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Republic of the Philippines

Department of Labor and Employment
NATIONAL LABOR RELATIONS COMMISSION
National Capital Region
Quezon City

JUAN DELA CRUZ,

ADRESS,
Complainant,

IBS ELECTRONICS, INC.

represented by ___________
ADRESS, NLRC NCR Case No. ________
Respondent.
x-----------------------------------------x

REPLY
(to Complainant _____________ Position Paper dated 10
May 2017)

COMES NOW Respondent _______________ represented by

_________________, through undersigned counsel, and to this
Honorable Office, respectfully submits this Reply to Complainant
________________ Position Paper dated 10 May 2017 and alleges
that:

I. The Confidentiality, Non-

Competition, and Non-Solicitation
Agreement is a reasonable, valid,
and legal agreement recognized and
sanctioned by the Supreme Court.

1. ___________________ (hereinafter referred to as

___________) is a corporation engaged in the highly competitive
industry of distribution and delivery of innovative electronic
components and logistic solutions to clients all over the world. As
such, every single person employed by __________ necessarily
deals with sensitive and confidential information that have the
potential of significantly affecting business;

2. This fact led the __________ management to decide

that the previous Confidentiality Clause found in their
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employment contracts was insufficient to protect the business
interest of the company. Hence, the drafting of the Confidentiality,
Non-Competition, and Non-Solicitation Agreement (hereinafter
referred to as the 2017 NDA);

3. ____________ (hereinafter referred to as ______)

committed gross insubordination in her unjustified refusal to sign
the 2017 NDA. She claims that her refusal is valid because the
xxx agreement is unlawful, contrary to law [sic] against public
policy and public order and prejudicial to her interest. (refer to
Par. 16, page 7, __________ Position Paper). She points to the
following provision in 2017 NDA as unlawful:

i. Non-Competition. The Employee agrees that, during the term of

his/her employment with the Company and for twenty four (24)
months after the termination thereof, regardless of the reason for
such termination, he/she will not, directly or indirectly, anywhere in
the Territory, engage in any Competitive Business, be employed in
any company engaging in any Competitive Business or perform the
same or substantially the same Job Duties in any other company.
(Paragraph II (i) of the 2017 NDA)

4. The Territory mentioned in the above provision is

defined as IBS Singapore office assigned customers. In other
words, wherever customers assigned by IBS Singapore may be
found;

5. Respondent respectfully submits that __________

contention is without basis;

6. The Supreme Court, in a long line of cases,1 has

consistently and most recently held in the case of Tiu vs. Platinum
Plans Phil., Inc.2 that a non-competition or non-involvement
clause is not necessarily void for being in restraint of trade as long
as there are reasonable limitations as to time, trade and place;

7. In the Tiu case mentioned above, the Petitioner makes

the following allegations in her contention that the non-
1
Cases of Ferrazzini v. Gsell, 34 Phil. 697, 714 (1916), G. Martini, Ltd. v. Glaiserman, 39 Phil. 120, 125
(1918), Del Castillo v. Richmond, 45 Phil. 679, 683 (1924), Consulta v. Court of Appeals, G.R. No. 145443,
March 18, 2005, 453 SCRA 732, 745.
2
G.R. No. 163512, February 28, 2017.

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involvement clause was unenforceable for being against public
order or public policy, thus:

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 petitioners
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 petitioners right to engage in the only work she knew.3

8. The Supreme Court sustained the validity of the non-

involvement clause rationalizing, thus:

However, in Del Castillo v. Richmond, we upheld a similar stipulation

as legal, reasonable, and not contrary to public policy. In the said
case, the employee was restricted from opening, owning or having any
connection with any other drugstore within a radius of four miles from
the employers place of business during the time the employer was
operating his drugstore. We said that a contract in restraint of trade
is valid provided there is a limitation upon either time or place
and the restraint upon one party is not greater than the protection
the other party requires.

