A company policy prohibiting spouses from working in the same company (no-spouse policy) is illegal and constitutes marital discrimination unless the employer can prove that the policy is founded on a reasonable business necessity and that the qualification is reasonably related to the essential operation of the job involved.

Petitioner Star Paper Corporation implemented a policy in 1995 stating that if two employees marry each other, one must resign. This policy also barred the hiring of new applicants who had relatives up to the third degree of relationship already employed by the company. The case arose when three regular employees, Ronaldo D. Simbol, Wilfreda N. Comia, and Lorna E. Estrella, were affected by this policy or related circumstances leading to their separation from the company.

• Petitioner Star Paper Corporation (company) had a policy promulgated in 1995 stating: "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."
• Respondent Ronaldo D. Simbol, employed since October 27, 1993, married co-employee Alma Dayrit on June 27, 1998. He was advised by Personnel Manager Josephine Ongsitco that one of them should resign per company policy, leading to Simbol's resignation on June 20, 1998.
• Respondent Wilfreda N. Comia, hired on February 5, 1997, married co-employee Howard Comia on June 1, 2000. Ongsitco similarly reminded them of the policy, and Comia resigned on June 30, 2000.
• Respondent Lorna E. Estrella, hired on July 29, 1994, had a relationship with co-worker Luisito Zuñiga, a married man, and became pregnant. Petitioners alleged she opted to resign on December 21, 1999, to avoid termination for immorality.
• Estrella's version: Zuñiga misrepresented himself as separated. After discovering the truth and becoming pregnant, she severed ties with him. After an accident and medical leave, she returned to work on December 21, 1999, was denied entry, and handed a memorandum for dismissal due to immoral conduct. She refused to sign, submitted an explanation, but was still dismissed. She later submitted a resignation letter in exchange for her thirteenth-month pay due to urgent financial need.
• All respondents signed a Release and Confirmation Agreement.
• Respondents filed a complaint for unfair labor practice, constructive dismissal, separation pay, and attorney's fees, alleging the company policy was illegal and contravened Article 136 of the Labor Code.

• The company policy is a valid exercise of management prerogative, covering hiring, work assignment, and discipline of workers.
• The policy is not contrary to Article 136 of the Labor Code because it does not require the woman employee to resign; the spouses can choose who resigns, and they are free to marry persons other than co-employees.
• The policy is an anti-nepotism measure intended to prevent favoritism and potential employment problems arising from relatives working together, specifically to give teeth to the rule against hiring relatives within the third degree.
• Respondents Simbol and Comia resigned voluntarily pursuant to the company policy.
• Respondent Estrella resigned voluntarily to avoid termination for immorality due to her pregnancy by a married co-worker.
• The Court of Appeals erred in holding that the 1995 policy is violative of constitutional rights towards marriage and the family and of Article 136 of the Labor Code.
• The Court of Appeals erred in holding that respondents' resignations were far from voluntary.

• The company policy is illegal and contravenes Article 136 of the Labor Code, which prohibits employers from requiring as a condition of employment that a woman employee shall not get married or be deemed resigned upon marriage.
• Respondents Simbol and Comia did not resign voluntarily but were compelled to resign due to the illegal company policy.
• Respondent Estrella was constructively dismissed. She was denied entry after medical leave, accused of immoral conduct without due process, and pressured to resign in exchange for her thirteenth-month pay due to financial hardship.
• They were dismissed due to their union membership (though this point was not extensively discussed in the Supreme Court's decision).
• The company policy is discriminatory.

• Whether the company policy banning spouses from working in the same company (no-spouse policy) is a valid exercise of management prerogative or violative of the rights of employees under the Constitution and the Labor Code.
• Whether respondents Simbol and Comia voluntarily resigned from their employment.
• Whether respondent Estrella voluntarily resigned or was illegally dismissed.

• The Supreme Court affirmed the Court of Appeals' decision, ruling that the company policy is illegal.
• The Court held that the policy is not a valid exercise of management prerogative because the petitioners failed to prove a reasonable business necessity for its implementation. The mere fear that married employees might be less efficient is not a valid justification.
• The Court found that while the policy may not facially violate Article 136 of the Labor Code (as it does not explicitly target women), it creates a disproportionate effect and, under the disparate impact theory, requires a showing of reasonableness despite its discriminatory effect. Petitioners failed to prove such reasonableness or a legitimate business concern.
• The Court emphasized that the protection given to labor is vast, and the absence of a statute expressly prohibiting marital discrimination does not mean such policies are valid if based on prejudice or stereotype.
• Regarding Simbol and Comia, the Court stated that the issue of their voluntary resignation became moot and academic due to the illegality of the policy that prompted their resignations.
• Regarding Estrella, the Court found her claim of being pressured to resign more in accord with evidence. Her actions of returning to work and filing an illegal dismissal case were inconsistent with voluntary resignation. The lack of sufficient evidence from petitioners that her resignation was voluntary led to the conclusion that her dismissal was illegal.

