Art. 1314.

Any third person who induces another to violate his contract shall be
liable for damages to the other contracting party. (n)

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. 8
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. 9 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,
petitioner's Trendsetter Marketing asked DCCSI to execute lease contracts in its
favor, and as a result petitioner deprived respondent corporation of the latter's
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. LexLib

Authorities debate on whether interference may be justified where the

defendant acts for the sole purpose of furthering his own financial or economic
interest. 10One view is that, as a general rule, justification for interfering with the
business relations of another exists where the actor's motive is to benefit himself.
Such justification does not exist where his sole motive is to cause harm to the
other. Added to this, some authorities believe that it is not necessary that the
interferer's interest outweigh that of the party whose rights are invaded, and that
an individual acts under an economic interest that is substantial, not merely de
minimis, such that wrongful and malicious motives are negatived, for he acts in
self-protection. 11 Moreover, justification for protecting one's financial position
should not be made to depend on a comparison of his economic interest in the
subject matter with that of others. 12 It is sufficient if the impetus of his conduct lies
in a proper business interest rather than in wrongful motives. 13
As early as Gilchrist vs. Cuddy, 14 we held that where there was no malice
in the interference of a contract, and the impulse behind one's 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. 15
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 da
mages to theother 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 attorney's
fees. prcd

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
inGilchrist, 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 petitioner's interference. cdasia

(So Ping Bun v. Court of Appeals, G.R. No. 120554, [September 21, 1999], 373
|||

PHIL 532-544)

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 tort recognized in that provision
is known as interference with contractual relations. 7 The interference is
penalized because it violates the property rights of a party in a contract to reap
the benefits that should result therefrom. 8
The core issue here is whether 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.

The Court, in the case of So Ping Bun v. Court of Appeals, 9 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.
In that case, petitioner So Ping Bun occupied the premises which the corporation
of his grandfather was leasing from private respondent, without the knowledge and
permission of the corporation. The corporation, prevented from using the premises
for its business, sued So Ping Bun for tortuous interference.
As regards the first element, the existence of a valid contract must be duly
established. To prove this, private respondent presented in court a notarized copy
of the purported lease renewal. 10 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. Settled is the rule that until overcome by clear, strong
and convincing evidence, a notarized document continues to be prima
facie evidence of the facts that gave rise to its execution and delivery. 11
The second element, on the other hand, requires that there be knowledge
on the part of the interferer that the contract exists. Knowledge of the subsistence
of the contract is an essential element to state a cause of action for tortuous
interference. 12 A defendant in such a case cannot be made liable for interfering
with a contract he is unaware of. 13 While it is not necessary to prove actual
knowledge, he must nonetheless be aware of the facts which, if followed by a
reasonable inquiry, will lead to a complete disclosure of the contractual relations
and rights of the parties in the contract. 14
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.
After a careful perusal of the records, we find the contention of petitioner
meritorious. He conducted his own personal investigation and inquiry, and
unearthed no suspicious circumstance that would have made a cautious man
probe deeper and watch out for any conflicting claim over the property. An
examination of the entire property's title bore no indication of the leasehold interest
of private respondent. Even the registry of property had no record of the same. 15
Assuming ex gratia argumenti that petitioner knew of the contract, such
knowledge alone was not sufficient to make him liable for tortuous interference.
Which brings us to the third element. According to our ruling in So Ping Bun,
petitioner may be held liable only when there was no legal justification or excuse
for his action 16or when his conduct was stirred by a wrongful motive. To sustain a
case for tortuous interference, the defendant must have acted with malice 17 or
must have been driven by purely impious reasons to injure the plaintiff. In other
words, his act of interference cannot be justified. 18
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
word "induce" refers to situations where a person causes another to choose one
course of conduct by persuasion or intimidation. 19 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. In short, even assuming that private respondent was able to prove the
renewal of his lease contract with Bai Tonina Sepi, the fact was that he was unable
to prove malice or bad faith on the part of petitioner in purchasing the
property. Therefore, the claim of tortuous interference was never established.
(Lagon v. Court of Appeals, G.R. No. 119107, [March 18, 2005], 493 PHIL 739-
|||

