CONSTTITUTIONAL LAW PRINCIPLES
IN RELATION TO LABOR LAW
MANILA ELECTRIC CO. v. QUISUMBING
Facts: Petition is granted and the orders of
public respondent Secretary of Labor dated
August 19, 1996 and December 28, 1996 are
set aside to the extent set forth above. The
parties are directed to execute a Collective
Bargaining Agreement incorporating the terms
and conditions contained in the unaffected
portions of the Secretary of Labor's orders of
August 19, 1996 and December 28, 1996, and
the modifications set forth above. The
retirement fund issue is remanded to the
Secretary of Labor for reception of evidence
and determination of the legal personality of
the MERALCO retirement fund.
Petitioner warns that if the wage increase of
P2,200.00 per month as ordered by the
Secretary is allowed, it would simply pass the
cost covering such increase to the consumers
through an increase in the rate of electricity.
This is a non sequitur. The Court cannot be
threatened with such a misleading argument.
An increase in the prices of electric current
needs the approval of the appropriate
regulatory government agency and does not
automatically result from a mere increase in
the wages of petitioner's employees. Besides,
this argument presupposes that petitioner is
capable of meeting a wage increase.
this petition had its origin in the renegotiation
of the parties' 1992-1997 CBA insofar as the
last two-year period thereof is concerned.
When the Secretary of Labor assumed
jurisdiction and granted the arbitral awards,
there was no question that these arbitral
awards were to be given retroactive effect.
ISSUE: Should the CBA agreement be
modified in such manner?
RULING: Yes.
- collective bargaining disputes
particularly those affecting the national
interest and public service "requires
due consideration and proper
balancing of the interests of the
parties to the dispute and of those
who might be affected by the dispute."
- The Court takes judicial notice that the
new amounts granted herein are
significantly higher than the weighted
average salary currently enjoyed by
other rank-and-file employees within
the community. It should be noted that
the relations between labor and
capital is impressed with public
interest which must yield to the
common good.11 Neither party should
act oppressively against the other or
impair the interest or convenience of
the public.12Besides, matters of
salary increases are part of
management prerogative
- The Court in the January 27, 1999
Decision, stated that the CBA shall be
"effective for a period of 2 years
counted from December 28, 1996 up
to December 27, 1999."
Parenthetically, this actually covers a
three-year period. Labor laws are
silent as to when an arbitral award
in a labor dispute where the
Secretary had assumed jurisdiction
by virtue of Article 263 (g) of the
Labor Code shall retroact. In
general, a CBA negotiated within six
months after the expiration of the
existing CBA retroacts to the day
immediately following such date
and if agreed thereafter, the
effectivity depends on the
agreement of the parties
- the law is silent as to the
retroactivity of a CBA arbitral award
or that granted not by virtue of the
mutual agreement of the parties but
by intervention of the government.
Despite the silence of the law, the
Court rules herein that CBA arbitral
awards granted after six months
from the expiration of the last CBA
shall retroact to such time agreed
upon by both employer and the
employees or their union. Absent
such an agreement as to
retroactivity, the award shall retroact
to the first day after the six-month
period following the expiration of
the last day of the CBA should there
be one. In the absence of a CBA, the
Secretary's determination of the
 date of retroactivity as part of his
discretionary powers over arbitral
awards shall control.
DUE PROCESS IN LABOR CASES
AGABON v. NLRC
Facts: Private respondent is Riviera Home
Improvements, Inc. is engaged in the business of
selling and installing ornamental and construction
materials. It employed petitioner Virgilio and Jenny
Agabon as gybsum board installers on January 2,
1992 until February 23, 1999 when they were
dismissed due to abandonment of work.
Petitioners filed a complaint for illegal dismissal and
payments of money claims and asserted that the
private respondent refused to give them assignments
unless they agreed to work on a pakyaw basis which
the petitioners turned down for it would cost them
their SSS benefits. Additionally, they argued that PR
did not comply with the twin requirements of notice
and hearing.
Private respondent contended that the petitioners
abandoned their work when the former offered a new
assignment in Pacific Plaza Towers involving 40sqm
of cornice installation. Petitioners did not report for
work for they were found to be subcontracting for
another company. Petitioners also demanded for an
increase in their salary and upon decline by the PR,
petitioners abandoned work.
