GILCHRIST V CUDDY

FACTS:
Cuddy was the owner of the film Zigomar
April 24: He rented it to C. S. Gilchrist for a
week for P125 to exhibit the film in his theaters
A few days to the date of delivery, Cuddy sent
the money back to Gilchrist because
Cuddy rented the film to Espejo and his
partner Zaldarriaga P350 for the week knowing
that it was rented to someone else and
that Cuddy accepted it because he was paying
about three times as much as he had
contracted with Gilchrist but they didn't know
the identity of the other party (he breached the
contract in order to enter w/ Espejo)
Gilchrist filed for injunction against these
parties
Trial Court and CA: granted - there is a
contract between Gilchrist and Cuddy
ISSUE: W/N Espejo and his partner Zaldarriaga
should be liable for damages though they do not
know the identity of Gilchrist

HELD: YES. judgment is affirmed

That Cuddy was liable in an action for
damages for the breach of that contract, there
can be no doubt.
the mere right to compete could not justify the
appellants in intentionally inducing Cuddy to
take away the appellee's contractual rights
Everyone has a right to enjoy the fruits
and advantages of his own enterprise,
industry, skill and credit. He has no
right to be free from malicious and
wanton interference, disturbance or
annoyance. If disturbance or loss come
as a result of competition, or the
exercise of like rights by others, it is
damnum absque injuria(loss without
injury), unless some superior right by
contract or otherwise is interfered with
Cuddy contract on the part of the
appellants was a desire to make a
profit by exhibiting the film in their
theater. There was no malice beyond
this desire; but this fact does not relieve
them of the legal liability for interfering
with that contract and causing its
breach.
liability of the appellants arises from unlawful
acts and not from contractual obligations, as

they were under no such obligations to induce

Cuddy to violate his contract with Gilchrist
So that if the action of Gilchrist had been one
for damages, it would be governed by chapter
2, title 16, book 4 of the Civil Code.
Article 1902 of that code provides that
a person who, by act or omission,
causes damages to another when there
is fault or negligence, shall be obliged
to repair the damage do done
There is nothing in this article which
requires as a condition precedent to the
liability of a tort-feasor that he must
know the identity of a person to whom
he causes damages
An injunction is a "special remedy" which was
there issued by the authority and under the
seal of a court of equity, and limited, as in
order cases where equitable relief is sought, to
cases where there is no "plain, adequate, and
complete remedy at law," which "will not be
granted while the rights between the parties
are undetermined, except in extraordinary
cases where material and irreparable injury will
be done," which cannot be compensated in
damages, and where there will be no adequate
remedy, and which will not, as a rule, be
granted, to take property out of the possession
of one party and put it into that of another
whose title has not been established by law
irreparable injury
not meant such injury as is
beyond the possibility of repair,
or beyond possible
compensation in damages, nor
necessarily great injury or great
damage, but that species of
injury, whether great or small,
that ought not to be submitted
to on the one hand or inflicted
on the other; and, because it is
so large on the one hand, or so
small on the other, is of such
constant and frequent
recurrence that no fair or
reasonable redress can be had
therefor in a court of law
Gilchrist was facing the immediate prospect of
diminished profits by reason of the fact that the
appellants had induced Cuddy to rent to them
the film Gilchrist had counted upon as his
feature film
It is quite apparent that to estimate with
any decree of accuracy the damages
which Gilchrist would likely suffer from

such an event would be quite difficult if

not impossible
So far as the preliminary injunction issued
against the appellants is concerned, which
prohibited them from exhibiting the Zigomar
during the week which Gilchrist desired to
exhibit it, we are of the opinion that the
circumstances justified the issuance of that
injunction in the discretion of the court
the remedy by injunction cannot be used to
restrain a legitimate competition, though such
competition would involve the violation of a
contract

Separate Opinion:
MORELAND, J., concurring:
The court seems to be of the opinion
that the action is one for a permanent
injunction; whereas, under my view of
the case, it is one for specific
performance.
The very nature of the case
demonstrates that a permanent
injunction is out of the question. The
only thing that plaintiff desired was to
be permitted to use the film for the
week beginning the 26th of May. With
the termination of that week his rights
expired. After that time Cuddy was
perfectly free to turn the film over to the
defendants Espejo and Zaldarriaga for
exhibition at any time.
No damages are claimed by reason of
the issuance of the mandatory
injunction under which the film was
delivered to plaintiff and used by him
during the week beginning the 26th of
May.
Daywalt vs. La Corporation de los Padres
Agustinos Recoletos (Art 1314)

