FACTS:

The case involves petitioner Star Paper Corporation, a trading company, and respondents Ronaldo D. Simbol, Wilfreda N. Comia, and Lorna E. Estrella, who were regular employees of the company. The company had a policy prohibiting spouses from working in the same company, requiring one of them to resign if they decide to get married. Simbol and Comia resigned in compliance with the policy, while Estrella alleged that she was dismissed from the company after discovering that her co-worker misrepresented himself as a married but separated man. She claimed that she was forced to submit a letter of resignation in exchange for her thirteenth-month pay due to her urgent need for money.

Respondents filed a complaint for unfair labor practice, constructive dismissal, separation pay, and attorney's fees, arguing that the company policy was illegal and violated the Labor Code. The Labor Arbiter dismissed the complaint, citing management prerogative, which was affirmed by the NLRC. However, the Court of Appeals reversed the NLRC decision and declared the respondents' dismissal illegal, ordering their reinstatement with full backwages and payment of attorney's fees. Petitioners appealed the decision to the Supreme Court, arguing that their policy was not discriminatory but aimed at preventing potential employment problems that may arise from favoritism towards relatives.

ISSUES:

1. Does the employer's policy banning spouses from working in the same company violate the employees' rights under the Constitution and the Labor Code, or is it a valid exercise of management prerogative?

2. Were the resignations of respondents Ronaldo D. Simbol, Wilfreda N. Comia, and Lorna E. Estrella voluntary?

RULING:

1. Issue on Employer's Policy

   The Supreme Court ruled that the employer's policy banning spouses from working in the same company is an invalid exercise of management prerogative. The Court held that the policy violates the employees' rights under the Labor Code and the Constitution because the employer failed to prove a reasonable business necessity for the policy. The policy creates a disproportionate effect on married employees, and without valid justification, such discrimination is not permissible under the law.

2. Voluntariness of Resignations

   The Court found that the resignations of Simbol and Comia were not voluntary but were compelled by the illegal company policy. Hence, their dismissals were declared illegal. Regarding Estrella, the Court ruled that her resignation was also not voluntary. She was pressured to resign due to her need for money and the company's termination threat based on alleged immoral conduct. Therefore, Estrella's dismissal was similarly declared illegal.

PRINCIPLES:

1. Management Prerogative

   Management prerogative must be exercised within the bounds of reasonableness and cannot infringe on employees' constitutional rights or protections under the Labor Code.

2. Discrimination Based on Marital Status

   Policies that disproportionately impact married employees, without a valid and compelling business necessity, constitute unjust discrimination and are contrary to the Labor Code provisions and the Constitution.

3. Article 136, Labor Code

   It is unlawful to discriminate against women employees based on their marital status by requiring them to resign upon getting married.

4. Voluntary Resignation

   A resignation must be truly voluntary, reflecting the employee's intent to dissociate from employment. If resignation is compelled by external pressures, threats, or coercive policies, it cannot be considered voluntary.

5. Bona Fide Occupational Qualification (BFOQ)

   Any employment policy that discriminates based on marital status must demonstrate a bona fide occupational qualification, establishing that the discriminatory practice is necessary for the essential operation of the business and that there is no reasonable alternative.

6. Reasonableness Standard

The standard of reasonableness assesses whether a company's policy is fair and justified under the circumstances, balancing the interests of the employer with the rights of the employees.