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 Zuiga (Zuiga), also a
co-worker. Petitioners stated that Zuiga, 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

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.
[8]

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. They
also contended that they were dismissed due to their union membership.
On May 31, 2001, Labor Arbiter Melquiades Sol del Rosario dismissed the
complaint for lack of merit, viz.:
[T]his company policy was decreed pursuant to what the respondent
corporation perceived as management prerogative. This management prerogative
is quite broad and encompassing for it covers hiring, work assignment, working
method, time, place and manner of work, tools to be used, processes to be
followed, supervision of workers, working regulations, transfer of employees,
work supervision, lay-off of workers and the discipline, dismissal and recall of
workers. Except as provided for or limited by special law, an employer is free to
regulate, according to his own discretion and judgment all the aspects of
employment.[9] (Citations omitted.)

On appeal to the NLRC, the Commission affirmed the decision of the Labor
Arbiter on January 11, 2002. [10]
Respondents filed a Motion for Reconsideration but was denied by the
NLRC in a Resolution[11] dated August 8, 2002. They appealed to respondent
court via Petition for Certiorari.

In its assailed Decision dated August 3, 2004, the Court of Appeals reversed
the NLRC decision, viz.:
WHEREFORE, premises considered, the May 31, 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, 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; and
(2)
Ordering private respondents to pay petitioners
attorneys fees amounting to 10% of the award and the cost of this
suit.[13]

On appeal to this Court, petitioners contend that the Court of Appeals erred
in holding that:
1.
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; AND
2.
X X X RESPONDENTS RESIGNATIONS WERE FAR FROM
VOLUNTARY.[14]

We affirm.
The 1987 Constitution[15] states our policy towards the protection of labor
under the following provisions, viz.:

Article II, Section 18. The State affirms labor as a primary social
economic force. It shall protect the rights of workers and promote their welfare.
xxx
Article XIII, Sec. 3. The State shall afford full protection to labor, local
and overseas, organized and unorganized, and promote full employment and
equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective
bargaining and negotiations, and peaceful concerted activities, including the right
to strike in accordance with law. They shall be entitled to security of tenure,
humane conditions of work, and a living wage. They shall also participate in
policy and decision-making processes affecting their rights and benefits as may be
provided by law.
The State shall promote the principle of shared responsibility between
workers and employers, 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.

The Civil Code likewise protects labor with the following provisions:
Art. 1700.
The relation between capital and labor are not merely
contractual. They are so impressed with public interest that labor contracts must
yield to the common good. Therefore, such contracts are subject to the special
laws on labor unions, collective bargaining, strikes and lockouts, closed shop,
wages, working conditions, hours of labor and similar subjects.
Art. 1702.
In case of doubt, all labor legislation and all labor contracts
shall be construed in favor of the safety and decent living for the laborer.

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.

Respondents submit that their dismissal violates the above provision. 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 rule does not require the woman employee to resign. The employee spouses
have the right to choose who between them should resign. Further, they are free to
marry persons other than co-employees. Hence, it is not the marital status of the
employee, per se, that is being discriminated. 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.[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. Companies adopt these policies to prevent the hiring of unqualified persons
based on their status as a relative, rather than upon their ability.[17] These policies
focus upon the potential employment problems arising from the perception of
favoritism exhibited towards relatives.
With more women entering the workforce, employers are also enacting
employment policies specifically prohibiting spouses from working for the same
company. We note that two types of employment policies involve spouses: policies
banning only spouses from working in the same company (no-spouse
employment policies), and those banning all immediate family members,
including spouses, from working in the same company (anti-nepotism
employment policies).[18]