The Labor Arbiter ruled in favor of Agabon; NLRC,
PR; CA, PR.
ISSUE: Was due process complied with?
RULING: No. They had abandoned their
employment and were already working for another
employer. To dismiss an employee, the law
requires not only the existence of a just and valid
cause but also enjoins the employer to give the
employee the opportunity to be heard and to
defend himself.
The present case squarely falls under the fourth
situation. The dismissal should be upheld because it
was established that the petitioners abandoned their
jobs to work for another company. Private
respondent, however, did not follow the notice
requirements and instead argued that sending notices
to the last known addresses would have been useless
because they did not reside there anymore.
Unfortunately for the private respondent, this is not a
valid excuse because the law mandates the twin
notice requirements to the employees last known
address. Thus, it should be held liable for non-
compliance with the procedural requirements of due
process.
- Article 282 of the Labor Code enumerates
the just causes for termination by the
employer: (a) serious misconduct or willful
disobedience by the employee of the lawful
orders of his employer or the latters
representative in connection with the
employees 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
his duly authorized representative; (d)
commission of a crime or offense by the
employee 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.
- Abandonment is the deliberate and
unjustified refusal of an employee to resume
his employment. It is a form of neglect of
duty, hence, a just cause for termination of
employment by the employer.
- For a valid finding of abandonment, these
two factors should be present: (1) the failure
to report for work or absence without valid
or justifiable reason; and (2) a clear intention
to sever employer-employee relationship,
with the second as the more determinative
factor which is manifested by overt acts
from which it may be deduced that the
employees has no more intention to work.
- The intent to discontinue the employment
must be shown by clear proof that it was
deliberate and unjustified.
- RE: DECISION: In February 1999,
petitioners were frequently absent having
subcontracted for an installation work for
another company. Subcontracting for
another company clearly showed the
intention to sever the employer-employee
relationship with private respondent. This
was not the first time they did this. In
January 1996, they did not report for work
because they were working for another
company. Private respondent at that time
warned petitioners that they would be
dismissed if this happened again. Petitioners
disregarded the warning and exhibited a
clear intention to sever their employer-
employee relationship. The record of an
employee is a relevant consideration in
determining the penalty that should be
meted out to him.
- RE: DECISION: an employee who
deliberately absented from work without
leave or permission from his employer, for
the purpose of looking for a job elsewhere,
is considered to have abandoned his job.
We should apply that rule with more reason
here where petitioners were absent because
they were already working in another
company.
- The law imposes many obligations on the
employer such as providing just
compensation to workers, observance of the
procedural requirements of notice and
hearing in the termination of employment.
On the other hand, the law also recognizes
the right of the employer to expect from its
workers not only good performance,
adequate work and diligence, but also good
conduct and loyalty. The employer may not
be compelled to continue to employ such
persons whose continuance in the service
will patently be inimical to his interests.
- RELEVANT SA DUE PROCESS: The
procedure for terminating an employee is
found in Book VI, Rule I, Section 2(d) of
the Omnibus Rules Implementing the Labor
Code:
o Standards of due process:
requirements of notice. In all cases
of termination of employment, the
following standards of due process
shall be substantially observed:
o For termination of employment
based on just causes as defined in
Article 282 of the Code:
 A written notice served on
the employee specifying
the ground or grounds for
termination, and giving to
said employee reasonable
opportunity within which
to explain his side;
 A hearing or conference
during which the
employee concerned, with
the assistance of counsel if
the employee so desires, is
given opportunity to
respond to the charge,
present his evidence or
rebut the evidence
presented against him; and
 A written notice of
termination served on the
employee indicating that
upon due consideration of
all the circumstances,
grounds have been
established to justify his
termination.
- In case of termination, the foregoing
notices shall be served on the employees
last known address.
- Dismissals based on just causes
contemplate acts or omissions attributable
to the employee while dismissals based on
authorized causes involve grounds under
the Labor Code which allow the employer to
terminate employees. A termination for an
authorized cause requires payment of
separation pay. When the termination of
employment is declared illegal,
reinstatement and full backwages are
mandated under Article 279. If
reinstatement is no longer possible where
the dismissal was unjust, separation pay
may be granted.
