G.R. No. L-13505; February 4, 1919
GEO. W. DAYWALT, plaintiff-appellant, vs. LA CORPORACION DE LOS PADRES AGUSTINOS RECOLETOS, ET AL., defendants-appellees.

FACTS:
In 1902, Teodorica Endencia agreed to sell a tract of land in Mindoro to Geo. W. Daywalt. The final contract, dated October 3, 1908, obligated her to deliver the Torrens title to Daywalt upon payment of a balance. The official survey later revealed the land area was 1,248 hectares, not 452 hectares as initially stated. Endencia refused to convey the entire tract, leading to litigation where the Supreme Court ultimately ordered specific performance in Daywalt’s favor, a decree which became final in early 1914.

The defendant, La Corporacion de los Padres Agustinos Recoletos, owned an adjacent estate. Its representative, Father Isidoro Sanz, was aware of Daywalt’s contract with Endencia. After the defendant corporation sold its main estate in 1909, it moved its cattle onto Endencia’s land with her permission, pasturing them there from June 1, 1909, to May 1, 1914. The Torrens title, issued in 1909, was held by the defendant corporation in Manila until compelled by the final decree to deliver it to Daywalt.

Daywalt filed this action seeking: (1) damages from the defendant corporation for the use and occupation of the land (first cause of action); and (2) damages from both the corporation and Endencia for the depreciation in land value allegedly caused by the delay in conveyance (second cause of action). The trial court awarded Daywalt P2,497 for use and occupation but denied the claim for depreciation damages. Daywalt appealed, contesting the amount awarded under the first cause and the denial of the second cause.

ISSUE:
1. Whether the damages awarded for the defendant corporation’s use and occupation of the land should be increased.

RULING:
1. On the first issue (use and occupation): The Supreme Court found no error in the trial court’s basis for computing damages. The rental value was reasonably estimated at 50 centavos per hectare per annum, consistent with the rate Daywalt later charged the defendant. The period of liability was correctly fixed from June 1, 1909, to May 1, 1914. However, the Court noted a slight computational error in the trial court’s judgment. Recalculating for the full period of 4 years and 11 months at 50 centavos per hectare for 1,248 hectares, the correct amount is P3,044. The judgment was modified to award this amount instead of P2,497.

2. On the second issue (depreciation damages): The Supreme Court denied the claim. The damages sought were classified as “special damages” under the rule in Hadley v. Baxendale. Such damages are recoverable only if, at the time the contract was made, the special circumstances making them a probable result of a breach were communicated to and contemplated by the breaching party. Here, the alleged depreciation due to a general fall in land values was not within the contemplation of the parties when the 1908 contract was executed. Furthermore, such damages were deemed too remote and speculative. This conclusion absolved both Teodorica Endencia and the defendant corporation from liability under this cause. The corporation, though it advised Endencia not to perform, could not be held liable for damages greater than those recoverable from the principal obligor.

DISPOSITIVE PORTION:
The judgment of the trial court was AFFIRMED with MODIFICATION. The award for damages for use and occupation was increased from P2,497 to P3,044. The denial of the claim for depreciation damages was sustained. Costs were imposed on the appellant.