VI. PERSONS SPECIFICALLY LIABLE - Persons Who Interfere With Contractual Relations

JOSE V.
LAGON, Petitioner,
vs.
HONORABLE COURT OF APPEALS and MENANDRO V. LAPUZ, respondents.
G.R. No. 119107 | March 18, 2005
CORONA, J.:
Digest Author: Jude Fanila
Topic: VI. PERSONS SPECIFICALLY LIABLE– Persons who interfere with contractual relations.
Case Summary: Lapuz leased parcels of land from the now deceased Bai Guiabar. Over the
course of the lease-contract petitioner, Jose Lagon bought the parcels of land from the estate of
Bai Guiabar. Lapuz filed a complaint for tortuous interference of contract against Lagon. RTC
ruled in favor of Lapuz but CA modified, finding that there was no liability for tortuous
interference of contract under NCC 1314.
SC held that NCC 1314, as the elements of a tortuous interference of contract are not present.
Jose could not have known of the lease contract and, that he was not motivated by bad faith
when he interfered.
Petitioners: Jose Lagon – Purchaser of land that Lapuz leased.

Respondents: CA | Menandro Lapuz – original lessor of the land.
Doctrines Involved: NCC 1314 provides that any person who induces another to violate his
contract shall be liable for damages to the other contracting party. The tort recognized in that
provision is known as interference with contractual relations. The interference is penalized
because it violates the property rights of a party in a contract to reap the benefits that should
result therefrom. 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.
FACTS:
1. 1964 – Respondent, Menandro Lapuz entered a contract of lease with Bai Tonina Sepi
Mengelen Guiabar over (3) parcels of land in Sultan Kudarat, Mindanao. The lease
contract allowed for Lopez to put up commercial buildings which he could then sub-
lease. Rentals paid by sub-lessors would be used to pay for Lapuz’ rent of land.
a. Contract ended in 1974 but allegedly, the lease contract was renewed.
2. Bai Tonina later died. Lapuz began remitting rent to the court-appointed administrator of
his estate.
3. June 23 1982 – petitioner, Jose Lagon purchased from the etate of Bai Tonina Sepi (2)
parcels of land in Sultan Kudarat. This purchase covered the parcels of land under the
lease contract.
4. Menandro Lapuz filed a complaint for torts and damages before the RTC of Sultan
Kudarat.
a. Alleging that: Jose induced the heirs of Bai Sepi to sell the property, in violation
of his leasehold rights over it.
b. Defense: That there was no inducement of violation. Instead, he verified with
Atty. Fajardo, the lawyer who notarized the lease contracts that at the time of his
purchase the lease contracts had not been renewed. Heirs sold to him because they
were in dire need of money. That he only found out about the alleged lease when
he was informed by the tenants of the building that Lapuz was collecting rent
from them.
5. July 29, 1986 – RTC ruled in favor of Lapuz. Found that there was interference in
contractual relation as penalized by NCC 1314. Lease contracts were valid and binding
for a period of (10) years, from Nov. 1974 to Oct. 1984.
a. January 31, 1995 – CA affirmed with modification. Deleted the award of moral,
compensatory, exemplary, temperate and nominal damages as well as award for
litigation expenses. Reduced award of attorney’s fees.
i. Basis being that for there to be liability for damages, Jose must have
known of the lease contract AND acted in malice or bad faith when he
purchased the land.
6. Led to current appeal.
ARGUMENTS BEFORE THE SUPREME COURT:

 Petitioner’s Argument related to Doctrine: That he had no knowledge of the lease
contract thus, could not have been made liable for tortuous interference.
 Respondent: That it was impossible for the petitioner not to know about the contract as he
was aware that Lapuz was collecting rentals from the tenants of the building.
ISSUES + HELD:
1. W/N Jose Lagon is liable for tortuous interference in contracts under 1314 when he
purchased the properties? – NO
a. NCC 1314 – provides that any third person who induces another to violate his
contract shall be liable for damages to the other contracting party. i
b. So Ping Bun v. CA – laid down the elements for tortuous interference of contract.
(a) Existence of a valid contract; (b) Knowledge on the part of the 3 rd person of
the existence of contract; (c) Interference of the 3 rd person without legal
justification or excuse.
i. (a) – there was a valid contract. Notarized copy sufficient proof.
ii. (b) – Lagon could not have known. He conducted his own personal
investigation and inquiry, which showed no suspicious circumstances that
warranted further examination. The heirs didn’t tell him about the lease.
The title of the property showed no leasehold interest, and the same was
not recorded in the registry of property.
1. Not necessary that there must be actual knowledge on the part of
the torfeasor. Sufficient that they must be aware of the facts which,
if followed by reasonable inquiry will lead to a complete disclosure
of the contractual relations and rights of the parties on the contract.
iii. (c) – Following the So Ping Bun doctrine there is sufficient justification to
interfere in the business relations if the motive of the actor is personal
benefit such as economic interest. Thus, interference was with legal
justification or excuse. Gilchrist v. Cuddy also laid down that a person is
not a malicious interferer if his conduct is impelled by proper business
interest.
1. Absent any proof that he was motivated by malice or bad faith he
cannot be held liable.
c. Damnum Absque Injuria – absent the elements of tortuous interference, this is a
case of damnum absque injuria or damage without injury. Injury being the legal
invasion of a legal right and damage being the hurt, loss or harm which results
from the injury. Because the damage was due to a legal act, the costs for the
injury must be borne by the injured person.
d. Damages – there being no malice or bad faith, damages cannot now then be
recovered.
WHEREFORE, premises considered, the petition is

hereby GRANTED. The assailed decision of the Court of
Appeals is hereby REVERSED and SET ASIDE.
No costs.
SO ORDERED
RULING:
DISSENT:
NOTES:
i
Article 1314. Any third person who induces another to violate his contract shall be liable for damages to the other
contracting party. (n)

VI. PERSONS SPECIFICALLY LIABLE - Persons Who Interfere With Contractual Relations

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JOSE V.

Petitioners: Jose Lagon – Purchaser of land that Lapuz leased.

ARGUMENTS BEFORE THE SUPREME COURT:

WHEREFORE, premises considered, the petition is

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