You are on page 1of 8

G.R. No.

L-2412 April 11, 1906

PEDRO ROMAN, plaintiff-appellant,


ANDRES GRIMALT, defendant-appellee.

Alberto Barretto, for appellant. Chicote, Miranda and Sierra, for appellee.


On July 2, 1904, counsel for Pedro Roman filed a complaint in the Court of First Instance of this city against Andres Grimalt,
praying that judgment be entered in his favor and against the defendant (1) for the purchase price of the schooner Santa
Marina, to wit, 1,500 pesos or its equivalent in Philippine currency, payable by installments in the manner stipulated; (2) for
legal interest on the installments due on the dates set forth in the complaint; (3) for costs of proceedings; and (4) for such
other and further remedy as might be considered just and equitable.

On October 24 of the same year the court made an order sustaining the demurer filed by defendant to the complaint and
allowing plaintiff ten days within which to amend his complaint. To this order the plaintiff duly excepted.

Counsel for plaintiff on November 5 amended his complaint and alleged that between the 13th and the 23rd day of June,
1904, both parties, through one Fernando Agustin Pastor, verbally agreed upon the sale of the said schooner; that the
defendant in a letter dated June 23 had agreed to purchase the said schooner and of offered to pay therefor in three
installment of 500 pesos each, to wit, on July 15, September 15, and November 15, adding in his letter that if the plaintiff
accepted the plan of payment suggested by him the sale would become effective on the following day; that plaintiff on or
about the 24th of the same month had notified the defendant through Agustin Pastor that he accepted the plan of payment
suggested by him and that from that date the vessel was at his disposal, and offered to deliver the same at once to
defendant if he so desired; that the contract having been closed and the vessel being ready for delivery to the purchaser, it
was sunk about 3 o'clock p. m., June 25, in the harbor of Manila and is a total loss, as a result of a severe storm; and that on
the 30th of the same month demand was made upon the defendant for the payment of the purchase price of the vessel in
the manner stipulated and defendant failed to pay. Plaintiff finally prayed that judgment be rendered in accordance with the
prayer of his previous complaint.

Defendant in his answer asked that the complaint be dismissed with costs to the plaintiff, alleging that on or about June 13
both parties met in a public establishment of this city and the plaintiff personally proposed to the defendant the sale of the
said vessel, the plaintiff stating that the vessel belonged to him and that it was then in a sea worthy condition; that defendant
accepted the offer of sale on condition that the title papers were found to be satisfactory, also that the vessel was in a
seaworthy condition; that both parties then called on Calixto Reyes, a notary public, who, after examining the documents,
informed them that they were insufficient to show the ownership of the vessel and to transfer title thereto; that
plaintiff then promised to perfect his title and about June 23 called on defendant to close the sale, and the defendant
believing that plaintiff had perfected his title, wrote to him on the 23d of June and set the following day for the execution of
the contract, but, upon being informed that plaintiff had done nothing to perfect his title, he insisted that he would buy the
vessel only when the title papers were perfected and the vessel duly inspected.

Defendant also denied the other allegations of the complaint inconsistent with his own allegations and further denied the
statement contained in paragraph 4 of the complaint to the effect that the contract was completed as to the vessel; that the
purchase price and method of payment had been agreed upon; that the vessel was ready for delivery to the purchaser and
that an attempt had been made to deliver the same, but admitted, however, the allegations contained in the last part of the
said paragraph.

The court below found that the parties had not arrived at a definite understanding. We think that this finding is supported b y
the evidence introduced at the trial.

A sale shall be considered perfected and binding as between vendor and vendee when they have agreed as to the thing
which is the object of the contract and as to the price, even though neither has been actually delivered. (Art. 1450 of
the Civil Code.)

Ownership is not considered transmitted until the property is actually delivered and the purchaser has taken possession of
the value and paid the price agreed upon, in which case the sale is considered perfected.

When the sale is made by means of a public instrument the execution thereof shall be equivalent to the delivery of the
thing which is the object of the contract. (Art. 1462 of the Civil Code.)

Pedro Roman, the owner, and Andres Grimalt, the purchaser, had been for several days negotiating for the purchase of the
schooner Santa Marina from the 13th to the 23d of June, 1904. They agreed upon the sale of the vessel for the sum of
1,500 pesos, payable in three installments, provided the title papers to the vessel were in proper form. It is so stated in the
letter written by the purchaser to the owner on the 23rd of June.

