U-Bix Corporation vs. Milliken & Company, et al.

A claim for malicious interference requires proof of a valid contract, knowledge by the respondent of that contract, and acts done in bad faith and without legal basis that interfere with the contracting parties' performance; absent a perfected contract, the claim cannot prosper. In a Rule 45 petition, only questions of law may be raised, and factual findings of the trial court affirmed by the Court of Appeals are generally binding on the Supreme Court.

U-Bix Corporation was designated by Milliken & Company as its authorized dealer of Milliken carpets in the Philippines under a dealership agreement. The agreement required U-Bix to market the carpets and maintain samples and stock, while Milliken undertook to support U-Bix's marketing efforts; once U-Bix specified a project through an accomplished dealer project registration form, Milliken was to designate that project exclusively to U-Bix. The agreement's project-registration mechanism is central to the dispute.

On February 5, 1998, respondent Milliken & Company designated petitioner U-Bix Corporation as its authorized dealer of Milliken carpets in the Philippines. Under the dealership agreement, U-Bix undertook to market Milliken carpets and to keep on hand samples for the local market and stock sufficient to cover market demand. M&C, on the other hand, bound itself to support U-Bix's marketing efforts and projects. Thus, once U-Bix had specified a project by submitting an accomplished dealer project registration form, M&C was to exclusively designate that project as U-Bix's.

In 1999, M&C informed U-Bix, at that time its lone Philippine dealer, that an international corporate client, Chase Manhattan Bank, was furnishing its Manila office. U-Bix immediately formed a team headed by its creative vice president, Carmen Huang, with respondent Onofre Eser as team member, to work on the CMB project. They conducted presentations and submitted product samples to CMB project director Gerry Shirley and interior designer Group Three. The team, however, failed to impress CMB.

On December 10, 1999, CMB awarded the supply contract to respondent Projexx Creator, Inc., which, like U-Bix, had in the meantime become a dealer of Milliken carpets. Eser resigned from U-Bix and joined Projexx.

On April 3, 2000, U-Bix filed a complaint for breach of contract, torts and damages against M&C, Sylvan Chemical Company, Wilfredo Batara, Projexx and Eser in the Regional Trial Court of Makati City, Branch 60, docketed as Civil Case No. 00-474. According to U-Bix, M&C violated the dealership agreement when it designated Projexx as an authorized dealer of Milliken carpets; Projexx, with the help of Sylvan and Batara, poached the CMB project from it; and Projexx hired Eser because he had worked on the CMB project while in U-Bix's employ, making them guilty of malicious interference.

In their answer, M&C, Sylvan and Batara averred that since U-Bix was unacceptable to CMB, M&C designated Projexx as authorized dealer; U-Bix neither submitted an accomplished dealer project registration form nor complied with the rules for project registration; it never specified the CMB project and therefore never earned a right over it. Projexx and Eser contended that since no contract was perfected between U-Bix and CMB, U-Bix never acquired any proprietary interest in the project.

At trial, after U-Bix offered its evidence and the RTC admitted the same, respondents separately moved for demurrer to evidence. M&C, Sylvan and Batara stated that because U-Bix was not the exclusive distributor of Milliken carpets in the Philippines, M&C had the right to appoint Projexx as dealer; U-Bix failed to prove a valid contract between it and CMB; and U-Bix never presented a dealer project registration form approved by M&C, never specified the CMB project, and consequently never acquired an exclusive right to it, leaving no cause of action. Projexx added that neither the appointment nor the resignation letter of Eser prohibited him from working for a direct competitor of U-Bix.

The RTC found that no contract was ever perfected between U-Bix and CMB; that U-Bix could not have specified the project as its own; that M&C therefore did not violate the dealership agreement when it appointed Projexx; and that U-Bix failed to prove respondents prevented the perfection of the contract and thus could not have been guilty of malicious interference.

• Malicious Interference: Petitioner contended that the CA erred in affirming the RTC decision in toto and insisted that respondents were guilty of malicious interference.
• Breach of Contract: Petitioner claimed that M&C violated the dealership agreement when it designated Projexx as an authorized dealer of Milliken carpets.
• Poaching and Hiring: Petitioner alleged that Projexx, with the help of Sylvan and Batara, poached the CMB project from it, and that Projexx hired Eser because he had worked on the CMB project while in petitioner's employ.

• M&C, Sylvan and Batara — Dealership and Project Registration: They averred that because petitioner was unacceptable to CMB, M&C designated Projexx as authorized dealer; petitioner neither submitted an accomplished dealer project registration form nor complied with the rules for project registration; it never specified the CMB project and therefore never earned a right over it.
• M&C, Sylvan and Batara — Demurrer: They stated that petitioner was not the exclusive distributor of Milliken carpets in the Philippines, so M&C had the right to appoint Projexx as dealer; petitioner failed to prove a valid contract between it and CMB; and petitioner never presented a dealer project registration form approved by M&C, never specified the CMB project, and consequently never acquired an exclusive right to it, leaving no cause of action.
• Projexx and Eser: They contended that since no contract was perfected between petitioner and CMB, petitioner never acquired any proprietary interest in the project; Projexx added that neither the appointment nor the resignation letter of Eser prohibited him from working for a direct competitor of petitioner.