Finally, in Consulta v. Court of Appeals, we considered a non-

involvement clause in accordance with Article 1306 of the Civil Code.
While the complainant in that case was an independent agent and not
an employee, she was prohibited for one year from engaging directly
or indirectly in activities of other companies that compete with the
business of her principal. We noted therein that the restriction did not
prohibit the agent from engaging in any other business, or from being
connected with any other company, for as long as the business or
company did not compete with the principals business. Further, the
prohibition applied only for one year after the termination of the agents
contract and was therefore a reasonable restriction designed to
prevent acts prejudicial to the employer.

Conformably then with the aforementioned pronouncements, a non-

involvement clause is not necessarily void for being in restraint

3
Id.

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 of trade as long as there are reasonable limitations as to time,
trade, and place.

In this case, the non-involvement clause has a time limit: two years
from the time petitioners 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 respondents.4

9. In the instant case, the 2017 NDA has reasonable

limitations as to time, trade, and place. The Non-Competition
clause being assailed by __________ as illegal limits her from
engaging in any trade that is in competition with __________. She
is not prevented from joining another company belonging in a
different industry or different line of business. The Non-
Competition clause is effective while she is employed by IBS and
thereafter but only for two years. In addition to this, the limitation
in regard to the place is clearly stated in the contract as IBS
Singapore office assigned customers;

10. The requirements set by the Supreme Court for the

validity of the non-competition or non-involvement clause are
unquestionably complied with by the 2017 NDA mandated by
__________ management;

11. In addition to this, the directive of __________ to revise

their policy on confidentiality and non-competition was formulated
and established in good faith and without abuse of management
prerogative;

12. The 2017 NDA is not a new employment contract, as

__________ wrongfully alleges.5 Respondent respectfully reiterates
that __________ employment contracts include a Confidentiality
Clause, to wit:

Confidentiality

During the course of your employment, you will have access to

material information confidential to IBS Technology and its clients. You
may also have access directly or indirectly, to material, publicly

4
Id.
5
Paragraphs 5 and 6, pages 3-5 of Jane H. Gonzales Position Paper.

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 undisclosed information in relation to IBS Technology. Employees
shall not, either during the term of employment or at any time
thereafter, reveal to [sic] any such confidential information or utilize,
either on their own behalf or on behalf of any third party, any such
information for their personal financial gain.

Any abuse of knowledge of any information related to the clients

and/or the Company may be grounds for immediate dismissal.

Furthermore, such abuse may involve you in serious offenses under

the securities legislation of various jurisdictions exposing you to the
possibility of substantial fines, imprisonment, and civil liabilities for
damages in regulatory sanctions.6

13. The confidentiality clause above was determined by the

management as insufficient to protect the genuine business
interests of __________ thus it became apparent that there is a
dire necessity to amend and revise it in order to have their current
business structure adapt to the changing market demands;

14. There is no new employment contract as __________

would have this Honorable Office believe. It was only an
amendment of the existing and previously agreed to
confidentiality clause, which was found inadequate to protect the
business of __________;

15. __________ likewise claims that the Non-Competition

Clause found in the 2017 NDA is against her will as it
incriminates her and prejudicial to her interest and employment.
Respondent respectfully submits that there is no truth to such
contentions. A perusal of the 2017 NDA (Annex C of the
Respondents Position Paper) shows that the provision is couched
in general terms not singling out any particular officer or
employee. There is nothing incriminating in the particular
stipulation she is assailing as detrimental to her interest and
employment. The clause is equitably devised with the sole purpose
of protecting __________ from the disclosure of non-public
information that could cause irreparable damage to the
corporation;

6
2006 Employment Contract, Annexes B and B-1 of Position Paper dated 24 May 2017.

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 II. __________ validly and legally
dismissed __________.