the defendant was not actuated with improper motives

but did so in good faith believing that, under the
circumstances, Endencia was not really bound by her
contract with the plaintiff. In view of Endencias refusal
to make the conveyance, the plaintiff instituted a
complaint for specific performance against her and,
upon appeal, the Supreme Court held that she was
bound by the contract and she was ordered to make
the conveyance of the land in question to the plaintiff.
The plaintiff then instituted an action against the
defendant to recover the following damages: (a) The
amount of Pesos 24,000.00 for the use and
occupation of the land in question by reason of the
pasturing of cattle therein during the period that the
land was not conveyed by Endencia to the plaintiff; (b)
The amount of Pesos 500,000.00 for plaintiffs failure
to sell the land in question to a sugar growing and
milling enterprise, the successful launching of which
depended on the ability of Daywalt to get possession
of the land and the Torrens Title. The lower court held
that the defendant was liable to the plaintiff for the use
and occupation of the land in question and
condemned the defendant to pay the plaintiff Pesos
2,497.00 as damages. The Supreme Court affirmed
this adjudication of the lower court. With respect to the
claim of Pesos 500,000.00 damages, the Supreme
Court.
Held: The most that can be said with reference to the
conduct of Teodorica Endencia is that she refused to
carry out a contract for the sale of certain land and
resisted to the last an action for specific performance
in court. The result was that the plaintiff was
prevented during a period of several years from
exerting that control over the property which he was
entitled to exert and was meanwhile unable to dispose
of the property advantageously. The extent of the
liability for the breach of a contract must be
determined in the light of the situation in existence at
the time the contract is made; and the damages
ordinarily recoverable in all events limited to such as
might be reasonably foreseen in the light of the facts
then known to the contracting parties. Where the
purchaser desires to protect himself, in the
contingency of the failure of the vendor promptly to
give possession, from the possibility of incurring other
damages than such as are incident to the normal
value of the use and occupation, he should cause to
be inserted in the contract a clause providing for
stipulated amount to be paid upon failure of the
vendor to give possession; and no case has been
called to our attention where, in the absence of such a
stipulation, damages have been held to be
recoverable by the purchase in excess of the normal
value of use and occupation.

Facts: Teodorica Endencia obligated herself to sell a

parcel of land to the plaintiff. It was agreed that the
final deed of sale will be executed when the land was
registered in Endencias name. Subsequently, the
Torrens Title for the land was issued in her favor but in
the course of the proceedings for registration it was
found that the land involved in the sale contained a
greater area than what Endencia originally thought
and she became reluctant to consummate the sale of
the land to the plaintiff. This reluctance was due to the
advice of the defendant which exercised a great moral
influence over her. However, in advising Endencia that The damages recoverable in case of the breach of a
she was not bound by her contract with the plaintiff,

contract are two sorts, namely, (1) the ordinary,

(2) knowledge on the part of the third
natural, and in a sense, necessary damage; and (2)
person of the existence of contract; and
special damages. Ordinary damages is found in all
(3) interference of the third person is
breaches of contract where there are no special
without legal justification or excuse.
circumstances to distinguish the case especially from
other contracts. The consideration paid for an
Lack of malice, however, precludes
unperformed promise is an instance of this sort of
damages. But it does not relieve petitioner
damage. In all such cases the damages recoverable
of the legal liability for entering into
are such as naturally and generally would result from
contracts and causing breach of existing
such a breach, according to the usual course of
ones.
things. In cases involving only ordinary damage, it is
conclusively presumed from the immediateness and
FACTS:
inevitableness of the damage, and the recovery of
1. In 1963, Tek Hua Trading Co, through its
such damage follows as a necessary legal
managing partner, So Pek Giok, entered into
consequence of the breach. Ordinary damage is
lease agreements with lessor Dee C. Chuan &
assumed as a matter of law to be within the
Sons Inc. (DCCSI).
contemplation of the parties. Special damage, on the
2. The leased premises located in Soler Street,
other hand, is such as follows less directly from the
Binondo, Manila were used as areas to store
breach than ordinary damage. It is only found in cases
its textiles.
where some external condition, apart from the actual
3. When the contracts expired, no renewal
terms of the contract exists or intervenes, as it were,
happened but Tek Hua continued to occupy
to give a turn to affairs and to increase damage in a
the premises.
way that the promissor, without actual notice of the
4. In 1976, Tek Hua Trading Co. was dissolved.
external condition, could not reasonably be expected
5. Later, the original members of Tek Hua Trading
to foresee.
Co. including Manuel Tiong, formed Tek Hua
Enterprising Corp. (respondent)
Plaintiffs right chiefly as against Teodorica Endencia;
6. When So Pek Giok died, his grandson, So
and what has been said suffices in our opinion to
Ping Bun, occupied the warehouse for his own
demonstrate that the damages laid under the second
textile business, Trendsetter Marketing.
cause of action in the complaint could not be
7. DCCSI sent letters addressed to Tek Hua
recovered from her, first, because the damages in
Enterprises, informing the latter of the rent
question are special damages which were not within
increases. Enclosed in these letters were new
contemplation of the parties when the contract was
lease contracts for signing. Respondents did
made, and secondly, because said damages are too
not accomplish the contracts and did not
remote to be subject of recovery. This conclusion is
respond to the letters. Still, the lease contracts
also necessarily fatal to the right of the plaintiff to
were not rescinded.
recover such damages from the defendant corporation
8. Manuel Tiong sent a letter to So Ping Bun
for, as already suggested, by advising Teodorica
saying that Tiong has only allowed him to
Endencia not to perform the contract, said corporation
temporarily use the warehouse and now that
could in no event render itself more extensively liable
he is back in business, he needs the
than the principal in the contract. Our conclusion is
warehouse immediately. Thus, requesting So
that the judgment of the trial court should be affirmed,
Ping Bun to vacate all his stocks. Otherwise,
and it is so ordered, with costs against the appellant.
Tiong will be constrained to take measure to
protect his interest.
SO PING BUN V CA
9. So Ping Bun refused to vacate:
a. He requested formal contracts of lease
So Ping Bun v. CA (1999)
with DCCSI in favor of Trendsetter
Marketing.
Petitioner: So Ping Bun
b. He has been occupying the premises
Respondent: CA, Tek Hua Enterprising Corp., and
for his business after his grandfathers
Manuel Tiong
death and that he has religiously paid
Ponencia: Quisumbing
rent.
10. DCCSI acceded to the request. Lease
DOCTRINE:
contracts were executed in favor of
Trendsetter.
The elements of tort interference are:
(1) existence of a valid contract;