751)
In So Ping Bun, the Court discussed whether interference can be justified at
all if the interferer acts for the sole purpose of furthering a personal financial
interest, but without malice or bad faith. As the Court explained it:
. . ., as a general rule, justification for interfering with the business
relations of another exists where the actor's motive is to benefit himself.
Such justification does not exist where the actor's motive is to cause harm
to the other. Added to this, some authorities believe that it is not necessary
that the interferer's interest outweigh that of the party whose rights are
invaded, and that an individual acts under an economic interest that is
substantial, not merely de minimis, such that wrongful and malicious
motives are negatived, for he acts in self-protection. Moreover,
justification for protecting one's financial position should not be made to
depend on a comparison of his economic interest in the subject matter
with that of the others. It is sufficient if the impetus of his conduct lies in a
proper business interest rather than in wrongful motives. 20
The foregoing disquisition applies squarely to the case at bar. In our view,
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 the very early case of Gilchrist v. Cuddy, 21 the Court declared that a
person is not a malicious interferer if his conduct is impelled by a proper business
interest. In other words, a financial or profit motivation will not necessarily make a
person an officious interferer liable for damages as long as there is no malice or
bad faith involved.
In sum, we rule that, 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. "Injury"
is the legal invasion of a legal right while "damage" is the hurt, loss or harm which
results from the injury. 22 In BPI Express Card Corporation v. Court of
Appeals, 23 the Court turned down the claim for damages of a cardholder whose
credit card had been cancelled by petitioner corporation after several defaults in
payment. We held there that there can be damage without injury where the loss or
harm is not the result of a violation of a legal duty. In that instance, the
consequences must be borne by the injured person alone since the law affords no
remedy for damages resulting from an act which does not amount to legal injury or
wrong. 24 Indeed, lack of malice in the conduct complained of precludes recovery
of damages. 25
(Lagon v. Court of Appeals, G.R. No. 119107, [March 18, 2005], 493 PHIL 739-
|||

751)

On the liability of
Rolando Navarro
and Jaime Gonzales
for tortious interference
In imputing liability to Rolando Navarro, Ferro Chemicals harps on the
following acts found by the trial court to be demonstrative of his malicious
intention to interfere with the contract between Antonio Garcia and Ferro
Chemicals:
(1) He facilitated in the execution of the Deed by showing the Stock and
Transfer Book of [Chemical Industries] to [Ferro Chemicals] thru
[Ramon Garcia] to assure the latter that the disputed shares had
no lien other than those in the Stock and Transfer Book and in order
to conceal the [Consortium Bank's] lien;
(2) He, together with Atty. Virgilio Gesmundo, also drafted in the
boardroom of the [Chemical Industries] the Deed which embodied
the basic terms and conditions of the sale as agreed upon by the
parties;
(3) He also signed as instrumental witness in the Deed;
(4) Upon examination of the Deed and despite knowledge of the
irregularity of the sale, he, acting as corporate secretary of
[Chemical Industries], transferred the disputed shares in the name
of [Ferro Chemicals] and issued the corresponding certificates of
stock;
(5) He drafted the Deed of Right to Repurchase under which [Antonio
Garcia] was given the right to redeem the shares sold to [Ferro
 Chemicals] within 180 days from signing of the said deed and
subject to other conditions stated therein;
(6) He, as the corporate secretary of [Chemical Industries], again made
the transfer of the said shares in the Stock and Transfer Book of
[Chemical Industries] this time with respect to the 4,119,614 shares
(which included the disputed shares) assigned by [Ferro
Chemicals] to [Chemphil Export]. cTDaEH

In essence, Ferro Chemicals contends that while Rolando Navaro is not

privy to the contract, his individual acts form part of the bigger scheme to
defraud the corporation.
In his Comment, 47 Rolando Navarro denies liability by arguing that not
being a party to the contract, he cannot be held liable for breach thereof under
Article 1311 of the New Civil Code. He underscores that Ferro Chemical's
complaint was for breach of contract, i.e., for failure to deliver the clean title of
the subject shares, which obligation befalls on the buyer alone. As an
instrumental witness to the deed, it is absurd to hold him liable for failure of the
buyer to make good his warranty under the agreement. Invoking that only
absolute transfers of shares of stocks are required to be recorded in the
corporation's stock and transfer book, Rolando Navarro insists that he cannot
be held liable for failing to record the claim of the Consortium Banks since it is
merely an attachment. Finally, he asserts that none of the conduct imputed
against him constitute tortious interference under Article 1314 of the New Civil
Code because these acts, i.e., transfer the certificate of title of the said shares
and preparing a draft of contracts, were mainly part of his primary duty as the
Corporate Secretary of the Chemical Industries.
We affirm the ruling of the Court of Appeals in favor of Rolando
Navarro.
The basic principle of relativity of contracts is that contracts can only bind
the parties who entered into it, and cannot favor or prejudice a third person,
even if he is aware of such contract and has acted with knowledge
thereof. 48 Where there is no privity of contract, there is likewise no obligation
or liability to speak about.49 Article 1311 of the New Civil Code provides:
Art. 1311. Contracts take effect only between the parties, their
assigns and heirs, except in case where the rights and obligations
arising from the contract are not transmissible by their nature, or by
stipulation or by provision of law. The heir is not liable beyond the value
of the property he received from the decedent.
The obligation of contracts is limited to the parties making them and,
ordinarily, only those who are parties to contracts are liable for their breach.
Parties to a contract cannot thereby impose any liability on one who, under its
terms, is a stranger to the contract, and, in any event, in order to bind a third
person contractually, an expression of assent by such person is
necessary. 50 ITAaHc

