G.R. No.

220978

CENTURY PROPERTIES, INC., Petitioner,

vs
EDWIN J. BABIANO and EMMA B. CONCEPCION, Respondents.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1are the Decision2 dated April 8, 2015 and the
Resolution3 dated October 12, 2015 of the Court of Appeals (CA) in CA-G.R. SP No. 132953,
which affirmed with modification the Decision4 dated June 25, 2013 and the Resolution5 dated
October 16, 2013 of the National Labor Relations Commission (NLRC) in NLRC LAC No. 05-
001615-12, and ordered petitioner Century Properties, Inc. (CPI) to pay respondents Edwin J.
Babiano (Babiano) and Emma B. Concepcion (Concepcion; collectively, respondents) unpaid
commissions in the amounts of P889,932.42 and P591,953.05, respectively.

The Facts

On October 2, 2002, Babiano was hired by CPI as Director of Sales, and was eventually6
appointed as Vice President for Sales effective September 1, 2007. As CPI' s Vice President for
Sales, Babiano was remunerated with, inter alia, the following benefits: (a) monthly salary of
P70,000.00; (b) allowance of P50,000.00; and (c) 0.5% override commission for completed sales.
His employment contract7 also contained a "Confidentiality of Documents and Non:-Compete
Clause"8 which, among others, barred him from disclosing confidential information, and from
working in any business enterprise that is in direct competition with CPI "while [he is] employed
and for a period of one year from date of resignation or termination from [CPI]." Should Babiano
breach any of the terms thereof, his "forms of compensation, including commissions and
incentives will be forfeited."9

During the same period, Concepcion was initially hired as Sales Agent by CPI and was
eventually10 promoted as Project Director on September 1, 2007.11 As such, she signed an
employment agreement, denominated as "Contract of Agency for Project Director"12 which
provided, among others, that she would directly report to Babiano, and receive a monthly subsidy
of P60,000.00, 0.5% commission, and cash incentives.13 On March 31, 2008, Concepcion
executed a similar contract14 anew with CPI in which she would receive a monthly subsidy of
P50,000.00, 0.5% commission, and cash incentives as per company policy. Notably, it was
stipulated in both contracts that no employer-employee relationship exists between Concepcion
and CPI.15

After receiving reports that Babiano provided a competitor with information regarding CPI's
marketing strategies, spread false information regarding CPI and its projects, recruited CPI's
personnel to join the competitor, and for being absent without official leave (AWOL) for five (5)
days, CPI, through its Executive Vice President for Marketing and Development, Jose Marco R.
Antonio (Antonio), sent Babiano a Notice to Explain16 on February 23, 2009 directing him to
explain why he should not be charged with disloyalty, conflict of interest, and breach of trust and
confidence for his actuations.17

On February 25, 2009, Babiano tendered18 his resignation and revealed that he had been
accepted as Vice President of First Global BYO Development Corporation (First Global), a
competitor of CPI.19 On March 3, 2009, Babiano was served a Notice of Termination20 for: (a)
incurring AWOL; (b) violating the "Confidentiality of Documents and Non-Compete Clause" when
he joined a competitor enterprise while still working for CPI and provided such competitor
enterprise information regarding CPI' s marketing strategies; and (c) recruiting CPI personnel to
join a competitor.21

On the other hand, Concepcion resigned as CPI's Project Director through a letter22 dated
February 23, 2009, effective immediately.