16. The Supreme Court has consistently held and most

recently reiterated in the latest case of Alps Transportation vs.
Rodriguez7-

For a dismissal to be valid, the rule is that the employer must comply with
both substantive and procedural due process requirements.8 Substantive due
process requires that the dismissal must be pursuant to either a just or an
authorized cause under Articles 282, 283 or 284 of the Labor
Code.9 Procedural due process, on the other hand, mandates that the
employer must observe the twin requirements of notice and hearing before a
dismissal can be effected.10

17. Respondent respectfully submits that both substantive

and procedural due process requirements were duly observed and
complied with in the dismissal of __________;

A. __________ was validly and

legally dismissed pursuant to
just causes namely, gross
insubordination and serious
misconduct.

18. In her Position Paper, __________ contends that there

was no valid cause for her dismissal because she was justifiably
refusing to sign the 2017 NDA as it was unlawful, contrary to law
[sic] against public policy and public order;

19. As previously established with clear and convincing

evidence, the Supreme Court recognizes the validity of a non-
competition or non-involvement clause. The 2017 NDA is not only
impartial and reasonable but also just and legal as it complies
with all the limitations explicitly mandated by the Supreme
Court;

7
G.R. No. 186732, June 13, 2013.
8
Id. citing Loadstar Shipping Co., Inc. v. Mesano, 455 Phil. 936, 942 (2003).
9
Id. citing Pascua v. National Labor Relations Commission, 351 Phil. 48, 62 (1998).
10
Id. citing Pono v. National Labor Relations Commission, 341 Phil. 615, 620-621 (1997).

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 20. The condition for __________ to sign the 2017 NDA was
a lawful order by the management of __________ in connection
with her work, which she willfully and capriciously disobeyed;

21. __________ failed to mention in her Position Paper that

she was also dismissed for serious misconduct when she made
threatening remarks to the Managing Director of IBS, Mr. Sohrab
Tavakoli (hereinafter referred to as Mr. Tavakoli) as shown in
Annex H of Respondents Position Paper. She made the following
threatening remarks to Mr. Tavakoli:

a) With respect to confidential tax information, that you will report to

the appropriate government agency the fact that IBS did not
submit accurate tax information;
b) That you will send email to all IBS customers about the
Managements unethical treatment of its employees under anti-
employee work conditions;
c) That you will share trade secrets to IBS competitors, intended to
harm IBS business;
d) That you threatened to file a lawsuit if your employment will be
terminated; and
e) Making disrespectful comments towards the Executive
Management Committee;

22. As a just cause for termination by the employer,

Misconduct has been defined as improper or wrong conduct. It is
the transgression of some established and definite rule of action, a
forbidden act, a dereliction of duty, willful in character, and
implies wrongful intent and not mere error of judgment. The
misconduct to be serious must be of such grave and aggravated
character and not merely trivial and unimportant. Such
misconduct, however serious, must nevertheless be in connection
with the employees work to constitute just cause for his
separation.11

23. In the instant case, __________ made threatening

remarks to Mr. Tavakoli, remarks that could not be taken lightly.
The threats compelled the management to take action because
should __________ make good her threats, it will put the whole
business in jeopardy;

11
Samson v. National Labor Relations Commission, 386 Phil. 669, 682 (2000).

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 24. The threats in and of itself are destructive and
malicious but considering the circumstances surrounding her
utterance of such threats make it more disappointing given the
fact that Mr. Tavakoli personally took it upon himself to allow
__________ the venue to express her concerns regarding the 2017
NDA. It was in such manner that he will be able to directly
explain to her the necessity of such company policy;

25. __________, instead, threatened not only to destroy the

companys reputation to its clients and share trade secrets to
competitors but also intimated that she will make bogus reports to
government agencies with intent to cause harm to __________
business;

26. __________ actions are very clear indications of her

gross insubordination and serious misconduct leaving __________
with no other option but to terminate her employment;

B. __________ validly and legally

dismissed __________ observing
procedural due process
prescribed by law.

