DAISY B. TIU vs. PLATINUM PLANS PHIL., INC.
, HELD:
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.
Consequently, respondent sued petitioner for
damages before the RTC of Pasig City, Branch 261.
Respondent alleged, among others, that petitioner’s
employment with Professional Pension Plans, Inc.
violated the non-involvement clause in her contract of
employment, which prohibits the employee for two
years in case of separation, whether voluntary or for
cause, to engage in or be involve with any pre-need
corporation.
Xxx In upholding the validity of the non-involvement
clause, 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.
On appeal, the Court of Appeals 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 natureof respondent’s
business. Petitioner moved for reconsideration but was
denied.
ISSUE:
Plainly stated, the core issue is whether the non-
involvement clause is valid.
YES. Conformably then with the aforementioned
pronouncements, a 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. 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. 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 respondents
business. To allow her to engage in a rival business
soon after she leaves would make respondents 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.
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 1159 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.
Ferrazzini v Gsell
Facts:
Carlos Gsell is engaged in the manufacture of
umbrellas, matches and hats; Anselmo Ferrazzini was
employed by Gsell as foreman in the umbrella factory;
at some point, he was discharged by Gsell so he filed
this case to recover damages for an alleged wrongful
discharge;
Gsell, for his part admitted he discharged Ferrazzini
without “written advice of six months in advance” as
provided in the contract; but, he says the discharge
was lawful on account of absence, unfaithfulness, and
disobedience of orders;
He also sought a counterclaim for further alleged
breach by Ferrazzini after his discharge (that he
cannotenter into employment of any enterprise in the
Philippines, during his employment and within 5
yearsafter termination except when given written
permission; if he does, he will pay Gsell P10k; Gsell
was employed in cement industry);
Trial court favored Ferrazzini and declined to consider
the counterclaim, so Gsell appealed.
Issues:
1. Was the discharge lawful?
2. Is the stipulation preventing Ferrazzinit o “enter into
the employment of any enterprise in the Philippine
Islands,whatever, save and except after obtaining
special written permission therefor” valid?
HELD:
1. Yes
2. No, against public policy.
The contract under consideration, tested by the law,
rules and principles above set forth, is clearly one in
undue or unreasonable restraint of trade and therefore
against public policy. It is limited as to time and space
but not as to trade. It is not necessary for the protection
of the defendant, as this is provided for in another part
of the clause. It would force the plaintiff to leave the
Philippine Islands in order to obtain a livelihood in case
the defendant declined to give him the written
permission to work elsewhere in this country
Perez vs Pomar
2 Phil. 682 (1903)
FACTS
Perez filed in the Court of First Instance of Laguna a
complaint asking the Court to determine the amount
due him for services rendered as an interpreter for
Pomar and for judgement to be rendered in his favor.
Pomar, on his part, denied having sought the services
of Perez, contending that, Perez being his friend, he
only accepted the services for they were rendered in a
spontaneous, voluntary and officious manner.
ISSUE
Whether or not consent has been given by the other
party.
HELD
Yes. It does not appear that any written contract was
entered into between the parties for the employment of
the plaintiff as interpreter, or that any other innominate
contract was entered into, but whether the plaintiff’s
services were solicited or whether they were offered to
the defendant for his assistance, inasmuch as these
services were accepted and made use of by the latter,
there was a tacit and mutual consent as to the rendition
of services. This gives rise to the delegation upon the
person benefited by the services to make
compensation thereof, since the bilateral obligation to
render services as interpreter, on the one hand, and on
the other to pay for the services rendered is thereby
incurred.
As was held in the Supreme Court of Spain in its
decision of February 12, 1889, it stated that “not only
is there an express and tacit consent which produces
real contract but there is also a presumptive consent
which is the basis of quasi-contracts this giving rise to
the multiple judicial relations which result in obligations
for the delivery of a thing or the rendition of a service.
Article 1254 of the Civil Code provides that a contract
exists the moment that one or more persons consent
to be bound, with respect to another or others, to
deliver some thing or to render some service. Article
1255 provides that the contracting parties may rentals of respondents for 13 months. (from the date of
establish such covenants, terms, and conditions as the filing of the consignment, Feb 1990-
they deem convenient, provided they are not contrary Jan1991).Jespajo appealed to the RTC, which became
to law, morals or public policy. Whether the service was in favor of the said corporation.CA reversed the
solicited or offered, the fact remains that Perez decision of the RTC. Hence, this petition.
