Case Summary (G.R. No. 170599)
Employer and Employee Obligations
Under the master-servant relationship, the employer must provide safe work conditions, pay agreed compensation, and respect contractual notice. The employee owes loyalty, faithfulness, and obedience to all reasonable, contract-consistent orders.
Grounds for Appellant’s Justification
Though admitting failure to give six months’ notice, the defendant contended that the plaintiff’s habitual absences for drinking, disobedience of managerial orders, and efforts to undermine employee morale constituted just cause for summary discharge.
Trial Court’s Findings and Issues on Appeal
The trial court held discharge unjustified and refused to entertain the defendant’s counterclaim for breach of a post-employment non-competition clause. On appeal, the defendant challenged both the factual determination on just cause and the exclusion of the counterclaim.
Plaintiff’s Testimony on Allegations
The plaintiff acknowledged remarking at a staff supper that employer‐measuring of umbrella goods showed distrust. He claimed brief absences for drinks were informally permitted by former management and denied repeated admonitions.
Defendant’s Testimony on Employee Misconduct
The proprietor testified that the plaintiff frequently left the factory without permission for an hour or more to drink, disrupting operations among 400 workers. He ordered cessation of this conduct, yet it persisted until dismissal.
Manager’s Evidence of Repeated Disobedience
Factory manager Bender confirmed he twice instructed the plaintiff not to exit the premises without leave. Despite explicit orders, the plaintiff violated this prohibition some thirty-five times, necessitating report to the employer.
Testimony of Other Employees
Witnesses at the mess corroborated the plaintiff’s disparaging comments, including that the employer lacked confidence in his foreman and that the foreman’s pay was insufficient. These statements fostered discontent among employees.
Legal Standard for Justification of Discharge
A master may summarily discharge a servant for conduct breaching express or implied contractual duties. Insurbordination, habitual unauthorized absences, and acts undermining workplace discipline constitute valid grounds despite an agreed notice provision.
Analysis of Just Cause for Termination
Reviewing the undisputed evidence, the appellate court found the plaintiff’s repeated defiance of orders and efforts to incite unrest clearly inconsistent with faithful performance. These breaches justified immediate termination.
Counterclaim and Restrictive Covenant Clause
The defendant’s amended answer asserted that the plaintiff violated a clause barring any Philippine employment or competing business for five years post-service without special written permission, entitling the defendant to P 10,000 as liquidated damages.
Validity of the Non-Competition Provision
Unlike precedents limiting restraints to similar trades or secr
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Facts of the Case
- Plaintiff Ferrazzini was employed by defendant Gsell for an indefinite term in his Manila industrial enterprises at a fixed monthly salary.
- The written contract required six months’ written notice by the employer before termination; defendant discharged plaintiff without such notice.
- Defendant admitted non-compliance with the six-month notice clause but pleaded just cause: absence, unfaithfulness, and disobedience.
- Plaintiff sued for damages for wrongful discharge; defendant counterclaimed for contract breaches by plaintiff after discharge.
- Trial court ruled in favor of plaintiff; defendant appealed on two grounds: unjustified discharge and refusal to consider counterclaim.
Contractual Relationship and Obligations
- Relation was master-servant: employer must provide safe workplace, pay agreed salary, and give six months’ notice before discharge.
- Employee must devote full time and skill exclusively, exercise discretion, show loyalty, faithfulness, and obey reasonable orders.
- Plaintiff’s “skilled service” contract bound him to devote entire time and efforts exclusively during the contract’s existence.
Issues on Appeal
- Whether plaintiff’s discharge was justified under express or implied contractual breaches.
- Whether the trial court erred in excluding and refusing relief on defendant’s counterclaim.
Trial Court Findings and Appellate Court’s Review
- Trial court found no just cause for discharge and disregarded defendant’s counterclaim amendment.
- Supreme Court declined to accept those findings on crucial points and reviewed all material testimony afresh.
- Appellate court concluded trial court had erred in fact-finding and failure to adjudicate counterclaim.
Evidence on Plaintiff’s Conduct
- Plaintiff admitted speaking at a mess that Gsell “has no confidence in his employees,” undermining management’s authority.
- Witnesses (Inhelder, Specht) corroborated that plaint