Century Properties vs. Babiano
Century Properties vs. Babiano
ti)
r.~
1t.i
~ .~
<!Court
fflanila
..
i\i: :
CENTURY
INC.,
PROPERTIES,
Petitioner,
- versus -
1'
fl"1 1
.la" . .
"'
.....
".('I",..'
1
I ..
\ ~....~~"-.,~-- .....,.,.
I
FIRST DIVISION
1:.1.,1.,' "v~.f:1t1.'HJ'"
~:;~~
, .... -1 i.'
.. I
'
1 I
Promulgated:
JUL 0 5 2016
x-------------------------------------------------------------------~,s:e2 __ _
DECISION
PERLAS-BERNABE, J.:
2
On official leave.
Per Special Order No. 2358 dated June 28, 2016.
Rollo, pp. 10-32.
Id. at 37-51. Penned by Associate Justice Fiorito S. Macalino with Associate Justices Mariflor P.
Punzalan Castillo and Zenaida T. Galapate-Laguilles concurring.
Id. at 53-56.
Id. at 276-290. Penned by Commissioner Romeo L. Go with Presiding Commissioner Gerardo C.
Nograles and Commissioner Perlita B. Velasco concurring.
ld.at310-311.
,,,,
Decision
The Facts
'~
'
11
12
,~13
14
15
16
Prior to his promotion as Vice President for Sales, Babiano was first promoted as Project Director in
June 2006. See id. at 3 and 277.
Dated September 1, 2007. Id. at 76-79.
Id. at 78.
Id. See also id. at 38-39 and 277.
Prior to her promotion as Project Director, records show that Concepcion was first promoted as Sales
Officer in June 2003, and as Sales Director in August 2006. See id. at 38 and 278.
See id. at 38 and 279.
Id. at 115.
Id.
Id. at 114.
Seeid.at114andl15.
Id. at 83.
Decision
In a Decision29 dated March 19, 2012, the Labor Arbiter (LA) ruled in
CPI's favor and, accordingly, dismissed the complaint for lack of merit. 30
17
18
19
20
21
22
23
24
25
26
27
28
29
30
l-J
Decision
In a Decision34 dated June 25, 2013, the NLRC reversed and set aside
the LA ruling, and entered a new one ordering CPI to pay Babiano and
Concepcion the amounts of P685,211.76 and P470,754.62, respectively,
representing their commissions from August 9, 2008 to August 8, 2011, as
well as 10% attorney's fees of the total monetary awards. 35
While the NLRC initially concurred with the LA that Babiano's acts
constituted just cause which would warrant the termination of his
employment from CPI, it, however, ruled that the forfeiture of all earned
commissions ofBabiano under the "Confidentiality of Documents and NonCompete Clause" is confiscatory and unreasonable and hence, contrary to
law and public policy. 36 In this light, the NLRC held that CPI could not
invoke such clause to avoid the payment of Babiano's commissions since he
had already earned those monetary benefits and, thus, should have been
released to him. However, the NLRC limited the grant of the money claims
in light of Article 291 (now Article 306)37 of the Labor Code which provides
for a prescriptive period of three (3) years. Consequently, the NLRC
awarded unpaid commissions only from August 9, 2008 to August 8, 2011 i.e., which was the date when the complaint was filed. 38 Meanwhile, contrary
to the LA's finding, the NLRC ruled that Concepcion was CPI's employee,
considering that CPI: (a) repeatedly hired and promoted her since 2002; (b)
paid her wages despite referring to it as "subsidy"; and (c) exercised the
power of dismissal and control over her. 39 Lastly, the NLRC granted
respondents' claim for attorney's fees since they were forced to litigate and
incurred expenses for the protection of their rights and interests. 40
31
32
33
34
35
36
37
38
39
40
Decision
Respondents did not assail the NLRC findings. In contrast, only CPI
42
moved for reconsideration, 41 which the NLRC denied in a Resolution dated
October 16, 2013. Aggrieved, CPI filed a petition for certiorarz43 before the
CA.
The CA Ruling
44
45
46
47
See motion for reconsideration dated July 10, 2013; id. at 292-307.
Id. at 310-311.
See Petition [with Extremely Urgent Application for Temporary Restraining Order and/or Preliminary
Injunction dated November 27, 2013]; id. at 313-343.
Id. at 37-51.
See id. at 50.
See id. at 44-47.
See id. at 47-48.
Decision
The core issue for the Court's resolution is whether or not the CA
erred in denying CPI's petition for certiorari, thereby holding it liable for
the unpaid commissions of respondents.
The Court's Ruling
The petition is partly meritorious.
I.
Article 1370 of the Civil Code provides that "[i]f the terms of a
contract are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of its stipulations shall control." 51 In Norton
Resources and Development Corporation v. All Asia Bank Corporation, 52
the Court had the opportunity to thoroughly discuss the said rule as follows:
The rule is that where the language of a contract is plain and
unambiguous, its meaning should be determined without reference to
extrinsic facts or aids. The intention of the parties must be gathered from
that language, and from that language alone. Stated differently, where
the language of a written contract is clear and unambiguous, the
contract must be taken to mean that which, on its face, it purports to
mean, unless some good reason can be assigned to show that the
words should be understood in a different sense. Courts cannot make
for the parties better or more equitable agreements than they themselves
have been satisfied to make, or rewrite contracts because they operate
harshly or inequitably as to one of the parties, or alter them for the benefit
of one party and to the detriment of the other, or by construction, relieve
one of the parties from the terms which he voluntarily consented to, or
48
49
50
51
52
Decision
53
And in order to ensure strict compliance herewith, you shall not work
for whatsoever capacity, either as an employee, agent or consultant
with any person whose business is in direct competition with the
company while you are employed and for a period of one year from
date of resignation or termination from the company.