Under Article 1314 of the New Civil Code,

however, any third person who induces another to violate his contract shall be
liable for damages to the othercontracting party. The tort recognized in that
provision is known as interference with contractual relations. The interference
is penalized because it violates the property right of a party in a contract to reap
the benefits that should result therefrom. 51
The Court, in the case of So Ping Bun v. Court of Appeals, et al., 52 laid
down the elements of tortious interference with contractual relations: (1)
existence of a valid contract; (2) knowledge on the part of the third person of
the existence of the contract and (3) interference on the part of the third person
without legal justification or excuse. 53
A duty which the law of torts is concerned with is respect for property of
others, and cause of action ex delicto may be predicated by an unlawful
interference by any person of the enjoyment of the other of his private property.
This may pertain to a situation where a third person induces a person to renege
on or violate his undertaking under a contract. 54
A perusal of the allegations proffered against Rolando Navarro would
show that none of his conduct prior or even subsequent to the execution of the
subject deed, which was primarily done in furtherance of his duties as corporate
secretary, constitutes tortious interference. To imply that by preparing a draft of
a contract, signing as instrumental witness of the deed and recording of transfer
of shares on the corporate books, Rolando Navarro can now be held liable for
tortious interference, is incredulous. Nothing from his acts as found by the trial
court, which were clearly carried out within the bounds of his office devoid of
malice and bad faith, would suggest involvement in the sinister design to
deprive Ferro Chemicals of its property right over the disputed shares. As the
Corporate Secretary of Chemical Industries, Rolando Navarro is under
obligation to record in the stock and transfer book any and all alienation
involving the shares of stocks of the corporation as mandated by Section 74 of
the Corporation Code which states:
Sec. 74. Books to be kept; stock transfer agent. — . . .
xxx xxx xxx
Stock corporations must also keep a book to be known as the
"stock and transfer book," in which must be kept a record of all stocks in
the names of the stockholders alphabetically arranged; the installments
paid and unpaid on all stock for which subscription has been made, and
the date of payment of any installment; a statement of every alienation,
sale or transfer of stock made the date thereof, and by and to whom
made; and such other entries as the by-laws may prescribe. The stock
 and transfer book shall be kept in the principal office of the corporation
or in the office of its stock transfer agent and shall be open for inspection
by any director or stockholder of the corporation at reasonable hours on
business days. cSaATC

