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  "data": {
    "topic": "non-compete",
    "state": "ph",
    "frontmatter": {
      "title": "Non-Competes in the Philippines",
      "description": "The Philippines has no non-compete statute; a post-employment restraint is enforceable only if it is reasonable — limited as to time, trade, and place, tied to a legitimate business interest, and not contrary to public policy — and a suit to enforce one is a civil case for the regular courts, not the labor tribunals.",
      "state": "Philippines",
      "country_code": "PH",
      "lastReviewed": "2026-06-03",
      "license": "CC BY 4.0",
      "authors": [
        "steven-obiajulu"
      ],
      "summary": {
        "enforceability": "reasonable",
        "bottomLine": "The Philippines has no non-compete statute. A post-employment restraint is enforceable only if it is reasonable — limited as to time, trade, and place, tied to a legitimate business interest, and not contrary to public policy — and suing on one is a civil case for the regular courts, not the labor tribunals.",
        "keyLaw": "Rivera v. Solidbank Corp., G.R. No. 163269 (2006); Tiu v. Platinum Plans Phil., Inc., G.R. No. 163512 (2007)",
        "exceptions": "No statutory industry carve-outs. Independent-contractor restraints are treated as ordinary civil/commercial contracts rather than labor matters (Consulta v. CA, G.R. No. 145443). A forfeiture clause can bite for competition during employment (Century Properties v. Babiano, G.R. No. 220978).",
        "courtNarrowing": "unsettled",
        "appliesToContractors": "yes",
        "extendedForBreach": "Not addressed",
        "maxLength": "No statutory limit; one- and two-year restraints have been upheld when otherwise reasonable",
        "noticeRequirement": "None",
        "incomeThreshold": "None",
        "saleOfBusiness": "No statutory seller carve-out; one Civil Code Art. 1306 reasonableness test (reasonable limits required)",
        "customerNonSolicit": "Likely the unitary reasonableness test (time, trade, place + legitimate interest)",
        "employeeNonSolicit": "Not addressed"
      },
      "about": [
        "Philippines non-compete agreements",
        "Philippines restraint of trade clause",
        "non-involvement clause Philippines",
        "reasonableness test time trade place",
        "Rivera v Solidbank five factors",
        "Tiu v Platinum Plans non-involvement",
        "Philippines liquidated damages non-compete",
        "regular courts versus NLRC non-compete",
        "Civil Code Article 1306 freedom to contract",
        "Philippines garden leave"
      ],
      "translations": [
        {
          "language": "Filipino",
          "status": "planned"
        }
      ],
      "eyebrow": "Philippines Law Practice Guide"
    },
    "questions": [
      {
        "slug": "employee-non-compete-enforceability",
        "label": "Are non-competes enforceable?",
        "heading": "Are non-competes enforceable in the Philippines?",
        "answerText": "Yes, if they are reasonable. The Philippines has no statute that governs non-competes, and it is not a per se ban jurisdiction. A post-employment non-compete or non-involvement clause is enforced under the Civil Code's freedom-to-contract principle — provided the stipulation is not contrary to law, morals, good customs, public order, or public policy. Within that limit a restraint is valid as long as it carries reasonable limitations as to time, trade, and place.",
        "sources": [
          {
            "id": "civilcode-1306",
            "authorityType": "primary-law",
            "tier": "primary-source-backed",
            "title": "Civil Code of the Philippines (RA 386), Art. 1306",
            "citation": "Civil Code of the Philippines, Republic Act No. 386, Art. 1306.",
            "url": "https://lawphil.net/statutes/repacts/ra1949/ra_386_1949.html",
            "proposition": "The Civil Code's freedom-to-contract principle is the statutory gateway for non-competes: parties may agree to any stipulation that is not contrary to law, morals, good customs, public order, or public policy.",
            "verbatimQuote": "Article 1306. The contracting parties 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.",
            "date": "1950-08-30",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-civilcode-1306"
          },
          {
            "id": "tiu-time-trade-place",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Tiu v. Platinum Plans Phil., Inc.",
            "citation": "Tiu v. Platinum Plans Phil., Inc., G.R. No. 163512, Feb. 28, 2007.",
            "url": "https://lawphil.net/judjuris/juri2007/feb2007/gr_163512_2007.html",