- HOW DISMISSAL WORKS:
Procedurally, (1) if the dismissal is based
on a just cause under Article 282, the
employer must give the employee two
written notices and a hearing or opportunity
to be heard if requested by the employee
before terminating the employment: a notice
specifying the grounds for which
dismissal is sought a hearing or an
opportunity to be heard and after hearing
or opportunity to be heard, a notice of the
decision to dismiss; and (2) if the dismissal
is based on authorized causes under
Articles 283 and 284, the employer must
give the employee and the Department of
Labor and Employment written notices 30
days prior to the effectivity of his separation.
- From the foregoing rules four possible
situations may be derived:
o (1) the dismissal is for a just cause
under Article 282 of the Labor
Code, for an authorized cause
under Article 283, or for health
reasons under Article 284, and
due process was observed;
(VALID; EMPLOYER NO
LIABILITY)
o (2) the dismissal is without just or
authorized cause but due process
was observed; (ILLEGAL
DISMISSAL **refer to Article
279 of labor code**)
o (3) the dismissal is without just or
authorized cause and there was
 no due process; (ILLEGAL
DISMISSAL **refer to ART 279
of LABOR CODE) and
o (4) the dismissal is for just or
authorized cause but due process
was not observed. (DISMISSAL
UPHELD or VALID; EMPLOYER
liable for non-compliance with the
procedural requirements of due
process; procedural infirmity
cannot be cured, it should not
invalidate the dismissal)
DUE PROCESS PRINCIPLES SA LABOR LAW
PA RIN
Prior to 1989, the rule was that a dismissal or
termination is illegal if the employee was not given
any notice.
In the 1989 case of Wenphil Corp. v. National Labor
Relations Commission,[23] we reversed this long-
standing rule and held that the dismissed employee,
although not given any notice and hearing, was not
entitled to reinstatement and backwages because the
dismissal was for grave misconduct and
insubordination, a just ground for termination under
Article 282. The employee had a violent temper and
caused trouble during office hours, defying superiors
who tried to pacify him. We concluded that
reinstating the employee and awarding backwages
may encourage him to do even worse and will render
a mockery of the rules of discipline that employees
are required to observe.
However, the petitioner must nevertheless be held to
account for failure to extend to private respondent his
right to an investigation before causing his dismissal.
The rule is explicit as above discussed. The
dismissal of an employee must be for just or
authorized cause and after due process. Petitioner
committed an infraction of the second requirement.
Thus, it must be imposed a sanction for its failure to
give a formal notice and conduct an investigation as
required by law before dismissing petitioner from
employment.
The rule thus evolved: where the employer had a
valid reason to dismiss an employee but did not
follow the due process requirement, the dismissal
may be upheld but the employer will be penalized to
pay an indemnity to the employee. This became
known as the Wenphil or Belated Due Process
Rule.
On January 27, 2000, in Serrano, the rule on
the extent of the sanction was changed. We held that
the violation by the employer of the notice
requirement in termination for just or authorized
causes was not a denial of due process that will
nullify the termination. However, the dismissal is
ineffectual and the employer must pay full backwages
from the time of termination until it is judicially
declared that the dismissal was for a just or
authorized cause.
The rationale for the re-examination of
the Wenphil doctrine in Serrano was the
significant number of cases involving dismissals
without requisite notices. We concluded that the
imposition of penalty by way of damages for
violation of the notice requirement was not serving as
a deterrent. Hence, we now required payment of
full backwages from the time of dismissal until the
time the Court finds the dismissal was for a just or
authorized cause.
Serrano was confronting the practice of
employers to dismiss now and pay later by
imposing full backwages.
We believe, however, that the ruling in Serrano did
not consider the full meaning of Article 279 (Security
of Tenure) of the Labor Code. This means that the
termination is illegal only if it is not for any of the
justified or authorized causes provided by law.
Payment of backwages and other benefits, including
reinstatement, is justified only if the employee was
unjustly dismissed.