Clearly, the transfer of the certificates of stocks covering the subject

shares in favor of Ferro Chemicals effected on the strength of a valid deed of
sale cannot be taken as an actionable tortious conduct, whether such action is
viewed in isolation or in connection with conduct of his co-defendants. The
Court, in So Ping Bun v. Court of Appeals, et al., 55 defined what constitutes an
unlawful interference with contract:
"The foregoing issues involve, essentially, the correct
interpretation of the applicable law on tortuous conduct, particularly
unlawful interference with contract. We have to begin, obviously, with
certain fundamental principles on torts and damages.
Damage is the loss, hurt, or harm which results from injury, and
damages are the recompense or compensation awarded for the damage
suffered. One becomes liable in an action for damages for a
nontrespassory invasion of another's interest in the private use and
enjoyment of asset if (a) the other has property rights and privileges with
respect to the use or enjoyment interfered with, (b) the invasion is
substantial, (c) the defendant's conduct is a legal cause of the invasion,
and (d) the invasion is either intentional and unreasonable or
unintentional and actionable under general negligence rules."
For sure, Rolando Navarro has transgressed no right of Ferro Chemicals
while performing his obligation as an officer of Chemical Industries. There is
absolutely no proof other than the weak indicia which, the plaintiff contends,
show the existence thereof. Even if we lend credence to the graver allegation
that Rolando Navarro showed the stock and transfer books of the corporation
to Ramon Garcia which bore no record of the Consortium Banks' lien, still he
could not be faulted in the absence of showing that he acted in bad faith with
the intention to lure the buyer to believe that the subject shares were lien-free.
As the Corporate Secretary of Chemical Industries, he is under no obligation to
record the attachment of the Consortium Banks, not being a transfer of
ownership but merely a burden on the title of the owner. Only absolute
transfers of shares of stock are required to be recorded in the
corporation's stock and transfer book in order to have "force and effect
as against third persons." 56 In Chemphil Export and Import Corporation v.
Court of Appeals, et al., 57 the Court enunciated the rule that attachments of
shares are not considered "transfer" and need not be recorded in the
corporations' stock and transfer book, viz.: CHTAIc

"Are attachments of shares of stock included in the term

"transfer" as provided in Sec. 63 of the Corporation Code? We rule
 in the negative. As succinctly declared in the case of Monserrat v.
Ceron, chattel mortgage over shares of stock need not be registered in
the corporation's stock and transfer book inasmuch as chattel mortgage
over shares of stock does not involve a "transfer of shares," and that
only absolute transfers of shares of stock are required to be recorded in
the corporation's stock and transfer book in order to have "force and
effect as against third persons."
xxx xxx xxx
"A 'transfer' is the act by which the owner of a thing delivers it to
another with the intent of passing the rights which he has in it to the
latter, and a chattel mortgage is not within the meaning of such term.
xxx xxx xxx
Although the Monserrat case refers to a chattel mortgage
over shares of stock, the same may be applied to the attachment
of the disputed shares of stock in the present controversy since an
attachment does not constitute an absolute conveyance of
property but is primarily used as a means "to seize the debtor's
property in order to secure the debt or claim of the creditor in the
event that a judgment is rendered."
Known commentators on the Corporation Code expound, thus:
xxx xxx xxx
Shares of stock being personal property, may be the subject
matter of pledge and chattel mortgage. Such collateral transfers are
however not covered by the registration requirement of Section 63, since
our Supreme Court has held that such provision applies only to absolute
transfers thus, the registration in the corporate books of pledges and
chattel mortgages of share cannot have any legal effect.
xxx xxx xxx
The requirement that the transfer shall be recorded in the
books of the corporation to be valid as against third persons has
reference only to absolute transfers or absolute conveyance of the
ownership or title to a share." 58 [Emphasis supplied]
Veritably, the facts, statutes and jurisprudence do not support Ferro
Chemical's imputation of fraud to Rolando Navarro. The accusations of fraud
directed to him upon which Ferro Chemicals rests its case are unsubstantiated,
no direct evidence of it exists; it was clutching at straws pointing out to a remote
participation of the defendant who carried out the imputed acts within the
bounds of his office. Fraud cannot be presumed but must be proved by clear
and convincing evidence. 59Whoever alleges fraud affecting a transaction must
substantiate his allegation, because a person is always presumed to take
ordinary care of his concerns, and private transactions are similarly presumed
 to have been fair and regular. 60 To be remembered is that mere allegation is
definitely not evidence; hence, it must be proved by sufficient evidence. 61
Be that as it may, undisputed is the fact that Rolando Navarro derived no
financial gains from the breach of Antonio Garcia's obligation to Ferro
Chemicals watering down the allusion that his acts were impelled by economic
motive. cHDAIS

Even if Jaime Gonzales, on other hand, eventually became the assignee

of the subject shares, he cannot, for that reason alone, be held liable for tortious
interference as the elements of this act are clearly wanting in this case. Jaime
Gonzales did nothing more than act as instrumental witness of the deed of sale
and give Antonio Garcia financial advice on the matter. None of these acts is
actionable tort.
In any case, the allegations against Rolando Navarro and Jaime
Gonzales have no more leg to stand on as we have ruled that fraud never
attended the transaction and that Ferro Chemicals entered the contract subject
of this case with the full knowledge and discretion of the existence of any and
all liens.
(Ferro Chemicals, Inc. v. Garcia, G.R. Nos. 168134, 168183 & 168196,
|||

[October 5, 2016])