On August 8, 2011, respondents filed a complaint23 for non-payment of commissions and

damages against CPI and Antonio before the NLRC, docketed as NLRC Case No. NCR-08-
12029-11, claiming that their repeated demands for the payment and release of their commissions
remained unheeded.24

For its part, CPI maintained25 that Babiano is merely its agent tasked with selling its projects.
Nonetheless, he was afforded due process in the termination of his employment which was based
on just causes.26 It also claimed to have validly withheld Babiano' s commissions, considering that
they were deemed forfeited for violating the "Confidentiality of Documents and Non-Compete
Clause."27 On Concepcion's money claims, CPI asserted that the NLRC had no jurisdiction to
hear the same because there was no employer-employee relations between them, and thus, she
should have litigated the same in an ordinary civil action.28

The LA Ruling

In a Decision29 dated March 19, 2012, the Labor Arbiter (LA) ruled in CPI's favor and,
accordingly, dismissed the complaint for lack of merit.30 The LA found that: (a) Babiano's acts of
providing information on CPI’s marketing strategies to the competitor and spreading false
information about CPI and its projects are blatant violations of the "Confidentiality of Documents
and Non-Compete Clause" of his employment contract, thus, resulting in the forfeiture of his
unpaid commissions in accordance with the same clause;31 and (b) it had no jurisdiction over
Concepcion's money claim as she was not an employee but a mere agent of CPI, as clearly
stipulated in her engagement contract with the latter.32

Aggrieved, respondents appealed33 to the NLRC.1âwphi1

The NLRC Ruling

In a Decision34 dated June 25, 2013, the NLRC reversed and set aside the LA ruling, and entered
a new one ordering CPI to pay Babiano and Concepcion the amounts of P685,211.76 and
P470,754.62, respectively, representing their commissions from August 9, 2008 to August 8, 2011,
as well as 10% attorney's fees of the total monetary awards.35

While the NLRC initially concurred with the LA that Babiano's acts constituted just cause which
would warrant the termination of his employment from CPI, it, however, ruled that the forfeiture of
all earned commissions ofBabiano under the "Confidentiality of Documents and Non-Compete
Clause" is confiscatory and unreasonable and hence, contrary to law and public policy.36 In this
light, the NLRC held that CPI could not invoke such clause to avoid the payment of Babiano's
commissions since he had already earned those monetary benefits and, thus, should have been
released to him. However, the NLRC limited the grant of the money claims in light of Article 291
(now Article 306)37 of the Labor Code which provides for a prescriptive period of three (3) years.
Consequently,· the NLRC awarded unpaid commissions only from August 9, 2008 to August 8,
2011 - i.e., which was the date when the complaint was filed.38 Meanwhile, contrary to the LA's
finding, the NLRC ruled that Concepcion was CPI's employee, considering that CPI: (a) repeatedly
hired and promoted her since 2002; (b) paid her wages despite referring to it as "subsidy"; and (c)
exercised the power of dismissal and control over her.39 Lastly, the NLRC granted respondents'
claim for attorney's fees since they were forced to litigate and incurred expenses for the protection
of their rights and interests.40
Respondents did not assail the NLRC findings. In contrast, only CPI moved for reconsideration,41
which the NLRC denied in a Resolution42 dated October 16, 2013. Aggrieved, CPI filed a petition
for certiorari43before the CA.

The CA Ruling

In a Decision44 dated April 8, 2015, the CA affirmed the NLRC ruling with modification increasing
the award of unpaid commissions to Babiano and Concepcion in the amounts of P889,932.42 and
P591,953.05, respectively, and imposing interest of six percent (6%) per annum on all monetary
awards from the finality of its decision until fully paid.45

The CA held that Babiano properly instituted his claim for unpaid commissions before the labor
tribunals as it is a money claim arising from an employer-employee relationship with CPI. In this
relation, the CA opined that CPI cannot withhold such unpaid commissions on the ground of
Babiano's alleged breach of the "Confidentiality of Documents and Non-Compete Clause"
integrated in the latter's employment contract, considering that such clause referred to acts done
after the cessation of the employer-employee relationship or to the "post-employment" relations of
the parties. Thus, any such supposed breach thereof is a civil law dispute that is best resolved by
the regular courts and not by labor tribunals.46