Unlike in our jurisdiction where there is no express prohibition on marital

discrimination,[19] there are twenty state statutes[20] in the United States prohibiting
marital discrimination. 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.
In challenging the anti-nepotism employment policies in the United States,
complainants
utilize
two
theories
of
employment
discrimination:
the disparate treatment and
thedisparate
impact. Under
the disparate
treatment analysis, the plaintiff must prove that an employment policy is
discriminatory on its face. No-spouse employment policies requiring an employee
of a particular sex to either quit, transfer, or be fired are facially discriminatory.
For example, an employment policy prohibiting the employer from hiring wives of
male employees, but not husbands of female employees, is discriminatory on its
face.[22]
On the other hand, to establish disparate impact, the complainants must
prove that a facially neutral policy has a disproportionate effect on a particular
class. For example, although most employment policies do not expressly indicate
which spouse will be required to transfer or leave the company, the policy often
disproportionately affects one sex.[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. Though they agree that the term marital status encompasses
discrimination based on a person's status as either married, single, divorced, or
widowed, they are divided on whether the term has a broader meaning. Thus, their
decisions vary.[24]
The courts narrowly[25] interpreting marital status to refer only to a person's
status as married, single, divorced, or widowed reason that if the legislature
intended a broader definition it would have either chosen different language or
specified its intent. They hold that the relevant inquiry is if one is married rather
than to whom one is married.They construe marital status discrimination to include
only whether a person is single, married, divorced, or widowed and not the
identity, occupation, and place of employment of one's spouse. 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 courts that have broadly[26] 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.[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. [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.[30] 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 employees spouse. [31] This is known as the bona fide
occupational qualification exception.
We note that since the finding of a bona fide occupational qualification
justifies an employers no-spouse rule, the exception is interpreted strictly and
narrowly by these state courts. There must be a compelling business necessity for
which no alternative exists other than the discriminatory practice. [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; 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.[33]
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
[34]
Pedro Tecson v. Glaxo WellcomePhilippines,
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 Glaxos 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.[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.
NLRC.[36] 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
qualityreasonably necessary for satisfactory job performance.[37] (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[38] is lame. 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.
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 coemployee. 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 coemployees. 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.[40]
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 legislatures silence[41] 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. Corollarily, the issue as to whether respondents Simbol and Comia
resigned voluntarily has become moot and academic.
As to respondent Estrella, the Labor Arbiter and the NLRC based their ruling
on the singular fact that her resignation letter was written in her own handwriting.
Both ruled that her resignation was voluntary and thus valid. The respondent court
failed to categorically rule whether Estrella voluntarily resigned but ordered that
she be reinstated along with Simbol and Comia.
Estrella claims that she was pressured to submit a resignation letter because
she was in dire need of money. We examined the records of the case and

find Estrellascontention to be more in accord with the evidence. While findings of

fact by administrative tribunals like the NLRC are generally given not only respect
but, at times, finality, this rule admits of exceptions,[42] as in the case at bar.
Estrella avers that she went back to work on December 21, 1999 but was
dismissed due to her alleged immoral conduct. At first, 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.
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. If she really wanted to avoid
embarrassment and humiliation, she would not have gone back to work at all. Nor
would she have filed a suit for illegal dismissal and pleaded for reinstatement. We
have held that in voluntary resignation, the employee is compelled by personal
reason(s) to dissociate himself from employment. It is done with the intention of
relinquishing an office, accompanied by the act of abandonment. [44] Thus, it is
illogical for Estrella to resign and then file a complaint for illegal dismissal. Given
the lack of sufficient evidence on the part of petitioners that the resignation was
voluntary, Estrellas dismissal is declared illegal.
IN VIEW WHEREOF, the Decision of the Court of Appeals in CA-G.R.
SP No. 73477 dated August 3, 2004 is AFFIRMED.
SO ORDERED.

[G.R. No. 162994. September 17, 2004]

DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A.

TECSON, petitioners, vs. GLAXO WELLCOME PHILIPPINES,
INC. respondent.
RESOLUTION

TINGA, J.:

Confronting the Court in this petition is a novel question, with constitutional

overtones, involving the validity of the policy of a pharmaceutical company
prohibiting its employees from marrying employees of any competitor
company.
This is a Petition for Review on Certiorari assailing the Decision dated
May 19, 2003 and the Resolution dated March 26, 2004 of the Court of
Appeals in CA-G.R. SP No. 62434.
[1]

[2]

Petitioner Pedro A. Tecson (Tecson) was hired by respondent Glaxo

Wellcome Philippines, Inc. (Glaxo) as medical representative on October 24,
1995, after Tecson had undergone training and orientation.
Thereafter, Tecson signed a contract of employment which stipulates,
among others, that he agrees 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
should management find that such relationship poses a possible conflict of
interest, to resign from the company.
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. If management perceives a conflict of interest or
a potential conflict between such relationship and the employees employment
with the 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 was initially assigned to market Glaxos products in the Camarines
Sur-Camarines Norte sales area.
Subsequently, Tecson entered into a romantic relationship with Bettsy, an
employee of Astra Pharmaceuticals (Astra), a competitor of Glaxo. Bettsy
was Astras Branch Coordinator in Albay. She supervised the district
[3]

