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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