~~
In the event the undersigned breaches any term of this contract, the
undersigned agrees and acknowledges that damages may not be an adequate
remedy and that in addition to any other remedies available to the Company
at law or in equity, the Company is entitled to enforce its rights hereunder
by way of injunction, restraining order or other relief to enjoin any breach
or default of this contract.
The undersigned agrees to pay all costs, expenses and attorney's fees
incurred by the Company in connection with the enforcement of the
obligations of the undersigned. The undersigned also agrees to .pay the
Company all profits, revenues and income or benefits derived by or
accruing to the undersigned resulting from the undersigned's breach of the
obligations hereunder. This Agreement shall be binding upon the
undersigned, all employees, agents, officers, directors, shareholders,
partners and representatives of the undersigned and all heirs, successors and
assigns of the foregoing.
54
55
56
Decision
any person whose business is in direct competition with [CPI] while [he is]
employed and for a period of one year from date of [his] resignation or
,,termination from the company," it also expressly provided in no uncertain
terms that should Babiano "[breach] any term of [the employment contract],
forms of compensation including commissions and incentives will be
forfeited." Here, the contracting parties - namely Babiano on one side, and
CPI as represented by its COO-Vertical, John Victor R. Antonio, and
Director for Planning and Controls, Jose Carlo R. Antonio, on the othe~ indisputably wanted the said clause to be effective even during the existence
of the employer-employee relationship between Babiano and CPI, thereby
indicating their intention to be bound by such clause by affixing their
respective signatures to the employment contract. More significantly, as
CPI's Vice President for Sales, Babiano held a highly sensitive and
confidential managerial position as he "was tasked, among others, to
guarantee the achievement of agreed sales targets for a project and to ensure
that his team has a qualified and competent manpower resources by
conducting recruitment activities, training sessions, sales rallies,
motivational activities, and evaluation programs."57 Hence, to allow Babiano
to freely move to direct competitors during and soon after his employment
with CPI would make the latter's trade secrets vulnerable to exposure,
especially in a highly competitive marketing environment. As such, it is only
reasonable that CPI and Babiano agree on such stipulation in the latter's
employment contract in order to afford a fair and reasonable protection to
CPI. 58 Indubitably, obligations arising from contracts, including employment
contracts, have the force of law between the contracting parties and should
be complied with in good faith. 59 Corollary thereto, parties are bound by the
stipulations, clauses, terms, and conditions they have agreed to, provided
that these stipulations, clauses, terms, and conditions are not contrary to law,
morals, public order or public policy, 60 as in this case.
Therefore, the CA erred in limiting the "Confidentiality of Documents
and Non-Compete Clause" only to acts done after the cessation of the
employer-employee relationship or to the "post-employment" relations of
the parties. As clearly stipulated, the parties wanted to apply said clause
during the pendency of Babiano' s employment, and CPI correctly invoked
the same before the labor tribunals to resist the farmer's claim for unpaid
commissions on account of his breach of the said clause while the employeremployee relationship between them still subsisted. Hence, there is now a
need to determine whether or not Babiano breached said clause while
employed by CPI, which would then resolve the issue of his entitlement to
his unpaid commissions.
57
,~ 8
59
60
ti
Decision
65
66
~""
Decision
10
Therefore, the CA correctly ruled that since there exists an employeremployee relationship between Concepcion and CPI, the labor tribunals
correctly assumed jurisdiction over her money claims.
III.
67
68
69
70
Ji
Decision
11
In the present case, the CA aptly pointed out that the NLRC failed to
account for all the unpaid commissions due to Concepcion for the period of
August 9, 2008 to August 8, 201l. 73 Indeed, Concepcion's right to her
earned commissions is a substantive right which cannot be impaired by an
erroneous computation of what she really is entitled to. Hence, following the
dictates of equity and in order to arrive at a complete and just resolution of
the case, and avoid a piecemeal dispensation of justice over the same, the
CA
correctly
recomputed
Concepcion' s . unpaid
commissions,
notwithstanding her failure to seek a review of the NLRC's computation of
the same.
In sum, the Court thus holds that the commissions of Babiano were
properly forfeited for violating the "C91}fidentiality of Documents and NonCompete Clause." On the other hand, CPI remains liable for the unpaid
commissions of Concepcion in the sum of P591,953.05.
~
M.~RLAS-BERNABE
Associate Justice
71
72
73
12
Decision
WE CONCUR:
On official leave
MARIA LOURDES P. A. SERENO
Chief Justice
,,-:;-
~J.~01E~O
Associate Justice
Acting Chairperson
ATTESTATION
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court's Division.
~~t&~
CERTIFICATION
ANTONIO T. CA
Acting Chief Justice
\:~