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G.R.No. 2412, April 11, 1906

FACTS: Pedro Roman, the owner of the schooner Sta. Maria and Andres Grimalt had been negotiating for several
days for the purchase of the schooner. They agreed upon the sale of the vessel for the sum of P1500 payable on
three installments, provided the title papers to the vessel were in proper form. The sale was not perfected and the
purchaser did not consent to the execution of the deed of transfer for the reason that the title of the vessel was in
the name of one Paulina Giron and not in the name of Pedro Roman. Roman promised however, to perfect his
title to the vessel but he failed to do so. The vessel was sunk in the bay in the afternoon of June 25, 1904 during
a severe storm and before the owner had complied with the condition exacted by the proposed purchaser. On the
30th of June 1904, plaintiff demanded for the payment of the purchase price of the vessel in the manner stipulated
and defendant failed to pay.
ISSUE: Whether there was a perfected contract of sale and who will bear the loss.
HELD: There was no perfected contract of sale because the purchase of which had not been concluded. The
conversations had between the parties and the letter written by defendant to plaintiff did not establish a contract
sufficient in itself to create reciprocal rights between the parties.
If no contract of sale was actually executed by the parties the loss of the vessel must be borne by its owner and
not by the party who only intended to purchase it and who was unable to do so on account of failure on the part
of the owner to show proper title to the vessel and thus enable them to draw up contract of sale.


LAW ON SALES Cases Compilation (Digest) Batch 4

Ponente: De Leon Jr. Facts: Bernal spouses purchased from (petitioner) Union Motor Corporation one Cimarron
Jeepney to be paid in installments and executed a promissory note and a deed of chattel mortgage in favor of the
petitioner, and entered into a contract of assignment of the promissory note and chattel mortgage with Jardine-
Manila Finance, Inc through Manuel Sosmea, an agent of the petitioner, although the respondent spouses have
not yet physically possessed the vehicle, Sosmea required them to sign the receipt as a condition for the delivery
of the vehicle. Spouses continued paying the installments even if the subject motor vehicle remained undelivered
inasmuch as Jardine-Manila Finance, Inc. promised to deliver the subject jeepney. The respondent spouses have
paid a total of worth of installments before they discontinued paying on account of non-delivery of the subject
motor vehicle, the reason why the vehicle was not delivered was due to the fact that Sosmea allegedly took the
subject motor vehicle in his personal capacity. Jardine-Manila Finance, Inc., filed a complaint for a sum of money,
against the respondent Bernal spouses before the then Court of First Instance of Manila.The complaint was
amended and transferred to the Regional Trial Court of Makati to include petitioner Union Motor Corporation as
alternative defendant, after the petitioner filed its answer, the respondent spouses filed their amended answer with
cross-claim against the former and counterclaim against Jardine-Manila Finance, Inc. The respondent spouses
presented witnesses in support of their defense and counterclaim against the plaintiff and cross-claim against the
petitioner.The trial court deemed the presentation of the said witness as having been waived by the petitioner.
Trial court rendered a decision ordering petitioner to pay the spouses. Not satisfied the petitioner interposed an
appeal before the Court of Appeals while the respondent spouses appealed to hold the petitioner solidarily liable
with Jardine-Manila Finance, Inc.The appellate court denied both appeals and affirmed the trial courts decision.
Hence this petition Issue1: Whether there has been a delivery, physical or constructive, of the subject motor
vehicle. Issue 2: Whether spouses must bear the risk of the loss of the thing sold. Held 1: NO to both. The
respondent Bernal spouses should bear the loss thereof in accordance with Article 1504 that when the ownership
of goods is transferred to the buyer, the goods are at the buyers risk. But Bernal spouses never came into
possession of the subject motor vehicle. It is but appropriate that they be reimbursed by the petitioner of the initial
payment which they made. The court ruled in favor of the respondent Bernal spouses. Undisputed is the fact that
the respondent Bernal spouses did not come into possession of the subject Cimarron jeepney that was supposed
to be delivered to them by the petitioner. The registration certificate, receipt and sales invoice that the respondent
Bernal spouses signed were signed as a part of the processing and for the approval of their application to buy the
subject motor vehicle. Without such signed documents, no sale, much less delivery, of the subject jeepney could
be made. The documents were not therefore an acknowledgment by respondent spouses of the physical acquisition
of the subject motor vehicle but merely a requirement of delivery. Issuance of a sales invoice does not prove
transfer of ownership of the thing sold to the buyer; an invoice is nothing more than a detailed statement of the
nature, quantity and cost of the thing sold and has been considered not a bill of sale. The thing is considered to be
delivered when it is placed in the hands and possession of the vendee. (Civil Code, Art. 1462). It is true that the
same article declares that the execution of a public instrument is equivalent to the delivery of the thing which is
the object of the contract, but, in order that this symbolic delivery may produce the effect, it is necessary that the
vendor shall have had control over the thing sold that, at the moment of the sale, its material delivery could have
been made. It is not enough to confer upon the purchaser the ownership and the right of possession. The thing
sold must be placed in his control. When there is no impediment whatever to prevent the thing sold passing into
the tenancy of the purchaser by the sole will of the vendor, symbolic delivery through the execution of a public
instrument is sufficient. But if, notwithstanding the execution of the instrument, the purchaser cannot have the
enjoyment and material tenancy of the thing and make use of it himself or through another in his name, because
such tenancy and enjoyment are opposed by the interposition of another will, then the delivery has not been
effected. Held 2: Inasmuch as there was neither physical nor constructive delivery of a determinate thing, (in this
case, the subject motor vehicle) the thing sold remained at the sellers risk.The petitioner should therefore bear the
loss of the subject motor vehicle after Sosmea allegedly stole the same. Decision AFFIRMED.
LAW ON SALES Cases Compilation (Digest) Batch 4

