[No. 13505. February 4, 1919.

]
GEO. W. DAYWALT, plaintiff and appellant, vs. LA CORPORACIN DE
LOS PADRES AGUSTINOS RECOLETOS ET AL., defendants and
appellees.
1.CONTRACTS; DAMAGES FOR BREACH; LIABILITY OF THIRD
PARTY.Whatever may be the character of the liability, if any, which a
stranger to a contract may incur by advising or assisting one of the
parties to evade performance, he cannot become more extensively liable
in damages for the nonperformance of the contract than the party in
whose behalf he intermeddles.
2.ID.; ID.; MEASURE OF DAMAGES FOR BREACH OF CONTRACT.
The damages recoverable upon breach of contract are, primarily, the
ordinary, natural and in a sense the necessary damage resulting from
the breach. Other damages, known as special damages, are
recoverable where it appears that the particular conditions which made
such damages a probable consequence of the breach were known to
the delinquent party at the time the contract was made. This proposition
must be understood with the qualification that, if the damages are in the
legal sense remote or speculative, knowledge of the special conditions
which render such damages possible will not make them recoverable.
Special damages of this character cannot be recovered unless made the
subject of special stipulation.
3.ID. ; ID. ; ID. ; DAMAGES FOR BREACH OF CONTRACT FOR SALE
OF LAND.The damages ordinarily recoverable against a vendor for
failure to deliver land which he has contracted to deliver is the value of
the use and occupation of the land for the time during which it is
wrongfully withheld.
APPEAL from a judgment of the Court of First Instance of Manila.
Ostrand, J.
The facts are stated in the opinion of the court.
C. C. Cohn and Thos. D. Aitken for appellant.
Crossfield & O'Brien for appellee.

STREET, J.:

In the year 1902, Teodorica Endencia, an unmarried woman, resident in

the Province of Mindoro, executed a contract whereby she obligated
herself to convey to Geo. W. Daywalt, .a tract of land situated in the
barrio of Mangarin, municipality of Bulalacao, now San Jose, in said
province. It was agreed that a deed should be executed as soon as the
title to the land should be perf ected by proceedings in the Court of Land
Registration and a Torrens certificate should be procured therefor in the
name of Teodorica Endencia. A decree recognizing the right ,of
Teodorica as owner was entered in said court in August 1906, but the
Torrens certificate was not issued until later. The parties, however, met
immediately upon the entering of this decree and made a new contract
with a view to carrying their original agreement into effect. This new
contract was executed in the form of a deed of conveyance and bears
date of August 16, 1906. The stipulated price was fixed at P4,000, and
the area of the land enclosed in the boundaries defined in the contract
was stated to be 452 hectares and a fraction.
The second contract was not immediately carried into effect for the
reason that the Torrens certificate was not yet obtainable and in fact said
certificate was not issued until the period of performance contemplated
in the contract had expired. Accordingly, upon October 3, 1908, the
parties entered into still another agreement, superseding the old, by
which Teodorica Endencia agreed, upon receiving the Torrens title to the
land in question, to 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 a
balance of P3,100.
The Torrens certificate was in time issued to Teodorica Endencia, but in
the course of the proceedings relative to the registration of the land, 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 instead of
452 hectares as stated in the contract. In view of this development
Teodorica Endencia became reluctant to transfer the whole tract to the

purchaser, asserting that she never intended to sell so large an amount

of land and that she had been misinformed as to its area.
This attitude of hers led to litigation in which Daywalt finally succeeded,
upon appeal to the Supreme Court, in obtaining a decree for specific
performance; and Teodorica Endencia was ordered to convey the entire
tract of land to Daywalt pursuant to the contract of October 3, 1908,
which contract was declared to be in full force and effect. This decree
appears to have become finally effective in the early part of the year
1914.1
The defendant, La Corporacin de los Padres Recoletos, is a religious
corporation, with its domicile in the city of Manila. Said corporation was
formerly the owner of a large tract of land, known as the San Jose
Estate, on the island of Mindoro, which was sold to the Government of
the Philippine Islands in the year 1909. The same corporation was at this
time also the owner of another estate on the same island immediately
adjacent to the land which Teoderica Endencia had sold to Geo. W.
Daywalt; and for many years the Recoletos Fathers had maintained
large herds of cattle on the farms referred to. Their representative,
charged with the management of these farms, was
____________