managers and medical representatives of her company and prepared

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

During the pendency of the grievance proceedings, Tecson was paid his
salary, but was not issued samples of products which were competing with
similar products manufactured by Astra. He was also not included in product
conferences regarding such products.
Because the parties failed to resolve the issue at the grievance machinery
level, they submitted the matter for voluntary arbitration. Glaxo offered Tecson
a separation pay of one-half () month pay for every year of service, or a total
of P50,000.00 but he declined the offer. On November 15, 2000, the National
Conciliation and Mediation Board (NCMB) rendered its Decisiondeclaring as
valid Glaxos policy on relationships between its employees and persons
employed with competitor companies, and affirming Glaxos right to transfer
Tecson to another sales territory.
Aggrieved, Tecson filed a Petition for Review with the Court of Appeals
assailing the NCMB Decision.
On May 19, 2003, 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. The appellate court held that Glaxos policy prohibiting its
employees from having personal relationships with employees of competitor
companies is a valid exercise of its management prerogatives.
[4]

Tecson
filed
a Motion
for
Reconsideration of
the
appellate
courts Decision, but the motion was denied by the appellate court in
its Resolution dated March 26, 2004.
[5]

Petitioners filed the instant petition, arguing therein that (i) the Court of
Appeals erred in affirming the NCMBs finding that the Glaxos policy
prohibiting its employees from marrying an employee of a competitor
company is valid; 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, and deprived of the opportunity to attend products seminars and
training sessions.
[6]

Petitioners contend that Glaxos policy against employees marrying

employees of competitor companies violates the equal protection clause of

the Constitution because it creates invalid distinctions among employees on

account only of marriage. They claim that the policy restricts the employees
right to marry.
[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, (3) he was excluded from attending seminars and
training sessions for medical representatives, and (4) he was prohibited from
promoting respondents products which were competing with Astras products.
[8]

In its Comment on the petition, 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; and that
Tecsons 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.
[9]

Glaxo insists that as a company engaged in the promotion and sale of

pharmaceutical products, it has a genuine interest in ensuring that its
employees avoid any activity, relationship or interest that may conflict with
their responsibilities to the company. Thus, 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. The policy is also aimed at preventing a competitor
company from gaining access to its secrets, procedures and policies.
[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 is therefore not violative of the equal protection clause. It
maintains that considering the nature of its business, the prohibition is based
on valid grounds.
[11]

According to Glaxo, Tecsons marriage to Bettsy, an employee of Astra,

posed a real and potential conflict of interest. Astras products were in direct

competition with 67% of the products sold by Glaxo. Hence, Glaxos

enforcement of the foregoing policy in Tecsons case was a valid exercise of
its management prerogatives. In any case, Tecson was given several
months to remedy the situation, and was even encouraged not to resign but to
ask his wife to resign from Astra instead.
[12]

[13]

Glaxo also points out that Tecson can no longer question the assailed
company policy because when he signed his contract of employment, he was
aware that such policy was stipulated therein. In said contract, 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.
[14]

Glaxo likewise insists that Tecsons reassignment to another sales area

and his exclusion from seminars regarding respondents new products did not
amount to constructive dismissal.
It claims that in view of Tecsons refusal to resign, he was relocated from
the Camarines Sur-Camarines Norte sales area to the Butuan CitySurigao City and Agusan del Sur sales area. Glaxo asserts that in effecting
the reassignment, it also considered the welfare of Tecsons family. Since
Tecsons hometown was in Agusan del Sur and his wife traces her roots
to Butuan City, 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.
[15]

In addition, Glaxo avers that Tecsons 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, and
hence, would pose a potential conflict of interest for him. Lastly, the delay in
Tecsons 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).
[16]

The Court is tasked to resolve the following issues: (1) Whether the Court
of Appeals erred in ruling that Glaxos policy against its employees marrying

employees from competitor companies is valid, and in not holding that said
policy violates the equal protection clause of the Constitution; (2) Whether
Tecson was constructively dismissed.
The Court finds no merit in the petition.
The stipulation in Tecsons contract of employment with Glaxo being
questioned by petitioners provides:

10. 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. Should it pose a possible conflict of interest in
management discretion, you agree to resign voluntarily from the Company as a matter
of Company policy.