            "proposition": "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.",
            "verbatimQuote": "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.",
            "date": "2007-02-28",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-tiu-time-trade-place"
          },
          {
            "id": "tiu-force-of-law",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Tiu v. Platinum Plans Phil., Inc.",
            "citation": "Tiu v. Platinum Plans Phil., Inc., G.R. No. 163512, Feb. 28, 2007.",
            "url": "https://lawphil.net/judjuris/juri2007/feb2007/gr_163512_2007.html",
            "proposition": "A reasonable non-involvement clause that is not contrary to public policy has the force of law between the parties and must be complied with in good faith.",
            "verbatimQuote": "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.",
            "date": "2007-02-28",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-tiu-force-of-law"
          }
        ]
      },
      {
        "slug": "reasonableness-test",
        "label": "What makes a non-compete reasonable?",
        "heading": "What makes a non-compete reasonable in the Philippines?",
        "answerText": "Reasonableness is decided clause by clause against a five-factor test. In Rivera v. Solidbank Corp., the Supreme Court directed trial courts to weigh whether the covenant protects a legitimate business interest, whether it unduly burdens the employee, whether it harms the public welfare, whether its time and territorial limits are reasonable, and whether it is reasonable as a matter of public policy. A restraint that flunks any of these — most classically one that is not limited as to trade — is void as against public policy.",
        "sources": [
          {
            "id": "rivera-five-factors",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Rivera v. Solidbank Corp.",
            "citation": "Rivera v. Solidbank Corp., G.R. No. 163269, Apr. 19, 2006.",
            "url": "https://lawphil.net/judjuris/juri2006/apr2006/gr_163269_2006.html",
            "proposition": "The trial court must weigh five factors to determine whether a non-compete is reasonable: legitimate business interest, undue burden on the employee, injury to public welfare, reasonableness of the time and territorial limits, and reasonableness from the standpoint of public policy.",
            "verbatimQuote": "Thus, in determining whether the contract is reasonable or not, the trial court should consider the following factors: (a) whether the covenant protects a legitimate business interest of the employer; (b) whether the covenant creates an undue burden on the employee; (c) whether the covenant is injurious to the public welfare; (d) whether the time and territorial limitations contained in the covenant are reasonable; and (e) whether the restraint is reasonable from the standpoint of public policy.",
            "date": "2006-04-19",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-rivera-five-factors"
          },
          {
            "id": "ferrazzini-not-trade",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Ferrazzini v. Gsell",
            "citation": "Ferrazzini v. Gsell, G.R. No. L-10712, Aug. 10, 1916.",
            "url": "https://lawphil.net/judjuris/juri1916/aug1916/gr_l-10712_1916.html",
            "proposition": "A five-year ban on any employment in the Philippine Islands was void as an unreasonable restraint of trade because it was limited as to time and space but not as to trade.",
            "verbatimQuote": "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.",
            "date": "1916-08-10",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-ferrazzini-not-trade"
          },
          {
            "id": "rivera-summary-judgment",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Rivera v. Solidbank Corp.",
            "citation": "Rivera v. Solidbank Corp., G.R. No. 163269, Apr. 19, 2006.",
            "url": "https://lawphil.net/judjuris/juri2006/apr2006/gr_163269_2006.html",
            "proposition": "Reasonableness is a factual question; a court errs in resolving it on summary judgment because doing so forecloses the evidence the parties need to present.",
            "verbatimQuote": "There is no factual basis for the trial court's ruling, for the simple reason that it rendered summary judgment and thereby foreclosed the presentation of evidence by the parties to prove whether the restrictive covenant is reasonable or not.",
            "date": "2006-04-19",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-rivera-summary-judgment"
          }
        ]
      },
      {