11. In the suit for injunction, private respondents

pressed for the nullification of the lease
contracts between DCCSI and petitioner. They
also claimed damages.
12. TC and CA ruled for respondents.
ISSUES:
1. WON So Ping Bun is guilty of tortuous
interference of contracts-YES
2. WON damages should be awarded-NO
RULING + RATIO:
1. YES, guilty.
The elements of tort interference are:
(1) existence of a valid contract;
(2) knowledge on the part of the third person of the
existence of contract; and
(3) interference of the third person is without legal
justification or excuse.
A duty which the law of torts is concerned with is
respect for the property of others, and a cause of
action ex delicto may be predicated upon an unlawful
interference by one person of the enjoyment by the
other of his private property.
This may pertain to a situation where a third
person induces a party to renege on or violate
his undertaking under a contract
In the case before us, petitioners Trendsetter
Marketing asked DCCSI to execute lease
contracts in its favor, and as a result petitioner
deprived respondent corporation of the latters
property right. Clearly, and as correctly viewed
by the appellate court, the three elements of
tort interference above-mentioned are present
in the instant case.
2. NO, it should not be awarded.
As early as Gilchrist vs. Cuddy, we held that where
there was no malice in the interference of a contract,
and the impulse behind ones conduct lies in a proper
business interest rather than in wrongful motives, a
party cannot be a malicious interferer. Where the
alleged interferer is financially interested, and such
interest motivates his conduct, it cannot be said that
he is an officious or malicious intermeddler.
In the instant case, it is clear that petitioner So Ping
Bun prevailed upon DCCSI to lease the warehouse to
his enterprise at the expense of respondent
corporation. Though petitioner took interest in the
property of respondent corporation and benefited from
it, nothing on record imputes deliberate wrongful
motives or malice on him.

Section 1314 of the Civil Code categorically provides

also that, Any third person who induces another to
violate his contract shall be liable for damages to the
other contracting party. Petitioner argues that damage
is an essential element of tort interference, and since
the trial court and the appellate court ruled that private
respondents were not entitled to actual, moral or
exemplary damages, it follows that he ought to be
absolved of any liability, including attorneys fees.
It is true that the lower courts did not award damages,
but this was only because the extent of damages was
not quantifiable. We had a similar situation in Gilchrist,
where it was difficult or impossible to determine the
extent of damage and there was nothing on record to
serve as basis thereof. In that case we refrained from
awarding damages. We believe the same conclusion
applies in this case.
While we do not encourage tort interferers seeking
their economic interest to intrude into existing
contracts at the expense of others, however, we find
that the conduct herein complained of did not
transcend the limits forbidding an obligatory award for
damages in the absence of any malice. The business
desire is there to make some gain to the detriment of
the contracting parties. Lack of malice, however,
precludes damages. But it does not relieve
petitioner of the legal liability for entering into
contracts and causing breach of existing ones.
The respondent appellate court correctly confirmed
the permanent injunction and nullification of the lease
contracts between DCCSI and Trendsetter Marketing,
without awarding damages. The injunction saved the
respondents from further damage or injury caused by
petitioners interference.
DISPOSITION: Petition denied.
JOSE V. LAGON vs. HONORABLE COURT OF
APPEALS and MENANDRO V. LAPUZ
FACTS:
On June 23, 1982, petitioner Jose Lagon purchased
two parcels of land located at Tacurong, Sultan
Kudarat from the estate of Bai Tonina Sepi. A few
months after the sale, private respondent Menandro
Lapuz filed a complaint for torts and damages against
petitioner before the Regional Trial Court (RTC) of
Sultan Kudarat.
Private respondent claimed that he entered into a
contract of lease with the late Bai Tonina Sepi over
three parcels of land in Sultan Kudarat, Maguindanao
beginning 1964. It was agreed upon that private
respondent will put up commercial buildings which
would, in turn, be leased to new tenants. The rentals