Similarly, the CA echoed the NLRC's finding that there exists an employer-employee relationship
between Concepcion and CPI, because the latter exercised control over the performance of her
duties as Project Director which is indicative of an employer-employee relationship. Necessarily
therefore, CPI also exercised control over Concepcion's duties in recruiting, training, and
developing directors of sales because she was supervised by Babiano in the performance of her
functions. The CA likewise observed the presence of critical factors which were indicative of an
employer-employee relationship with CPI, such as: (a) Concepcion's receipt of a monthly salary
from CPI; and (b) that she performed tasks besides selling CPI properties. To add, the title of her
contract which was referred to as "Contract of Agency for Project Director" was not binding and
conclusive, considering that the characterization of the juridical relationship is essentially a matter
of law that is for the courts to determine, and not the parties thereof. Moreover, the totality of
evidence sustains a finding of employer-employee relationship between CPI and Concepcion.47

Further, the CA held that despite the NLRC's proper application of the three (3)-year prescriptive
period under Article 291 of the Labor Code, it nonetheless failed to include all of respondents'
earned commissions during that time - i.e., August 9, 2008 to August 8, 2011 - thus, necessitating
the increase in award of unpaid commissions in respondents' favor.48

Undaunted, CPI sought for reconsideration,49 which was, however, denied in a Resolution50
dated October 12, 2015; hence, this petition.

The Issue Before the Court

The core issue for the Court's resolution is whether or not the CA erred in denying CPI's petition
for certiorari, thereby holding it liable for the unpaid commissions of respondents.

The Court's Ruling

The petition is partly meritorious.

I.

Article 1370 of the Civil Code provides that "[i]f the terms of a contract are clear and leave no
doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall
control."51 In Norton Resources and Development Corporation v. All Asia Bank Corporation,52the
Court had the opportunity to thoroughly discuss the said rule as follows:

The rule is that where the language of a contract is plain and unambiguous, its meaning
should be determined without reference to extrinsic facts or aids. The intention of the parties
must be gathered from that language, and from that language alone. Stated differently, where
the language of a written contract is clear and unambiguous, the contract must be taken to
mean that which, on its face, it purports to mean, unless some good reason can be
assigned to show that the words should be understood in a different sense. Courts cannot
make for the parties better or more equitable agreements than they themselves have been
satisfied to make, or rewrite contracts because they operate harshly or inequitably as to one of the
parties, or alter them for the benefit of one party and to the detriment of the other, or by
construction, relieve one of the parties from the terms which he voluntarily consented to, or impose
on him those which he did not.53 (Emphases and underscoring supplied)

Thus, in the interpretation of contracts, the Court must first determine whether a provision or
stipulation therein is ambiguous. Absent any ambiguity, the provision on its face will be read as it
is written and treated as the binding law of the parties to the contract.54

In the case at bar, CPI primarily invoked the "Confidentiality of Documents and Non-Compete
Clause" found in Babiano's employment contract55 to justify the forfeiture of his commissions,
viz.:

Confidentiality of Documents and Non-Compete Clause

All records and documents of the company and all information pertaining to its business or affairs
or that of its affiliated companies are confidential and no unauthorized disclosure or reproduction
or the same will be made by you any time during or after your employment.

And in order to ensure strict compliance herewith, you shall not work for whatsoever
capacity, either as an employee, agent or consultant with any person whose business is in
direct competition with the company while you are employed and for a period of one year
from date of resignation or termination from the company.

In the event the undersigned breaches any term of this contract, the undersigned agrees and
acknowledges that damages may not be an adequate remedy and that in addition to any other
remedies available to the Company at law or in equity, the Company is entitled to enforce its rights
hereunder by way of injunction, restraining order or other relief to enjoin any breach or default of
this contract.

The undersigned agrees to pay all costs, expenses and attorney's fees incurred by the Company
in connection with the enforcement of the obligations of the undersigned. The undersigned also
agrees to .pay the Company all profits, revenues and income or benefits derived by or accruing to
the undersigned resulting from the undersigned's breach of the obligations hereunder. This
Agreement shall be binding upon the undersigned, all employees, agents, officers, directors,
shareholders, partners and representatives of the undersigned and all heirs, successors and
assigns of the foregoing.