1 Daywalt vs. Endencia, R. G. No. 7331, decided November 16, 1912,

not published.
590

590
PHILIPPINE REPORTS ANNOTATED
Daywalt vs. Corporacin de PP. Agustinos Recoletos.
father Isidoro Sanz, himself a member of the order. Father Sanz had
long been well acquainted with Teodorica Endencia and exerted over
her an influence and ascendency due to his religious character as well

as to the personal friendship which existed between them. Teodorica

appears to be a woman of little personal force, easily subject to
influence, and upon all the important matters of business was
accustomed to seek, and was given, the advice of Father Sanz and
other members of his order with whom she came in contact.
Father Sanz was fully aware of the existence of the contract of 1902 by
which Teodorica Endencia agreed to sell her land to the plaintiff as well
as of the later important developments connected with the history of that
contract and the contract - substituted successively for it; and in
particular Father Sanz, as well as other members of the defendant
corporation, knew of the existence of the contract of October 3, 1908,
which, as we have already seen, finally fixed the rights of the parties to
the property in question. When the Torrens certificate was finally issued
in 1909 in favor of Teodorica Endencia, she delivered it for safekeeping
to the defendant corporation, and it was then taken to Manila where it
remained in the custody and under the control of P. Juan Labarga the
procurador and chief official of the defendant corporation, until the
delivery thereof to the plaintiff was made compulsory by reason of the
decree of the Supreme Court in 1914.
When the defendant corporation sold the San Jose Estate, it was
necessary to bring the cattle off of that property; and, in the first half of
1909, some 2,368 head were removed to the estate of the corporation
immediately adjacent to the property which the plaintiff had purchased
from Teodorica Endencia. As Teodorica still retained possession of said
property Father Sanz entered into an arrangement with her whereby
large numbers of cattle belonging to the def endant corporation were
pastured upon said land during a period extending from June 1, 1909, to
May 1, 1914.
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VOL. 39, FEBRUARY 4, 1919.

591
Daywalt vs. Corporacin de PP. Agustinos Recoletos.

Under the first cause stated in the complaint in the present action the
plaintiff seeks to recover from the defendant corporation the sum of
P24,000, as damages for the use and occupation of the land in question
by reason of the pasturing of cattle thereon during the period stated. The
trial court came to the conclusion that the defendant corporation was
liable for damages by reason of the use and occupation of the premises
in the manner stated; and fixed the amount to be recovered at P2,497.
The plaintiff appealed and has assigned error to this part of the judgment
of the court below, insisting that damages should have been awarded in
a much larger sum and at least to the full extent of P24,000, the amount
claimed in the complaint.
As the def endant did not appeal, the propriety of allowing damages f or
the use and occupation of the land to the extent of P2,497, the mount
awarded, is not now in question; and the only thing here to be
considered, in connection with this branch of the case, is whether the
damages allowed under this head should be increased. The trial court
rightly ignored the fact that the defendant corporation had paid
Teodorica Endencia f or use and occupation of the same land during the
period in question at the rate of P425 per annum, inasmuch as the final
decree of this court in the action for specific performance is conclusive
against her right, and as the defendant corporation had notice of the
rights of the plaintiff under his contract of purchase, it can not be
permitted that the corporation should escape liability in this action by
proving payment of rent to a person other than, the true owner.
With ref erence to the rate at which compensation should be estimated
the trial court came to the following conclusion:
"As to the rate of the compensation, the plaintiff contends that the
defendant corporation maintained at least one thousand head of cattle
on the land and that the pasturage was of the value of forty centavos per
head monthly, or P4,800 annually, for the whole tract. The court can not
accept this view. It is rather improbable that 1,248 hec592