        "slug": "duration-limits",
        "label": "How long and how wide can it be?",
        "heading": "How long and how wide can a Philippine non-compete be?",
        "answerText": "There is no statutory limit, but the durations the Supreme Court has actually upheld are short. In Tiu, a two-year non-involvement clause confined to the employer's pre-need industry was held reasonable. Geography matters too: the Court has said a territorial limitation is necessary so the employee knows what counts as a violation and so the restraint tracks where the employer actually does business.",
        "sources": [
          {
            "id": "tiu-two-year",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Tiu v. Platinum Plans Phil., Inc.",
            "citation": "Tiu v. Platinum Plans Phil., Inc., G.R. No. 163512, Feb. 28, 2007.",
            "url": "https://lawphil.net/judjuris/juri2007/feb2007/gr_163512_2007.html",
            "proposition": "A two-year non-involvement clause limited to the employer's pre-need industry was reasonable as to both time and trade.",
            "verbatimQuote": "In this case, the non-involvement clause has a time limit: two years from the time petitioner's employment with respondent ends.",
            "date": "2007-02-28",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-tiu-two-year"
          },
          {
            "id": "rivera-territorial",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Rivera v. Solidbank Corp.",
            "citation": "Rivera v. Solidbank Corp., G.R. No. 163269, Apr. 19, 2006.",
            "url": "https://lawphil.net/judjuris/juri2006/apr2006/gr_163269_2006.html",
            "proposition": "A territorial limitation is necessary so the employee knows what constitutes a violation and so the geographic scope is co-extensive with where the employer does business.",
            "verbatimQuote": "A provision on territorial limitation is necessary to guide an employee of what constitutes as violation of a restrictive covenant and whether the geographic scope is co-extensive with that in which the employer is doing business.",
            "date": "2006-04-19",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-rivera-territorial"
          },
          {
            "id": "delcastillo-time-or-place",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Del Castillo v. Richmond",
            "citation": "Del Castillo v. Richmond, G.R. No. L-21127, Feb. 9, 1924.",
            "url": "https://lawphil.net/judjuris/juri1924/feb1924/gr_21127_1924.html",
            "proposition": "A contract in restraint of trade is valid provided there is a reasonable limitation upon either time or place; a locality-bound restriction on opening a competing drugstore was legal and reasonable.",
            "verbatimQuote": "Later cases, and we think the rule is now well established, have held that a contract in restraint of trade is valid providing there is a limitation upon either time or place.",
            "date": "1924-02-09",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-delcastillo-time-or-place"
          }
        ]
      },
      {
        "slug": "legitimate-interest",
        "label": "What interest must it protect?",
        "heading": "What interest must a Philippine non-compete protect?",
        "answerText": "A legitimate business interest — typically confidential strategies, trade secrets, or goodwill the employee was trusted with. The first Rivera factor asks exactly that: whether the covenant protects a legitimate business interest of the employer. Tiu shows what qualifies: the clause there was upheld because the employee was a senior executive who would otherwise carry the employer's sensitive, industry-specific knowledge straight to a direct competitor.",
        "sources": [
          {
            "id": "q4-rivera-interest",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Rivera v. Solidbank Corp.",
            "citation": "Rivera v. Solidbank Corp., G.R. No. 163269, Apr. 19, 2006.",
            "url": "https://lawphil.net/judjuris/juri2006/apr2006/gr_163269_2006.html",
            "proposition": "The first reasonableness factor is whether the covenant protects a legitimate business interest of the employer, weighed alongside the burden on the employee, public welfare, the time and territorial limits, and public policy.",
            "verbatimQuote": "Thus, in determining whether the contract is reasonable or not, the trial court should consider the following factors: (a) whether the covenant protects a legitimate business interest of the employer; (b) whether the covenant creates an undue burden on the employee; (c) whether the covenant is injurious to the public welfare; (d) whether the time and territorial limitations contained in the covenant are reasonable; and (e) whether the restraint is reasonable from the standpoint of public policy.",