The sale of the schooner 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, the alleged owner. Roman promised, however, to perfect his title to the vessel, but he failed to do so. The papers
presented by him did not show that he was the owner of the vessel.

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
a 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 the contract of sale.

The vessel was sunk in the bay on the afternoon of the 25th of June, 1904, during a severe storm and before the owner
had complied with the condition exacted by the proposed purchaser, to wit, the production of the proper papers
showing that the plaintiff was in fact the owner of the vessel in question.

The defendant was under no obligation to pay the price of the vessel, 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.

It follows, therefore, that article 1452 of the Civil Code relative to the injury or benefit of the thing sold after a contract has
been perfected and articles 1096 and 1182 of the same code relative to the obligation to deliver a specified thing and the
extinction of such obligation when the thing is either lost or destroyed, are not applicable to the case at bar.

The first paragraph of article 1460 of the Civil Code and section 335 of the Code of Civil Procedure are not applicable. These
provisions contemplate the existence of a perfected contract which can not, however, be enforced on account of the entire
loss of the thing or made the basis of an action in court through failure to conform to the requisites provided by law.

The judgment of the court below is affirmed and the complaint is dismissed with costs against the plaintiff. After the
expiration of twenty days from the date hereof let judgment be entered in accordance herewith and ten days thereafter let
the case be remanded to the Court of First Instance for proper action. So ordered.

Arellano, C.J., Mapa, Johnson, Carson and Willard, JJ., concur.

G.R. No. L-9954 March 22, 1915

CARLOS DE LIZARDI, administrator of the estate of Lim Jocsing, plaintiff-appellee,

F.M. YAPTICO, defendant-appellant.

P. E. del Rosario for appellant.

Aitken and DeSelms for appellee.


Appeal filed through bill of exceptions by counsel for the defendant from the judgment of January 30, 1913, whereby the
Honorable Adolph Wislizenus, judge, sentenced him to pay to the plaintiff the sum of P10,320, with legal interest at the rate
of 6 per cent a years from the date of the filing of the complaint, and the costs.

On June 5, 1913, counsel for Carlos de Lizardi, administrator of the property of the deceased Lim Jocsing, appointed in the
proceedings for the settlement of his intestate estate, filed a complaint in writing in the Court of First Instance of Cebu
alleging; That on October 13, 1912, said Lim Jocsing, then living, placed on board the steamer Bais, lying at Malitbog, Leyte,
a certain quantity of abaca valued at P15,000, consigned to the defendant F.M. Yaptico to be sold in Cebu, Lim Jocsing
insuring said abaca for the sum of P15,000 with an insurance company whose agent in Cebu was the defendant
himself and paying the premium on the insurance policy; that on or about October 15, 1912, by reason of the wrecking
of the said steamer Bais in its voyage to Cebu, Lim Jocsing perished in the sea and at the same time all the abaca
he had on board was lost; that the defendant Yaptico collected the insurance, amounting to P15,000 and appropriated the
sum to his own use, refusing to return it to the plaintiff; wherefore, judgment is prayed against the defendant by sentencing
him to pay the sum of P15,000 to the plaintiff administrator of the property of Lim Jocsing.

In his answer the defendant F.M. Yaptico admitted as a fact that Lim Jocsing had delivered for him and loaded on board the
steamer Bais a certain quantity of abaca valued at P10,320, and under an express contract made between him and Lim
Jocsing the abaca the latter delivered on board the Bais became the property of Yaptico; he also admitted that said
shipment of abaca had been insured in his own name by the defendant, who paid the corresponding premium; that this
abaca was lost as a consequence of the wrecking of the said steamer, on which occasion the said Lim Jocsing
perished; that he likewise admitted the fact of having collected the insurance on the abaca; but he denied that said insurance
belonged to him Jocsing, and furthermore denied all other allegations in the complaint not specifically admitted in his

Under date of October 20, 1913 defendant filed a motion asking leave to amend the first paragraph of his answer, because
the value of the abaca loaded by Lim Jocsing upon the steamer Bais, as billed to the defendant, was only P9,460, but was
insured for P10,320. This motion was denied by the court, as the facts set forth in the amendment might be the object of
proof on trial.