592

PHILIPPINE REPORTS ANNOTATED

Daywalt vs. Corporacin de PP. Agustinos Recoletos.
tares of wild Mindoro land would furnish sufficient pasturage for one
thousand head of cattle during the entire year, and, considering the
locality, the rate of forty centavos per head monthly seems too high. The
evidence shows that after having recovered possession of the land the
plaintiff rented it to the defendant corporation for fifty centavos per
hectare annually, the tenant to pay the taxes on the land, and this
appears to be a reasonable rent. There is ,no reason to suppose that the
land was worth more for grazing purposes during the period -from 1909
to 1913, than it was at the later period. Upon this basis the plaintiff is
entitled to damages in. the sum of P2,497, and is under no obligation to
reimburse the defendants for the land taxes paid by either f them during
the period the land was occupied by the defendant corporation. It may
be mentioned in this connection that the Lontok tract adjoining the land
in question and containing over three thousand hectares appears to
have been leased for only P1,000 a year, plus the taxes."
From this it will be seen that the trial court estimated the rental value of
the land for grazing purposes at 50 centavos per hectare per annum,
and roughly adopted the period of four years as the time for which
compensation at that rate should be made. As the. court had already
found that the defendant was liable for these damages from June, 1,
1909, to May 1, 1914, or a period of four years and eleven months, there
seems some ground for the contention made in the appellant's first
assignment of error that the court's computation was erroneous, even
accepting the rule upon which the damages were assessed, as it is
manifest that at the rate of 50 centavos per hectare per annum, the
damages for f our years and eleven months would be P3,090.
Notwithstanding this circumstance, we are of the opinion that the
damages assessed are sufficient to compensate the plaintiff for the use
and occupation of the land during the whole time it was used. There is
evidence in the record strongly tending to show that the wrongful use of
the
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593
Daywalt vs. Corporacin de PP. Agustinos Recoletos.
land by the defendant was not continuous throughout the year but was
confined mostly to the season when the f orage obtainable on the land of
the defendant corporation was not sufficient to maintain its cattle, for
which reason it became necessary to allow them to go over to pasture
on the land in question; and it is not clear that the whole of the land was
used f or pasturage at any time. Considerations of this character
probably led the trial court to adopt four years as roughly being the
period during which compensation should be allowed. But whether this
was advertently done or not, we see no sufficient reason, in the
uncertainty of the record with reference to the number of the cattle
grazed and the period when the land was used, for substituting our
guess for the estimate made by the trial court. In the second cause of
action stated in the complaint
the plaintiff seeks to recover f rom the def endant corporation the sum of
P500,000, as damages, on the ground that said corporation, for its own
selfish purposes, unlawfully induced Teodorica Endencia to refrain from
the performance of her contract f or the sale of the land in question and
to withhold delivery to the plaintiff of the Torrens title, and further,
maliciously and without reasonable cause, maintained her in her
defense to the action of specific performance which was finally decided
in favor of the plaintiff in this court. The cause of action here stated is
based on a 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: In 1911, it
appears, the plaintiff, as the owner of the land which he had bought from
Teodorica Endencia entered into a contract (Exhibit C) 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

594

594
PHILIPPINE REPORTS ANNOTATED
Daywalt vs. Corporacin de PP. Agustinos Recoletos.
Daywalt to get possession of the land and the Torrens certificate of title.
In order to accomplish this end, the plaintiff returned to the Philippine
Islands, communicated his arrangement to the defendant, and made
repeated efforts to secure the registered title for delivery in compliance
with said agreement with Wakefield. 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 prevailed upon to stand out against the perf ormance of her 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.
The determination of the issue presented in this second cause of action
requires a consideration of two points. The first is 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. The second is whether the damages
which the plaintiff seeks to recover under this head are too remote and
speculative to be the subject of recovery.
As preliminary to a consideration of the first of these questions, we deem
it well to dispose of the contention that the members of the defendant
corporation, in advising and prompting Teodorica Endencia not to
comply with the contract of sale, were actuated by improper and
malicious motives. The trial court found that this contention was not

sustained, observing that while it was true that the circumstances

pointed to an entire sympathy on the part
595

VOL. 39, FEBRUARY 4, 1919.

595
Daywalt vs. Corporacin de PP. Agustinos Recoletos.
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. It may be added that when
one considers the hardship that the ultimate performance of that contract
entailed on the vendor, and the doubt in which the issue was involved
to the extent that the decision of the Court of the First Instance was
unfavorable to the plaintiff and the Supreme Court itself was divided
the attitude of the defendant corporation, as exhibited in the conduct of
its procurador, Juan Labarga, and other members of the order of the
Recollect Fathers, is not difficult to understand. To our mind a fair
conclusion on this feature of the case is that father Juan Labarga and his
associates believed in good faith that the contract could not be enf orced
and that Teodorica would be wronged if it should be carried into effect.
Any advice or assistance which they may have given was, therefore,
prompted by no mean or improper motive. It is not, in our opinion, to be
denied that Teodorica would have surrendered the documents of title
and given possession of the land but for the influence and promptings of
members of the defendant corporation. But we do not credit the idea that
they were in any degree influenced to the giving of such advice by the
desire to secure to themselves the paltry privilege of grazing their cattle
upon the land in question to the prejudice of the just rights of the plaintiff.
The attorney for the plaintiff maintains that, by interfering in the
performance of the contract in question and obstructing the plaintiff in his
efforts to secure the certificate of title to the land, the defendant
corporation made itself a co-participant with Teodorica Endencia in the
breach of said contract; and inasmuch as father Juan Labarga, at the

time of said unlawful intervention between the contracting parties, was

fully aware of the existence of the contract (Exhibit C) which the plaintiff
had made with
596