• Management Prerogative — The right of an employer to regulate all aspects of employment, such as hiring, work assignments, working methods, 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. This prerogative is not absolute and is subject to limitations imposed by law, collective bargaining agreements, and general principles of fair play and justice. In this case, the Court found the no-spouse policy to be an invalid exercise of management prerogative because it was not supported by a reasonable business necessity.
• Bona Fide Occupational Qualification (BFOQ) — A standard that allows an employer to discriminate on the basis of religion, sex, or national origin in those instances where religion, sex, or national origin is an actual qualification for performing the job. The Court noted this concept from US jurisprudence and applied a similar standard of "reasonableness of the company policy." To justify a BFOQ, the employer must prove (1) that the employment qualification is reasonably related to the essential operation of the job involved; and (2) that there is a factual basis for believing that all or substantially all persons meeting the qualification would be unable to properly perform the duties of the job. The petitioners failed to prove that their no-spouse policy met this standard.
• Disparate Impact — A theory of employment discrimination where a facially neutral employment policy disproportionately affects a protected class. Even if a policy does not explicitly discriminate, if its application leads to a discriminatory outcome without a valid business justification, it can be deemed illegal. The Court found the no-spouse policy, while not facially violating Article 136, created a disproportionate effect, and petitioners failed to show it was reasonable despite this effect.
• Reasonableness of Company Policy — A standard requiring that company policies, especially those affecting fundamental rights or leading to discrimination, must be justified by legitimate business concerns and be reasonable under the circumstances. The Court held that the employer has the burden to prove the existence of a reasonable business necessity to uphold a questioned employment policy. Petitioners failed to meet this burden.
• Security of Tenure — The constitutional right of workers to not be dismissed from employment without just or authorized cause and without due process. The Court implied that upholding the no-spouse policy without valid justification would allow employers to create policies based on unproven presumptions at the expense of an employee's right to security of tenure.
• Protection to Labor (Constitutional) — Article II, Section 18 and Article XIII, Section 3 of the 1987 Constitution affirm labor as a primary social economic force, mandate the State to protect the rights of workers, promote their welfare, afford full protection to labor, and promote full employment and equality of employment opportunities. The Court cited these provisions to underscore the broad protection afforded to labor.
• Protection to Labor (Civil Code) — Article 1700 states that the relation between capital and labor is impressed with public interest and labor contracts must yield to the common good. Article 1702 provides that in case of doubt, all labor legislation and labor contracts shall be construed in favor of the safety and decent living for the laborer. These were cited to support the protective stance towards labor.
• Marital Status Discrimination — Although not explicitly defined by a specific Philippine statute prohibiting it generally (beyond Article 136's specific context for women), the Court ruled against a policy that effectively discriminated based on marital status (marrying a co-employee) without reasonable business necessity.

• "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."
• "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."
• "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."
• "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. Thus, it is illogical for Estrella to resign and then file a complaint for illegal dismissal."

• Duncan Association of Detailman-PTGWO and Pedro Tecson v. Glaxo Wellcome Philippines, Inc. — Referenced for upholding a company policy prohibiting employees from marrying employees of competitor companies due to the reasonable business necessity of guarding trade secrets. This was contrasted with the current case where no such reasonable business necessity was proven by Star Paper.
• Philippine Telegraph and Telephone Company v. NLRC — Cited for establishing that a company policy requiring a woman employee to remain unmarried could only be justified as a BFOQ if the particular requirements of the job necessitated it, not on a general principle. The Court in PT&T found the policy discriminatory under Article 136. This case guided the current ruling on the need for reasonableness in company policies.
• Employees Association of the Philippine American Life Insurance Co. v. NLRC — Cited for the established exceptions to the general rule that findings of fact by administrative tribunals like the NLRC are given respect and finality. This was relevant to overturning the NLRC's finding on Estrella's resignation.
• Great Southern Maritime Services Corporation v. Acuña — Cited for the definition of voluntary resignation, emphasizing that it involves an intention to relinquish an office due to personal reasons, accompanied by an act of abandonment. This was used to argue against the voluntariness of Estrella's resignation.

• 1987 Constitution, 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." Referenced to highlight the State's policy on labor protection.
• 1987 Constitution, Article XIII, Section 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..." Referenced to underscore the comprehensive rights and protection afforded to workers.
• Labor Code, Article 136 (formerly Article 134) — "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." Central to the respondents' argument that the company policy was illegal, though the Court noted the policy in question did not facially target only women.
• Civil Code, Article 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." Cited to emphasize the public interest aspect of labor relations.
• Civil Code, Article 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." Cited to support the principle of interpreting labor laws and contracts in favor of the worker.