Perfecto Tabora bought from the Lawyers Cooperative Publishing Company a complete set of AmJur, plus a set
of AmJur, General Index.
CONTRACT Title to and ownership of the books shall remain with the seller until the purchase price shall have
been fully paid. Loss or damage to the books after delivery to the buyer shall be borne by the buyer.
Tabora made a partial payment of P300.00, leaving a balance of P1,382.40. The books were delivered and
receipted for by Tabora. On the same day, a fire broke out, burning down Taboras law office and library. Tabora
immediately reported it to LCBC. The company replied and as a token of goodwill it sent to Tabora free of charge
4 Philippine Reports volumes.
As Tabora failed to pay the monthly installments agreed upon, LCBC filed an action to recover of the
Contract: title to and the ownership of the books shall remain with the seller until the purchase price shall have
been fully paid, so LCBC should bear the loss
Even assuming that the ownership was transferred to Tabora, he should not answer for the loss: force majeure
(no evidence that Tabora contributed in any way)
Who bears the loss? Tabora
GENERAL RULE The loss of the object of the contract of sale is borne by the owner or in case of force
majeure the one under obligation to deliver the object is exempt from liability
THIS IS NOT APPLICABLE HERE Contract provides that loss or damage after delivery shall be borne by
the buyer
The rule only holds true when the obligation consists in the delivery of a determinate thing and there is no
stipulation holding him liable even in case of fortuitous event.
The obligation is pecuniaryin nature, and the obligor bound himself to assume the loss after the delivery.



On September 20, 1979, private respondent Alberto Nepales bought from the Norkis Distributors, Inc. (Norkis)
in its Bacolod branch a brand new Yamaha Wonderbike motorcycle Model YL2DX with Engine No.L2-329401K
Frame No.NL2-0329401, color maroon, which was then on display in the Norkis showroom. The Branch Manager
Avelino Labajo agreed to accept the P7,500.00 price payable by means of a Letter of Guaranty from the
Development Bank of the Philippines (DBP), Kabankalan. Hence, credit was extended to Nepales, and as security
for the loan, he executed a chattel mortgage on the motorcycle in favor of DBP. Labajo issued the Norkis Sales
Invoice No. 0120 perfecting the contract of sale, and Nepales signed the same to conform to the terms of the sale,
while the unit remained in Norkis' possession. On November 6, 1979, it was registered under Alberto Nepales
name in the Land Transportation Commission.

On January 22, 1980, the motorcycle was delivered to a certain Julian Nepales who was allegedly the agent of
Alberto Nepales but the latter denies it. The record shows, however, that Alberto and Julian Nepales presented
the unit to DBP's Appraiser-Investigator Ernesto Arriesta at the DBP offices in Kabankalan, Negros Occidental
Branch. On February 3, 1980, the motorcycle met an accident at Binalbagan, Negros Occidental while being
driven by a certain Zacarias Payba. The unit was a total wreck, was returned, and stored inside Norkis' warehouse.

LAW ON SALES Cases Compilation (Digest) Batch 4
On March 20, 1980, DBP released the proceeds of private respondent's motorcycle loan to Norkis in the total sum
of P7,500. As the price of the motorcycle later increased to P7,828 in March, 1980, Nepales paid the difference
of P328 and demanded the delivery of the motorcycle. Norkis failed to deliver the unit, and Nepales filed an
action for specific performance with damages in the RTC of Himamaylan, Negros Occidental. Norkis answered
that the motorcycle had already been delivered to private respondent before the accident, hence, he should bear
the risk of loss or damage as owner of the unit. The lower court ruled in favor of Nepales, and the Court of Appeals
affirmed the decision but deleted the award of damages "in the amount of P50.00 a day from February 3, 1980
until payment of the present value of the damaged vehicle." Norkis concedes that there was no "actual" delivery
of the vehicle, but insists that there was constructive delivery of the unit upon the issuance of the sales invoice,
upon the registration of the unit in Nepales name, and upon the issuance of the official receipt.


Who should bear the risk of loss?

