Tiu VS Platinum Plans Phil New Print

G.R. No.
163512 February 28, 2007
DAISY B. TIU, Petitioner
vs.
PLATINUM PLANS PHIL., INC., Respondent.
FACTS: Respondent Platinum Plans Philippines, Inc. is a domestic corporation engaged in the pre-need industry.
From 1987 to 1989, petitioner Daisy B. Tiu was its Division Marketing Director.
On January 1, 1993, respondent re-hired petitioner as Senior Assistant Vice-President and Territorial Operations
Head in charge of its Hongkong and Asean operations. The parties executed a contract of employment valid for five
years.
On September 16, 1995, petitioner stopped reporting for work. In November 1995, she became the Vice-President for
Sales of Professional Pension Plans, Inc., a corporation engaged also in the pre-need industry. Respondent alleged,
among others, that petitioner’s employment with Professional Pension Plans, Inc. violated the non-involvement
clause in her contract of employment, to wit:
8. NON INVOLVEMENT PROVISION – The EMPLOYEE further undertakes that during his/her engagement with
EMPLOYER and in case of separation from the Company, whether voluntary or for cause, he/she shall not, for the
next TWO (2) years thereafter, engage in or be involved with any corporation, association or entity, whether directly
or indirectly, engaged in the same business or belonging to the same pre-need industry as the EMPLOYER. Any
breach of the foregoing provision shall render the EMPLOYEE liable to the EMPLOYER in the amount of One
Hundred Thousand Pesos (P100,000.00) for and as liquidated damages.
DEFENSE: Petitioner countered that the non-involvement clause was unenforceable for being against public order or
public policy: First, the restraint imposed was much greater than what was necessary to afford respondent a fair and
reasonable protection. Petitioner contended that the transfer to a rival company was an accepted practice in the pre-
need industry. Since the products sold by the companies were more or less the same, there was nothing peculiar or
unique to protect. Second, respondent did not invest in petitioner’s training or improvement. At the time petitioner was
recruited, she already possessed the knowledge and expertise required in the pre-need industry and respondent
benefited tremendously from it. Third, a strict application of the non-involvement clause would amount to a
deprivation of petitioner’s right to engage in the only work she knew.
ISSUE: WON THE NON INVOLVEMENT CLAUSE IS UNENFORCEABLE FOR BEING AGAINST PUBLIC ORDER
OR PUBLIC POLICY/WON DAISY B. TIU VIOLATED THE NON INVOLVEMENT CLAUSE IN HER CONTRACT OF
EMPLOYMENT?
RULING: RTC the trial court ruled that a contract in restraint of trade is valid provided that there is a limitation upon
either time or place. In the case of the pre-need industry, the trial court found the two-year restriction to be valid and
reasonable. The dispositive portion of the decision reads:
CA: affirmed the trial court’s ruling. It reasoned that petitioner entered into the contract on her own will and volition.
Thus, she bound herself to fulfill not only what was expressly stipulated in the contract, but also all its consequences
that were not against good faith, usage, and law. The appellate court also ruled that the stipulation prohibiting non-
employment for two years was valid and enforceable considering the nature of respondent’s business.
SC: In this case, the non-involvement clause has a time limit: two years from the time petitioner’s employment with
respondent ends. It is also limited as to trade, since it only prohibits petitioner from engaging in any pre-need
business akin to respondent’s.1awphi1.net
More significantly, since petitioner was the Senior Assistant Vice-President and Territorial Operations Head in charge
of respondent’s Hongkong and Asean operations, she had been privy to confidential and highly sensitive marketing
strategies of respondent’s business. To allow her to engage in a rival business soon after she leaves would make
respondent’s trade secrets vulnerable especially in a highly competitive marketing environment. In sum, we find the
non-involvement clause not contrary to public welfare and not greater than is necessary to afford a fair and
reasonable protection to respondent.13
In any event, Article 1306 of the Civil Code provides that parties to a contract may establish such stipulations,
clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy.
Article 115914 of the same Code also provides that obligations arising from contracts have the force of law between
the contracting parties and should be complied with in good faith. Courts cannot stipulate for the parties nor amend
their agreement where the same does not contravene law, morals, good customs, public order or public policy, for to
do so would be to alter the real intent of the parties, and would run contrary to the function of the courts to give force
and effect thereto.15 Not being contrary to public policy, the non-involvement clause, which petitioner and respondent
freely agreed upon, has the force of law between them, and thus, should be complied with in good faith.16

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G.R. No.

163512 February 28, 2007

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