After trial and examination of the evidence adduced by both parties, the court found that the abaca loaded by Lim Jocsing on
the steamer Bais on October 13, 1912, was his property, wherefore it rendered the decision above mentioned. Defendant
excepted thereto and in writing asked for a reopening of the case and moved for a new trial. This motion was denied with
exception on the part of the appellant, who presented his bill of exceptions, which was approved and forwarded to the clerk
of this court.

There is no question whatsoever as to the facts. Manuela Perez Lim Jocsing, a Chinese merchant of the town of Malitbog,
Leyte, secured from the firm of F.M. Yaptico, called also Chiat Seng, of Cebu, the opening of an account current on its books
and furthermore the extension to him of a credit of P15,000 to be employed in the purchase of abaca and copra, this credits
to be guaranteed by all his business (Exhibit B, PP. 60, 61). On October 9, 1912, the Chinaman Manuel telegraphed
several times to the Yaptico firm asking it to send him one of its steamers, with money and certain goods he had ordered
that same day (Exhibit 16, p. 47; Exhibit 18, p. 48; Exhibit 19, p. 52, Exhibit 22, p. 55; and Exhibit 23, p. 57); wherefore
Yaptico sent the steamer Bais to Malitbog, carrying 850 sacks of rice and other goods the value whereof amounted to
P7,127, and also the sum of P4,000 in cash consigned to the said Chinaman Lim Jocsing (Exhibit C, p. 62).

Having received the goods and the money sent by the defendant, said Lim Jocsing in his turn on October 13, 1912, loaded
upon the Bais 430 piculs of abaca consigned to the defendant in Cebu, which abaca at the rate of P22 a picul was worth
P9,460, and this amount was charged to the defendant, while it was also credited on the account current of Lim Jocsing, as
appears from the extract of accounts entered on page 46 of the record.

Aside from the consignment of abaca, copra was also loaded upon the said steamer, and these articles of merchandise were
insured at P15,000 for and in the name of Chiat Seng that is, the defendant Yaptico, in two insurance companies, whose
agent in Cebu was defendant himself (Exhibit 14, p. 45).

It is an indisputable fact that the defendant Yaptico collected the sum of P10,320, the insurance on 430 piculs of abaca at
the rate of P24, a picul, which sum he retains in his possession on the ground that the abaca insured and lost through the
wrecking of the said steamer belonged to him.

We have therefore to decided who was to owner of the abaca carried on board the Bais when it was wrecked, and who is
entitled to collect the insurances on that abaca.

The question resolves itself into an interpretation of the contract entered into between the parties (Exhibit B, PP. 60 and 61
of the record), which gave rise to the commercial relations between Manuela Perez Lim Jocsing of Malitbog, Leyte, and the
firm of F.M. Yaptico of Cebu., This contract, which is written in Chinese characters, was executed about the years 1909 by
the said Lim Jocsing in favor of the firm F.M. Yaptico, or Chiat Seng, and by virtue thereof the defendant opened for him in
its books an account current and at the same time extended to him a credit of P15,000 to be employed in the purchase of
abaca and copra, which was his principal business in the Island of Leyte, Jim Jocsing guaranteeing said credit with the
business he had established.

In the said contract appears the stipulation, among other things, that all the abaca and copra which Lim Jocsing might
secure should to be delivered to the defendant Yaptico and the value thereof should be credited on the shipper's account,
said Lim Jocsing obligating himself to ship these article only Yaptico's steamers and to pay the latter the freight
charge set forth in the contract. Lim Jocsing bound himself to send and deliver to Yaptico at least 10,000 piculs of abaca
annually, but no quantity of copra was fixed, and if the abaca secured did not amount to 10,000 piculs he would pay the
difference, and he obligated himself to pay to the defendant a commission of 20 centavos for each picul sent; but the
warehouse charges, fire insurance, and other expenses the abaca might occasion while it was stored in Cebu would be for
the account of the shipper Lim Jocsing. IN the forth paragraph it was agreed that whenever Yaptico should send a steamer
to Lim Jocsing to get the abaca and copra he would also furnish the latter money and merchandise in value approximating
the amount of abaca and copra delivered. The fifth paragraph of the contract reads literally: "The abaca and copra that I
may deliver to be received on board by his agent shall be for the account of Yaptico,. except in case I should
otherwise expressly provide in writing."

