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only aims to protect its interests against the possibility that a competitor company will gain access
to its secrets and procedures.

That Glaxo possesses the right to protect its economic interests cannot be denied. 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.

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. 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, thus:

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 not aimed at restricting a personal
prerogative that belongs only to the individual. However, an employee’s personal decision does not
detract the employer from exercising management prerogatives to ensure maximum profit and
business success. . .

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, such as that signed
by Tescon, was made known to him prior to his employment. Tecson, therefore, was aware of that
restriction when he signed his employment contract and when he entered into a relationship with
Bettsy. Since Tecson knowingly and voluntarily entered into a contract of employment with Glaxo,
the stipulations therein have the force of law between them and, thus, should be complied with in
good faith." He is therefore estopped from questioning said policy.

The Court finds no merit in petitioners’ contention that Tescon was constructively dismissed when
he was transferred from the Camarines Norte-Camarines Sur sales area to the Butuan City-Surigao
City-Agusan del Sur sales area, and when he was excluded from attending the company’s seminar on
new products which were directly competing with similar products manufactured by Astra.
Constructive dismissal is defined as a quitting, an involuntary resignation resorted to when
continued employment becomes impossible, unreasonable, or unlikely; when there is a demotion in
rank or diminution in pay; or when a clear discrimination, insensibility or disdain by an employer
becomes unbearable to the employee.30 None of these conditions are present in the instant case. The
record does not show that Tescon was demoted or unduly discriminated upon by reason of such
transfer. As found by the appellate court, Glaxo properly exercised its management prerogative in
reassigning Tecson to the Butuan City sales area.

STAR PAPER CORPORATION, JOSEPHINE ONGSITCO & SEBASTIAN CHUA, Petitioners,

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.

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

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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 employee’s right to security of tenure.

FACTS:

Petitioner Star Paper Corporation 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.

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. Simbol resigned on June 20, 1998 pursuant to the company policy.

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.

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.

According to petitioners, 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.

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 Estrella, she alleges that she had a relationship with co-worker Zuñiga 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 hospitalized for twenty-one
days. When she returned to work, she found out that her name was on-hold at the gate, and she was
being dismissed for immoral conduct. She refused to sign the memorandum because she has not been
given a chance to explain. 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 attorney’s fees. They averred that the aforementioned company policy is illegal and contravenes
Article 136 of the Labor Code. The Labor Arbiter dismissed the complaint for lack of merit. The NLRC
affirmed the decision of the Labor Arbiter. However, the Court of Appeals reversed the NLRC decision.

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ISSUE:

Whether or not petitioner’s policy was a valid exercise of management prerogative (NO)

RULING:

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.

Unlike in our jurisdiction where there is no express prohibition on marital discrimination, there are
twenty state statutes in the United States prohibiting marital discrimination. Some state courts have
been confronted with the issue of whether no-spouse policies violate their laws prohibiting both
marital status and sex discrimination.

The courts that have broadly construed the term "marital status" rule that it encompassed the
identity, 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. 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. 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. They hold that the absence of
such a bona fide occupational qualification invalidates a rule denying employment to one spouse
due to the current employment of the other spouse in the same office. Thus, 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, an employer may not discriminate against an employee based on the identity
of the employee’s spouse. This is known as the bona fide occupational qualification exception.

The concept of a bona fide occupational qualification is not foreign in our jurisdiction. We employ the
standard of reasonableness of the company policy which is parallel to the bona fide occupational
qualification requirement. In the recent case of Duncan Association of Detailman-PTGWO and
Pedro Tecson v. Glaxo Wellcome Philippines, Inc., we passed on the validity of the policy of a
pharmaceutical company prohibiting its employees from marrying employees of any competitor
company. We held that Glaxo has a right to guard its trade secrets, manufacturing formulas,
marketing strategies and other confidential programs and information from competitors. We
considered the prohibition against personal or marital relationships with employees of competitor
companies upon Glaxo’s employees reasonable under the circumstances because relationships of
that nature might compromise the interests of Glaxo. In laying down the assailed company policy, 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.

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

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petitioner’s 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. (Emphases supplied.)

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.

We do 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 employee’s 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 employee’s right to be free
from arbitrary discrimination based upon stereotypes of married persons working together in one
company.

Lastly, the absence of a statute expressly prohibiting marital discrimination in our jurisdiction cannot
benefit the petitioners. The protection given to labor in our jurisdiction is vast and extensive that we
cannot prudently draw inferences from the legislature’s silence that married persons are not
protected under our Constitution and declare valid a policy based on a prejudice or stereotype. Thus,
for failure of petitioners to present undisputed proof of a reasonable business necessity, we rule that
the questioned policy is an invalid exercise of management prerogative.

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