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

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:

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 3rd person of the
existence of contract; (c) Interference of the 3rd 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

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)