596
PHILIPPINE REPORTS ANNOTATED
Daywalt vs. Corporacin de PP. Agustinos Recoletos.
S. B. Wakefield, of San Francisco, it is insisted that the defendant
corporation is liable for the loss consequent upon the failure of the
project outlined in said contract.
In this connection reliance is placed by the plaintiff upon certain
American and English decisions in which it is held that a person who is a
stranger to a contract may, by an unjustifiable interference in the
performance thereof, render himself liable f or the damages consequent
upon non-performance. It is said that the doctrine of these cases was
recognized by this court in Gilchrist vs. Cuddy (29 Phil. Rep., 542); and
we have been earnestly pressed to extend the rule there enunciated to
the situation here presented. Somewhat more than half a century ago
the English Court of the Queen's Bench saw its way clear to permit an
action for damages to be maintained against a stranger to a contract
wrongfully interfering in its performance. The leading case on this
subject is Lumley vs. Gye ([1853], 2 El. & Bl., 216). It there appeared
that the plaintiff, as manager of a theatre, had entered into a contract
with Miss Johanna Wagner, an opera singer, whereby she bound herself
for a period to sing in the plaintiff's theatre and nowhere else. The
defendant, knowing of the existence of this contract, and, as the
declaration alleged, "maliciously intending to injure the plaintiff," enticed
and procured Miss Wagner to leave the plaintiff's employment. It was
held that the plaintiff was entitled to recover damages. The right which
was here recognized had its origin in a rule, long familiar to the courts of
the common law, to the effect that any person who entices a servant
from his employment is liable in damages to the master. The master's
interest in the service rendered by his employee is here considered as a

distinct subject of juridical right. It being thus accepted that it is a legal

wrong to break up a relation of personal service, the question now arose
whether it is illegal for one person to interfere with any contract relation
subsisting between others. Prior to the decision of Lumley vs. Gye
[supra] it had been supposed that the liability here
597

VOL. 39, FEBRUARY 4, 1919.

597
Daywalt vs. Corporacin de PP. Agustinos Recoletos.
under consideration was limited to the cases of the enticement of menial
servants, apprentices, and others to whom the English Statutes of
Laborers were applicable. But in the case cited the majority of the judges
concurred in the opinion that the principle extended to all cases of hiring.
This doctrine was f ollowed by the Court of Appeal in Bowen vs. Hall
([1881], 6 Q. B., Div., 333); and in Temperton vs. Russell ([1893], 1 Q.
B., 715), it was held that the right of action for maliciously procuring a
breach of contract is not confined to contracts f or personal services, but
extends to contracts in general. In that case the contract which the
defendant had procured to be breached was a contract for the supply of
building material.
Malice in some form is generally supposed to be an essential ingredient
in cases of interf erence with contract relations. But upon the authorities
it is enough if the wrongdoer, having knowledge of the existence of the
contract relation, in bad faith sets about to break it. up. Whether his
motive is to benefit himself or gratify his spite by working mischief to the
employer is immaterial. Malice in the sense of ill-will or spite is not
essential.
Upon the question as to what constitutes legal justification, a good
illustration was put in the leading case. If a party enters into contract to
go for another upon a journey to a remote and unhealthful climate, and a
third person, with a bona fide purpose of benefiting the one who is under
contract to go, dissuades him from the step, no action will lie.. But if the

advice is not disinterested and the persuasion is used for "the indirect
purpose of benefiting the defendant at the expense of the plaintiff," the
intermedler is liable if his advice is taken and the contract broken.
The doctrine embodied in the cases just cited has sometimes been
found useful, in the complicated relations of modern industry, as a
means of restraining the activities of labor unions and industrial societies
when improperly engaged in the promotion of strikes. An illustration of
the application of the doctrine in question in a case of this kind
598

