G.R. No. 196539
October 10, 2012
Facts
Respondent hired petitioner under the agreement containing a “Goodwill Clause” wherein the latter will not engage in any other gainful employment by herself or with any other company.
In her 10th year of employment, petitioner was promoted. Petitioner signed another letter agreement containing a “Goodwill Clause” wherein she agreed that she will not engage as employee manager, proprietor, or solicitor for in a similar or competitive business or the same character of work which she was employed for a period of three (3) years thereafter.
Three years thereafter, petitioner resigned since she will be engaging on the business of rice wholesale. However, it was found out that petitioner was employed by a competitor of respondent.
Thereafter, petitioner filed a complaint with the National Labor Relations Commission (NLRC) for non-payment of 1 1/2 months’ salary, two (2) months’ commission, 13th month pay, plus moral, exemplary and actual damages and attorney’s fees. Respondent admitted liability but raised the defense of legal compensation by contending that the petitioner’s money claim should be offset by the alleged breach of the “Goodwill Clause” in the employment contract.
Issue
Whether or not the money claims of the petitioner can be offset by alleged damages sustained by the employer due to the petitioner’s breach of contract?
Held
No. Article 217, paragraph 4 of the Labor Code provides that the Labor Arbiter has jurisdiction over claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations. However, such provision does not cover not all disputes between an employer and his employee(s). In order that Article 217, paragraph 4 of the Labor Code may be invoked, there must be a reasonable causal connection between the claim and the employer-employee relationship.
Furthermore, the Supreme Court in Dai-Chi Electronics Manufacturing Corporation v. Villarama pronounced that a non-compete clause, as in the “Goodwill Clause” refers to post-employment relations of the parties. As a result, the cause of action was within the realm of Civil Law, thus, jurisdiction over the controversy belongs to the regular courts.
In this case, the “Goodwill Clause” in this case is likewise a post-employment issue. In accordance with jurisprudence, breach of the undertaking is a civil law dispute, not a labor law case. This is because there is no reasonable causal connection between the claim of the respondent for damages against petitioner and the employer-employee relation.
Consequently, respondent cannot claim compensation on the grounds that it had suffered damages arising from petitioner’s breach of the “Goodwill Clause.” At best, the claim must be filed before the Civil Courts and not with the Labor Arbiter.