VIVENCIO CERRANO, PLAINTIFF AND APPELLEE, VS. TAN CHUCO, DEFENDANT AND APPELLANT.

This is an action by plaintiff for damages alleged to have been caused by the
breach of a contract for the hiring of a casco. The trial court gave judgment
for plaintiff. Defendant excepted to the judgment, moved for a new trial,
excepted to the order denying the motion, and brought the case to this court by
bill of exceptions.

The facts established by the evidence are that during the month of January,
1916, the defendant, who was then the owner of casco No. 1033, rented it to the
plaintiff at a monthly rental of P70. The contract was made in Manila, and the
casco was delivered to the plaintiff in this city. There was no express
agreement as regards the duration of the contract. The rent was payable at the
end of each month. Some time during the month of May, 1916, the defendant
notified plaintiff that in “the following month it would be necessary to send
the casco to Malabon for repairs. Plaintiff then informed the defendant that he
would like to rent the casco again after the repairs had been completed.
Defendant indicated that he was willing to rent it, but would expect P80 a month
for it. Plaintiff contends that it was agreed that he was to take the casco at
the increased rental while defendant insists that his offer to lease it at the
higher rate was never accepted. It is admitted, however, that there was no
agreement between the parties concerning the length of time for which the hire
of the casco was to continue. It is contended on behalf of plaintiff, and denied
by defendant, that according to the custom prevailing in the port of Manila, a
contract for the rental of a casco, when made by the owner, is deemed, in the
absence of an express stipulation to the contrary, to run from the date of the
contract until the casco has to be docked for its annual overhauling and repair.
In this case it is contended by plaintiff that the contract of hire was to
commence as soon as the casco came off the dock and that its term was to be ten
months, this being the period which is ordinarily allowed from one docking to
another. Defendant, on the contrary, contends that in the absence of an express
stipulation regarding the duration of the hire, it is deemed to be from month to
month when a monthly rental is agreed upon.

The casco was taken to Malabon by plaintiff in June, 1916, and delivered at
the shipyard selected by defendant. The casco remained there, undergoing
repairs, until the 24th of July, 1916. About one week before the end of the
repair period defendant sold the casco to Siy Cong Bieng & Co. J. Santos,
the man who had been employed by plaintiff as patron of the casco while
it was in his possession, upon hearing that it had been sold to Siy Cong Bieng
& Co. went to the office of the latter in Manila, and asked for employment
in the same capacity. He received from Siy Cong Bieng & Co. P5 on account of
his wages, and was instructed by them to go to Malabon and bring the casco to
Manila, which he did, Siy Cong Bieng & Co. supplying the launch by which the
casco was towed. Upon the arrival of the casco in Manila, however, the
plaintiff, claiming that he was entitled to the possession of the casco under
his contract with the defendant, regardless of its sale to Siy Cong Bieng &
Co., induced Santos to refuse to take orders from the new owners. The result was
that Siy Cong Bieng & Co. were obliged to bring an action of replevin
against Santos for the recovery of the possession of their dasco. The sheriff
took possession of the casco under a writ of replevin, but redelivered it to
Santos upon a delivery bond executed by the present plaintiff and his wife as
sureties. After the casco had been in possession of Santos for some three
months, the replevin suit was submitted to the court for decision upon a written
stipulation in which it was admitted that the casco was the property of Siy Cong
Bieng & Co. at the time the suit was commenced, and that the “illegal
detention” of the casco by Santos had caused damages to Siy Cong Bieng & Co.
in the sum of P457.98. Upon this stipulation judgment was entered for the
delivery of the casco to Siy Cong Bieng & Co. and for P457.98 as damages.
Cerrano, the plaintiff in the present action, paid the judgment in favor of Siy
Cong Bieng & Co. in the replevin suit, for which he had become liable under
the terms of the delivery bond. The evidence shows that Santos was only a
nominal defendant in the replevin suit, which was entirely controlled by the
present plaintiff. In addition to paving the judgment for damages rendered, in
favor of Siy Cong Bieng & Co. in the replevin suit, the present plaintiff,
Cerrano, paid P500 to the attorney employed by him to defend that action on
behalf of the nominal defendant, Santos. Plaintiff testified that the average
profit derived by him from other cascos rented by him during the period during
which he contends he should have had possession of the casco in question was P60
a month for each casco. Upon these facts, the trial court held that the
defendant had rented the casco in question to plaintiff for a term of ten
months, and for the breach of the contract he was liable to plaintiff in the sum
of P600 for the loss of the profits he would have derived from the use of the
casco, and that he is also liable to plaintiff for the sum of P457.98 paid by
him as damages to Siy Cong Bieng & Co. in the replevin suit, and for the sum
of P500 paid to the attorney employed by Cerrano to defend Santos in that
action.

