Supreme Court of the Philippines

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39 Phil. 587

G.R. No. 13505, February 04, 1919

GEO. W. DAYWALT, PLAINTIFF AND APPELLANT, VS.
LA CORPORACION DE LOS PADRES AGUSTINOS
RECOLETOS ET AL., DEFENDANTS AND APPELLEES.
DECISION
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 Mangrarin,
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 perfected 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 encased 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 1,48 hectares instead of 4.2 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 &o 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 Corporation 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 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 asof 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
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 procurator
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 intx) an
arrangement with her whereby large numbers of cajbtlei belonging to the
defendant corporation were pastured ujfon said land charing a period extending
from June 1,1909, to May 1, 1914.
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 Qf 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 tfhe full extent of P24,000, the
amount claimed in the complaint.
As the defendant did not appeal, the propriety of allowing damages for 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 Jiead should be
increased. The trial court rightly ignored the fact that the defendant corporation
had paid Teodorica Endencia for 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 reference 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 hectares of
 can not accept this view. It is rather improbable that 1,248 hectares 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 qf 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 Pl,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. cour^had already found that the defendant was liable for
thesevdamages 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 pe? annum, the damages for four 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 land by the defendant was
not continuous throughout the year but was confined mostly to the season when
the forage 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 for 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
from the defendant corporation ihe sum of P5OO,OOO, 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 for 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
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
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 tp
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 performance 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 mot sustained, observing that 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. 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
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 enforced 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 surrenderejct 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 alffifo 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 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 heldr r that a person who is a stranger to a
contract may, by an unjustifiable interference in the performance thereof, render
himself liable for 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 under
consideration was limited to the cases of the enticement of menial servants,
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 followed by the Court
of Appeal in Bowen vs. Hall ([1881], 6 Q. B., Div., 333) ; and in Temperton vs.
Russell ([18933, 1 Q. B., 715), it was held that the right of action for maliciously
procuring a breach of contract is not confined to contracts for 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

interference 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 ip 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 ihe 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 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 arid 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
American authorities, no question can be made as to the liability of one who
interferes 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, coer-cion, 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 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.
Gilclirist 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 favor 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 Ij^y 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 righjfc.

Translated into terms applicable to the case at bar, the decision in Gilchrist v&.
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' therein. 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 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 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
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 oi 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 Tarn and Uy Yet
vs. Leonard, 30 Phil. Rep., 471.) As observed by this court in Manila Railroad Co.
vs. Compania Trasatlantica, 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 applicable
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 thereoft 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 grdtesque arid 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 to surrender the certificate of title and to
to the plaintiff by reason of her failure 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 o£ 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 failure to
deliver land which he has contracted to deliver is the value
ofjthejuse_and^occupaUon pjfjthe 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. Sul stantially 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 for the wrongful 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 found 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
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 G.
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 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 for 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 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 naill. 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
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 suchas 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 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. Home 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. Th6
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 for 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
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.
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 aU
ready 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.

[1]Daywalt vs. Endencia, R. G, Nor 7331, decided November 16, 1912, not
published.

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