In the remaining paragraph it was agreed how the account should be liquidated and the debt paid to Yaptico.

Plaintiff claims that all the abaca and copra delivered and loaded upon Yaptico's steamer and sent to him in Cebu
belonged to Lim Jocsing, who forwarded them in order that the defendant might sell them on commission, not only
because the Yaptico firm is a commission firm and this kind of transactions form a large part of its business, but also from
the context of the said contract (Exhibit B) it appears that Lim Jocsing could pay a commission of 20 centavos to Yaptico for
each picul of abaca or copra sent to the latter; that these articles of merchandise should be shipped only in the defendant's
steamers at the freight rates stipulated; that furthermore said Lim Jocsing obligated himself to bear the expenses of
storage, insurance, etc., upon the goods while they were stored in Cebu; and therefore the defendant Yaptico had on
various occasions telegraphed to Lim Jocsing in Malitbog the price quoted for abaca and copra in the Cebu market and at
other times communicated to him by telegraph the sales of his abaca or copra, giving the grade of the article, the selling
price and the buyer's name (Exhibit 16, p.47; Exhibit 17, p.49; Exhibit 20, p. 50; and Exhibit 25, p. 53).

Finally, the plaintiff Lizardi produced in evidence various documents he had found among the papers belonging to the
deceased Lim Jocsing, some of which are invoices for goods sent him by the defendant Yaptico; various extracts from
Lim Jocsing's account current, which under the contract (Exhibit B) the defendant sent him monthly, in which extract Lim
Jocsing is credited with the value of the sales of copra and abaca (Exhibit 6, 7, 8, and 12, ); some statements of sale of
abaca sent to Lim Jocsing by the defendant showing he quantity, grade, price, and buyer's name (Exhibits 9, 10, and 11). All
these documents are drawn up in Chinese, but heir corresponding translations into Spanish are attached are attached to the
originals. In the said statement of sale it appears that Lim Jocsing paid the expenses of the abaca sold in Cebu,
consisting of freight charges, drying, insurance, internal-revenue tax, and defendant's commission, expenses that
by the terms of the contract (Exhibit B) Lim Jocsing was obligated to meet.
It is now alleged by the plaintiff that in view of these facts the conclusions is inevitable that the abaca which Lim
Jocsing sent to the defendant Yaptico for sale on commission did not become the latter's property, but continued to
belong to the said Lim Jocsing and the trial; court so held.

Defendant maintains that by the clear and explicit terms of the fifth paragraph of the contract (Exhibit B) it is understood
without any effort whatsoever that all abaca shipped and delivered on board his steamers became his property, unless
Lim Jocsing expressly provided otherwise in writing. It cannot be denied that Lim Jocsing did not expressly provided in
writing for the equipment of the abaca that he delivered on board the steamer Bais on October 13, 1912, according to the
agreement. he merely delivered it to the steamer's supercargo, without providing in writing for the disposition of the
abaca in a special manner under the terms of the contract.

The witness Benito Tan Unchuan, who examined the Spanish translation of the contract Exhibit B, at the request of plaintiff's
counsel, affirmed that it is faithful and exact. The fifth paragraph of this contract sets forth in a clear and positive manner,
without leaving room for any reasonable doubt, that the intention of the contracting parties was that the abaca and
copra which should be delivered and received on board the defendant's steamers would be on account that is to
say, on account and at the risk of Yaptico, unless Lim Jocsing otherwise expressly provided in writing. It is clear that the
merchandise which was shipped on defendant's account and ta his risk would be in his charge and under his
responsibility, because once received it became his property; and in case of loss, as has occurred, the defendant
would be the only one prejudiced as the owner thereof.

Upon this understanding of the contract the parties had dealing during the three of four years they maintained commercial
relations, for the manager of the Yaptico firm asserted that whenever Lim Jocsing had abaca or copra to forward, he sent
him money and goods for a value equal to that of said merchandise which Lim Jocsing was to receive and the latter
obligated were made with money of the defendant, and for these reasons he had an agent, named Go Tiu, who at the same
time was the supercargo of the shipper Lim Jocsing (sten. notes, p. 23). In fact, the insurance policies, Exhibit E, F, and G,
demonstrate that in the months of February, April, and May, 1912, Lim Jocsing insured in his own name certain shipments of
abaca and copra forwarded to the defendant in Cebu to be sold by him and these must have been acquired by Lim Jocsing
with his own money; but the other policies, Exhibit H and I, must undoubtedly have been for the insurance of the abaca and
copra collected and acquired with money of the defendant, for they were issued in favor of Chiat Seng that is, the