            "date": "2006-04-19",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-q4-rivera-interest"
          },
          {
            "id": "q4-tiu-trade",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Tiu v. Platinum Plans Phil., Inc.",
            "citation": "Tiu v. Platinum Plans Phil., Inc., G.R. No. 163512, Feb. 28, 2007.",
            "url": "https://lawphil.net/judjuris/juri2007/feb2007/gr_163512_2007.html",
            "proposition": "The clause was tied to the employer's specific industry — barring the employee only from the pre-need business — which is what made the trade limitation reasonable rather than an open-ended occupational ban.",
            "verbatimQuote": "It is also limited as to trade, since it only prohibits petitioner from engaging in any pre-need business akin to respondent's.",
            "date": "2007-02-28",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-q4-tiu-trade"
          }
        ]
      },
      {
        "slug": "court-narrowing",
        "label": "Can a court narrow an overbroad clause?",
        "heading": "Can a Philippine court narrow an overbroad non-compete?",
        "answerText": "There is no established practice of doing so. When the Supreme Court has found a restraint unreasonable, it has treated the covenant as void against public policy — as it did with the five-year, all-trades ban in Ferrazzini — rather than rewriting it to a reasonable scope. No decision squarely holds whether a Philippine court may instead narrow an overbroad covenant, and the courts have not adopted the judicial-reformation or read-down approach used in some United States states. The safe assumption is therefore that an overbroad clause fails entirely rather than being trimmed.",
        "sources": [
          {
            "id": "q5-ferrazzini-void",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Ferrazzini v. Gsell",
            "citation": "Ferrazzini v. Gsell, G.R. No. L-10712, Aug. 10, 1916.",
            "url": "https://lawphil.net/judjuris/juri1916/aug1916/gr_l-10712_1916.html",
            "proposition": "An unreasonable restraint is declared void as against public policy; the Court struck the five-year, all-trades ban down in its entirety.",
            "verbatimQuote": "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.",
            "date": "1916-08-10",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-q5-ferrazzini-void"
          },
          {
            "id": "q5-tiu-goodfaith",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Tiu v. Platinum Plans Phil., Inc.",
            "citation": "Tiu v. Platinum Plans Phil., Inc., G.R. No. 163512, Feb. 28, 2007.",
            "url": "https://lawphil.net/judjuris/juri2007/feb2007/gr_163512_2007.html",
            "proposition": "A reasonable non-involvement clause has the force of law between the parties and must be complied with in good faith; on that footing the Court enforced the stipulated liquidated damages and declined to reduce them because the employee showed no good-faith intent to comply.",
            "verbatimQuote": "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.",
            "date": "2007-02-28",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-q5-tiu-goodfaith"
          }
        ]
      },
      {
        "slug": "which-court",
        "label": "Which court hears a non-compete case?",
        "heading": "Which court hears a Philippine non-compete dispute?",
        "answerText": "The regular civil courts, not the labor tribunals — when the breach is post-employment. A suit to recover damages for breaching a post-employment non-compete is a civil-law action over which the regular courts, not the Labor Arbiter or the NLRC, have jurisdiction. The Supreme Court has reaffirmed this repeatedly: the covenant takes effect only after the employment relationship ends, so the claim sounds in contract, not labor law.",
        "sources": [
          {
            "id": "daichi-civil",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Dai-Chi Electronics Mfg. Corp. v. Villarama",
            "citation": "Dai-Chi Electronics Mfg. Corp. v. Villarama, G.R. No. 112940, Nov. 21, 1994.",
            "url": "https://lawphil.net/judjuris/juri1994/nov1994/gr_112940_1994.html",
            "proposition": "A damages claim for breach of a post-employment non-compete is a civil-law action within the jurisdiction of the regular courts, not the labor tribunals, because it concerns the parties' post-employment relations.",