rendered to Pomar services as interpreter. As it does
not appear that he did this gratuitously, the duty is ISSUE:
imposed upon the defendant, having accepted the
Whether or not the contention of the petitioner-
benefit of the service, to pay a just compensation
corporation that the stipulation in a contract: The lease
therefor, by virtue of the innominate contract of facio ut
period shall subsist for an indefinite period provided the
des implicitly established.
lessees is up-to-date in the payment of his monthly
rentals is contrary to Art. 1308 of the civil code
Jespajo Realty Corp vs. CA
HELD:
FACTS:
The fact that such option is binding only on the lessor
The controversy springs from an apartment building
and can be exercised only by the lessee does not
owned by the Jespajo Realty Corp. The said
render it void for lack of mutuality. After all, the lessor
corporation lead by its President Jesus Uy executed a
is free to give or not to give the option to the lessee.
contract of lease with herein respondents Tan Te and
And while the lessee has a right to elect whether to
Co Tong. Pursuant to the said contract, Tan Te
continue with the lease or not, once he exercises his
occupied rm. no. 217 of the said building at a monthly
option to continue and the lessor accepts, both parties
rate of P814 while Tong occupied the penthouse at a
are thereafter bound by the new lease agreement.
monthly rate of P917.The contract of lease explicitly
Their rights and obligations become mutually fixed, and
stipulates: that the lessees may occupy the said
the lessee is entitled to retain possession of the
premises as long as that payment for monthly rental is
property for the duration of the new lease, and the
updated. The lessees may terminate the contract
lessor may hold him liable for the rent therefor. The
anytime provided that they give a 60 day prior written
lessee cannot thereafter escape liability even if he
notice. The lessor may terminate the contract anytime
should subsequently decide to abandon the premises.
should the lessees commit any violation of the terms of
Mutuality obtains in such a contract and equality exists
agreement. For 5 years, the lessees were able to pay
between the lessor and the lessee since they remain
petitioner-corporation religiously. However, as of Jan.
with the same faculties in respect to fulfillment. As
1990, the petitioner sent them a letter asking for an
correctly ruled by the MTC in its decision, the grant of
increase in the monthly rent. From the original price
benefit of the period in favor of the lessee was given in
agreed (P800-900), it became 3,500 for each of them,
exchange for no less than an automatic 20% yearly
In reply to the said proposal, the respondents through
increase in monthly rentals. Thus, the present petition
their counsel, sent a letter of opposition to the said
is DENIED, the ruling of the CA is upheld.
proposal. Due to the opposition, the petitioner-
corporation, filed an ejectment case against the Borromeo vs Court of Appeals
respondents, also ordering them to pay P7,000 for the
monthly rental on Feb.-March 1990.Respondents gave FACTS
extra efforts to pay the petitioner according to the
Respondent is a domestic savings bank corporation. At
original price agreed in the contract. However, it
the time the dispute began, it was a subsidiary of
refused. May 1990 - respondent-lessees take refuge to
Equitable PCI Bank (EPCIB. After the merger of EPCIB
the MTC, to consign their payment for the monthly
and Banco De Oro (BDO), they have adopted the
rentals. Now. 1990 - MTC dismissed the ejectment
corporate name Banco De Oro.
case filed by the petitioner. Feb. 1991 - the judge
decreed an order allowing herein respondents to Petitioners were client-depositors of EPCIB for more
deposit with the city treasurer of MLA the respective than 12 years. Petitioners applied for a loan of
P4,000,000.00 and were approved in October 1999. It
was in the early part of 2000 that petitioners signed
blank loan documents consisting of the Loan
Agreement, Promissory Notes, a Real Estate
Mortgage (REM) and Disclosure Statements.
To secure the payment of the loan, petitioners
executed an REM over their land, registered under
Transfer Certificate of Title (TCT) No. N-203923,
located at Loyola Grand Villas, Quezon City, consisting
of 303 square meters; and the proposed house that
was to be built thereon.Petitioners asserted that even
if the loan documents were signed in blank, it was
understood that they executed the REM in favor of
EPCIB.
From April 2001 to September 2002, respondent
released a total amount of P3,600,000.00 in four
installments, while the balance of P400,000.00 was not
drawn by petitioners.On the other hand, petitioners
started to pay their monthly amortizations on 21 April
2001.
When the petitioners failed to pay for the loan in full by
30 September 2003, respondent sought to extra-
judicially foreclose the REM
Issue: Whether or not the right of foreclosure can be
exercised by the Equitable Savings Bank
Held: In this case, petitioners rights to their property is
restricted by the REM they executed over it. Upon their
default on the mortgage debt, the right to foreclose the
property would be vested upon the creditor-
mortgagee- EPCIB and not ESB.. Nevertheless, the
right of foreclosure cannot be exercised against the
petitioners by any person other than the creditor-
mortgagee or its assigns. According to the pertinent
provisions of the Civil Code:
Art. 1311. Contracts take effect only between the
parties, their assigns and heirs, except in case where
the rights and obligations arising from the contract are
not transmissible by their nature, or by stipulation or by
provision of law. The heir is not liable beyond the value
of the property he received from the decedent.