It is, therefore fact proven that, under clause 5 of the contract before mentioned, under the terms of which the contracting
parties acted, the abaca and copra delivered by Lim Jocsing on board the steamer Bias for the defendant became
the latter's property, nor can the plaintiff be permitted to maintain a different theory from that which clearly and indisputably
appears in the fifth paragraph of the contract, Exhibit B, for it is provided in article 1281 of the Civil Code that:

When the terms of an obligation stated in a written contract are clear and leave no room for doubt, the plaint
meaning of the wording thereof should be observed, it not being lawful to include therein things and cases different
from those which the interested parties intended to contract for. (Azarraga vs. Rodriquez, 9 Phil. Rep., 637.)

Persons who enter into a contract which is not contrary to law, to good morals, or to public policy are bound by the
terms of their agreement. (Santos vs. Marquez, 13 Phil., Rep. 207; Alcantara vs. Alinea, 8 Phil. Rep., 11; Icaza vs. Perz, 5
Phil. Rep., 166.)

Moreland, in the first paragraph it was stipulated that, when Lim Jocsing sent his products to the defendant the latter was to
credit the former's account with the value of the abaca and copra forwarded. Hence it follows that upon receiving the goods
and crediting Lim Jocsing's account current with the value thereof the defendant made himself the real owner of the
merchandise delivered and therefore had a right to protect his interests by insuring it as he did. If the abaca lost in
the wrecking of the Bais had not been insured, upon whom would the loss fallen? Under the paragraph of the contract cited,
Lim Jocsing would not have lost the value of the abaca because upon receipt of the goods on board the steamer the
defendant had to place the value thereof to the credit of Lim Jocsing, and whether the shipment arrived at Cebu or not its
value was already entered on his account, wherefore the one who would have suffered the loss in that case would have
been the defendant; but as he insured it in his name and on his account to provided against accident and as the abaca
belonged to him, it is just that he collect the value of the insurance thereon.

True it is that Lim Jocsing was on board the Bais with the abaca in question when it was lost; and that when he was going in
person to Cebu with his abaca, the shipment was his own money; but it is not proven in the record that Lim Jocsing had
disposed by letter of the abaca which disappeared, the value whereof was Yaptico's and therefore once delivered on
board the steamer to the supercargo, according to the fifth paragraph of the contract, the abaca should be regarded
as sold to Yaptico and as belonging to him, with the value of the insurance.

This theory is in conformity with the terms of the contract and is reasonable, for when the defendant extended credit to
Lim Jocsing he furnished him in cash the sum of P15,000 and, furthermore, obligated himself to send money and
goods of approximately the same value as the abaca and copra he should receive from Lim Jocsing, so that the latter
might secure more, thus furnishing in advance the value of the goods which Lim Jocsing obligated himself to deliver to the
party who was furnishing him in advance the value of the shipment, and these goods, consisting of copra and abaca,
forwarded and delivered to the agent of the defendant, became the reimbursement or payment of the sum advanced;
wherefore it is only just that the defendant, as owner of the money or of the value of the shipment, should be
regarded as the owner thereof and consequently of the insurance, the premiums on which he had paid.

Plaintiff argues that it is ridiculous and in conflict with the other clauses of the said contract, Exhibit B, to suppose that the
abaca and copra shipped on the defendant's steamer would be his property and yet that Lim Jocsing should be obligated to
pay the freight charges, insurance, storage, and other expenses, for if Lim Jocsing had not been the owner of said article
then he would not have been obligated to bear those expenses.

The fact that Lim Jocsing had to reimburse these expenses does not conflict with the property rights of the defendant
Yaptico in the abaca and copra received from Lim Jocsing, taking into consideration that the latter was doing business
with capital or money of the defendant Yaptico, without payment of any premium or interest; wherefore nothing is
more just than that the creditor should benefits from the freight charges on his boats, from the commission on the sales, and
that he be indemnified for the expenses of storage, fire insurance, and so forth, because the defendant advanced his money
without getting any profits from the operations of buying up abaca copra carried on by the said Lim Jocsing.