The first question which arises on this appeal is whether it was agreed
between the plaintiff and defendant that the casco was to be leased to the
former again after it had been repaired. It is contended by defendant that while
he offered to rent the casco to plaintiff for P80 a month, this offer was never
accepted. We are of the opinion, however, that the evidence sustains the
conclusion of the lower court that it was understood between the parties, when
the casco was taken to Malabon in June, that plaintiff was to have it again at
the increased rental as soon as the contemplated repairs had been completed.
That such was the understanding is shown by the fact that plaintiff paid for the
towage of the casco to the dry dock at Malabon; that he left his equipment in
it; and that his patron stayed with the casco in Malabon during the
time it was on the dock. There can be no doubt, in our opinion, that the casco
had been rented to plaintiff, and that its sale to Siy Cong Bieng & Co. was
a breach of the contract.

Having concluded that the casco was under hire to plaintiff at the time it
was sold and delivered to Siy Cong Bieng & Co. by defendant, the next
inquiry relates to the duration of the term. Plaintiff contends that in
accordance with the custom of the port of Manila it was to be ten months from
July 24, 1916, when the repairs were completed. Defendant contends that in the
absence of an express agreement for a definite period, when a monthly rent is
reserved, it is to be understood that the hiring is from month to month. The
court below found that the custom of Manila with regard to such agreements is as
contended by plaintiff. The evidence on this subject is very conflicting and
unsatisfactory, however, and is not sufficient, in our judgment, to warrant a
finding of the existence of such a custom. There is no definite season of the
year, of necessity, when cascos are docked, nor is it possible, in the nature of
things, that the length of time which must transpire from one overhauling to
another can be fixed and invariable with respect to any particular vessel. It
must depend, of course, upon the age and condition of the vessel. If any such
custom in fact existed it would produce the absurd result that in one case the
parties might be bound for a year or more while in the next a contract in the
same terms might not last a month. Furthermore, there is obviously no definite
standard by which to determine the precise period at which it becomes
necessary to dock a casco. One owner might deem it essential to dock
his casco and have her overhauled, while the same casco in the hands of another
owner might be kept at work for several months more. The uncertainty and the
unreasonable character of the alleged custom are such that we should be
unwilling to fasten it upon the port of Manila upon evidence so unsatisfactory
as that relied upon in this case.

There being no rule of law, expressly applicable to the hiring of personal
property in general or of vessels in particular, by which the duration of such a
contract is to be determined, and no local custom having been satisfactorily
proved, we are required to apply the general principles of law. (Civil Code,
art.. 6.) Under this authorization we may adopt and apply by analogy the general
rules established by the Code relating to the lease of real property. We find
that article 1581 of the Civil Code provides that when no definite agreement has
been made regarding its du^ration, the lease of a house is deemed to have been
made from day to day, from month to month, or from year to year, according to
whether a daily, monthly, or yearly rent is to be paid. That is to say, this
article establishes the reasonable presumption that one who agrees to pay a
monthly rent intends that his tenancy is to endure for a like period, subject to
indefinite tacit renewals at the end of each month as long as the arrangement is
agreeable to both parties. We are of the opinion that a similar presumption
arises under similar conditions with respect to the hire of personal property,
in the absence of special circumstances showing a contrary intention. This is
the rule of the French law, stated by Dalloz (Jur. Gen., vol. 30, p. 482) as
follows:

“In the absence of any circumstance * * * which indicate (s) that it was the
intention of the parties that the bailment should continue for a definite term,
if a chattel—a horse, for example—is hired by the day or by the week, the
bailment ceases at the end of each day, or of each week, if either of the
parties so desires * * *.”

Our conclusion is, therefore, that under the terms of his contract the
defendant was bound to deliver the casco to plaintiff for one month from the
date upon which the repairs were ended, but was under no obligation to renew the
contract at the end of the month. By selling the casco to Siy Cong Bieng &
Co. he broke his contract with plaintiff and is responsible for the damages
caused by his failure to give plaintiff possession of the casco for the term of
one month. The only evidence on this subject is the testimony of plaintiff to
the effect that his average profits from the rented casco were P60 a month. The
appellant contends that this does not furnish the proper measure of damages, but
that plaintiff’s right is limited to the recovery of the difference between the
contract price at which the casco was hired by him and such higher rate as he
might have been compelled to pay for the hire of a similar casco in the open
market to take its place. Defendant further contends that it was the duty of
plaintiff to endeavor to obtain another casco at the best rate possible, as soon
as he was notified that defendant would not perform his contract, and that the
burden rests upon plaintiff to show that he did so. We are of opinion that the
plaintiff is entitled to recover, as damages for the breach of the contract by
the defendant, the profit which he would have been able to make had the contract
been performed. He has testified, without contradiction, that the average net
profit made by him from the casco in question during the time it was in his
possession was P60 a month. During this period he was paying rent for it at the
rate of P70 a month. Under the terms of the contract now under consideration he
was to have paid P80 a month for it, which we must assume would have reduced the
profit to P50 a month. Article 1106 of the Civil Code establishes the rule that
prospective profits may be recovered as damages, while article 1107 of the same
Code provides that the damages recoverable for the breach of obligations not
originating in fraud (dolo) are those which were or might have been
foreseen at the time the contract was entered into. Applying these principles to
the facts in this case, we think that it is unquestionable that defendant must
be deemed to have foreseen at the time he made the contract that in the event of
his failure perform it, the plaintiff would be damaged by the loss of the profit
he might reasonably have expected to derive from its use.