            "verbatimQuote": "Such cause of action is within the realm of Civil Law, and jurisdiction over the controversy belongs to the regular courts. More so when we consider that the stipulation refers to the post-employment relations of the parties.",
            "date": "1994-11-21",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-daichi-civil"
          },
          {
            "id": "yusen-civil",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Yusen Air & Sea Service Phils., Inc. v. Villamor",
            "citation": "Yusen Air & Sea Service Phils., Inc. v. Villamor, G.R. No. 154060, Aug. 16, 2005.",
            "url": "https://lawphil.net/judjuris/juri2005/aug2005/gr_154060_2005.html",
            "proposition": "An employer seeking damages for breach of an employment contract's restraint, rather than relief under the Labor Code, states a civil-law cause of action over which the regular courts have jurisdiction.",
            "verbatimQuote": "It merely seeks to recover damages based on the parties' contract of employment as redress for respondent's breach thereof. Such cause of action is within the realm of Civil Law, and jurisdiction over the controversy belongs to the regular courts.",
            "date": "2005-08-16",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-yusen-civil"
          },
          {
            "id": "portillo-civil",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Portillo v. Rudolf Lietz, Inc.",
            "citation": "Portillo v. Rudolf Lietz, Inc., G.R. No. 196539, Oct. 10, 2012.",
            "url": "https://lawphil.net/judjuris/juri2012/oct2012/gr_196539_2012.html",
            "proposition": "A goodwill or non-compete clause is a contractual undertaking effective after employment ends, so breach of it is a civil-law dispute, not a labor case.",
            "verbatimQuote": "In accordance with jurisprudence, breach of the undertaking is a civil law dispute, not a labor law case.",
            "date": "2012-10-10",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-portillo-civil"
          },
          {
            "id": "portillo-no-setoff",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Portillo v. Rudolf Lietz, Inc.",
            "citation": "Portillo v. Rudolf Lietz, Inc., G.R. No. 196539, Oct. 10, 2012.",
            "url": "https://lawphil.net/judjuris/juri2012/oct2012/gr_196539_2012.html",
            "proposition": "There is no causal connection between an employee's unpaid-wage claim and the employer's liquidated-damages claim under a goodwill clause, so the employer cannot offset one against the other.",
            "verbatimQuote": "There is no causal connection between the petitioner employees' claim for unpaid wages and the respondent employers' claim for damages for the alleged “Goodwill Clause” violation.",
            "date": "2012-10-10",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-portillo-no-setoff"
          }
        ]
      },
      {
        "slug": "during-employment",
        "label": "What about breaches while still employed?",
        "heading": "What if the employee competed while still employed?",
        "answerText": "That changes the analysis. A restraint that operates during employment is backed by the employee's duty of loyalty, and the labor tribunals can enforce it as part of a compensation dispute. In Century Properties v. Babiano, the Supreme Court upheld the forfeiture of a sales executive's unpaid commissions because he accepted a position with a direct competitor while still employed — a breach of the contract's confidentiality and non-compete clause.",
        "sources": [
          {
            "id": "century-forfeiture",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Century Properties, Inc. v. Babiano",
            "citation": "Century Properties, Inc. v. Babiano, G.R. No. 220978, July 5, 2016.",
            "url": "https://lawphil.net/judjuris/juri2016/jul2016/gr_220978_2016.html",
            "proposition": "An express clause forfeiting commissions and incentives on breach of the employment contract was enforced according to its terms.",
            "verbatimQuote": "Finally, if undersigned breaches any terms of this contract, forms of compensation including commissions and incentives will be forfeited.",
            "date": "2016-07-05",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-century-forfeiture"
          },
          {
            "id": "century-violation",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Century Properties, Inc. v. Babiano",
            "citation": "Century Properties, Inc. v. Babiano, G.R. No. 220978, July 5, 2016.",
            "url": "https://lawphil.net/judjuris/juri2016/jul2016/gr_220978_2016.html",
