Is a non-compete clause in my employment contract legally enforceable in the Philippines?

Why

Under Article 1306 of the Civil Code of the Philippines, contracting parties may establish any terms and conditions they deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy, and Article 1409 makes a contract whose object or purpose is contrary to public policy void. Post-employment non-compete covenants are scrutinised closely because they restrain a person's trade, and because Article XIII, Section 3 of the 1987 Constitution directs the State to afford full protection to labor and promote full employment.

The leading case is Rivera v. Solidbank Corp. (G.R. No. 163269, April 19, 2006). The Court held that the employer bears the burden of proving the restriction is reasonable and not greater than necessary to protect its legitimate business interests, and that reasonableness is decided on the facts of each case. It listed the factors to weigh: (1) whether the covenant protects a legitimate business interest of the employer; (2) whether it creates an undue burden on the employee; (3) whether it is injurious to the public welfare; (4) whether its time and territorial limits are reasonable; and (5) whether the restraint is reasonable from the standpoint of public policy. In that case, a retiring bank officer's one-year undertaking not to join any competitor bank or financial institution was found unreasonable on its face because it had no geographic limit, and the case was sent back for trial. By contrast, in Century Properties, Inc. v. Babiano (G.R. No. 220978, July 5, 2016), the Court upheld a clause barring a Vice President for Sales from working for direct competitors during employment and for one year afterwards, given his access to the company's confidential sales strategies.

A non-compete clause that broadly prohibits an employee from working in 'any business related to technology or sales' across the entire Philippines for several years is very unlikely to survive that analysis. Courts are reluctant to enforce restrictions that amount to a blanket prohibition against practising one's craft or profession.

Where the employer itself breached the contract first, for example by constructively dismissing the worker or failing to pay wages due, the employee has a strong argument that the employer should not be allowed to hold them to the covenant, though the outcome depends on the facts.

If a non-compete clause is valid and reasonable, an employee who violates it may be sued for damages the employer can prove, for any liquidated damages or forfeiture the contract validly provides, or for an injunction. Where the employer sues over a post-employment breach, the case has generally been brought as an ordinary civil action in the regular courts, as in Rivera, which began in the Regional Trial Court. But the clause can also come up in a labor case: in Century Properties, the labor tribunals and the Supreme Court ruled on it because the employer had used it to forfeit commissions the employee was claiming.