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    Legal Memorandum

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    Joseph Concepcion
    The document provides a legal opinion on whether a restrictive covenant in Dr. Sy's employment contract with Lazaro Dental Clinic can prevent him from opening his own dental clinic in Laguna. While the contract prohibits practicing dentistry within 160 km of Pasay City for 5 years, it does not specify damages for breach. The lawyer concludes that without damages specified, the clinic would need to prove actual damages from Dr. Sy opening a new clinic outside the territory to enforce the restrictive covenant.

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    Legal Memorandum

    Uploaded by

    Joseph Concepcion
    34 views2 pages
    The document provides a legal opinion on whether a restrictive covenant in Dr. Sy's employment contract with Lazaro Dental Clinic can prevent him from opening his own dental clinic in Laguna. While the contract prohibits practicing dentistry within 160 km of Pasay City for 5 years, it does not specify damages for breach. The lawyer concludes that without damages specified, the clinic would need to prove actual damages from Dr. Sy opening a new clinic outside the territory to enforce the restrictive covenant.

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    The document provides a legal opinion on whether a restrictive covenant in Dr. Sy's employment contract with Lazaro Dental Clinic can prevent him from opening his own dental clinic in Laguna. While the contract prohibits practicing dentistry within 160 km of Pasay City for 5 years, it does not specify damages for breach. The lawyer concludes that without damages specified, the clinic would need to prove actual damages from Dr. Sy opening a new clinic outside the territory to enforce the restrictive covenant.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    34 views2 pages

    Legal Memorandum

    Uploaded by

    Joseph Concepcion
    The document provides a legal opinion on whether a restrictive covenant in Dr. Sy's employment contract with Lazaro Dental Clinic can prevent him from opening his own dental clinic in Laguna. While the contract prohibits practicing dentistry within 160 km of Pasay City for 5 years, it does not specify damages for breach. The lawyer concludes that without damages specified, the clinic would need to prove actual damages from Dr. Sy opening a new clinic outside the territory to enforce the restrictive covenant.

    Copyright:

    © All Rights Reserved
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    of 2

    1 December 2018

    DR. FE SY
    San Pedro, Laguna

    Dear Dr. Sy:

    This legal opinion seeks to answer your question as to whether or not the contract you
    signed with Lazaro Dental Clinic can enforce a restrictive covenant against you, should
    you leave the Clinic and set up your own Dental Clinic in Laguna.

    The Facts:

    Per our discussion, the following are the pertinent facts:

    Seven (7) years ago, you signed up for an employment contract with Lazaro Dental
    Clinic and that you agreed not to practice dentistry within the 160-kilomenter radius of
    Pasay City for five years. However, the contract does not stipulate any damages or
    penalty in the event of breach. Moreover, you have established the affiliation of Lazaro
    Dental Clinic with many health maintenance organizations and employers in Pasay City
    with respect to the provision of dental care.

    That you have plans of setting up your own clinic in San Pedro, Laguna which the
    shareholders of the clinic do not know yet.

    The Applicable Law:

    The applicable law is Article 1159 of the Civil Code. It provides that:

    “Obligations arising from contracts have the force of law between the contracting
    parties and should be complied with in good faith”

    The contract you signed up for includes restrictive terms. However, the validity of
    restrictive covenants, such as those mentioned in yours, is anchored on law and
    applicable jurisprudence. The employer and the employee may establish such
    stipulations, clauses, terms, and conditions as they may deem convenient (Art. 1306,
    Civil Code). In order to determine whether restrictive covenants are reasonable or not,
    the following factors should be considered:

    a. whether the covenant protects a legitimate business interest of the


    employer;
    b. whether the covenant creates an undue burden on the employee;
    c. whether the covenant is injurious to the public welfare;
    d. whether the time and territorial limitations contained in the covenant are
    reasonable and;
    e. whether the restraint is reasonable from the standpoint of public policy
    (Rivera v. Solidbank Corporation [G.R. No. 163269, 19 April 2006])

    Although there is no stipulation in your contract of any damages or cause of


    action that your employer may impose upon you once you separated from them and put
    up your own clinic outside the territorial limits, actual damages are primarily intended to
    simply make good or replace the loss covered by said breach. It cannot be presumed.
    Lazaro Dental Clinic must prove that it suffered damages and the amount thereof.

    It is my opinion that in the absence of damages or penalties brought about by


    breach of an employment contract, an Undertaking and the Release, Waiver and
    Quitclaim may subsume such. In your case, the prohibition to practice your prosession
    within the set territorial limits. However, such injunction is proper when:

    a. the employee’s services are extraordinary, unique, or special;


    b. the employee possesses trade secrets or confidential customers’ lists;
    c. the employee is in a position to transmit secret formulae to the new
    employer;
    d. the employee is in a position to draw customers away from the former
    employer and;
    e. the services of the employee are of such a character as to make him or
    her irreplaceable;

    I appreciate the opportunity to have advised you on this matter. Should you wish
    to discuss these issues further, please don’t hesitate to let me know.

    Very truly yours,

    (Sgd.) JOSEPH B. CONCEPCION


    Legal Counsel

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