            "proposition": "Because the employee accepted a competitor's offer while still employed, his conduct was a glaring violation of the confidentiality and non-compete clause, justifying forfeiture of his unpaid commissions.",
            "verbatimQuote": "Irrefragably, this is a glaring violation of the “Confidentiality of Documents and Non-Compete Clause” in his employment contract with CPI, thus, justifying the forfeiture of his unpaid commissions.",
            "date": "2016-07-05",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-century-violation"
          }
        ]
      },
      {
        "slug": "non-solicitation-sale-of-business",
        "label": "How are non-solicits and sale covenants treated?",
        "heading": "How does the Philippines treat customer non-solicitation and sale-of-business covenants?",
        "answerText": "No Philippine decision squarely addresses a customer non-solicit or a pure sale-of-business covenant, but both would likely be measured against the same unitary Civil Code reasonableness and public-policy test that governs every restraint of trade.",
        "sources": [
          {
            "id": "ph-cust-rivera-test",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Rivera v. Solidbank Corp.",
            "citation": "Rivera v. Solidbank Corp., G.R. No. 163269, Apr. 19, 2006.",
            "url": "https://lawphil.net/judjuris/juri2006/apr2006/gr_163269_2006.html",
            "proposition": "A post-employment restraint is enforced only if reasonable and not greater than necessary to protect the employer's legitimate business interests.",
            "verbatimQuote": "the employer has to adduce evidence to prove that the restriction is reasonable and not greater than necessary to protect the employer’s legitimate business interests.",
            "date": "2006-04-19",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-ph-cust-rivera-test"
          },
          {
            "id": "ph-cust-tiu-time-trade-place",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Tiu v. Platinum Plans Phil., Inc.",
            "citation": "Tiu v. Platinum Plans Phil., Inc., G.R. No. 163512, Feb. 28, 2007.",
            "url": "https://lawphil.net/judjuris/juri2007/feb2007/gr_163512_2007.html",
            "proposition": "A post-employment restraint is not void as a restraint of trade so long as it is reasonably limited as to time, trade, and place.",
            "verbatimQuote": "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.",
            "date": "2007-02-28",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-ph-cust-tiu-time-trade-place"
          },
          {
            "id": "ph-sob-delcastillo",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Del Castillo v. Richmond",
            "citation": "Del Castillo v. Richmond, G.R. No. L-21127, Feb. 9, 1924.",
            "url": "https://lawphil.net/judjuris/juri1924/feb1924/gr_21127_1924.html",
            "proposition": "A contract in restraint of trade is valid provided there is a reasonable limitation upon either time or place.",
            "verbatimQuote": "Later cases, and we think the rule is now well established, have held that a contract in restraint of trade is valid providing there is a limitation upon either time or place.",
            "date": "1924-02-09",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-ph-sob-delcastillo"
          },
          {
            "id": "ph-sob-ferrazzini",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Ferrazzini v. Gsell",
            "citation": "Ferrazzini v. Gsell, G.R. No. L-10712, Aug. 10, 1916.",
            "url": "https://lawphil.net/judjuris/juri1916/aug1916/gr_l-10712_1916.html",
            "proposition": "A restraint limited as to time and space but not as to trade is void as an unreasonable restraint of trade against public policy.",
            "verbatimQuote": "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.",
            "date": "1916-08-10",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-ph-sob-ferrazzini"
          }
        ]
      },
      {
        "slug": "contractors",
        "label": "Do they apply to independent contractors?",
        "heading": "Do non-competes apply to independent contractors in the Philippines?",
        "answerText": "Yes. When the restrained party is an independent contractor rather than an employee, the dispute is handled as an ordinary civil action under the freedom-to-contract principle rather than as a labor case. In Consulta v. Court of Appeals, once the Supreme Court found that the managing associate was an independent agent and not an employee, it upheld her one-year exclusivity restriction as a reasonable restriction designed to protect the company's business interest.",
