G.R. No. 13228 ; September 13, 1918
WILLIAM OLLENDORFF, plaintiff-appellee, vs. IRA ABRAHAMSON, defendant-appellant.

FACTS:
Plaintiff William Ollendorff was engaged in the business of manufacturing ladies’ embroidered underwear for export in the Philippines. On September 10, 1915, he entered into a two-year employment contract with defendant Ira Abrahamson. A clause in the contract stipulated that for a period of five years from said date, Abrahamson would not engage, directly or indirectly, in any business similar to or competitive with Ollendorff’s within the Philippine Islands. Abrahamson worked for Ollendorff until April 1916, when he left for the United States due to ill health. He later returned to Manila as the manager of the Philippine Underwear Company, a corporation engaged in a substantially similar business of producing and exporting embroidered underwear, employing some of the same workers and competing in the same market as Ollendorff. Ollendorff filed an action seeking to enjoin Abrahamson from violating the non-competition clause of their contract. The Court of First Instance of Manila granted a perpetual injunction.

ISSUE:
Whether the injunction perpetually enjoining the defendant from engaging in a competitive business for five years, pursuant to the contract, is valid and proper.

RULING:
Yes, the Supreme Court affirmed the judgment of the trial court.
1. On the Nature of the Businesses: The Court found that the business managed by Abrahamson was not only very similar but also directly competitive with Ollendorff’s business, as both produced the same class of goods for the same export market. This constituted a clear breach of the negative covenant in the contract.
2. On the Validity of the Contract: The Court rejected the defendant’s arguments against the contract’s validity.
Lack of Mutuality: The clause allowing Ollendorff to discharge Abrahamson if his performance was unsatisfactory did not render the entire contract void for lack of mutuality. Even if that specific clause were invalid, it would not necessarily invalidate the separate non-competition agreement.
Unreasonable Restraint of Trade: The contract was not void as an unreasonable restraint of trade. No law, moral principle, or consideration of public order in the Philippines prohibited such an agreement. The restraint was limited to five years and the territory of the Philippine Islands, which was reasonable given that Abrahamson had gained intimate knowledge of Ollendorff’s business methods and connections during his employment.
3. On the Propriety of Injunctive Relief: The Court held that an injunction was the proper remedy.
Proof of Pecuniary Damage Not Required: For the breach of a negative covenant (an agreement not to do something), it is not necessary for the plaintiff to prove actual pecuniary damage to obtain an injunction. The injury from a continuing breach is considered irreparable by an action for damages at law.
Irreparable Injury: A continuing breach of a valid negative covenant constitutes “irreparable injury” for the purpose of granting an injunction, as it is a species of injury for which no fair or reasonable redress can be had in a court of law. The difficulty in measuring the business loss caused by unfair competition further supports the grant of equitable relief.

The judgment granting a perpetual injunction against the defendant was affirmed.