Due process under the Labor Code,
like Constitutional due process, has two aspects:
substantive, i.e., the valid and authorized causes of
employment termination under the Labor Code;
and procedural, i.e., the manner of dismissal.
Procedural due process requirements for dismissal
are found in the Implementing Rules of P.D. 442, as
amended, otherwise known as the Labor Code of the
Philippines in Book VI, Rule I, Sec. 2, as amended
by Department Order Nos. 9 and 10. Breaches of
these due process requirements violate the Labor
Code. Therefore statutory due process should be
differentiated from failure to comply
with constitutional due process.
Constitutional due process protects the individual
from the government and assures him of his rights in
criminal, civil or administrative proceedings;
while statutory due process found in the Labor
Code and Implementing Rules protects employees
from being unjustly terminated without just cause
after notice and hearing.
The sanction (of employer) should be in the nature
of indemnification or penalty, and depends on the
facts of each case and the gravity of the omission
committed by the employer.
In Nath v. National Labor Relations Commission it
was ruled that even if the employee was not given
due process, the failure did not operate to
eradicate the just causes for dismissal. The
dismissal being for just cause, albeit without due
process, did not entitle the employee to
reinstatement, backwages, damages and attorneys
fees.
Where there is just cause for dismissal but due
process has not been properly observed by an
employer, it would not be right to order either the
reinstatement of the dismissed employee or the
payment of backwages to him. In failing, however,
to comply with the procedure prescribed by law in
terminating the services of the employee, the
employer must be deemed to have opted or, in any
case, should be made liable, for the payment of
separation pay. It might be pointed out that the
notice to be given and the hearing to be conducted
generally constitute the two-part due process
requirement of law to be accorded to the employee
by the employer. Nevertheless, peculiar
circumstances might obtain in certain situations
where to undertake the above steps would be no more
than a useless formality and where, accordingly, it
would not be imprudent to apply the res ipsa
loquitur rule and award, in lieu of separation pay,
nominal damages to the employee. (VITUG)
WENPHIL MASUSUNOD NA DOCTRINE
The law protecting the rights of the laborer
authorizes neither oppression nor self-destruction
of the employer.
CONCLUSION:
An employee who is clearly guilty of conduct
violative of Article 282 should not be protected by
the Social Justice Clause of the Constitution.
Social justice, as the term suggests, should be used
only to correct an injustice. As the eminent Justice
Jose P. Laurel observed, social justice must be
founded on the recognition of the necessity of
interdependence among diverse units of a society
and of the protection that should be equally and
evenly extended to all groups as a combined force
in our social and economic life, consistent with the
fundamental and paramount objective of the state of
promoting the health, comfort, and quiet of all
persons, and of bringing about the greatest good to
the greatest number.
Justice in every case should only be for the deserving
party. It should not be presumed that every case of
illegal dismissal would automatically be decided in
favor of labor, as management has rights that should
be fully respected and enforced by this Court. As
interdependent and indispensable partners in nation-
building, labor and management need each other to
foster productivity and economic growth; hence, the
need to weigh and balance the rights and welfare
of both the employee and employer.
Where the dismissal is for a just cause, as in the
instant case, the lack of statutory due process should
not nullify the dismissal, or render it illegal, or
ineffectual. However, the employer should indemnify
the employee for the violation of his statutory rights,
as ruled in Reta v. National Labor Relations
Commission.[36] The indemnity to be imposed
should be stiffer to discourage the abhorrent practice
of dismiss now, pay later, which we sought to deter in
the Serrano ruling.
Under the Civil Code, nominal damages is
adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the
defendant, may be vindicated or recognized, and
not for the purpose of indemnifying the plaintiff for
any loss suffered by him. an employer is liable to
pay indemnity in the form of nominal damages to
an employee who has been dismissed if, in
effecting such dismissal, the employer fails to
comply with the requirements of due process.
JAKA v. PACOT
FACTS: Respondents Darwin Pacot, Robert
Parohinog, David Bisnar, Marlon Domingo, Rhoel
Lescano and Jonathan Cagabcab were earlier hired by
petitioner JAKA Foods Processing Corporation
(JAKA, for short) until the latter terminated their
employment on August 29, 1997 because the
corporation was in dire financial straits. It is not
disputed, however, that the termination was effected
without JAKA complying with the requirement under
Article 283 of the Labor Code regarding the service
of a written notice upon the employees and the
Department of Labor and Employment at least one
(1) month before the intended date of termination.
