Excellent Essentials International Corp. v. Extra Excel International Philippines, Inc.

 Excellent Essentials International Corp. v. Extra Excel International Philippines, Inc., 

G.R. No. 192797, 

April 18, 2018


DOCTRINE: The elements of tortuous interference: (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.


FACTS: Excel International and Excel Philippines entered into an exclusive right

contract wherein the latter was granted exclusive rights to distribute Excel products in

the Philippines. Under the same contract, Excel International reserved the right to

discontinue or alter their agreement at any time. Excel International experienced intracorporate

struggle over the control of the corporation and the operations of its various

exclusive distributors in Asia. It ended with new management, which in her capacity as

president of Excel International, revoked Excel Philippines' exclusive rights contract and

appointed Excellent Essentials as its new exclusive distributor in the Philippines.

Despite the revocation of its exclusive rights contract and the appointment of Excellent

Essentials, Excel Philippines continued its operation in violation of the new exclusive

distributorship agreement. Excel International, through counsel, demanded that Excel

Philippines cease from selling, importing, distributing, or advertising, directly or

indirectly, any and all of E. Excel products. With its demand unheeded, Excel

International and Excellent Essentials filed a complaint for injunction and damages

against Excel Philippines. On its part, Excel Philippines argued that Excel International

had no right to unilaterally revoke its exclusive right to distribute E. Excel products in the

Philippines pursuant to an agreement showing that Excel Philippines' exclusive

distributorship was irrevocable. In fact, it was because of this agreement that Excel

Philippines was incorporated so that it would become Excel International's exclusive

distributor within the Philippines.


ISSUES:

Whether or not Excellent Essentials, a third party, may be held liable for damages under

the contract between Excel Philippines and Excel International.


HELD:

Yes. Under the principle of relativity of contracts, only those who are parties to a

contract are liable to its breach. Under Article 1314 of the Civil Code, however, any third

person who induces another to violate his contract shall be liable to damages to the

other contracting party. The elements of tortuous interference:

(1) existence of a valid contract

(2) knowledge on the part of the third person of the existence of contract

(3) interference of the third person is without legal justification or excuse

In the case before us, we observe the same unjust conduct exhibited by Excellent

Essentials tantamount to tortuous interference.

To sustain a case for tortuous interference, the defendant must have acted with

malice or must have been driven by purely impure reasons to injure plaintiff;

otherwise stated, his act of interference cannot be justified. We further explained

that ·the word induce refers to situations where a person causes another to choose

one course of conduct by persuasion or intimidation.

Contrary to Excellent Essentials' argument in the instant petition, its participation

in the scheme against Excel Philippines transgressed the bounds of permissible

financial interest. Its mere corporate existence played an important factor for

Stewart to revoke Excel Philippines' exclusive· right to distribute E. Excel products

in the Philippines. For without it, or the participation of its incorporators, Excel

International would not have the means to connect with the marketing network

Excel Philippines established. Simply put, Excellent Essentials became the vessel

for the breach of Excel International's contractual undertaking with Excel

Philippines.

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