confidence. He must be
invested with confidence on delicate matters such as the custody, handling, care and protection
of the employer's property and/or funds. But in order to constitute a just cause for dismissal, the
act complained of must be "work-related" such as would show the employee concerned to be
unfit to continue working for the employer." Gonzales v. NLRC, G.R. No. 131653, 26 March
2001, 355 SCRA 195.

15 Section 2, Article XV, constitution.

16 Article 1, family code.

17 See Article 1409 (1), Civil Code. See also Article 1352, Civil Code, which states that
"[C]ontracts without cause, or with unlawful cause, produce no effect whatever. The cause is
unlawful if it is contrary to law, morals, good customs, public order or public policy." Yet, while
the principle is of long-standing recognition, it is also of purposeful ambiguity. "Public policy" is a
vague expression, and few cases can arise in which its application may not be disputed. Noble
v. City of Palo Alto, 89 Cal. App. 47, 50-51 (1928). A court's power to void a contract as being in
contravention of public policy has been described as delicate and undefined, see Jeffrey Lake
Development, Inc. v. Central Nebraska Public Power and Irrigation Dist., 262 Neb. 515, 633
N.W. 2d 102 (2001); In re Kaufman, 201 OK 88, 37 P.3d 845 (Okla. 2001), and is thus
exercised sparingly. First Nat. Bank of Springfield v. Malpractice Research, Inc., 179 III. 2d 353,
228 III. Dec. 202, 688 N.E. 2d 1179, 70 A.L.R. 5th 759. The concepts of "morals", "good
customs", and "public order" are no less susceptible to easy definition.

18 Properly speaking, Articles 1306, 1352 and 1409 (1) pertain to contracts. These provisions
can operate to nullify clauses contained in employment contracts. We are aware though that in
many establishments, employees are not required to sign formal contracts, but are otherwise
enjoined to observe company policies. The absence of a formal contract would not preclude the
application of the Civil Code in preventing the enforcement of obligations that are contrary to
law, good customs or public policy. Article 1183 of the Civil Code mandates the annulment of
conditions to an obligation that are contrary to good customs, public policy, or otherwise
prohibited by law. Moreover, Article 6 prohibits the waiver of rights if such waiver is contrary to
law, public order, public policy, morals or good customs. Such rights would include the right to
marry or the choice of whom to marry.

19 The grey area may exist in instances wherein the employer is a religious order which, in
accordance with its tenets, demands a vow of celibacy. In such a case, the freedom of exercise
of religion would be accorded its due respect, depending on its appropriate applicability in the

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particular case.

20 See Section 3, Article XIII, constitution.

21 See Duncan Association v. Glaxo, supra note 1 at 352.

22 Id. at 355.

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