ISSUE: Is the Due process requirement complied
with?
RULING: No. Accordingly, the assailed decision
and resolution of the Court of Appeals respectively
dated November 16, 2001 and January 8, 2002 are
hereby SET ASIDE and a new one entered upholding
the legality of the dismissal but ordering petitioner to
pay each of the respondents the amount of
P50,000.00, representing nominal damages for non-
compliance with statutory due process.
- The rule, therefore, is that in all cases of
business closure or cessation of operation
or undertaking of the employer, the
affected employee is entitled to separation
pay. This is consistent with the state policy
of treating labor as a primary social
economic force, affording full protection to
its rights as well as its welfare. The
exception is when the closure of business
or cessation of operations is due to serious
business losses or financial reverses; duly
proved, in which case, the right of
affected employees to separation pay is
lost for obvious reasons.
- The difference between Agabon and the
instant case is that in the former, the
dismissal was based on a just cause under
Article 282 of the Labor Code while in the
present case, respondents were dismissed
due to retrenchment, which is one of the
authorized causes under Article 283 of the
same Code.
- A dismissal for just cause under Article 282
implies that the employee concerned has
committed, or is guilty of, some violation
against the employer, i.e. the employee has
committed some serious misconduct, is
guilty of some fraud against the employer,
or, as in Agabon, he has neglected his duties.
Thus, it can be said that the employee
himself initiated the dismissal process.
- a dismissal for an authorized cause under
Article 283 does not necessarily imply
delinquency or culpability on the part of the
employee. Instead, the dismissal process is
initiated by the employers exercise of his
management prerogative, i.e. when the
employer opts to install labor saving
devices, when he decides to cease business
operations or when, as in this case, he
undertakes to implement a retrenchment
program.
- The clear-cut distinction between a
dismissal for just cause under Article 282
and a dismissal for authorized cause
under Article 283 is further reinforced by
the fact that in the first, payment of
separation pay, as a rule, is not required,
while in the second, the law requires
payment of separation pay.
ABBOT v. ALCARAZ
FACTS: Petitioner publicized a job opening on a
broadsheet newspaper. Alcaraz sent an application.
She was accepted as a probationary employee. An
employment contract was shown to Alcaraz setting
forth the fact that she is on probation for 6 months
from February 15, 2005 to August 14, 2005. The
employment offer was sent to Alcaraz which includes
the organizational structure of Abbott and her job
description through email. Alcaraz was also required
to attend training programs. Alcaraz was sent a copy
of Abbott’s Code of Conduct and Performance
Modules which was further explained by Maria
Olivia T. Yabut-Misa who explained to Alcaraz the
procedure for evaluation probationary employees and
that Abbott only has one evaluation system for all of
its employees. Alcaraz was dismissed without having
been informed of her sales quota. (Regulatory Affairs
Manager inapplyan niya).
Records show that Alcaraz was terminated because
she (a) did not manage her time effectively; (b) failed
to gain the trust of her staff and to build an effective
rapport with them; (c) failed to train her staff
effectively; and (d) was not able to obtain the
knowledge and ability to make sound judgments on
case processing and article review which were
necessary for the proper performance of her duties.
NLRC held that Alcaraz was a regular and not a
probationary employee because her receipt of the Job
description and code of conduct is not equivalent to
her being aware of the performance standards to
which she have been evaluated on.
ISSUE: Was the termination valid?
RULING: Yes. Due to the nature and variety of
these managerial functions, the best that Abbott could
have done, at the time of Alcaraz's engagement, was
to inform her of her duties and responsibilities, the
adequate performance of which, to repeat, is an
inherent and implied standard for regularization; this
is unlike the circumstance in Aliling where a
quantitative regularization standard, in the term of a
sales quota, was readily articulable to the employee at
the outset. Hence, since the reasonableness of
Alcaraz's assessment clearly appears from the
records, her termination was justified.
