Case Digest (G.R. No. 156841) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
In GF Equity, Inc. vs. Arturo Valenzona (G.R. No. 156841, decided June 30, 2005 under the 1987 Constitution), petitioner GF Equity, Inc., represented by its CFO W. Steven Uytengsu, engaged respondent Arturo Valenzona as Head Coach of its Alaska team in the Philippine Basketball Association via a written Contract of Employment dated January 1, 1988 to December 31, 1989. The contract provided P35,000 net monthly salary, a service vehicle and fuel allowance, and detailed duties: to coach practices, regular and exhibition games, All-Star events and playoffs; to enforce team conduct rules on and off the court; to maintain physical fitness, loyalty, proper attire and moral standards; and to appear in promotional activities. Paragraph 3 contained a unilateral termination clause authorizing GF Equity, “in its sole opinion,” to cancel the contract if the coach “fails to exhibit sufficient skill or competitive ability.” Valenzona, having sought legal advice on this one-sided provision but Case Digest (G.R. No. 156841) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Contract Formation and Terms
- GF Equity, Inc. (petitioner) hired Arturo Valenzona (respondent) as Head Coach of its Alaska PBA team under a written Contract of Employment (Jan 1, 1988–Dec 31, 1989).
- Key contractual provisions:
- Paragraph 3’s termination clause: “if at any time … in the sole opinion of the CORPORATION, [the coach] fails to exhibit sufficient skill or competitive ability … the CORPORATION may terminate this contract.”
- Paragraph 4: duties to report fit, maintain physical condition, loyalty, conduct standards.
- Paragraph 7: endorsement of corporate products, use of coach’s likeness for publicity.
- Compensation: ₱35,000 monthly (net of taxes), service vehicle, gasoline allowance.
- Pre-termination Events and Litigation
- Prior to written contract, Valenzona coached the team (then Hills Brothers) in the 3rd 1987 PBA Conference under a verbal agreement.
- On September 26, 1988, GF Equity invoked paragraph 3, terminated services, and halted salary payments (outstanding balance ₱75,868.38), demanding return of vehicle.
- Six years later (July 30, 1994), Valenzona’s counsel demanded unpaid salaries; GF Equity refused.
- On September 26, 1994, Valenzona sued for breach of contract with damages: actual (₱560,000), moral (₱100,000), exemplary (₱50,000), attorney’s fees (₱100,000), costs.
- RTC Manila (June 28, 1997) dismissed complaint, upholding clause 3; Court of Appeals (Oct 14, 2002) reversed, ordered payment of damages and attorney’s fees.
Issues:
- Whether paragraph 3’s sole-opinion termination clause violates the mutuality requirement of Article 1308, New Civil Code.
- Whether GF Equity abused its contractual right and acted in bad faith, justifying damages under Article 19 and 20.
- Whether Valenzona is entitled to actual, moral, exemplary damages, and attorney’s fees as awarded by the CA.
- Whether the defense of laches bars Valenzona’s claim given the six-year delay.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)