When the existence of a loss is established, absolute certainty as to its
amount is not required. The benefit to be derived from a contract which one of
the parties has absolutely failed to perform is of necessity to some extent, a
matter of speculation, but the injured party is not to be denied all remedy for
that reason alone. He must produce the best evidence of which his case is
susceptible and if that evidence warrants the inference that he has been damaged
by the loss of profits which he might with reasonable certainty have anticipated
but for the defendant’s wrongful act, he is entitled to recover. As stated in
Sedgwick on Damages (Ninth Ed., par. 177) :

“The general rule is, then, that a plaintiff may recover compensation for any
gain which he can make it appear with reasonable certainty the defendant’s
wrongful act prevented him from acquiring, * * * (See also Algarra
vs. Sandejas, 27 Phil. Rep., 284, 289; Hicks vs. Manila Hotel
Co., 28 Phil. Rep., 325.)

The uncontradicted testimony of the plaintiff as regards the profits earned
by him in the past from the use of the casco in question is, in our judgment,
sufficient to justify the conclusion that had defendant complied with his
agreement, plaintiff would have earned a net profit of P50 from the use of the
casco in the month during which he was entitled to its possession. It is
contended by defendant, however, that “it must be presumed” that plaintiff could
have secured another casco at the same price had he looked for it. It is a well
recognized principle of law that damages resulting from avoidable consequences
of the breach of a contract or other legal duty are not recoverable. It is the
duty of one injured by the unlawful act of another to take such measures as
prudent men usually take under such circumstances to reduce the damages as much
as possible. (Warren vs. Stoddart, 15 Otto, 224; Baird vs. U.
S., 21 L. ed. [17 Wallace], 519, No. 1.)

It is equally well settled, however, that the burden of proof rests upon the
defendant to show that the plaintiff might have reduced the damages. (Sedgwick
on Damages, Ninth Ed., par. 227.) In this case the defendant has made no effort
whatever to show that any other similar cascos were in fact available to
plaintiff, or the price at which he would have been able to obtain the use of
one. In the absence of evidence it will not be presumed that plaintiff
could have secured another casco at the same price had he looked for one.

It is contended by appellant that the trial court erred in holding him liable
for the money which plaintiff expended in connection with the litigation between
Siy Cong Bieng & Co. and J. Santos. We are of the opinion that this point is
well taken. The contract of lease or hiring does not create a right in
rem in favor of the lessee, except in the case of a recorded lease
of real estate. It is admitted that the casco was sold to Siy Cong Bieng &
Co. and that Santos’ attempt to retain possession of it against the lawful
owners by whom he had been placed in charge of it, was unlawful. The present
plaintiff was not a party to that suit. In becoming a surety upon Santos’ bond
and in paying the attorney employed to defend the latter he acted voluntarily
and officiously. If he is unable to recover from Santos the money paid by him
upon latter’s account— as to which the record is silent—that fact will not
justify us in imposing the burden of repaying this money upon the defendant. The
latter is liable for the damages which he might have foreseen as those
reasonably to be anticipated as the natural and probable consequence of the
breach of the contract, but the damages suffered by plaintiff by reason of his
voluntary assumption of the liability incurred by Santos by reason of his
unlawful attempt to withhold possession of the casco from its owners, by whom he
was put in charge of it, are not attributable to defendant and he is not
responsible for them. The proximate cause of the loss incurred by plaintiff as a
result of his voluntary assumption of liability for the unlawful acts of Santos
was not the breach of his contract by defendant herein, but plaintiff’s own
imprudence.

The judgment of the lower court is therefore reversed, and it is adjudged and
decreed that the plaintiff recover from defendant P50 as damages, and his costs
in the Court of First Instance. No costs will be allowed in this court. So
ordered.

Arellano, C. J., Carson, Street, and Avanceña, JJ.,
concur.

Torres, J., dissents, with whom concurs Malcolm, J.

---

DISSENTING OPINION

TORRES, J., dissenting:

I am of the opinion that the judgment appealed from should be
affirmed.