to be paid by those tenants would answer for the rent

private respondent was obligated to pay Bai Tonina
Sepi for the lease of the land. In 1974, the lease
contract ended but was allegedly renewed.
When Bai Tonina Sepi died, private respondent
started remitting his rent to the court-appointed
administrator of her estate. But when the administrator
advised him to stop collecting rentals from the tenants
of the buildings he constructed, he discovered that
petitioner, representing himself as the new owner of
the property, had been collecting rentals from the
tenants. He thus filed a complaint against the latter,
accusing petitioner of inducing the heirs of Bai Tonina
Sepi to sell the property to him, thereby violating his
leasehold rights over it.
Petitioner denied the allegation, thus contending that
the heirs were in dire need of money to pay off the
obligations of the deceased. He also denied interfering
with private respondent's leasehold rights as there
was no lease contract covering the property when he
purchased it; that his personal investigation and
inquiry revealed no claims or encumbrances on the
subject lots.
On July 29, 1986, the RTC decided in favor of the
private respondent.
Petitioner appealed the judgment to the Court of
Appeals. The appellate court affirmed the ruling of the
trial court with modification.
ISSUE:
Whether or not the purchase by petitioner of the
subject property, during the supposed existence of
private respondent's lease contract with the late Bai
Tonina Sepi, constituted tortuous interference for
which petitioner should be held liable for damages.
HELD:
The Supreme Court affirmed the petition and sets
aside the decision of the appellate court.
Before the appellate court, petitioner disclaimed
knowledge of any lease contract between the late Bai
Tonina Sepi and private respondent. On the other
hand, private respondent insisted that it was
impossible for petitioner not to know about the
contract since the latter was aware that he was
collecting rentals from the tenants of the building.
While the appellate court disbelieved the contentions
of both parties, it nevertheless held that, for petitioner
to become liable for damages, he must have known of
the lease contract and must have also acted with
malice or bad faith when he bought the subject
parcels of land.
Article 1314 of the Civil Code provides that any third
person who induces another to violate his contract

shall be liable for damages to the other contracting

party.
The Court, in the case of So Ping Bun v. Court of
Appeals, laid down the elements of tortuous
interference with contractual relations: (a) existence of
a valid contract; (b) knowledge on the part of the third
person of the existence of the contract and (c)
interference of the third person without legal
justification or excuse.
Private respondent presented in court a notarized
copy of the purported lease renewal to show the
existence of a valid contract. While the contract
appeared as duly notarized, the notarization thereof,
however, only proved its due execution and delivery
but not the veracity of its contents. Nonetheless, after
undergoing the rigid scrutiny of petitioner's counsel
and after the trial court declared it to be valid and
subsisting, the notarized copy of the lease contract
presented in court appeared to be incontestable proof
that private respondent and the late Bai Tonina Sepi
actually renewed their lease contract.
The second element, on the other hand, in this case,
petitioner claims that he had no knowledge of the
lease contract. His sellers (the heirs of Bai Tonina
Sepi) likewise allegedly did not inform him of any
existing lease contract. Even the registry of property
had no record of the same.
To sustain a case for tortuous interference, the
defendant must have acted with malice or must have
been driven by purely impious reasons to injure the
plaintiff. In other words, his act of interference cannot
be justified.
Furthermore, the records do not support the allegation
of private respondent that petitioner induced the heirs
of Bai Tonina Sepi to sell the property to him. The
records show that the decision of the heirs of the late
Bai Tonina Sepi to sell the property was completely of
their own volition and that petitioner did absolutely
nothing to influence their judgment. Private
respondent himself did not proffer any evidence to
support his claim.
Petitioner's purchase of the subject property was
merely an advancement of his financial or economic
interests, absent any proof that he was enthused by
improper motives.
In sum, inasmuch as not all three elements to hold
petitioner liable for tortuous interference are present,
petitioner cannot be made to answer for private
respondent's losses.
This case is one of damnun absque injuria or damage
without injury.