G.R. No. 159796 - Gerochi vs. Department of Energy

Case Summary (G.R. No. 159796)

Key Dates and Procedural Posture

Employment commencement: June 11, 2004. Company policy effective: May 1, 2006. Marriage: October 31, 2009. Request to remain employed after marriage: November 4, 2009. Termination by HR: November 10, 2009 (with parties’ proceedings reflecting a dismissal reckoned from February 17, 2010 for monetary computation). Labor Arbiter decision: October 29, 2010 (found illegal dismissal; ordered reinstatement and backwages). NLRC resolution: June 30, 2011 (affirmed Labor Arbiter). CA decision: July 31, 2014 (reversed NLRC and validated termination as management prerogative). Supreme Court decision: reversed the CA and reinstated the Labor Arbiter/NLRC rulings.

Applicable Law and Legal Standards

Constitutional basis: 1987 Constitution (State obligation to afford full protection to labor and promote equality of employment opportunities). Statutory protections: Labor Code provision prohibiting discrimination by reason of marriage (Article 134, formerly Article 136), the Labor Code remedy for illegal dismissal (Article 294, formerly Article 279), and related statutory policy statements (e.g., Magna Carta of Women cited for anti‑discrimination and right to freely choose a spouse). Administrative and judicial standards: management prerogative is recognized but subject to limits of justice and fair play; the bona fide occupational qualification (BFOQ) exception and the Star Paper test require the employer to prove reasonable business necessity by satisfying (1) the qualification is reasonably related to essential job operations and (2) a factual basis that all or substantially all persons with the qualification would be unable to perform the job. The employer bears the burden of proof by substantial evidence.

Factual Background: Employment and the “Exogamy” Policy

One Network Bank employed petitioner as an Accounting Specialist. The bank adopted an “Exogamy Policy” effective May 1, 2006, which provided that when two bank employees subsequently marry, one must immediately terminate employment; the policy exempted employees already married as of the end of April 2006. Petitioner married a co‑employee (a Loan Specialist) on October 31, 2009; after requesting permission to continue employment (offering alternatives such as transferring her husband), HR denied the request and terminated petitioner. Petitioner sought reconsideration and later filed a complaint for illegal dismissal.

Labor Arbiter and NLRC Findings

The Labor Arbiter found the dismissal illegal and ordered reinstatement with full backwages and related benefits; it made reinstatement immediately executory under the Labor Code. The NLRC affirmed, holding that the bank failed to demonstrate legitimate business necessity for its no‑spouse policy and characterizing the bank’s fears (e.g., spouses divulging client information) as speculative and unproven. The NLRC found that the employer had not shown the policy’s reasonableness under prevailing jurisprudence (including the Star Paper criteria).

Court of Appeals’ Ruling and Rationale

The Court of Appeals reversed the NLRC, treating the exogamy policy as a valid exercise of management prerogative and characterizing the ban as justified under the BFOQ exception. The CA accepted the bank’s assertion that its public interest duties and the need for heightened diligence in safeguarding confidential client information created a reasonable business necessity that could justify a categorical prohibition on married co‑employees. Because the CA found substantive justification for dismissal, it awarded separation pay and nominal damages for procedural defects rather than reinstatement.

Standard of Review Applied by the Supreme Court

The Supreme Court reiterated that Rule 45 review is generally limited to questions of law, with an exception where lower courts’ findings are contradictory or where the CA’s Rule 65 (certiorari) review is assessed for grave abuse of discretion. The narrow inquiry before the Court was whether the Court of Appeals correctly determined that the NLRC acted with grave abuse of discretion in finding the dismissal illegal. The Court applied established parameters for grave abuse review and labor jurisprudence cited in the record.

Supreme Court’s Analysis on Discrimination and Management Prerogative

The Court emphasized constitutional and statutory protections against discrimination based on marital status and security of tenure. It observed that respondents terminated petitioner but retained her husband, and that respondents provided no specific, individualized reason why petitioner (rather than her husband) had to be terminated. The Court held that dismissal solely because of marriage, particularly as selectively enforced, is precisely the form of discrimination prohibited by the Labor Code and cannot be justified by management prerogative alone. Management prerogative is not limitless and cannot be used to justify actions that violate statutory or constitutional protections.

Application of the BFOQ/Star Paper Test to the Facts

Using the Star Paper criteria, the Court found respondents failed to satisfy either required element. First, the no‑spouse rule was not reasonably related to the bank’s essential operations because it indiscriminately discouraged marriage among employees and was not tailored to actual job functions or risks. Second, there was no factual basis showing that all or substantially all married employees would be unable to perform their duties. The Court agreed with the NLRC that the bank’s asserted

Case Syllabus (G.R. No. 159796)

Parties and Case Title

Petitioner: Catherine Dela Cruz-Cagampan (hereafter "Catherine" or "petitioner").
Respondents: One Network Bank, Inc. (hereafter "One Network Bank" or "respondent employer"); Alex V. Buenaventura (President); Myrna S. Viado (Head of Human Resources).
Case docketed as G.R. No. 217414; Decision authored by Justice Leonen, Second Division; date of decision June 22, 2022.
Nature of proceedings: Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking review of the Court of Appeals' reversal of the NLRC and Labor Arbiter rulings that petitioner was illegally dismissed.

