Daywalt v. Corporacion Agustinos Recoletos, 39 Phil. 587

3/28/2021 SUPREME COURT REPORTS ANNOTATED VOLUME 039
[No. 13505. February 4, 1919.]
GEO. W. DAYWALT, plaintiff and appellant, vs. LA

CORPORACIÓN 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
588
588 PHILIPPINE REPORTS ANNOTATED
Daywalt vs. Corporación de PP. Agustinos Recoletos.
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.
www.central.com.ph/sfsreader/session/000001787680ffe7b547e91f003600fb002c009e/t/?o=False 1/18
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
589
VOL. 39, FEBRUARY 4, 1919. 589

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 f ound 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
1
early part of the year 1914.
The defendant, La Corporación 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

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

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 hec-
592

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
593
VOL. 39, FEBRUARY 4, 1919. 593

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

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

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

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
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VOL. 39, FEBRUARY 4, 1919. 597

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

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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VOL. 39, FEBRUARY 4, 1919. 599

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

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. Compañía
Trasatlántica, 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 ap-
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VOL. 39, FEBRUARY 4, 1919. 601

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

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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VOL. 39, FEBRUARY 4, 1919. 603

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
604

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
605
VOL. 39, FEBRUARY 4, 1919. 605

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
606

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.
607
VOL. 39, FEBRUARY 6, 1919. 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, Avanceña,

and Moir, JJ., concur.
Judgment affirmed.
____________
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3/28/2021 SUPREME COURT REPORTS ANNOTATED VOLUME 039

[No. 13505. February 4, 1919.]

GEO. W. DAYWALT, plaintiff and appellant, vs. LA

1. CONTRACTS; DAMAGES FOR BREACH; LIABILITY OF

2. ID.; ID.; MEASURE OF DAMAGES FOR BREACH OF

3. ID. ; ID. ; ID. ; DAMAGES FOR BREACH OF CONTRACT FOR

588 PHILIPPINE REPORTS ANNOTATED

Daywalt vs. Corporación de PP. Agustinos Recoletos.

for failure to deliver land which he has contracted to deliver is the

APPEAL from a judgment of the Court of First Instance of Manila.

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

VOL. 39, FEBRUARY 4, 1919. 589

590 PHILIPPINE REPORTS ANNOTATED

Endencia, she delivered it for safekeeping to the defendant

VOL. 39, FEBRUARY 4, 1919. 591

With ref erence to the rate at which compensation should be

592 PHILIPPINE REPORTS ANNOTATED

VOL. 39, FEBRUARY 4, 1919. 593

594 PHILIPPINE REPORTS ANNOTATED

Daywalt to get possession of the land and the Torrens certiﬁcate of

VOL. 39, FEBRUARY 4, 1919. 595

of the defendant corporation with the efforts of Teodorica Endencia

prompted by no mean or improper motive. It is not, in our opinion,

596 PHILIPPINE REPORTS ANNOTATED

S. B. Wakeﬁeld, of San Francisco, it is insisted that the defendant

master. The master's interest in the service rendered by his employee

VOL. 39, FEBRUARY 4, 1919. 597

under consideration was limited to the cases of the enticement of

598 PHILIPPINE REPORTS ANNOTATED

is found in South Wales Miners Federation vs. Glamorgan Coal Co.

VOL. 39, FEBRUARY 4, 1919. 599

violation of the terms of this agreement, Cuddy proceeded to turn

600 PHILIPPINE REPORTS ANNOTATED

that in order to sustain this liability it is not necessary to resort to

conception of liability for the tortious acts likely to be developed in

VOL. 39, FEBRUARY 4, 1919. 601

plicable with respect to the person against whom the obligation of

liable in damages for the nonperformance of the contract than the

602 PHILIPPINE REPORTS ANNOTATED

to surrender the certiﬁcate of title and to place the plaintiff in

The damages ordinarily and normally recoverable against a

VOL. 39, FEBRUARY 4, 1919. 603

604 PHILIPPINE REPORTS ANNOTATED

to protect himself, in the contingency of the failure of the vendor

VOL. 39, FEBRUARY 4, 1919. 605

be manufactured at Greenwich until the broken one arrived to serve

606 PHILIPPINE REPORTS ANNOTATED

VOL. 39, FEBRUARY 6, 1919. 607

In the preceding discussion we have considered the plaintiff's right

Arellano, C. J., Torres, Carson, Araullo, Malcolm, Avanceña,

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