Dharamdas v. Haroomall
REITERATIONFacts
The Antecedents: Plaintiffs, a registered business firm, alleged that defendants, an unregistered business association, entered into a written agreement on May 9, 1913, wherein the defendants, through Rochiram Haroomall acting for Gopaldas Haroomall, promised not to employ, help, or advise any person in the service of certain named Indian firms, including the plaintiffs. A penalty of P500 was stipulated for each person employed in violation of this agreement. Separately, one Veromal Lilliram had a written contract with the plaintiffs from March 3, 1912, for three years as a salesman, clerk, peddler, or manager, agreeing not to engage in any business directly or indirectly for himself or as an employee of any other person or firm in the Philippine Islands. The plaintiffs alleged that on December 6, 1913, Veromal Lilliram left their employ at the instance of the defendants, violating his contract and causing damage. They further alleged that the defendants assisted Veromal Lilliram and furnished him goods for sale, incurring the penalty stipulated in the May 9, 1913 agreement. The plaintiffs also claimed that the defendants enticed Veromal Lilliram away from their employment, maliciously procuring him to break his contract, causing damages. Similar allegations were made regarding another employee, Dodimo Vifto, who allegedly left plaintiffs' employ on February 6, 1914, at the defendants' instance and was employed by them in violation of the May 9, 1913 agreement. The plaintiffs also claimed that on February 8, 1914, Rochiram Haroomall allegedly abused plaintiff Jhamandas Watumull, causing damages. In April 1913, Gopaldas Haroomall delivered goods on consignment to the plaintiffs for sale, valued at P2,500, of which plaintiffs sold P1,000 worth and remitted P350. Procedural History: The trial court rendered judgment in Case No. 10463 against the defendants for P1,000 for breach of contract and P200 against Rochiram Haroomall personally for defamation. In Case No. 10440, judgment was rendered against the defendants to restore unsold merchandise or pay its value, and to pay P868.76 for goods sold and not paid for. Appeals were taken in both cases. The Petition: The defendants in Case No. 10463 appealed, assigning errors related to the admission and enforcement of the written agreement of May 9, 1913, and the award of damages for defamation. In Case No. 10440, the defendants objected to the order requiring the return of unsold merchandise or payment of its full value, arguing that the consignment agreement allowed them to sell the goods and account for the proceeds, and that portions had been sold since the trial.
Issue(s)
Whether the written agreement of May 9, 1913, is contrary to public policy and therefore unenforceable. Whether the trial court erred in admitting the written agreement of May 9, 1913, in evidence. Whether the award of P200 as damages for defamation was proper. Whether the defendants in Case No. 10440 should be compelled to return unsold merchandise or pay the full invoice value, considering the consignment agreement and subsequent sales.
Ruling
The judgment in Case No. 10463 is affirmed except as to the P200 damages for defamation, which is reversed and dismissed. The judgment in Case No. 10440 is affirmed. No costs are awarded in Case No. 10463.
Ratio Decidendi
On the enforceability of the agreement of May 9, 1913: The Court held that the agreement, when properly interpreted as preventing the inducement of employees to leave their service, is legal and not against public policy. The act of inducing an employee to leave service was actionable under common law if done willfully and maliciously. The Court noted that if the contract were interpreted as the appellant claimed, it would raise serious questions of enforceability. The penalty prescribed was P500 for each person employed in violation of the agreement, and the judgment for P1,000 was affirmed as two employees were induced to leave plaintiffs' service. On the admission of the written agreement: The Court did not explicitly rule on the second assignment of error regarding the admission of evidence, but by upholding the enforceability of the agreement, its admission was implicitly validated. On the award of damages for defamation: The Court found the third contention of the appellant to be correct. Punitive damages are not allowed in cases of slander without proof of actual damages. The Court rejected the argument that Section 3 of Act No. 1773 provided for exemplary damages, stating that the Act merely conferred the right to bring a civil action and did not alter the substantive law regarding the measure of damages in such cases. Therefore, the judgment awarding P200 for defamation was reversed. On the judgment in Case No. 10440: The Court found the defendants' argument that they could hold consigned merchandise indefinitely or that the consignment agreement allowed them to sell it without consequence unsound. Although no specific return date was set, the defendants were obligated to return the merchandise within a reasonable time. The demand for return, the refusal, and the filing of the action terminated the contract, obligating the defendants to return the property. The judgment requiring restitution of unsold merchandise or payment of its value was deemed proper and affirmed.
Main Doctrine
A contract that prevents the inducement of employees to leave their service is legal and not against public policy, as the act contracted against was actionable under common law when done willfully and maliciously. Punitive damages are not allowed in cases of slander without actual damages.