Bear in mind that the quantum of proof which the
employer must discharge is only substantial
evidence which, as defined in case law, means that
amount of relevant evidence as a reasonable mind
might accept as adequate to support a conclusion,
even if other minds, equally reasonable, might
conceivably opine otherwise.14 To the Court's mind,
this threshold of evidence Abbott amply overcame in
this case.
- "adequate performance” hinged on the
qualitative assessment of the employee’s
work; by its nature, this largely rests on the
reasonable exercise of the employer’s
management prerogative. While in some
instances the standards used in measuring
the quality of work may be conveyed.
- A good example would be the case of
probationary employees whose tasks involve
the application of discretion and intellect,
such as – to name a few – lawyers, artists,
and journalists. In these kinds of occupation,
the best that the employer can do at the
time of engagement is to inform the
probationary employee of his duties and
responsibilities and to orient him on how
to properly proceed with the same. The
employer cannot bear out in exacting
detail at the beginning of the engagement
what he deems as "quality work"
especially since the probationary
employee has yet to submit the required
output. In the ultimate analysis, the
communication of performance standards
should be perceived within the context of
the nature of the probationary employee’s
duties and responsibilities.
- RULING RELATED SA CONCEPT
ABOVE: The same logic applies to a
probationary managerial employee who is
tasked to supervise a particular department,
as Alcaraz in this case.1âwphi1 It is hardly
possible for the employer, at the time of the
employee’s engagement, to map into
technical indicators, or convey in precise
detail the quality standards by which the
latter should effectively manage the
department. Factors which gauge the
ability of the managerial employee to
either deal with his subordinates (e.g.,
how to spur their performance, or command
respect and obedience from them), or to
organize office policies, are hardly
conveyable at the outset of the
engagement since the employee has yet to
be immersed into the work itself. Given
that a managerial role essentially connotes
an exercise of discretion, the quality of
effective management can only be
determined through subsequent
assessment. While at the time of
engagement, reason dictates that the
employer can only inform the
probationary managerial employee of his
duties and responsibilities as such and
provide the allowable parameters for the
same. Verily, as stated in the Decision, the
adequate performance of such duties and
responsibilities is, by and of itself, an
implied standard of regularization.
- performance standard contemplated by
law should not, in all cases, be contained in
a specialized system of feedbacks or
evaluation.
- In fact, even if a system of such kind is
employed and the procedures for its
implementation are not followed, once an
employer determines that the
probationary employee fails to meet the
standards required for his regularization,
the former is not precluded from
dismissing the latter. The rule is that when
a valid cause for termination exists, the
procedural infirmity attending the
termination only warrants the payment of
nominal damages. This was the principle
laid down in the landmark cases of Agabon
v. NLRC9 (Agabon) and Jaka Food
Processing Corporation v. Pacot10 (Jaka).
EQUAL PROTECTION:
TECSON v. GLAXO
FACTS: 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.
Tecson married Bettsy, an employee of Astra
Pharmaceuticals which as a major competitor
company of Glaxo. The District Manage reminded
Tecson of the conflict of interest which their
relationship may pose on his job with Glaxo and
recommended Bettsy’s resignation from Astra
because they wanted to retain Tecson. Tecson
implored for Glaxo to wait for some more because
Bettsy is about to be transferred Zeneca, another drug
company and they were just waiting to avail of the
redundancy package. Tecson was transferred to
Butuan City, Surigao Del Sur, Agusan del Sur sales
area and the delivery of milk products were delayed
due to Tecson’s refusal to transfer.
Tecson contends that the company’s code of conduct
pertaining to the employee-relationship is violative of
the equal protection clause and restricts his right to
marry; his transfer amounted to illegal dismissal; he
was denied receipt of the goods; and he experienced
pay diminution.
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.
ISSUE: Is there a violation of the equal protection
clause?
RULING: None. It is a valid exercise of
Glaxo’s 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.[20] 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.
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.[24] 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.[25] The only exception
occurs when the state[26] in any of its
manifestations or actions has been found to have
become entwined or involved in the wrongful
private conduct.[27] 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.
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.
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 ButuanCity sales area.

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.