OBLIGATIONS AND CONTRACTS

DIGESTS OF SOME CASES ON THE CHARACTERISTICS OF CONTRACTS AND

ESSENTIAL REQUISITES OF CONTRACTS

By:
AIZA LIZA P. NAMINGIT
2006-64381
I- EVENING

On Effects of Contract as to Third Parties in Relation to their Interference

1. The case of Daywalt v La Corporacin de los Padres Agustinos Recoletos, et. al.
39 Phil. 587 (1919)
The decision was promulgated on 04 February 1919 penned by Justice Street.
Facts:
The case is an appeal from the decision of the Court of First instance of Manila.
In 1902, Teodorica Endencia executed a contract with Geo W. Daywalt wherein she
obligated herself to convey to Daywalt a parcel of land in barrio of Mangarin, Bulalacao,
Mindoro that originally measured 452 hectares. They executed a second contract in the
form of a deed of conveyance with a stipulated price fixed at P4, 000.00. It was agreed
upon that Endencia shall deliver to Daywalt the Torrens Title upon receipt through the
method stiulated.
In the issuance of the Torrens Title, it was later found out that the said parcel of land
measured to 1,248 hectares instead of 452 hectares. Thus, Endencia became reluctant
to transfer the whole tract to the purchaser asserting.
The Court ruled in favor of Daywalt in obtaining a decree for specific performance;
Endencia was ordered to convey the entire tract of land to Daywalt pursuant to their
contract, which was declared to be in full force and effect.
The defendant, La Corporacin de los Padres Agustinos Recoletos came into the
picture when, being a neighbor of Endencia with knowledge on the existence of
Endencias contract with Daywalt, took in custody the Torrens certificate of the land.
When the defendant sold the land adjacent to Endencias land, they entered into an
agreement with Endencia who was still in possession of the land in question whereby a
large numbers of cattle owned by the defendant were pastured in the land.
Issue:
WON defendant corporation unlawfully induced 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 in her defense to the action of specific performance;
WON a person who is not a party to a contract 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;
WON damages, which the plaintiff seeks to recover, are too remote and speculative to
be the subject of recovery.
Ratio:

2. The case of So Ping Bun v Court of Appeals

314 SCRA 751 (1999)

The decision was promulgated on 21 September 1999 penned by Justice
Quisimbing.
Facts:
The case is petition for review of a decision of the Court of Appeals.
In 1963, Tek Hua Trading Co. through its managing partner, So Pek Giok
entered into 4 lease agreements with lessor Dee C. Chuan & Sons, Inc. (DCCI)
for several properties located at Soler Street Binondo, Manila. The agreements
each had a 1-year term after which, the lease would be on a month-to-month
basis. The areas were used to store textiles of the lessee.
In 1973, Tek Hua Trading Co. dissolved. Later on, the original members including

Manuel Tiong formed Tek Hua Enterprising Corp.

In 1986, So Pek Giok died. The leased areas were then occupied but his
grandson, So Ping Bun, for his own textile business, Trendsetter Marketing.
In 1991, Manuel Tiong wrote So Ping Bun advising him that he has decided to return
into the textile business and to vacate his stocks in Tek Hua Enterprising Corp.
warehouse.
So Ping Bun refused to vacate and requested formal contract of lease with DCCI in
favor of Trendsetter Marketing claiming that he had been occupying the premises and
religiously paid the rent. The lease contracts were executed in favor of Trendsetter
Marketing.
Thus, a suit for injunction seeking the nullification of the lease contracts between DCCI
and Trendsetter Marketing was filed.
Issue:
WON So Ping Bun is guilty of tortuous interference of contract.
Ratio:
A duty that the law of torts is concerned with is respect for the property of others, and
one person of the enjoyment may predicate a cause of action ex delicto upon an
unlawful interference by the other of his private right. This may pertain to a situation
where a third person induces a party to renege on or violate his undertaking under a
contract. The elements of tort interference are: 1. Existence of a valid contract; 2.
Knowledge on the part of the third person of the existence of contract; 3. Interference of
the third person without legal justification or excuse.
In the case, Trendsetter Marketing aked DCCSI to execute lease contracts in its favor,
and as a result petitioner deprived Tek Hua Enterprising Corp. of the latters property
rights. The 3 elements are sufficiently met. The Court, however, ruled that malice did not
motivate petitioners actions.

While there was no malice in the interference of a contract, and the impulse behind
ones conduct lies in a proper business interest rtahen that in wrongful motives, a party
cannot be a malicious interferer