27. First and foremost, __________ claims that she was

never apprised what constitutes the stages of offenses when will
[sic] an employee be terminated12 never given a copy of the
Employees Handbook. With all due respect to __________, this
allegation is downright untruthful, if not illogical and nonsensical;

28. __________ has been an employee of __________

beginning 17 October 2005. Her claim that she never had access to
the Employees Handbook is self-serving and could not be farther
from the truth. She is considered a pioneer employee being a part
of the company since its early days. She also held the position of
Accounts and Administrative Supervisor from 07 March 2008 to
21 August 2016. She was no ordinary rank-and-file employee but
was part of the management as a supervisor. She always had free
access to the Employees Handbook and she was sufficiently
informed of the standard of conduct expected of __________
employees;
12
Paragraph 23, Page 11, Gonzales Position Paper.

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 29. This notwithstanding, assuming for the sake of
argument that she has not seen the Company Handbook, this does
not change the fact that the totality of her actions constitute just
cause for her termination as clearly shown above and she had
been accorded due process in her dismissal;

30. To meet the requirements of due process in the

dismissal of an employee, an employer must furnish the worker
with two written notices: (1) a written notice specifying the
grounds for termination and giving to said employee a reasonable
opportunity to explain his side and (2) another written notice
indicating that, upon due consideration of all circumstances,
grounds have been established to justify the employer's decision to
dismiss the employee.13

31. In the case at bar, __________ complied with all the

procedural requirements prescribed by law. The First Notice with
Preventive Suspension (hereinafter referred to as First Notice),
Annex H of Respondents Position Paper constitutes the first
notice required to specify the grounds for termination and
allowing the erring employee a reasonable opportunity to be
heard.

32. This First Notice informed her of her specific actions

that are the grounds of her termination, namely:

1. Gross Insubordination Refusal to accept and sign the standard Non-

Disclosure Agreement (NDA) on the following dates: February 03, 2017,
February 17, 2017 and February 21,2017, despite full explanation from
Management of the need for all employees to accept and sign such
document;

2. Serious Misconduct / Giving threatening remarks - Threatening the

Managing Director of the company, Mr. Sohrab Tavakoli, in relation to the
non-signing of the NDA, as follows:

f) With respect to confidential tax information, that you will report to the
appropriate government agency the fact that IBS did not submit accurate
tax information;

13
Perez, et. al vs. Philippine Telegraph and Telephone Company, et. al, G.R. No. 152048, April 7, 2009
citing Omnibus Rules Implementing the Labor Code, Book VI, Rule 1, Sec. 2 (a) and (c).

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 g) That you will send email to all IBS customers about the Managements
unethical treatment of its employees under anti- employee work
conditions;
h) That you will share trade secrets to IBS competitors, intended to harm
IBS business;
i) That you threatened to file a lawsuit if your employment will be
terminated; and
j) Making disrespectful comments towards the Executive Management
Committee;

33. The First Notice likewise informed her that the

management is conducting an investigation and that an
administrative hearing is scheduled on 10 March 2017 at 10:00
a.m. for her to be given the opportunity to be heard and explain
her side. __________, however, answered in a letter dated 02
March 2017 that she will no longer attend the administrative
hearing because I will answer further discussion/s on (sic) a
proper venue;

34. Despite __________ response that she will not attend

the scheduled hearing, the management still waited for her to
present her side on 10 March 2017 at 10 a.m. She did not show up
nor was she represented by any counsel and she never submitted
an answer to the allegations found on the First Notice. The
investigation only dealt with evidence from the management
without any participation from __________;

35. The hearing was concluded and after the management

objectively considered the circumstances surrounding the case, it
was decided that __________ be dismissed;

36. To inform her of the decision of the management to

dismiss her, she received the Resolution/Memorandum dated 23
March 2017 on 25 March 2017 Annexes J to J-2 of Respondents
Position Paper;

37. The Resolution/ Memorandum comprehensively

explained the rationale of the decision of the management to
terminate her employment with __________;

38. With the foregoing, it is clear that __________ complied

with all the requirements set by the Supreme Court for the

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protection of the laborer. __________ was accorded due process
when __________ gave her the First Notice on 27 February 2017,
held an administrative hearing on 10 March 2017, and provided
her with the second notice when she received the Resolution/
Memorandum on 25 March 2017;

III. The real reason behind __________

refusal to sign the Confidentiality,
Non-Competition, and Non-
Solicitation Agreement, under pain
of administrative sanction, is her
plan all along to transfer to a
competitor of IBS.