598
PHILIPPINE REPORTS ANNOTATED
Daywalt vs. Corporacin de PP. Agustinos Recoletos.
is found in South Wales Miners Federation vs. Glamorgan Coal Co.
([1905], A. C., 239). It there appeared that certain miners employed in
the plaintiff's collieries, acting under the order of the executive council of
the defendant federation, violated their contract with the plaintiff by
abstaining from work on certain days. The federation and council acted
without any actual malice or ill-will towards the plaintiff, and the only
object of the order in question was that the price of coal might thereby
be kept up, a factor which affected the miner's wage scale. It was held
that no sufficient justification was shown and that the federation was
liable.
In the United States, the rule established in England by Lumley vs. Gye
[supra] and subsequent cases is commonly accepted, though in a few of
the States the broad idea that a stranger to a contract can be held liable
Upon it is rejected, and in these jurisdictions the doctrine, if accepted at
all, is limited to the situation where the contract is strictly for personal
service. (Boyson vs. Thorn, 98 Cal., 578; Chambers & Marshall vs.
Baldwin 91 Ky., 121; Bourlier vs. Macauley, 91 Ky., 135; Glencoe Land
& Gravel Co. vs. Hudson Bros. Com. Co., 138 Mo.; 439.)

It should be observed in this connection that, according to the English

and American authorities, no question can be made as to the liability of
one who interf eres with a contract existing between others by means
which, under known legal canons, 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. And in jurisdictions
where the doctrine of Lumley vs. Gye [supra] is rejected, no liability can
arise from a meddlesome and malicious interference with a contract
relation unless some such unlawful means as those just indicated are
used. (See cases last above cited.)
This brings us to the decision made by this court in
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599
Daywalt vs. Corporacin de PP. Agustinos Recoletos.
Gilchrist vs. Cuddy (29 Phil. Rep., 542). It there appeared that one
Cuddy, the owner of a cinematographic film, let it under a rental contract
to the plaintiff Gilchrist for a specified period of time. In violation of the
terms of this agreement, Cuddy proceeded to turn over the film also
under a rental contract, to the defendants Espejo and Zaldarriaga.
Gilchrist thereupon restored to the Court of First. Instance and procured
an injunction restraining the defendants from exhibiting the film in
question in their theater during the period specified in the contract of
Cuddy with Gilchrist. Upon appeal to this court it was in effect held that
the injunction was not improperly granted, although the defendants did
not, at the time their contract was made, know the identity of the plaintiff
as the person holding the prior contract but did know of the existence of
a contract in f avor of someone. It was also said arguendo, that the
defendants would have been liable in damages under article 1902 of the
Civil Code, if the action had been brought by the plaintiff to recover
damages. The force of the opinion is, we think, somewhat weakened by

the criticism contained in the concurring opinion, wherein it is said that

the question of breach of contract by inducement was not really involved
in the case. Taking the decision upon the point which was really
decided, it is authority for the proposition that one who buys something
which he knows has been sold to some other person can be restrained
from using that thing to the prejudice of the person having the prior and
better right.
Translated into terms applicable to the case at bar, the decision in
Gilchrist vs. Cuddy (29 Phil. Rep., 542), indicates that the def endant
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
600

600
PHILIPPINE REPORTS ANNOTATED
Daywalt vs. Corporacin de PP. Agustinos Recoletos.
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 used 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 f or 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. Thus considered, it cannot be said

that the doctrine of Lumley vs. Gye [supra] and related cases is
repugnant to the principles of the civil law.
Nevertheless, it must be admitted that the codes and jurisprudence of
the civil law furnish a somewhat uncongenial field in which to propagate
the idea that a stranger to a contract may be sued for the breach thereof.
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. (Uy Tam and Uy Yet vs.
Leonard, 30 Phil. Rep., 471.) As observed by this court in Manila
Railroad Co. vs. Compaa Trasatlntica, R. G. No. 11318 (38 Phil.
Rep., 875), a contract, when effectually entered into between certain
parties, determines not only the character and extent of the liability of the
contracting parties but also the person or entity by whom the obligation
is exigible. The same idea should. apparently be ap601

VOL. 39, FEBRUARY 4, 1919.