Relevant Chronology and Factual Background

June 11, 2004: One Network Bank hired Catherine as an Accounting Specialist.
May 1, 2006: One Network Bank implemented an "Exogamy Policy" (also described as a "no-spouse employment policy") which provided: "Effective May 1, 2006, when two employees working for One Network Bank are subsequently married through Church or Civil Court rites, one must terminate employment immediately after marriage. This policy shall not affect co-employees of the bank who are already married to each other as of the end of April 2006."
October 31, 2009: Catherine married her co-worker, Audie Angelo A. Cagampan (Audie Angelo), a Loan Specialist at One Network Bank.
November 4, 2009: The couple requested permission from One Network Bank President Buenaventura to both continue working for the bank; they offered that Audie Angelo could be transferred to other bank branches.
November 10, 2009: HR Head Myrna S. Viado denied the request and terminated Catherine's employment.
February 1, 2010: Catherine sought reconsideration, arguing (a) the Exogamy Policy could not be applied to her because she was employed prior to the policy’s effectivity, and (b) the policy contradicted Article 136 (renumbered Article 134) of the Labor Code which prohibits discriminatory practices against marriage; her reconsideration was unheeded.
Petitioner subsequently filed a Complaint for illegal dismissal against One Network Bank.

Procedural History — Administrative and Lower Tribunal Dispositions

October 29, 2010: Labor Arbiter issued a Decision declaring Catherine illegally dismissed, ordering reinstatement within ten calendar days without loss of seniority; ordering payment of full backwages inclusive of allowances and other benefits or their monetary equivalent reckoned from dismissal up to reinstatement; tentative computation of aggregate money claims as of the decision was P100,690.85 (P12,009.00 x 8 months and 10 days) and proportionate 13th month pay for 2010 of P1,501.13. The Labor Arbiter allowed immediate executory reinstatement even pending appeal pursuant to Article 223 of the Labor Code and ruled that posting of a bond shall not stay execution for reinstatement. Other money claims were dismissed for lack of merit.
June 30, 2011: National Labor Relations Commission (NLRC), Eighth Division, affirmed the Labor Arbiter’s Decision; NLRC found One Network Bank’s policy unreasonable and that the bank failed to prove a legitimate business concern justifying the discriminatory policy. NLRC quoted that the "mere fear of the possibility that the spouses may divulge to each other information with respect to client's accounts is speculative, unfounded, and imaginary."
August 24, 2011: NLRC denied One Network Bank’s motion for reconsideration.
One Network Bank filed a petition for certiorari with application for TRO before the Court of Appeals; the Court of Appeals denied the TRO on May 2, 2012 for lack of merit.

Court of Appeals Decision and Reliefs Awarded by CA

July 31, 2014: Court of Appeals granted One Network Bank’s petition for certiorari, reversing the NLRC and declaring the bank’s Exogamy Policy a valid exercise of management prerogative and a bona fide occupational qualification exception. The CA found reasonable business necessity due to the bank’s public-interest imbued business and the need to protect confidential client information and minimize risks from privileged spousal communications. The CA held there was just cause to dismiss Catherine.
The Court of Appeals nonetheless found procedural due process lacking (no required notice of dismissal) and ordered One Network Bank to pay Catherine nominal damages of P30,000.00 and separation pay equivalent to one month’s salary for every year of service based on her basic salary at the time of dismissal.
February 10, 2015: Court of Appeals denied Catherine’s motion for reconsideration; its Resolution was penned by Associate Justice Henri Jean Paul B. Inting (now a member of the Supreme Court).

Petition to the Supreme Court — Issues Presented

Core issue before the Supreme Court: Whether the Court of Appeals erred in reversing the NLRC’s affirmation of the Labor Arbiter’s finding that Catherine was illegally dismissed.
Subsidiary, legal issue: Whether One Network Bank’s prohibition on retaining employees who marry a co-worker (the Exogamy Policy/no-spouse employment rule) is lawful and justified as a bona fide occupational qualification (BFOQ) or reasonable exercise of management prerogative.
Procedural claim by petitioner: The Court of Appeals purportedly resolved the petition for certiorari despite being filed out of time (petition timeliness argued).
Petitioner’s substantive arguments: (a) the CA erred in concluding the Exogamy Policy was a valid exercise of management prerogative; (b) the two requisites for a BFOQ under Star Paper Corp. v. Simbol are absent; (c) the employer has the burden to prove reasonable business necessity and failed to do so; (d) respondents applied the policy selectively and displayed double standards by retaining other employees who married co-workers.

Respondents’ Position in Comment and Before the Court of Appeals

Respondents contended petitioner was misleading the Court on material dates and that their petition before the Court of Appeals was timely filed.
Respondents characterized petitioner’s other assertions as baseless, self-serving, and rehashed arguments not deserving repetitive counter-argument.
Respondents maintained that petitioner and her husband knowingly violated a policy they had known beforehand; the bank asserted the policy’s validity as management prerogative and that dismissal was for just cause.

Standard of Review and Jurisdictional Parameters (Rule 45 / Rule 65 Distinction)

Rule 45 ordinarily precludes reexamination of factual issues requiring reassessment of evidence, subject to exceptions such as contradictory findings of lower tribunals.
In labor cases, a Rule 45 petition can succeed only if the Court of Appeals failed to correctly determine whether the NLRC committed grave abuse of discretion.
Grave abuse of discretion is described as conduct tha