Tolledo, Ronald JD-2B

Notes on Module 5

EFFECTS OF THE CONTRACT WHEN THE THING SOLD HAS BEEN LOST

LOSS (1493-1494)

Art. 1493. If at the time the contract of sale is perfected, the thing which is the object of the contract
has been entirely lost, the contract shall be without any effect.

But if the thing should have been lost in part only the vendee may choose between withdrawing from
the contract and demanding the remaining part, paying its price in proportion to the total sum agreed
upon.

Loss of the Object Before Sale

This refers to case of loss of the object even before the perfection of the contract. It is evident that there
would be no cause or consideration; hence, the contract is void. It is the seller here who naturally have to
bear the loss.

Complete Loss Distinguished from Partial Loss

a. When the object has been COMPLETELY LOST;

- Where the object is entirely lost at the time of perfection, the contract is inexistent and void
(Art. 1409 [3]).
b. When the object has been PARTLY or PARTIALLY LOST.
Remedies:
- Withdrawal (or rescission)
- Specific performance (demand the delivery) as to remainder by payment of proportional
price.

The thing is lost when it perishes or goes out of commerce or disappears in such a way that its existence
is unknown or it cannot be recovered. (Art. 1189 [2])

The word “perishes” is sufficiently inclusive as to cover a case where there has been material deterioration
or complete change in the nature of the thing in such a manner that it loses its former utility taking into
consideration the time the contract was entered into.

Art. 1494. Where the parties purport a sale of specific goods, and the goods without the knowledge of
the seller have perished in part or have wholly or in a material part so deteriorated in quality as to be
substantially changed in character, the buyer may at his option treat the sale:

(1) As avoided; or
(2) As valid in all of the existing goods or in so much thereof as have not deteriorated, and as binding
the buyer to pay the agreed price for the goods in which the ownership will pass, if the sale was divisible.
Loss of Specific Goods

Article 1493 applies to a sale of specific thing. Article 1494, on the other hand, applies to sales of goods,
that is, the object of the sale consists of a mass of “specific goods” which means “goods identified and
agreed upon at the time a contract of sale is made.” (Art. 1636)

Both articles have actually the same essence providing two alternative remedies to the buyer in case of
deterioration or partial loss of the object prior to the sale.

a. This article practically reiterates the principles involved in the preceding article.
b. Again, the remedies are:
- Cancellation (rescind or withdrawal);
- Or specific performance (give it legal effect) as to the remaining existing goods (if the sale was
divisible).

LOSS OF THE DETERMINATE THING IN THE DIFFERENT STAGES OF A SALE TRANSACTIONS

Art. 1480. Any injury to or benefit from the thing sold, after the contract has been perfected, from the
moment of the perfection of the contract to the time of delivery, shall be governed by Articles 1163 to
1166, and 1262.

This rule shall apply to the sale of fungible things, made independently and for a single price, or without
consideration of their weight, number, or measure.
Should fungible things be sold for a price fixed according to weight, number, or measure, the risk shall
not be imputed to the vendee until they have been weighed, counted, or measured, and delivered,
unless the latter has incurred in delay.

Who Bears the Risk of Loss?

Four rules may be given regarding risk of loss:

a. If the object has been lost before perfection, the seller bears the loss. Reason: there was no
contract, for there was no cause or consideration. Being the owner, the seller bears the loss. This
means that he cannot demand payment of the price.
b. If the object was lost after delivery to the buyer, clearly the buyer bears the loss. (Res perit domino
– the owner bears the loss.)
c. If the object is lost after perfection but before delivery. Here the buyer bears the loss, as exception
to the rule of res perit domino.
d. If the object is lost at the time of perfection, the contract is void or inexistent (Art. 1409[3]). The
legal effect is the same as when the object is lost before the perfection of the contract of sale (Art.
1493).

Art. 1538. In case of loss, deterioration or improvement of the thing before its delivery, the rules in
article 1189 shall be observed, the vendor being considered the debtor.

Effect of Loss, Deterioration or Improvement Before Delivery

This reiterates the rule that from time of perfection to delivery, risk is borne by the buyer.
Article 1189 provides that when the conditions have been imposed with the intention of suspending the
efficacy of an obligation to give, the following rules shall be observed in case of the improvement, loss or
deterioration of the thing during the pendency of the condition:

1. If the thing is lost without the fault of the debtor, the obligation shall be extinguished;

2. If the thing is lost through the fault of the debtor, he shall be obliged to pay damages; it is
understood that the thing is lost when it perishes, or goes out of commerce, or disappears in such
a way that its existence is unknown or it cannot be recovered;

3. When the thing deteriorates without the fault of the debtor, the impairment is to be borne by the
creditor;

4. If it deteriorates through the fault of the debtor, the creditor may choose between the rescission
of the obligation and its fulfillment, with indemnity for damages in either case;

5. If the thing is improved by its nature, or by time, the improvement shall inure to the benefit of
the creditor;

6. If it is improved at the expense of the debtor, he shall have no other right than that granted to
the usufructuary.