39. __________ prays that this Honorable Office order that

__________ reinstate her to her former position without loss of
seniority rights;

40. Respondent respectfully submits that reinstatement is

no longer possible in the instant case;

41. First, there is strained relations between the employer

and the employee. __________ absolutely lost confidence in
__________ after she made all the threatening remarks to the
Managing Director, Mr. Tavakoli. __________ valued __________ as
shown by the efforts exerted by the management to explain to her
the importance of the 2017 NDA. She resorted to make threats
when she was informed that the agreement is standard for a
number of business and can no longer be revised. __________
cannot be expected to reinstate an employee and allow her access
to confidential information when she refuses to honor its
confidentiality agreement;

42. Secondly, __________ recently received information

that __________ is already working for IBS competitor, Azego. As
a matter of fact, __________ already identifies her employer as
Azego as shown in the information she provided when she visited
Ionics EMS, Inc. at SCM Center, Binary Street, LISP 1, Brgy.
Diezmo, Cabuyao, Laguna. Ms. Dureza bumped into __________ by
chance last 17 May 2017 and saw her logbook entry. A copy of the

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entry in the logbook dated 17 May 2017 is attached herewith as
Annex A-Reply;

43. A perusal of the website of Azego shows that it is

considered a key partner to some of the worlds largest OEM
(original equipment manufacturer) and EMS (electronics
manufacturing service) companies. Likewise, the website states
as a description of Azego that, We work side by side with
Managing Directors, Purchasing Managers and Buyers to source
and supply electronic components, manage excess inventories and
reduce purchase prices;

44. This clearly explains __________ blatant refusal to sign

the 2017 NDA even when she already signed a similar agreement
in 2006;

45. __________ holds a managerial position at __________

and it is contrary to human experience for her to begin working
for a new company in a span of just a few weeks from her
termination for just causes. The only conceivable explanation is
that she was already in consideration for employment in the rival
company even before her refusal to sign the 2017 NDA;

46. __________ unfounded refusal to sign the 2017 NDA is

now shown to be due to her impending transfer to the competitor
company;

47. __________ filed this spurious and groundless illegal

dismissal complaint against __________ with the Department of
Labor and Employment (hereinafter referred to as DOLE)
MUNTAPARLAS Office ahead of the administrative hearing and
her deliberate refusal to participate in the investigation conducted
by __________;

48. This recent development bolsters the impossibility of

reinstatement. Neither is payroll reinstatement feasible because
she is already employed with a rival company. Payroll
reinstatement is against the basic principle in labor, No work, no

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pay. It will be unjust enrichment on __________ part if she will be
receiving her salary from __________;

49. In addition to the above-stated due process

requirements, __________ also complied with the requirement to
submit a Termination Report to DOLE-MUNTAPARLAS Office.
Attached is the Termination Report received by DOLE-
MUNTAPARLAS Office on 18 May 2017 as Annex B-Reply
hereof;

WHEREFORE, premises considered, it is respectfully prayed

of this Honorable Office that this Reply to Complainant Jane H.
Gonzales Position Paper dated 10 May 2017 be duly noted and
admitted into the records.

Other remedies just and equitable in the premises are

likewise prayed for.

Respectfully filed.

Muntinlupa City, 31 May 2017.

By:

COPY FURNISHED BY PERSONAL SERVICE TO:

RECEIVED: ____________________
DATE: _____________________

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