LCP

SUBJECT: Obligations and Contracts

TOPIC: Article 1314: Liability of third person responsible for breach of contract

Daywalt vs. Corporacion de PP. Agustinos Recoletos

No. 13505 | February 4, 1919 | Street, J.

GENERAL RULE OF LAW/DOCTRINE

CONTRACTS; DAMAGES FOR BREACH; LIABILITY OFTHIRD 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.

FACTS:
Teoderica Endencia obligated herself to convey to Geo W. Daywalt a tract of land. The deed should be
executed as soon as the tittle of the land is perfected. There was a decree recognizing Teoderica as the
owner of land but the Torrens certificate was not issued until later. The parties met immediately upon the
entering of the decree and made a new contract.

There was a development of Teoderica’s land as the Torrens title was issued and in view of this
development she became reluctant to transfer the whole tract of land asserting that she never intended to
sell the large amount of land and that she was misinformed by the area of the land.

After the Torrens title was issued to Teoderica she gave it to the defendant company for safekeeping in
which the defendant did so. As Teodorica still retained possession of said property Father Sanz entered
into an arrangement with her whereby large numbers of cattle belonging to the defendant corporation
were pastured upon said land.

ISSUE:
Whether a person who is not a party to a contract for the sale of land makes himself liable for damages to
the vendee, 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.

RULING:
The Supreme Court held that the members of the defendant’s corporation, in advising and prompting
Teodorica Endencia not to comply with the contract of sale, were actuated by improper and malicious
motives.

In 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.

In the case at bar, as Teodorica Endencia was the party directly bound by the contract, it is obvious that
the liability of the defendant corporation, even admitting that it has made itself coparticipant in the breach
of the contract, can in no even exceed hers.

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 place the plaintiff in possession.

RELEVANT LAWS APPLICABLE

ARTICLE 1314. Any third person who induces another to violate his contract shall be liable for damages
to the other contracting party. (n)

1
by Divina
 LCP

2
by Divina