Finally, if undersigned breaches any terms of this contract, forms of compensation

including commissions and incentives will be forfeited .56 (Emphases and underscoring
supplied)

Verily, the foregoing clause is not only clear and unambiguous in stating that Babiano is barred to
"work for whatsoever capacity x x x with any person whose business is in direct competition with
[CPI] while [he is] employed and for a period of one year from date of [his] resignation or
termination from the company," it also expressly provided in no uncertain terms that should
Babiano "[breach] any term of [the employment contract], forms of compensation including
commissions and incentives will be forfeited." Here, the contracting parties - namely Babiano on
one side, and CPI as represented by its COO-Vertical, John Victor R. Antonio, and Director for
Planning and Controls, Jose Carlo R. Antonio, on the other - indisputably wanted the said clause
to be effective even during the existence of the employer-employee relationship between Babiano
and CPI, thereby indicating their intention to be bound by such clause by affixing their respective
signatures to the employment contract. More significantly, as CPI's Vice President for Sales,
Babiano held a highly sensitive and confidential managerial position as he "was tasked, among
others, to guarantee the achievement of agreed sales targets for a project and to ensure that his
team has a qualified and competent manpower resources by conducting recruitment activities,
training sessions, sales rallies, motivational activities, and evaluation programs."57 Hence, to
allow Babiano to freely move to direct competitors during and soon after his employment with CPI
would make the latter's trade secrets vulnerable to exposure, especially in a highly competitive
marketing environment. As such, it is only reasonable that CPI and Babiano agree on such
stipulation in the latter's employment contract in order to afford a fair and reasonable protection to
CPI.58 Indubitably, obligations arising from contracts, including employment contracts, have the
force of law between the contracting parties and should be complied with in good faith.59 Corollary
thereto, parties are bound by the stipulations, clauses, terms, and conditions they have agreed to,
provided that these stipulations, clauses, terms, and conditions are not contrary to law, morals,
public order or public policy,60 as in this case.

Therefore, the CA erred in limiting the "Confidentiality of Documents and Non-Compete Clause"
only to acts done after the cessation of the employer-employee relationship or to the "post-
employment" relations of the parties. As clearly stipulated, the parties wanted to apply said clause
during the pendency of Babiano' s employment, and CPI correctly invoked the same before the
labor tribunals to resist the farmer's claim for unpaid commissions on account of his breach of the
said clause while the employer-employee relationship between them still subsisted. Hence, there
is now a need to determine whether or not Babiano breached said clause while employed by CPI,
which would then resolve the issue of his entitlement to his unpaid commissions.

A judicious review of the records reveals that in his resignation letter61 dated February 25, 2009,
Babiano categorically admitted to CPI Chairman Jose Antonio that on February 12, 2009, he
sought employment from First Global, and five (5) days later, was admitted thereto as vice
president. From the foregoing, it is evidently clear that when he sought and eventually accepted
the said position with First Global, he was still employed by CPI as he has not formally resigned at
that time. 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.

II.

Anent the nature of Concepcion' s engagement, based on case law, the presence of the following
elements evince the existence of an employer-employee relationship: (a) the power to hire, i.e.,
the selection and engagement of the employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the employer's power to control the employee's conduct, or the so called
"control test." The control test is commonly regarded as the most important indicator of the
presence or absence of an employer-employee relationship.62 Under this test, an employer-
employee relationship exists where the person for whom the services are performed reserves the
right to control not only the end achieved, but also the manner and means to be used in reaching
that end.63

