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DAYWALT V.

CORPORACIO DE PP AGUSTINO Emergency Recitation: Daywalt seeks to recover damages on ground that defendant corporation, for own selfish purposes, induces Teodorica to refrain from performance of contract of sale and withhold delivery of Torrens title. Cause of action: liability from wrongful interference. Issue: Whether a person who is not a party to a contract for the sale of land makes himself liable for damages to the vendee by colluding with the vendor in the effort to resist an action for specific performance The Court held the defendants liable for the use and occupation of the land and for its act of inducing the old lady to renege on her contract with the petitioner, but its liability shall be only equal to that of the principal contracting party. Malice is not essential agreement: It is enough if wrongdoer, having knowledge of existence of contract relation, in bad faith sets about to break it up. No liability if disinterested advice. Liable if advice is for indirect purpose of benefiting defendant at expense of plaintiff and contract broken because of the advice. (Doctrine under Lumley v. Gye requires interference by unlawful means.) Court held that it is enough that defendant used property with notice that plaintiff had a prior and better right liability of stranger to contract must not be more than liability of person who actually breached contract Special damages awarded only when external conditions present, apart from actual terms

FACTS: Teodorica obligated herself to convey a tract of land to Daywalt. 1902 contract: A deed should be executed as soon as Endencias title to the land should be perfected. A decree recognizing the right of Teodorica as owner was entered but the Torrens certificate was not issued until later. 1908 contract: Upon receiving the Torrens title to the land, Teodorica will deliver the same to the Hongkong and Shanghai Bank in Manila, to be forwarded to the Crocker National Bank in San Francisco, where it was to be delivered to the plaintiff upon payment of balance. The Torrens certificate was issued to Teodorica, but it was found by official survey that the area of the tract inclosed in the boundaries stated in the contract was about 1.248 hectares of 452 hectares as stated in the contract. Because of this, Teodorica became reluctant to transfer the whole tract to the purchaser. This attitude of hers led to litigation in which Daywalt finally succeeded in obtaining a decree for specific performance. La Corporacion de los Padres Recoletos, is a religious corporation. It was the

owner of another estate on the same island immediately adjacent to the land which Teodorica had sold to Daywalt Their representative, Father Sanz, had long been well acquainted with Teodorica and exerted over her an influence and ascendency due to his religious character Father Sanz was fully aware of the existence of the contract of 1902 contract and 1908 contract. When the Torrens certificate was finally issued in 1909 in favor of Teodorica, she delivered it for safekeeping to the defendant corporation As Teodorica still retained possession of said property Father Sanz entered into an arrangement with her whereby large numbers of cattle belonging to the defendant corporation were pastured upon said land during 1909 to 1914. Daywalt seeks to recover from the defendant corporation the sum of P500,000, as damages, on the ground that said corporation, for its own selfish purposes, unlawfully induced Teodorica to refrain from the performance of her contract for the sale of the land in question and to withhold delivery to the plaintiff of the Torrens title. The cause of action here stated is based on liability derived from the wrongful interference of the defendant in the performance of the contract between the plaintiff and Teodorica Endencia; and the large damages laid in the complaint were, according to the proof submitted by the plaintiff, incurred as a result of a combination of circumstances of the following nature: o In 1911, it appears, the plaintiff, as the owner of the land which he had bought from Teodorica Endencia entered into a contract with S. B. Wakefield, of San Francisco, for the sale and disposal of said lands to a sugar growing and milling enterprise, the successful launching of which depended on the ability of Daywalt to get possession of the land and the Torrens certificate of title. Teodorica Endencia seems to have yielded her consent to the consummation of her contract, but the Torrens title was then in the possession of Padre Juan Labarga in Manila, who refused to deliver the document. Teodorica also was in the end contract with the plaintiff, with the result that the plaintiff was kept out of possession until the Wakefield project for the establishment of a large sugar growing and milling enterprise fell through.

In the light of what has happened in recent years in the sugar industry, we feel justified in saying that the project above referred to, if carried into effect, must inevitably have proved a great success.