Affirming the decision of the Court of Appeals, the Supreme Court reiterated that Article 1496 of the Civil Code
which provides that "in the absence of an express assumption of risk by the buyer, the things sold remain at seller's
risk until the ownership thereof is transferred to the buyer," is applicable in the case at bar for there was neither
an actual nor constructive delivery of the thing sold.

The Court of Appeals correctly ruled that the purpose of the execution of the sales invoice dated September 20,
1979 and the registration of the vehicle in the name of Alberto Nepales with the Land Registration Commission
was not to transfer the ownership and dominion over the motorcycle to him, but only to comply with the
requirements of the DBP for processing private respondent's motorcycle loan. The circumstances in the case itself
more than amply rebut the disputable presumption of delivery upon which Norkis anchors its defense to Nepales'


There is a perfected sale with regard to the thing whenever the article of sale has been physically segregated
from all other articles.
Gonzalez received P3,000 from Yu Tek and Co. and in exchange, the former obligated himself to deliver 600
piculs of sugar of the first and second grade, according to the result of the polarization, within the period of
three months. It was also stipulated that in case Gonzales fails to deliver, the contract will be rescinded he will
be obligated to return the P3,000 received and also the sum of P1,200 by way of indemnity for loss and
Plaintiff proved that no sugar had been delivered to him under the contract nor had he been able to recover the
Gonzales assumed that the contract was limited to the sugar he might raise upon his own plantation; that the
contract represented a perfected sale; and that by failure of his crop he was relieved from complying with his
undertaking by loss of the thing due.
Whether or not there was a perfected contract of sale
No. This court has consistently held that there is a perfected sale with regard to the thing whenever the article
of sale has been physically segregated from all other articles.

LAW ON SALES Cases Compilation (Digest) Batch 4
In the case at bar, the undertaking of the defendant was to sell to the plaintiff 600 piculs of sugar of the first and
second classes. Was this an agreement upon the thing which was the object of the contract? For the purpose
of sale its bulk is weighed, the customary unit of weight being denominated a picul. Now, if called upon to
designate the article sold, it is clear that the defendant could only say that it was sugar. He could only use this
generic name for the thing sold. There was no appropriation of any particular lot of sugar. Neither party could
point to any specific quantity of sugar and say: This is the article which was the subject of our contract.
We conclude that the contract in the case at bar was merely an executory agreement; a promise of sale and not a
sale. There was no perfected sale.


LAW ON SALES Cases Compilation (Digest) Batch 4

Doctrine: An irrevocable letter of credit cannot, during its lifetime, be cancelled or modified without the
express permission of the beneficiary.
Facts: Timoteo Sevilla, proprietor and General Manager of the Philippine Associated Resources (PAR) was
awarded in a public bidding the right to import Virginia leaf tobacco. Subsequently, the Philippine Virginia
Tobacco Administration (PVTA) and Sevilla entered into a contract for the importation of 85 million kilos of
Virginia leaf tobacco and a counterpart exportation of 2.53 million kilos of tobacco and 5.1 million kilos of
farmers and tobacco at P3.00 a kilo. In accordance with their contract Sevilla purchased from PVZTA and
exported 2,101.470 kilos of tobacco, paying the PVTA the sum of P2,482,938.50 and leaving a balance of
P3,713,908.91. Before respondent Sevilla could import the counterpart blending Virginia tobacco, amounting to
525,560 kilos, Republic Act No. 4155 was passed and took effect on June 20, 1 964, authorizing the PVTA to
grant import privileges at the ratio of 4 to 1 instead of 9 to 1 and to dispose of all its tobacco stock at the best
price available.

Because of the prevailing export or world market price under which Sevilla will be exporting at a loss, the
agreement was further amended to require Sevilla would open an irrevocable letter of credit with the Prudential
Bank and Trust Co. (Prudential) in favor of the PVTA to secure the payment of said balance, drawable upon the
release from the Bureau of Customs of the imported Virginia blending tobacco. While Sevilla was trying to
negotiate the reduction of the procurement cost of the 2,101.479 kilos of PVTA tobacco already exported which
attempt was denied by PVTA and also by the Office of the President. PVTA attempted to collect from the letter
of Credit with Prudential. Sevilla filed an injunction for the release of funds with Prudential in the sala of Judge
Delos Santos. Judge Delos Santos issued the injunction order and in a subsequent petition, ordered the funds of
the letter of credit released to Sevilla.

Issue: Whether or not Judge Sevilla acted with grave abuse of discretion in releasing the funds to the applicant
of the letter of credit.

Held: Judge Delos Santos violated the irrevocability of the letter of credit issued by respondent Bank in favor of
petitioner. An irrevocable letter of credit cannot, during its lifetime, be cancelled or modified Without the
express permission of the beneficiary. Consequently, if the finding the trial on the merits is that respondent
Sevilla has ailieged unpaid balance due the petitioner, such unpaid obligation would be unsecured.


LAW ON SALES Cases Compilation (Digest) Batch 4
LAW ON SALES Cases Compilation (Digest) Batch 4