The circumstances that the defendant Yaptico kept Lim Jocsing informed of the price of the abaca and copra sold in Cebu,
even of he goods delivered on board to the supercargo, does not indicate ownership rights, but merely the interest Lim
Jocsing had in knowing the price of the sales, since the result of the latter would appear in the account current and
the amount the sale produced would be deducted from the sum advanced to him by the defendant.

As owner of the abaca the defendant Yaptico was interested in its preservation and had the right to insure it against any risk
or accident prejudicial to his interests, and since the loss of the abaca would have injured Yaptico as the owner of both the
fiber and the money with which it was acquired, nothing is more just than that when it was insured the insurance
should accrue to his benefits and in payment of the value of the abaca, which he had already advanced.

For these reason the judgment appealed from must be reversed, and we should absolved the defendant Yaptico from the
complaint, as we hereby do, without special finding as to costs. So ordered.

Arellano, C.J., Johnson, Carson, Moreland, Trent and Araullo, JJ., concur.

G.R. No. L-17527 April 30, 1963

SUN BROTHERS APPLIANCES, INC., plaintiff-appellee,

DAMASO P. PEREZ, defendant-appellant.

Dominador A. Alafriz for plaintiff-appellee.

Robert P. Halili & Associates for defendant-appellant.


This is an action brought by the plaintiff to recover from defendant the sum of P1,404.00, the price of one Admiral Air
Conditioner, Slim Style, Model 100-23-1 H.P., Serial No. 2978828, delivered to the defendant by the plaintiff under a
conditional sale agreement entered into by and between them on December 6, 1958, in the City of Manila, plus stipulated
interest of 12% from January 6, 1959 until the same is fully paid, together with P200 as attorney's fees, and costs. Defendant
answered that the air-conditioner in question was delivered to him installed in the office of the defendant located at Gardiner
street, Lucena, Quezon on December 14, 1959 but that said air-conditioner was totally destroyed by fire which occured
in the morning of December 28, 1958 at 2 o'clock. Defendant further claimed that the machine was destroyed by force
majeure, not by the defendant's fault and/or negligence and, therefore, he is not liable under the conditional sale,
Annex "A", which the parties, plaintiff and defendant, had executed.

At the trial of the case the parties entered into a stipulation of facts, the most important provision of which are as follows:

1. That defendant admits that on December 6, 1958, he entered into a Conditional Sale Agreement with the plaintiff, copy of
which contract is attached to the complaint as Annex "A";

2. That pursuant to the terms and conditions provided in the said Conditional Sale Agreement the plaintiff delivered to the
defendant (1) Admiral Air Conditioner Slim Style Model 100-23-1 HP, Serial No. 2978828 with the contract price of
P1,678.00 and that said Air Conditioner was received by the defendant;

3. That defendant made a down payment of P274.00 on December 6, 1958, pursuant to the terms and conditions of the
Conditional Sales Agreement; and Air Conditioner was installed by the plaintiff, thru its representative, at Lucena, Quezon;

4. That said Air Conditioner was burned on December 27,1958, on or about 2:00 o'clock in the morning, however, defendant
will present evidence to show that the Air Conditioner subject of the complaint herein was burned where it was installed by
the plaintiff;

5. That defendant, after making down payment of P274.00 to the plaintiff, did not pay any of the monthly installments of
P78.00 thereafter, leaving a balance of P1,404.00 in favor of the plaintiff;

6. That after defendant presents evidence to prove that the Air Conditioner was burned where it was installed by the plaintiff
to the satisfaction of this Honorable Court, the parties agree to leave to this Honorable Court the resolution of the issue
whether loss by fire extinguishes the obligation of the defendant to pay to the plaintiff the subsequent installments of the
initial payment;"
The Court of First Instance before which the action was brought rendered judgment condemning the defendant to pay the
plaintiff the amount demanded in the complaint, including interest and attorney's fees. The defendant has appealed the case
directly to us as involving only a question of law.

The conditional sale executed by the plaintiff and defendant contained the following stipulation:

"2. Title to said property shall vest in the Buyer only upon full payment of the entire account as herein provided, and only
upon complete performance of all the other conditions herein specified:

"3. The Buyer shall keep said property in good condition and properly protected against the elements, at his/its address
above-stated, and undertakes that if said property or any part thereof be lost, damaged, or destroyed for any causes, he
shall suffer such loss, or repair such damage, it being distinctly understood and agreed that said property remains at Buyer's
risk after delivery;"

The Court below declared that as the buyer would be liable in case of loss for any cause, such buyer assumed liability even
in case of loss by fortuitous event; so it rendered judgment declaring defendant liable for the sun demanded together with
interest and attorney's fees.

Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and approved by this Honorable
Court, without prejudice to the parties adducing other evidence to prove their case not covered by this stipulation of facts.

In this Court on appeal defendant-appellant argues that inasmuch as the title to the property sold shall vest in the buyer only
upon full payment of the price, the loss of the vendor; that the phrase "for any cause" used in paragraph 2 of the
agreement may not be interpreted to include a fortuitous event absolutely beyond the control of the appellant; and
that although Article 1174 of the new Civil Code recognizes the exception on fortuitous event when the parties to a contract
expressly so stipulate, the phrase "for any cause" used in the contract did not indicate any intention of the parties that the
loss of the unit due to fortuitous event is to be included within the responsibility of the vendor.

In answer to the arguments above set forth the appellee argues that the stipulation in the contract of sale whereby the buyer
shall be liable for any loss, damage or destruction for any cause, is not contrary to law, morals or public policy and is
specifically authorized to be stipulated upon between the parties by Article 1174 of the Civil Code; that the risk of loss was
expressly stipulated to be undertaken by the buyer, even if the title to the property sold remained, also by stipulation, in the
vendor; that the terms "any cause" used in the agreement includes a fortuitous event, and an express stipulation
making the vendee responsible in such case is valid.

We believe that the agreement making the buyer responsible for any loss whatsoever, fortuitous or otherwise, even
if the title to the property remains in the vendor, is neither contrary to law, nor to morals or public policy. We have
held such stipulation to be legal in the case of Government vs. Amechazurra, 10 Phil. 637 (Tolentino, Commentaries on the
Civil Code, Vol. IV, p. 120)and declare it to be based on a sound public policy in conditional sales according to American

"The weight of authority support the rule that where goods are sold and delivered to the vendor under an agreement that the
title is to remain in the vendor until payment, the loss or destruction of the property while in the possession of the vendor
before payment, without his fault, does not relieve him from the obligation to pay the price, and he, therefore, suffers the
loss. In accord with this rule are the provisions of the Uniform Sales Act and the Uniform Conditional Sales Act. There are
several basis for this rule. First is the absolute and unconditional nature of the vendee's promise to pay for the goods. The
promise is nowise dependent upon the transfer of the absolute title. Second is the fact that the vendor has fully performed
his contract and has nothing further to do except receive payment, and the vendee received what he bargained for when he
obtained the right of possession and use of the goods and the right to acquire title upon making full payment of the price. A
third basis advanced for the rule is the policy of providing an incentive to care properly for the goods, they being exclusively
under the control and dominion of the vendee." (47 Am. Jur., pp. 81-82).

We, therefore, agree with the trial court that the loss by fire or fortuitous event was expressly agreed in the contract to be
borne by the buyer and this express agreement is not contrary to law but sanctioned by it as well as by the demands of
sound, public policy. The judgment of the court below is affirmed, with costs against defendant-appellant.

Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, Barrera, Paredes, Dizon, Regala and Makalintal, JJ., concur.
Padilla, J., did not take part.
Judgment affirmed.

G.R. No. L-21263 April 30, 1965


PERFECTO A. TABORA, defendant-appellant.

Paredes, Poblador, Cruz and Nazareno for plaintiff-appellee.

Tabora and Concon for defendant-appellant.


On May 3, 1955, Perfecto A. Tabora bought from the Lawyers Cooperative Publishing Company one complete set of
American Jurisprudence consisting of 48 volumes with 1954 pocket parts, plus one set of American Jurisprudence,
General Index, consisting of 4 volumes, for a total price of P1,675.50 which, in addition to the cost of freight of P6.90,
makes a total of P1,682.40. Tabora made a partial payment of P300.00, leaving a balance of P1,382.40. The books
were duly delivered and receipted for by Tabora on May 15, 1955 in his law office Ignacio Building, Naga City.

