PHILIP YU. v.
CA  Lastly, this caused a diversion of the trade from Yu’s business due to Unisia’s
GR. No. 86683, 21 January 1993, 217 SCRA 328 (1993)
Ponente: Melo, J.
DOCTRINE: The right to perform an exclusive distributorship agreement and to reap the
profits resulting from such performance are proprietary rights which a party may protect
FACTS
 Philip S. Yu is the exclusive distributor of the House of Mayfair wallcovering products
in the Philippines.
 Unisia Merchandising Co., Inc. was his former dealer for the same goods.
 Unisia, through FNF Trading in West Germany, bought merchandise from the House
of Mayfair in England and sold it in the Philippines.
 Yu alleged that this was a violation of his rights as the exclusive distributor. It is a
form of unfair competition within the context of NCC 28.
 Yu filed an injunction case against Unisia as its act in effect by-passed Yu’s right to be
the exclusive distributor. This was done by Unisia with FNF by misleading Mayfair
into believing that what Unisia purchased will be shipped to Nigeria.
 Yu is seeking to enjoin the sale and distribution of the Mayfair products by Unisai
 Unisia contended that it was not privy to the contract of Yu with Mayfair and the
contract is only binding between the parties.
 RTC: Denied. It ruled that Unisia was not privy to the exclusive distribution contract
and the breach was caused by FNF Trading. This is shown by Mayfair demanding
4,500 as payment for the loss it incurred due to shipment being brought to the
Philippines.
 CA: Affirmed. Unisia is a stranger to the contract of Yu and Mayfair. Likewise, Yu may
be fully compensated as Mayfair has already sought compensation for its loss.
 Yu appeals that the lower and appellate court erred and that Unisai still continues to
distribute and sell Mayfair products.
ISSUE: WON Unisia Merchandising violated the right of Yu to exclusively sell Mayfair
products in the Philippines
HELD: YES.
 The fact that Unisia is not privy to the covenant between Yu and Mayfair has no
merit.
 The liability of Unisia stems from a separate civil liability and not from the breach
of the contract.
 The right to perform an exclusive distributorship agreement and to reap the
profits resulting from such performance are proprietary rights which a party may
protect. To hold otherwise, will render the conceptualization of exclusive
distributorship useless at the expense of the sole authorized distributor.
 In addition, Unisia did not refute Yu’s claim that it duped Mayfair into believing
that the shipment was to Nigeria and not the Philippines.
continued sale of the products despite the TRO issued by the Court.
 CA is REVERSED and SET ASIDE. Remanded to RTC for issuance of a preliminary
writ of injunction.
Verily, injunction is the appropriate remedy to prevent a wrongful interference with
contracts by strangers to such contracts where the legal remedy is insufficient and the
resulting injury is irreparable
To Our mind, the right to perform an exclusive distributorship agreement and to reap the
profits resulting from such performance are proprietary rights which a party may protect
which may otherwise not be diminished, nay, rendered illusory by the expedient act of
utilizing or interposing a person or firm to obtain goods from the supplier to defeat the
very purpose for which the exclusive distributorship was conceptualized, at the expense
of the sole authorized distributor.
The House of Mayfair in England was duped into believing that the goods ordered through
the FNF Trading were to be shipped to Nigeria only, but the goods were actually sent to
and sold in the Philippines. A ploy of this character is akin to the scenario of a third person
who induces a party to renege on or violate his undertaking under a contract, thereby
entitling the other contracting party to relief therefrom.
The breach caused by private respondent was even aggravated by the consequent
diversion of trade from the business of petitioner to that of private respondent caused by
the latter’s species of unfair competition as demonstrated no less by the sales effected
inspite of this Court’s restraining order. This brings Us to the irreparable mischief which
respondent court misappreciated when it refused to grant the relief simply because of
the observation that petitioner can be fully compensated for the damage.
the injury is irreparable where it is continuous and repeated since from its constant and
frequent recurrence, no fair and reasonable redress can be had therefor by petitioner
insofar as his goodwill and business reputation as sole distributor are concerned. Withal,
to expect petitioner to file a complaint for every sale effected by private respondent will
certainly court multiplicity of suits.
No because ause of action is with house of mayfair because they violated the
distributorship agreement. You cannot use trademark rights to infringement of
distributorshi