Pirating or Poaching Employees May be Considered as Tortious Interference - Nicolas and De Vega Law Offices Article Image

This article talks about tortious interference and its possible application to poaching and pirating of employees made by competitors.

Poaching or Pirating may be considered as tortious interference under Art. 1314 of the Civil Code.

It is a matter of common sense that one must conduct his business in good faith. However, it seems like common sense is not common at all. One of the bad faith practices plaguing industries is the practice of poaching or pirating employees.  There is surely nothing wrong with an employee transferring to a competitor company, in the absence of a non-competition or non-involvement clause. It has been held that a non-involvement clause is not necessarily void for being in restraint of trade as long as there are reasonable limitations as to time, trade, and place [Tiu vs. Platinum Plans, G.R. No. 163512, 28 February 2007]. However, it is surely wrong to induce employees to leave their company and join another. Such act may be considered as tortious interference which is actionable and may eb a source of damages against the interferer.  This finds support in Article 1314 of the Civil Code which states that any third person who induces another to violate his contract shall be liable for damages to the other contracting party. The interference is penalized because it violates the property rights of a party in a contract to reap the benefits that should result therefrom [Lagon vs. Court of Appeals, G.R. No. 119107, 18 March 2005].

Elements of Tortious Interference

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 a contract; and (3) interference of the third person is without legal justification [Go vs. Cordero, G.R. No. 164703, 04 May 2010]

Anent the second element, knowledge of the subsistence of the contract is an essential element to state a cause of action for tortuous interference. A defendant in such a case cannot be made liable for interfering with a contract he is unaware of [Lagon vs. Court of Appeals, G.R. No. 119107, 18 March 2005].

With regard to the third element, 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. Moreover, the word induce refers to situations where a person causes another to choose one course of conduct by persuasion or intimidation [Excellent Essentials International Corporation vs. Extra Excel International Philippines, Inc., G.R. No. 192797, 18 April 2018].

Thus, if a person, knowing that an employee has a contract with a company, induces said employee to leave his present company so that the latter can instead work for his competitor company, it may be considered as tortious interference. 

The interferer may be held liable for damages.

It has been held that the liability of the third person cannot go beyond that of the defaulting party.  However, it is possible that the third party can be liable for greater damages. Since the liability of the third person is quasi-delictual and that of the defaulting party, is generally speaking, contractual, there may be cases where the third party is guilty of malice not imputable to the defaulting party [Ruben F. Balane, Jottings and Jurisprudence in Civil Law (Obligations and Contracts) (2020 ed.) p. 565]

The interferer may be held liable for actual damages sustained by the plaintiff.  The recovery of attorney’s fees in the concept of actual or compensatory damages, is allowed under the circumstances provided for in Article 2208 of the Civil Code.  One such occasion is when the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest [So Ping Bun vs. Court of Appeals, G.R. No. 120554, 21 September 1999]. Exemplary, temperate and moral damages may also be awarded if warranted and supported by evidence. In fact, in the case of Excellent Essentials International Corporation vs. Extra Excel International Philippines, Inc. [G.R. No. 192797, 18 April 2018], the court granted nominal damages of P50,000,000.00 and P2,500,000.00 as exemplary damages in favor of the wronged corporation in a tortuous interference suit.

A key takeaway from this article is that bad faith never wins. Even if you do not have a contract with another, the latter can still sue you for tortious interference if you pirate or poach its employees with malice.

About Nicolas and De Vega Law Offices

If you need assistance  in corporate law, commercial law, corporate or commercial litigation, or civil or other criminal law-related issues,  we can help you. Nicolas and de Vega Law Offices is a full-service law firm in the Philippines.  You may visit us at the 16th Flr., Suite 1607 AIC Burgundy Empire Tower, ADB Ave., Ortigas Center, 1605 Pasig City, Metro Manila, Philippines.  You may also call us at +632 84706126, +632 84706130, +632 84016392 or e-mail us at info@ndvlaw.com. Visit our website https://ndvlaw.com.