        "sources": [
          {
            "id": "consulta-status",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Consulta v. Court of Appeals",
            "citation": "Consulta v. Court of Appeals, G.R. No. 145443, Mar. 18, 2005.",
            "url": "https://lawphil.net/judjuris/juri2005/mar2005/gr_145443_2005.html",
            "proposition": "The restrained party was an independent agent, not an employee, so the dispute over her covenant was an ordinary civil matter for the regular courts rather than a labor case.",
            "verbatimQuote": "Consulta was an independent agent and not an employee of Pamana.",
            "date": "2005-03-18",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-consulta-status"
          },
          {
            "id": "consulta-reasonable",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Consulta v. Court of Appeals",
            "citation": "Consulta v. Court of Appeals, G.R. No. 145443, Mar. 18, 2005.",
            "url": "https://lawphil.net/judjuris/juri2005/mar2005/gr_145443_2005.html",
            "proposition": "An exclusivity provision barring only competing activity by an independent contractor was a reasonable restriction designed to protect the company's business interest.",
            "verbatimQuote": "The exclusivity provision was a reasonable restriction designed to prevent similar acts prejudicial to Pamana's business interest.",
            "date": "2005-03-18",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-consulta-reasonable"
          }
        ]
      },
      {
        "slug": "remedies",
        "label": "How are they enforced?",
        "heading": "How is a Philippine non-compete enforced?",
        "answerText": "By injunction and by damages, including liquidated damages. A continuing breach of a valid negative covenant can be restrained by injunction, because the ongoing harm cannot be adequately repaired through an ordinary damages suit. To avoid having to prove actual loss, employers typically attach a penal clause; under the Civil Code such a penalty substitutes for damages on breach.",
        "sources": [
          {
            "id": "ollendorff-injunction",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Ollendorff v. Abrahamson",
            "citation": "Ollendorff v. Abrahamson, G.R. No. 13228, Sept. 13, 1918.",
            "url": "https://lawphil.net/judjuris/juri1918/sep1918/gr_13228_1918.html",
            "proposition": "A continuing breach of a valid negative covenant may be restrained by injunction because such a breach is irreparable through the ordinary processes of courts of law.",
            "verbatimQuote": "With respect to the contention that an injunction may only be granted to prevent irreparable injury, the answer is that any continuing breach of a valid negative covenant is irreparable by the ordinary process of courts of law.",
            "date": "1918-09-13",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-ollendorff-injunction"
          },
          {
            "id": "civilcode-1226",
            "authorityType": "primary-law",
            "tier": "primary-source-backed",
            "title": "Civil Code of the Philippines (RA 386), Art. 1226",
            "citation": "Civil Code of the Philippines, Republic Act No. 386, Art. 1226.",
            "url": "https://lawphil.net/statutes/repacts/ra1949/ra_386_1949.html",
            "proposition": "In an obligation with a penal clause, the penalty substitutes for the indemnity for damages and the payment of interest on noncompliance, absent a contrary stipulation — the statutory basis for liquidated-damages clauses in non-competes.",
            "verbatimQuote": "Article 1226. In obligations with a penal clause, the penalty shall substitute the indemnity for damages and the payment of interests in case of noncompliance, if there is no stipulation to the contrary.",
            "date": "1950-08-30",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-civilcode-1226"
          },
          {
            "id": "yusen-moot",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Yusen Air & Sea Service Phils., Inc. v. Villamor",
            "citation": "Yusen Air & Sea Service Phils., Inc. v. Villamor, G.R. No. 154060, Aug. 16, 2005.",
            "url": "https://lawphil.net/judjuris/juri2005/aug2005/gr_154060_2005.html",
            "proposition": "Once the restraint period expires, a suit seeking an injunction becomes moot, though a claim for damages already incurred remains.",
            "verbatimQuote": "Necessarily, upon the expiration of said period, a suit seeking the issuance of a writ of injunction becomes functus oficio and therefore moot.",