ISSUES: 1. Whether a person who is not a party to a contract for the sale of land makes himself liable for damages to the vendee, beyond the value of the use and occupation, by colluding with the vendor and maintaining him in the effort to resist an action for specific performance. NO 2. Whether the damages which the plaintiff seeks to recover under this head are too remote and speculative to be the subject of recovery. YES

HELD: The judgment of the trial court should be affirmed, and it is so ordered, with costs against the appellant. RATIO: 1st issue While it was true that the circumstances pointed to an entire sympathy on the part of the defendant corporation with the efforts of Teodorica Endencia to defeat the plaintiff's claim to the land, the fact that its officials may have advised her not to carry the contract into effect would not constitute actionable interference with such contract. According to the English and American authorities, no question can be made as to the liability to one who interferes with a contract existing between others by means which, under known legal cannons, can be denominated an unlawful means. Thus, if performance is prevented by force, intimidation, coercion, or threats, or by false or defamatory statements, or by nuisance or riot, the person using such unlawful means is, under all the authorities, liable for the damage which ensues. (Doctrine under Lumley v. Gye) Translated into terms applicable to the case at bar, the decision in Gilchrist vs. Cuddy (29 Phil. Rep., 542), indicates that the defendant corporation, having notice of the sale of the land in question to Daywalt, might have been enjoined by the latter from using the property for grazing its cattle thereon. That the defendant corporation is also liable in this action for the damage resulting to the plaintiff from the wrongful use and occupation of the property has also been already determined. But it will be observed that in order to sustain this liability it is not necessary to resort to any subtle exegesis relative to the liability of a stranger to a contract for unlawful interference in the performance thereof. It is enough that defendant use the property with notice that the plaintiff had a prior and better right. Article 1902 of the Civil Code declares that any person who by an act or omission, characterized by fault or negligence, causes damage to another shall be liable for the damage so done. Ignoring so much of this article as relates to liability for negligence, we take the rule to be that a person is liable for damage done to another by any culpable act; and by "culpable act" we mean any act which is blameworthy when judged by accepted legal standards. The idea thus expressed is undoubtedly broad enough to include any rational conception of liability for the tortious acts likely to be developed in any society. Article 1257 of the Civil Code declares that contracts are binding only between the parties and their privies. In conformity with this it has been held that a stranger to a contract has no right of action for the nonfulfillment of the contract except in the case especially contemplated in the second paragraph of the same article. If the two antagonistic ideas which we have just brought into juxtaposition are capable of reconciliation, the process must be accomplished by distinguishing clearly between the right of action arising from the improper interference with the contract by a stranger thereto, considered as an independent act generate of civil liability, and the right of action ex contractu against a party to the contract

resulting from the breach thereof. Whatever may be the character of the liability which a stranger to a contract may incur by advising or assisting one of the parties to evade performance, there is one proposition upon which all must agree. This is, that the stranger cannot become more extensively liable in damages for the nonperformance of the contract than the party in whose behalf he intermeddles. To hold the stranger liable for damages in excess of those that could be recovered against the immediate party to the contract would lead to results at once grotesque and unjust. In the case at bar, as Teodorica Endencia was the party directly bound by the contract, it is obvious that the liability of the defendant corporation, even admitting that it has made itself coparticipant in the breach of the contract, can in no even exceed hers.

2nd issue: The extent of the liability for the breach of a contract must be determined in the light of the situation in existence at the time the contract is made; and the damages ordinarily recoverable are in all events limited to such as might be reasonable are in all events limited to such as might be reasonably foreseen in the light of the facts then known to the contracting parties. Ordinary damages is found in all breaches of contract where the are no special circumstances to distinguish the case specially from other contracts. In all such cases the damages recoverable are such as naturally and generally would result from such a breach, "according to the usual course of things." Special damage, on the other hand, is such as follows less directly from the breach than ordinary damage. It is only found in case where some external condition, apart from the actual terms to the contract exists or intervenes, as it were, to give a turn to affairs and to increase damage in a way that the promisor, without actual notice of that external condition, could not reasonably be expected to foresee. Where the damage which a plaintiff seeks to recover as special damage is so far speculative as to be in contemplation of law remote, notification of the special conditions which make that damage possible cannot render the defendant liable therefor. To bring damages which would ordinarily be treated as remote within the category of recoverable special damages, it is necessary that the condition should be made the subject of contract in such sense as to become an express or implied term of the engagement. In the preceding discussion we have considered the plaintiff's right chiefly against Teodorica Endencia; and what has been said suffices in our opinion to demonstrate that the damages laid under the second cause of action in the complaint could not be recovered from her: o first, because the damages in question are special damages which were not within contemplation of the parties when the contract was made, and secondly, because said damages are too remote to be the subject of recovery. This conclusion is also necessarily fatal to the right of the plaintiff to recover such damages from the defendant corporation, for, as already suggested, by advising Teodorica not to perform the contract, said corporation could in no event render itself more

extensively liable than the principle in the contract.