601
Daywalt vs. Corporacin de PP. Agustinos Recoletos.
plicable with respect to the person against whom the obligation of the
contract may be enforced; for it is evident that there must be a certain
mutuality in the obligation, and if the stranger to a contract is not
permitted to sue to enforce it, he cannot consistently be held liable upon
it.
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 generative of civil liability, and the
right of action ex contractu against a party to the contract resulting from

the breach thereof. However, we do not propose here to pursue the

matter further, inasmuch as, for reasons presently to be stated, we are
of the opinion that neither the doctrine of Lumley vs. Gye [supra] nor the
application made of it by this court in Gilchrist vs. Cuddy (29 Phil. Rep.,
542), affords any basis for the recovery of the damages which the
plaintiff is supposed to have suffered by reason of his inability to comply
with the terms of the Wakefield contract.
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
event exceed hers. This leads us to consider at this point the extent of
the liability of Teodorica Endencia to the plaintiff by reason of her failure
602

602
PHILIPPINE REPORTS ANNOTATED
Daywalt vs. Corporacin de PP. Agustinos Recoletos.
to surrender the certificate of title and to place the plaintiff in possession.
It should in the first place be noted that the liability of Teodorica
Endencia for damages resulting from the breach of her contract with
Daywalt was a proper subject for adjudication in the action for specific
performance which Daywalt instituted against her in 1909 and which was
litigated by him to a successful conclusion in this court, but without
obtaining any special adjudication with referrence to damages.
Indemnification for damages resulting from the breach of a contract is a

right inseparably annexed to every action for the fulfilment of the

obligation (art. 1124, Civil Code); and it is clear that if damages are not
sought or recovered in the action to enforce performance they cannot be
recovered in an independent action. As to Teodorica Endencia,
therefore, it should be considered that the right of action to recover
damages for the breach of the contract in question was exhausted in the
prior suit. However, her attorneys have not seen fit to interpose the
defense of res judicata in her behalf; and as the defendant corporation
was not a party to that action, and such defense could not in any event
be of any avail to it, we proceed to consider the question of the liability of
Teodorica Endencia for damages without reference to this point.
The most that can be said with reference to the conduct of Teodorica
Endencia is that she refused to carry out a contract for the sale of certain
land and resisted to the last an action for specific performance in court.
The result was that the plaintiff was prevented during a period of several
years from exerting that control over the property which he was entitled
to exert and was meanwhile unable to dispose of the property
advantageously. Now, what is the measure of damages for the wrongful
detention of real property by the vender after the time has come for him
to place the purchaser in possession?
The damages ordinarily and normally recoverable against a vendor for f
ailure to deliver land which he has contracted
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603
Daywalt vs. Corporacin de PP. Agustinos Recoletos.
to deliver is the value of the use and occupation of the land for the time
during which it is wrongfully withheld. And of course where the
purchaser has not paid the purchase money, a deduction may be made
in respect to the interest on the money which constitutes the purchase
price. Substantially the same rule holds with respect to the liability of a
landlord who fails to put his tenant in possession pursuant to a contract

of lease. The measure of damages is the value of the leasehold interest,

or use and occupation, less the stipulated rent, where this has not been
paid. The rule that the measure of damages f or the wrongf ul detention
of land is normally to be found in the value of use and occupation is, we
believe, one of the things that may be considered certain in the law (39
Cyc., 1630; 24 Cyc., 1052; Sedgewick on Damages, Ninth ed., sec.
185.)almost as wellsettled, indeed, as the rule that the measure of
damages for the wrongful detention of money is to be f ound in the
interest.
We recognize the possibility that more extensive damages may be
recovered where, at the time of the creation of the contractual obligation,
the vendor, or lessor, is aware of the use to which the purchaser or
lessee desires to put the property which is the subject of the contract,
and the contract is made with the eyes of the vendor or lessor open to
the possibility of the damage which may result to the other party from his
own failure to give possession. The case before us is not of this
character, inasmuch as at the time when the rights of the parties under
the contract were determined, nothing was known to any of them about
the San Francisco capitalist who would be willing to back the project
portrayed in Exhibit C.
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 reasonably foreseen in the light of the facts then known to
the contracting parties. Where the purchaser desires
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604
PHILIPPINE REPORTS ANNOTATED
Daywalt vs. Corporacin de PP. Agustinos Recoletos.
to protect himself, in the contingency of the failure of the vendor
promptly to give possession, from the possibility of incurring other
damages than such as are incident to the normal value of the use and