            "date": "2005-08-16",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-yusen-moot"
          }
        ]
      },
      {
        "slug": "garden-leave",
        "label": "Is garden leave allowed?",
        "heading": "Is garden leave allowed in the Philippines?",
        "answerText": "Yes. The Supreme Court has said there is no prohibition under Philippine labor law against a garden-leave clause in an employment contract. Because garden leave keeps the employee on the payroll and bound by the duty of loyalty during the notice period, it is a useful — and lower-risk — alternative to a post-employment restraint, which must instead run the full reasonableness gauntlet.",
        "sources": [
          {
            "id": "mejila-garden-leave",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Mejila v. Wrigley Philippines, Inc.",
            "citation": "Mejila v. Wrigley Philippines, Inc., G.R. Nos. 199469 & 199505, Sept. 11, 2019.",
            "url": "https://lawphil.net/judjuris/juri2019/sep2019/gr_199469_2019.html",
            "proposition": "There is no prohibition under Philippine labor law against a garden-leave clause in an employment contract.",
            "verbatimQuote": "There is no prohibition under our labor laws against a garden leave clause in an employment contract.",
            "date": "2019-09-11",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-mejila-garden-leave"
          }
        ]
      },
      {
        "slug": "extended-for-breach",
        "label": "Does the restriction pause during a breach?",
        "heading": "Does a Philippine non-compete pause or extend if the employee breaches?",
        "answerText": "The Supreme Court has not addressed it. No Philippine decision holds that the restraint period tolls — pauses and then resumes — while a former employee is in breach or while litigation runs, so a clause that purports to extend the covenant by the length of any breach is untested. An employer should treat the stated period as the maximum and not assume the clock stops while the employee competes.",
        "sources": [
          {
            "id": "q11-rivera-certainty",
            "authorityType": "case-law",
            "tier": "primary-source-backed",
            "title": "Rivera v. Solidbank Corp.",
            "citation": "Rivera v. Solidbank Corp., G.R. No. 163269, Apr. 19, 2006.",
            "url": "https://lawphil.net/judjuris/juri2006/apr2006/gr_163269_2006.html",
            "proposition": "A territorial limitation is necessary to guide the employee on what constitutes a violation and whether the geographic scope is co-extensive with where the employer does business.",
            "verbatimQuote": "A provision on territorial limitation is necessary to guide an employee of what constitutes as violation of a restrictive covenant and whether the geographic scope is co-extensive with that in which the employer is doing business.",
            "date": "2006-04-19",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-q11-rivera-certainty"
          }
        ]
      },
      {
        "slug": "statutory-outlook",
        "label": "Is the law about to change?",
        "heading": "Is a non-compete statute coming in the Philippines?",
        "answerText": "Not as of June 2026. There is no Philippine statute that bans or specifically regulates employee non-competes; enforceability still turns entirely on the Civil Code and the Supreme Court's reasonableness jurisprudence. The constitutional backdrop reinforces that scrutiny — the 1987 Constitution declares that no combinations in restraint of trade or unfair competition shall be allowed — but it is applied as a public-policy lens on contracts, not as a self-executing ban on covenants.",
        "sources": [
          {
            "id": "consti-art12",
            "authorityType": "primary-law",
            "tier": "primary-source-backed",
            "title": "1987 Constitution, Article XII, Section 19",
            "citation": "1987 Constitution, Art. XII, Sec. 19.",
            "url": "https://lawphil.net/consti/cons1987.html",
            "proposition": "The 1987 Constitution's economic-policy provision prohibits combinations in restraint of trade and unfair competition, supplying the public-policy backdrop against which courts scrutinise restrictive covenants.",
            "verbatimQuote": "No combinations in restraint of trade or unfair competition shall be allowed.",
            "date": "1987-02-02",
            "anchor": "https://openagreements.org/practice-guides/non-compete/ph#src-consti-art12"
          }
        ]
      }
    ]
  }
}