If a contract should contain some stipulation in favor
of a third person, he may demand its fulfillment
provided he communicated his acceptance to the
obligor before its revocation. A mere incidental benefit
or interest of a person is not sufficient. The contracting
parties must have clearly and deliberately conferred a
favor upon a third person.
An extrajudicial foreclosure instituted by a third party to
the Loan Agreement and the REM would, therefore, be
a violation of petitioners rights over their property.
Respondent, although a wholly-owned subsidiary of
EPCIB, has an independent and separate juridical
personality from its parent company. The fact that a
corporation owns all of the stocks of another
corporation, taken alone, is not sufficient to justify their
being treated as one entity. If used to perform
legitimate functions, a subsidiary’s separate existence
shall be respected, and the liability of the parent
corporation, as well as the subsidiary, shall be confined
to those arising from their respective businesses. A
corporation has a separate personality distinct from its
stockholders and other corporations to which it may be
conducted. Any claim or suit of the parent corporation
cannot be pursued by the subsidiary based solely on
the reason that the former owns the majority or even
the entire stock of the latter.
From a perusal of the records, petitioners did not
enter into a Loan Agreement and REM with
respondent. Respondent, therefore, has no right to
foreclose the subject property even after default,
since this right can only be claimed by the creditor-
mortgagor, EPCIB; and, consequently, the
extrajudicial foreclosure of the REM by respondent
would be in violation of petitioner’s property rights.
JOSE V. LAGON, petitioner, vs. HONORABLE
COURT OF APPEALS and MENANDRO V. LAPUZ,
respondents
FACTS:
In 1982, petitioner Jose Lagon purchased two parcels
of land located at Tacurong, Sultan Kudarat from the
estate of Bai Tonina Sepi.
Private respondent, Menandro Lapuz, claimed that he
entered into a contract of lease with the late Bai Tonina
Sepi over three parcels of land and it was agreed upon
that the former will put up commercial buildings which
would be leased to new tenants. The rentals to be paid
by those tenants, would cover for the rent obligations
of Menandro. In 1974, the lease contract ended but
was allegedly renewed. When Bai Tonina Sepi died,
Menandro started remitting his rent to the court-
appointed administrator of her estate but was advised
to stop collecting rentals from the tenants of the
building. The latter only then discovered that petitioner
Lagon, represents himself as the new owner of the
property had been collecting rentals from the tenants.
Menandro filed a complaint against Lagon of allegedly
inducing the heirs of Bai Tonina Sepi to sell the
property to the latter, thereby violating his leasehold
rights over it. Lagon denied the allegation of interfering
with Menandro’s leasehold rights as there was no
lease contract covering the property when he
purchased it; that even upon his further investigation
and inquiry it has revealed that there were no claims or
encumbrances on the subject lots.
the late Bai Tonina Sepi actually renewed their lease
contract.
2. Lagon claims that he had no knowledge of the lease
contract. His sellers (the heirs of Bai Tonina Sepi)
likewise allegedly did not inform him of any existing
lease contract. He conducted his own personal
investigation and inquiry, and unearthed no conflicting
claim over the property. Even the registry of property
had no record of the same.
3. The records do not support the allegation of
Menandro that Lagon induced the heirs of Bai Tonina
Sepi to sell the property to the latter. Lagon’s purchase
of the subject property was merely an advancement of
his financial or economic interests, absent any proof
that he was enthused by improper motives. In other
words, a financial or profit motivation will not
necessarily make a person an officious interferer liable
for damages as long as there is no malice or bad faith
involved.

RTC ruled in favor of Menadro. CA affirmed the ruling Not all three elements of tortuous interference are
of RTC with modification. Hence, this petition. present, hence, petitioner cannot be held liable for the
losses of private respondents.
ISSUE:
Whether the purchase by Lagon, during the supposed
existence of private respondent’s lease contract with
the late Bai Tonina Sepi, constituted tortuous
interference.
HELD:
The elements of tortuous interference with contractual
relations are:
existence of a valid contract;
knowledge on the part of the third person of the
existence of the contract; and
interference of the third person without legal
justification or excuse.
1. There is a valid and subsisting contract. The
notarized copy of the lease contract presented in court
appeared to be incontestable proof that Menandro and