occupation, he should cause to be inserted in the contract a clause

providing f or stipulated amount to be paid upon failure of the vendor to
give possession; and no case has been called to our attention where, in
the absence of such a stipulation, damages have been held to be
recoverable by the purchaser in excess of the normal value of use and
occupation. On the contrary, the most fundamental conceptions of the
law relative to the assessment of damages are inconsistent with such
idea.
The principles governing this branch of the law were profoundly
considered in the case of Hadley vs. Baxendale (9 Exch., 341), decided
in the English Court of Exchequer in 1854; and a few words relative to
the principles governing the recovery of damages, as expounded in that
decision, will here be found instructive. The decision in that case is
considered a leading authority in the jurisprudence of the common law.
The plaintiffs in that case were proprietors of a mill in Gloucester, which
was propelled by steam, and which was engaged in grinding and
supplying meal and flour to customers. The shaft of the engine got
broken, and it became necessary that the broken shaft be sent to an
engineer or foundry man at Greenwich, to serve as a model for casting
or manufacturing another that would fit into the machinery. The broken
shaft could be delivered at Greenwich on the second day after its receipt
by the carrier It was delivered to the defendants, who were common
carriers engaged in that business between these points, and who had
told plaintiffs it would be delivered at Greenwich on the second day after
its delivery to them, if delivered at a given hour. The carriers were
informed that the mill was stopped, but were not informed of the special
purpose for which the broken shaft was desired to be forwarded. They
were not told the mill would remain idle until the new shaft would be
returned, or that the new shaft could not
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Daywalt vs. Corporacin de PP. Agustinos Recoletos.

be manufactured at Greenwich until the broken one arrived to serve as a

model. There was delay beyond the two days in delivering the broken
shaft at Greenwich, and a corresponding delay in starting the mill. No
explanation of the delay was offered by the carriers. The suit was
brought to recover damages for the lost profits of the mill, caused by the
delay in delivering the broken shaft. It was held that the plaintiff could not
recover.
The discusion contained in the opinion of the court in that case leads to
the conclusion that the damages recoverable in case of the breach of a
contract are two sorts, namely, (1) the ordinary, natural, and in a sense
necessary damage; and (2) special damages.
Ordinary damages is found in all breaches of contract where there are
no special circumstances to distinguish the case specially from other
contracts. The consideration paid for an unperformed promise is an
instance of this sort of damage. 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." In cases involving
only ordinary damage no discussion is ever indulged as to whether that
damage was contemplated or not. This is conclusively presumed from
the immediateness and inevitableness of the damage, and the recovery
of such damage follows as a necessary legal consequence of the
breach. Ordinary damage is assumed as a matter of law to be within the
contemplation of the parties.
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. Concerning this sort of
damage, Hadley vs. Baxendale (1854) [supra] lays down the definite and
just rule that before such damage can be recovered the plaintiff must
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Daywalt vs. Corporacin de PP. Agustinos Recoletos.
show that the particular condition which made the damage a possible
and likely consequence of the breach was known to the defendant at the
time the contract was made.
The statement that special damages may be recovered where the
likelihood of such damages flowing from the breach of the contract is
contemplated and foreseen by the parties needs to be supplemented by
a proposition which, though not enunciated in Hadley vs. Baxendale, is
yet clearly to be drawn from subsequent cases. This is that 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. Horne vs. Midland R. Co. (L. R., 8 C. P., 131) is a case
where the damage which was sought to be recovered as special
damage was really remote, and some of the judges rightly placed the
disallowance of the damage on the ground that to make such damage
recoverable, it must so far have been within the contemplation of the
parties as to form at least an implied term of the contract. But others
proceeded on the idea that the notice given to the defendant was not
sufficiently full and definite. The result was the same in either view. The
facts in that case were as follows: The plaintiffs, shoe manufacturers at
K, were under contract to supply by a certain day shoes to a firm in
London for the French government. They delivered the shoes to a carrier
in sufficient time f or the goods to reach London at the time stipulated in
the contract and informed the railroad agent that the shoes would be
thrown back upon their hands if they did not reach the destination in
time. The defendants negligently failed to forward the good in due
season. The sale was therefore lost, and the market having fallen, the
plaintiffs had to sell at a loss.
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607
Ahern vs. Julian.
In the preceding discussion we have considered the plaintiff's right
chiefly as 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, 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 principal in the contract.
Our conclusion is that the judgment of the trial court should be affirmed,
and it is so ordered, with costs against the appellant.
Arellano, C. J., Torres, Carson, Araullo, Malcolm, Avancea, and Moir,
JJ., concur.
Judgment affirmed. []