• Malicious Interference: Whether respondents were guilty of malicious interference, requiring proof of a valid contract, knowledge by respondents of that contract, and acts done in bad faith and without legal basis that interfered with the contracting parties' performance.
• Rule 45 and Factual Findings: Whether the CA erred in affirming in toto the RTC decision dismissing the complaint, where the findings that no contract was perfected between petitioner and CMB are factual and generally binding on the Supreme Court in a Rule 45 petition.

• Malicious Interference: No. The elements were not established because no valid contract was perfected between petitioner and CMB; the RTC and CA findings on this point were factual and binding.
• Rule 45 and Factual Findings: No. Only questions of law may be raised in a Rule 45 petition, and factual findings of the trial court affirmed by the CA are generally binding; petitioner merely reiterated arguments already rejected below.

• Malicious Interference: To prove malicious interference, petitioner had to show (a) the existence of a valid contract, (b) knowledge by respondents that such a contract existed, and (c) acts done in bad faith and without legal basis by respondents which interfered in the due performance by the contracting parties of their obligations under the contract. Both the RTC and the CA found that no contract was ever perfected between petitioner and CMB. Because no valid contract existed, respondents could not be guilty of malicious interference. Petitioner also failed to prove entitlement to the relief sought, and these matters were factual and beyond the Court's mandate to review.
• Rule 45 and Factual Findings: Only questions of law may be raised in a Rule 45 petition because the Supreme Court's jurisdiction is limited to passing upon errors of law. Factual findings of the trial court, when affirmed by the CA, are generally binding on the Court. Here, both the RTC and the CA found that respondents were not guilty of malicious interference because no contract was ever perfected between petitioner and CMB. Petitioner presented only reiterations of its arguments in the courts a quo, so there was no reason to disturb the CA decision.

• Malicious Interference — A claim for malicious interference requires proof of: (a) the existence of a valid contract; (b) knowledge by the respondent that such a contract existed; and (c) acts done in bad faith and without legal basis by the respondent which interfered in the due performance by the contracting parties of their respective obligations under the contract. The Court applied this test and found it unmet because no contract was ever perfected between U-Bix and CMB, so respondents could not be liable for malicious interference.
• Rule 45 Limitation to Questions of Law — A petition for review on certiorari under Rule 45 may raise only questions of law because the Supreme Court's jurisdiction is limited to passing upon errors of law. The Court applied this rule in denying the petition, as petitioner's challenge rested on factual matters already resolved by the RTC and CA.
• Binding Effect of Factual Findings Affirmed by the Court of Appeals — Factual findings of the trial court, when affirmed by the Court of Appeals, are generally binding on the Supreme Court. The Court applied this principle because both the RTC and the CA found that no contract was perfected between U-Bix and CMB, a finding that petitioner failed to overturn.

• "To prove that respondents were guilty of malicious interference, petitioner had to show the following: the existence of a valid contract, knowledge by respondents that such a contract existed and acts (done in bad faith and without legal basis) by respondents which interfered in the due performance by the contracting parties of their respective obligations under the contract." — This passage states the elements of malicious interference that the Court applied in denying the petition.
• "Only questions of law may be raised in a Rule 45 petition because the jurisdiction of this Court is limited to passing upon errors of law." — This passage states the procedural limitation that guided the Court's review.
• "Factual findings of the trial court, when affirmed by the CA, are generally binding on this Court." — This passage supplies the reason the Court declined to disturb the lower courts' finding that no contract was perfected.
• "In this case, both the RTC and the CA found that respondents were not guilty of malicious interference because no contract was ever perfected between petitioner and CMB." — This passage states the ratio decidendi on the malicious interference claim.

• Lagon vs. Court of Appeals, G.R. No. 119107, 18 March 2005, 453 SCRA 616, 624 — Cited in the footnote for the elements of malicious interference, which the Court applied in this case.
• Tayag vs. Lacson, G.R. No. 134971, 25 March 2004, 426 SCRA 282, 305 — Cited with Lagon for the elements of malicious interference.
• Titan-Ikeda Construction Corporation vs. Court of Appeals, G.R. No. 153874, 1 March 2007, 517 SCRA 180, 186 — Cited for the rule that only questions of law may be raised in a Rule 45 petition because jurisdiction is limited to errors of law.
• Fuentes vs. Court of Appeals, G.R. No. 109849, 26 February 1997, 268 SCRA 703 — Cited for the rule that factual findings of the trial court, when affirmed by the CA, are generally binding on the Supreme Court.
• Tirol, Jr. vs. Commission on Audit, 391 Phil. 897 (2000) — Cited within Titan-Ikeda for the same Rule 45 limitation to questions of law.

• Article 1314, 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 Court referenced this provision in connection with the malicious interference claim.
• Rule 33, Section 1, Rules of Court — Governs demurrer to evidence: after the plaintiff has completed the presentation of his evidence, the defendant may move for dismissal on the ground that upon the facts and the law plaintiff has shown no right to relief. If the motion is denied, the defendant has the right to present evidence; if granted but on appeal the order of dismissal is reversed, the defendant is deemed to have waived the right to present evidence. Respondents separately moved for demurrer after petitioner offered its evidence, and the RTC granted the motions.
• Rule 45, Rules of Court — Provides that only questions of law may be raised in a petition for review on certiorari because the Supreme Court's jurisdiction is limited to passing upon errors of law. The Court applied this provision in denying the petition.

Puno, C.J. (Chairperson), Carpio, Azcuna, and Leonardo-De Castro, JJ., concur.