GF EQUITY, INC. vs. VALENZONA | G.R. No. 156841 | June 30, 2005

GF EQUITY, INC. vs. VALENZONA

G.R. No. 156841, June 30, 2005 

Facts

GF Equity, represented by its Chief Financial Officer, W. Steven Uytengsu, hired Valenzona as head coach of the Alaska basketball team in the PBA under a contract of employment.  He was tasked to coach at all practices and games scheduled for the Alaska team, coach exhibition games, coach if invited to participate in any all-star game, attending every event conducted, play-off games, etc. 

He was also tasked to comply with all requirements respecting to the conduct of its team and players, to implement. He also agreed to report from time to time as fixed by the corporation in good physical condition, give his best services, loyalty, to be neatly and fully attired in public and to conduct himself on and off the court according to the highest standards of honesty, morality, fair play and sportsmanship, and not to do anything detrimental to the best interest of the corporation. 

He also agreed to endorse the corporation‘s products in commercial advertising, promotions, will allow himself to be taken pictures with others for still photographs, motion pictures or TV.  For his services, he will be paid P35, 000.00 monthly, net of taxes, provide him with a service vehicle and gasoline allowance.  The contract was for two (2) years starting January 1, 1988 to December 31, 1989, with the condition that if at any time during the contract, the coach fails to exhibit sufficient skill or competitive ability to coach the team, the contract can be terminated by the corporation. (Paragraph 3) 

Before signing the contract, Valenzona consulted his lawyer who pointed out that the contract was one-sided, but still, Valenzona acceded to the terms of the contract as he had trust and confidence in Uytengsu who recommended him to GF Equity. 

Alaska placed third both in the open and all-Filipino PBA Conference in 1988, he was advised of the termination of his services by way of a letter dated September 26, 1988, invoking their right as specified in paragraph 3 of the contract and to return the service vehicle no later than September 30, 1984.  He will still be paid the balance of P75, 868.38 for his services.  Six (6) years after or on July 30, 1994, Valenzona‘s counsel demanded from GF Equity payment of compensation arising from the   arbitrary and unilateral termination of his employment. But GF Equity refused the claim.  Valenzona filed before the RTC of Manila a complaint for breach of contract with damages, ascribing bad faith, malice and disregard to fairness and to the rights of the plaintiff by unilaterally and arbitrarily pre-terminating the contract without just cause and legal and factual basis.  He prayed award for damages, moral damages, exemplary damages, attorney‘s fees and cost of the suit.  He challenged the condition in paragraph 3 as lacking the elements of mutuality of a contract, a clear transgression of Art. 1308 of the NCC and reliance thereon did not warrant his unjustified and arbitrary dismissal. 

GF Equity maintained that it merely exercised its right under the contract to pre-terminate Valenzona due to incompetence, and that he was guilty of laches, in any event, complaint should be instituted before a labor arbiter.  The trial court dismissed the complaint on June 28, 1997 and it declared Valenzona as fully aware of the bargain.  The CA reversed the RTC‘s decision and ordered GF Equity to pay him damages.  The CA concluded that GF Equity abused its right by arbitrarily terminating Valenzona‘s employment, finding Valenzona‘s claim for damages as valid.  The court ordered GF Equity to pay compensatory damages, moral damages, exemplary damages and attorney‘s fees.   Hence, this petition. 

Issue

Whether or not, the CA concluded wrongly from established facts in a manner violative of applicable laws and established jurisprudence. 

Ruling

GF Equity argued that it entered into a contract protected by law, as it was not contract to law, morals, good customs public policy or public order, hence, no bad faith.  Valenzona is guilty of laches for his unexplained inaction of six (6) years.   In the case at bar, paragraph 3 gives GF Equity the unbridled prerogative to pre-terminate the contract irrespective of the soundness, fairness, or reasonableness, or even lack of bass of its opinion.  To validate the paragraph would open the gate for arbitrary and illegal dismissals, for void contractual stipulations would be used as justification therefor.   Laches applies to equity, prescription applies to law.  The claims was filed within the statutory period of prescription, doctrine of laches cannot be applied.  The action was filed for breach of contract, way well within the prescriptive period of ten (10) years, considering he filed the action six (6) years from the date of his cause of action.   Valenzona is entitled to recover actual damages, however, award for moral damages, exemplary damages, must be set aside, as there is no showing that GF Equity acted in a wanton, fraudulent, reckless, oppressive manner.  Attorney‘s fees are awarded because GF Equity refused to pay the balance of Valenzona‘s salaries therefore to protect himself, was compelled to litigate.