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Ferrazzini v Gsell | 1916 | Trent, J.

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; o At some point, he was discharged by Gsell so he filed this case to recover damages for an alleged wrongful discharge;

1. The discharge was lawful.

a. Court looked into whether Gsell had


just cause to discharge Ferrazzini; Gsell has to prove justification for his act because it was in contravention of the six-month clause in the contract; if it was without just cause, it was in violation of the contract and Ferrazzini is entitled to recover; b. Court based the justifications on the testimonies of the parties; 1. For Ferrazzinis absences during working hours for the purpose of drinking: Ferrazini he said he was allowed by Gsell in the morning ten or fifteen minutes during the hot season to absent himself to have a drink of beer or whiskey, and the same in the afternoon and that the manager (whose name is Bender) merely told him not to do it in such an ostentatious manner;

Gsell, for his part admitted he discharged Ferrazzini without written advice of six months in advance as provided in the contract; o 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 cannot enter into employment of any enterprise in the Philippines, during his employment and within 5 years after termination except when given written permission; if he does, he will pay Gsell P10k; Gsell was employed in cement industry);

o Gsell he directed the manager to discontinue the habit of during; Bender he expressly told Ferrazini not to go out without permission; 2. For his unfaithfulness: o Ferrazzini he admitted saying to persons at supper in the mess hall that Gsell measured the cloth for the umbrellas, that it is his idea that Gsell has no confidence in his employees; but he testified that he did not remember saying that Specht, the foreman, was not receiving sufficient salary; o Specht and another coworker, however, testified

Trial court favoured Ferrazzini and declined to consider the counterclaim, so Gsell appealed. Issues:

1. Was the discharge lawful? Yes. 2. Is the stipulation preventing Ferrazzini


to enter into the employment of any enterprise in the Philippine Islands, whatever, save and except after obtaining special written permission therefor valid? No, against public policy. Ratio:

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positively to what he said about Specht; c. All the foregoing shows a conduct on the part of Ferrazzini inconsistent with the due and faithful performance of his duties as an employee of Gsell; former is at times a foreman and at times in charge of important departments of the factory wherein four hundred employees work, Gsell did only had the right to prohibit the drinking but also his duty for his own interests and the safety of his other employees; d. Although, in the record, Gsell terminated Ferrazzini on account of the conversation at the mess, he, at the time of the discharge, was authorized to take into consideration the latters whole course of conduct in determining whether the contract of employment should be terminated; 2. The stipulation is unlawful for being against public policy;

d. Two principal grounds why a contract in restraint of trade is void as against public policy: 1. Injury to the public by being deprived of the restricted partys industry; and 2. The injury to the party himself by being precluded from pursuing his occupation, and thus being prevented from supporting himself and his family; e. Contract under consideration is clearly one in undue or unreasonable restraint of trade and therefore against public policy: 1. It is limited to time and space but not as to trade;

2. It is not necessary for the protection


of the employer; 3. It would force Ferrazzini to obtain a livelihood in case the defendant declined to give him the written permission to work elsewhere in the country. Note: The test on whether a given agreement constitutes an unlawful machination or a combination in restraint of trade: Whether, under the particular circumstances of the case and the nature of the particular contract involved in it, the contract is, or is not, unreasonable. JUDGMENT: Modified.

a. Public policy the principle under


which the freedom of contract or private dealing is restricted by law for the good of the public; intended that the principle of the law which holds that no subject or citizen can lawfully do that which has a tendency to be injurious to the public or against the public good;

b. Case distinguished from Gsell v Koch


there the provisions in the contract against the engaging in the manufacturing of straw hats (by the terminated employee, being the same business the employer is in) were held to be reasonably necessary for the protection of the plaintiff and not oppressive;

c. Contract in undue or unreasonable


restraint of trade unenforceable because they are repugnant to the established public policy; illegal in the sense that the law will not enforce them;

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