In the midnight of the same date, however, a big fire broke out in that locality which destroyed and burned all the
buildings standing on one whole block including at the law office and library of Tabora As a result, the books bought from
the company as above stated, together with Tabora's important documents and papers, were burned during the
conflagration. This unfortunate event was immediately reported by Tabora to the company in a letter he sent on May
20, 1955. On May 23, the company replied and as a token of goodwill it sent to Tabora free of charge volumes 75, 76,
77 and 78 of the Philippine Reports. As Tabora failed to pay he monthly installments agreed upon on the balance of the
purchase price notwithstanding the long time that had elapsed, the company demanded payment of the installments due,
and having failed, to pay the same, it commenced the present action before the Court of First Instance of Manila for the
recovery of the balance of the obligation. Plaintiff also prayed that defendant be ordered to pay 25% of the amount due as
liquidated damages, and the cost of action.

Defendant, in his answer, pleaded force majeure as a defense. He alleged that the books bought from the plaintiff were
burned during the fire that broke out in Naga City on May 15, 1955, and since the loss was due to force majeure he
cannot be held responsible for the loss. He prayed that the complaint be dismissed and that he be awarded moral
damages in the amount of P15,000.00.

After due hearing, the court a quo rendered judgment for the plaintiff. It ordered the defendant to pay the sum of P1,382.40,
with legal interest thereon from the filing of the complaint, plus a sum equivalent to 25% of the total amount due as liquidated
damages, and the cost of action.

Defendant took the case to the Court of Appeals, but the same is now before us by virtue of a certification issued by that
Court that the case involves only questions of law.

Appellant bought from appellee one set of American Jurisprudence, including one set of general index, payable on
installment plan. It was provided in the contract that "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." The total price of the books, including the cost of freight, amounts to P1,682.40. Appellant only made a down
payment of P300.00 thereby leaving a balance of P1,382.40. This is now the import of the present action aside from
liquidated damages.

Appellant now contends that since it was agreed that the title to and the ownership of the books shall remain with the seller
until the purchase price shall have been fully paid, and the books were burned or destroyed immediately after the
transaction, appellee should be the one to bear the loss for, as a result, the loss is always borne by the owner. Moreover,
even assuming that the ownership of the books were transferred to the buyer after the perfection of the contract the latter
should not answer for the loss since the same occurred through force majeure. Here, there is no evidence that appellant has
contributed in any way to the occurrence of the conflagration.1wph1.t

This contention cannot be sustained. While as a 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, the application of that rule does
not here obtain because the law on the contract entered into on the matter argues against it. It is true that in the contract
entered into between the parties the seller agreed that the ownership of the books shall remain with it until the purchase
price shall have been fully paid, but such stipulation cannot make the seller liable in case of loss not only because such was
agreed merely to secure the performance by the buyer of his obligation but in the very contract it was expressly agreed that
the "loss or damage to the books after delivery to the buyer shall be borne by the buyer." Any such stipulation is sanctioned
by Article 1504 of our Civil Code, which in part provides:

(1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer, in pursuance of the contract and the
ownership in the goods has been retained by the seller merely to secure performance by the buyer of his obligations under
the contract, the goods are at the buyer's risk from the time of such delivery.

Neither can appellant find comfort in the claim that since the books were destroyed by fire without any fault on his part he
should be relieved from the resultant obligation under the rule that an obligor should be held exempt from liability when the
loss occurs thru a fortuitous event. This is because this 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. Here these qualifications are
not present. The obligation does not refer to a determinate thing, but is pecuniary in nature, and the obligor bound himself to
assume the loss after the delivery of the goods to him. In other words, the obligor agreed to assume any risk concerning the
goods from the time of their delivery, which is an exception to the rule provided for in Article 1262 of our Civil Code.

Appellant likewise contends that the court a quo erred in sentencing him to pay attorney's fees. This is merely the result of a
misapprehension for what the court a quo ordered appellant to pay is not 25% of the amount due as attorney's fees, but as
liquidated damages, which is in line with an express stipulation of the contract. We believe, however, that the appellant
should not be made to pay any damages because his denial to pay the balance of the account is not due to bad faith.

WHEREFORE, the decision appealed from is modified by eliminating that portion which refers to liquidated damages. No

Bengzon, C.J., Concepcion, Barrera, Paredes, Dizon, Regala, Makalintal, Bengzon, J.P., and Zaldivar, JJ., concur.
Reyes, J.B.L., J., concurs in the result.