[17]

The same contract also stipulates that Tecson agrees to abide by the
existing company rules of Glaxo, and to study and become acquainted with
such policies. In this regard, the Employee Handbook of Glaxo expressly
informs its employees of its rules regarding conflict of interest:
[18]

1. Conflict of Interest
Employees should avoid any activity, investment relationship, or interest that may run
counter to the responsibilities which they owe Glaxo Wellcome.
Specifically, this means that employees are expected:
a. To avoid having personal or family interest, financial or otherwise, 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.

b. To refrain from using their position in Glaxo Wellcome or knowledge of

Company plans to advance their outside personal interests, that of their
relatives, friends and other businesses.
c. To avoid outside employment or other interests for income which would impair
their effective job performance.
d. To consult with Management on such activities or relationships that may lead to
conflict of interest.
1.1. 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. If management perceives a conflict or potential
conflict of interest, 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-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.
[19]

No reversible error can be ascribed to the Court of Appeals when it ruled

that Glaxos policy prohibiting an employee from having a relationship with an
employee of a competitor company is a valid exercise of management
prerogative.
Glaxo has a right to guard its trade secrets, manufacturing formulas,
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.
The prohibition against personal or marital relationships with employees of
competitor companies upon Glaxos employees is reasonable under the
circumstances because relationships of that nature might compromise the
interests of the company. In laying down the assailed company policy, Glaxo
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. 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 recognizes that management has rights which are also
entitled to respect and enforcement in the interest of fair play.
[20]

[21]

As held in a Georgia, U.S.A case, 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. Consequently, 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.
The Court pointed out that the policy was applied to men and women
equally, and noted that the employers business was highly competitive and
that gaining inside information would constitute a competitive advantage.
[22]

[23]

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.
[24]

[25]

[26]

[27]

In 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. 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 employees personal decision does not detract the employer
from exercising management prerogatives to ensure maximum profit and business
success. . .
[28]

The Court of Appeals also correctly noted that the assailed company
policy which forms part of respondents Employee Code of Conduct and of its
contracts with its employees, such as that signed by Tecson, 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.
[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, and when he was excluded from attending the companys 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. None of these conditions
are present in the instant case. The record does not show that Tecson 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:
[30]

. . . In this case, petitioners transfer to another place of assignment was merely in

keeping with the policy of the company in avoidance of conflict of interest, and thus
validNote that [Tecsons] 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. Her duties include
monitoring sales of Astra products, conducting sales drives, establishing and
furthering relationship with customers, collection, monitoring and managing Astras
inventoryshe therefore takes an active participation in the market war characterized
as it is by stiff competition among pharmaceutical companies. Moreover, and this is
significant, petitioners sales territory covers Camarines Sur and Camarines Norte
while his wife is supervising a branch of her employer in Albay. The proximity of
their areas of responsibility, all in the same Bicol Region, renders the conflict of
interest not only possible, but actual, as learning by one spouse of the others market
strategies in the region would be inevitable. [Managements] appreciation of a
conflict of interest is therefore not merely illusory and wanting in factual basis
[31]

In Abbott Laboratories (Phils.), Inc. v. National Labor Relations

Commission, 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, the Court upheld the right of the drug company to transfer or
reassign its employee in accordance with its operational demands and
requirements. The ruling of the Court therein, quoted hereunder, also finds
application in the instant case:
[32]

By the very nature of his employment, a drug salesman or medical representative is

expected to travel. He should anticipate reassignment according to the demands of
their business. 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. More so if such reassignments
are part of the employment contract.
[33]

As noted earlier, the challenged policy has been implemented by Glaxo

impartially and disinterestedly for a long period of time. In the case at bar, the
record shows that Glaxo gave Tecson several chances to eliminate the conflict
of interest brought about by his relationship with Bettsy. When their
relationship was still in its initial stage, Tecsons supervisors at Glaxo

constantly reminded him about its effects on his employment with the
company and on the companys interests. After Tecson married Bettsy, 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. Glaxo likewise
acceded to his repeated requests for more time to resolve the conflict of
interest. When the problem could not be resolved after several years of
waiting, Glaxo was constrained to reassign Tecson to a sales area different
from that handled by his wife for Astra. Notably, the Court did not terminate
Tecson from employment but only reassigned him to another area where his
home province, Agusan del Sur, was included. In effecting Tecsons transfer,
Glaxo even considered the welfare of Tecsons family. Clearly, the foregoing
dispels any suspicion of unfairness and bad faith on the part of Glaxo.
[34]

WHEREFORE, the Petition is DENIED for lack of merit. Costs against

petitioners.
SO ORDERED.