Dear Atty. Maan,

We found out that three of our employees are putting up a business directly competing that of ours. Despite their contractual obligations specifically the non-compete clause in their employment contracts, they conspired to establish and operate a competing business which offers similar products and services. Can we file a complaint against them?

Ann

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Dear Ann,

In a number of cases decided by the Supreme Court, it was held that the Employment Agreement, and its corresponding Non-Disclosure and Non-Compete Agreements entered into by the Parties, is valid, binding and enforceable contracts between the parties. Since both parties freely and voluntarily entered into the agreement with full knowledge and understanding of the terms and consequences of the contract.

Moreover, in In Consulta v. Court of Appeals, the Honorable Supreme court considered a non-involvement clause in accordance with Article 1306 of the Civil Code. Similarly, in Century Properties Inc. vs. Babiano and Concepcion, the validity of the Non-Complete Clause was upheld the Honorable Supreme Court.

In the case of Cathay Pacific Airways Ltd. v. Spouses Vazquez, G.R. 150843, breach of contract is the inability to fulfill the specifications of the contract without any legal reason. It can also be defined as the failure to perform any promise forming part or whole of the contract without legal excuse. Further, in the case of RCPI v. Verchez, G.R. 164349 31 January 2006, the aggrieved party has a right of relief following the proof of existence of a contract and failure of the other party in complying with its terms.

In light of the foregoing, if it is proven that the said employees have willfully and blatantly breached the valid and binding Employment Agreement, and its corresponding Confidentiality, Non-Disclosure, Non-Solicitation and Non-Compete Agreement, a complaint for breach of contract with damages may prosper against them.

Hope this helps.

Atty. Mary Antonnette Baudi