Guided by these parameters, the Court finds that Concepcion was an employee of CPI
considering that: (a) CPI continuously hired and promoted Concepcion from October 2002 until her
resignation on February 23, 2009,64 thus, showing that CPI exercised the power of selection and
engagement over her person and that she performed functions that were necessary and desirable
to the business of CPI; (b) the monthly "subsidy" and cash incentives that Concepcion was
receiving from CPI are actually remuneration in the concept of wages as it was regularly given to
her on a monthly basis without any qualification, save for the "complete submission of documents
on what is a sale policy";65 (c) CPI had the power to discipline or even dismiss Concepcion as her
engagement contract with CPI expressly conferred upon the latter "the right to discontinue [her]
service anytime during the Eeriod of engagement should [she] fail to meet the performance
standards,"66 among others, and that CPI actually exercised such power to dismiss when it
accepted and approved Concepcion' s resignation letter; and most importantly, (d) as aptly pointed
out by the CA, CPI possessed the power of control over Concepcion because in the performance
of her duties as Project Director - particularly in the conduct of recruitment activities, training
sessions, and skills development of Sales Directors - she did not exercise independent discretion
thereon, but was still subject to the direct supervision of CPI, acting through BabiaNo. 67

Besides, while the employment agreement of Concepcion was denominated as a "Contract of

Agency for Project Director," it should be stressed that the existence of employer-employee
relations could not be negated by the mere expedient of repudiating it in a contract. In the case of
Insular Life Assurance Co., Ltd. v. NLRC,68 it was ruled that one's employment status is defined
and prescribed by law, and not by what the parties say it should be, viz.:

It is axiomatic that the existence of an employer-employee relationship cannot be negated by

expressly repudiating it in the management contract and providing therein that the "employee" is
an independent contractor when the terms of the agreement clearly show otherwise. For, the
employment status of a person is defined and prescribed by law and not by what the
parties say it should be. In determining the status of the management contract, the "four-fold
test" on employment earlier mentioned has to be applied.69 (Emphasis and underscoring
supplied)

Therefore, the CA correctly ruled that since there exists an employer-employee relationship
between Concepcion and CPI, the labor tribunals correctly assumed jurisdiction over her money
claims.

III.

Finally, CPI contends that Concepcion's failure to assail the NLRC ruling awarding her the amount
of P470,754.62 representing unpaid commissions rendered the same final and binding upon her.
As Such, the CA erred in increasing her monetary award to P591,953.05.70

The contention lacks merit.

As a general rule, a party who has not appealed cannot obtain any affirmative relief other than the
one granted in the appealed decision.1avvphi1 However, jurisprudence admits an exception to the
said rule, such as when strict adherence thereto shall result in the impairment of the substantive
rights of the parties concerned. In Global Resource for Outsourced Workers, Inc. v. Velasco:71

Indeed, a party who has failed to appeal from a judgment is deemed to have acquiesced to it and
can no longer obtain from the appellate court any affirmative relief other than what was already
granted under said judgment. However, when strict adherence to such technical rule will
impair a substantive right, such as that of an illegally dismissed employee to monetary
compensation as provided by law, then equity dictates that the Court set aside the rule to
pave the way for a full and just adjudication of the case. 72 (Emphasis and underscoring
supplied)

In the present case, the CA aptly pointed out that the NLRC failed to account for all the unpaid
commissions due to Concepcion for the period of August 9, 2008 to August 8, 201l.73 Indeed,
Concepcion's right to her earned commissions is a substantive right which cannot be impaired by
an erroneous computation of what she really is entitled to. Hence, following the dictates of equity
and in order to arrive at a complete and just resolution of the case, and avoid a piecemeal
dispensation of justice over the same, the CA correctly recomputed Concepcion' s unpaid
commissions, notwithstanding her failure to seek a review of the NLRC's computation of the same.

In sum, the Court thus holds that the commissions of Babiano were properly forfeited for violating
the "Confidentiality of Documents and Non-Compete Clause." On the other hand, CPI remains
liable for the unpaid commissions of Concepcion in the sum of P591,953.05.

WHEREFORE, the petition is PARTLY GRANTED. The Decision dated April 8, 2015 and the
Resolution dated October 12, 2015 of the Court of Appeals (CA) in CA-G.R. SP No. 132953 are
hereby MODIFIED in that the commissions of respondent Edwin J. Babiano are deemed
FORFEITED. The rest of the CA Decision stands.

SO ORDERED.