Risk of Loss or Deterioration

LAWYER’S COOPERATIVE PUBLISHING COMPANY V TABORA

G.R. No. L-21263, APRIL 30, 1965
I. Facts:
Sometime on May 3 1955, Perfecto Tabora bought set of books from Lawyers
Cooperative Publishing Company for the amount of P1682.40 including the cost of freight. He
made a partial payment of P300 and the balance of P1382.40 shall be paid through installments.
The books were then delivered to his law office on May 15, 1955. However, in the midnight of
the same date, a big fire broke within the locality of Tabora’s law office where he kept the books
and was burnt thereafter. He immediately wrote a letter to the company about the incident and in
return of goodwill, the company charged him free on 4 volumes of the books he ordered. Tabora,
defaulted with the installment and after repeated demands, he still failed to pay the same. The
company then commenced the present action for the recovery of the balance of the obligation.
Tabora contended that the company should bear the risk of loss given that they were destroyed
by the fire that broke in Naga City on May 15, 1955 after the transaction and that it was agreed
upon that title to and the ownership of the books shall remain with the seller until the purchase
price shall have been fully paid. In the alternative, he sought exemption from liability on ground
of fortuitous event.
The lower court ruled in favor of the company and ordered Tabora to pay the sum of P1382.40
with legal interest from filing of the complaint. 10. Hence, this appeal.

II. Contention of the Petitioner:

The petitioner – Lawyer’s Cooperative Publishing Company commenced the present action for
the recovery of the balance of the obligation.

III. Contention of the Respondent:

The respondent – Tabora, the respondent contends that the company should bear the risk of loss
given that they were destroyed by the fire that broke in Naga City on May 15, 1955 after the
transaction and that it was agreed upon that title to and the ownership of the books shall remain
with the seller until the purchase price shall have been fully paid. In the alternative, he sought
exemption from liability on ground of fortuitous event.

IV. Issues:
Whether or not Tabora is liable to pay the remainder of the installments?
Whether or not Tabora is exempted from liability arising from the loss as the same was
due to a fortuitous event?

V. Ruling:
YES. It was provided in the contract that the “title to and the 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. Moreover,
under article 1504, it provides that: “Where the 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 of the buyer of his
 obligations under the contract, the goods are at the buyer’s risk from the time of such
delivery.

Therefore, Tabora bears the risk of loss on the books he purchased from the company
after the latter has made its delivery.

NO. The exemption from liability from loss arising from fortuitous events applies only
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. In this case, 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 which
states that, any loss by fortuitous event, the obligation of the buyer does not extinguish
and he shall be responsible for the damages.

ROMAN V GRIMALT
G.R. No. L-2412, APRIL 11, 1906
I. Facts:
1. Pedro Roman and Andres Grimalt verbally agreed of sale of a schooner vessel.
2. Both agreed to the purchase price of P1500 payable in 3 installment dates and Pedro has
expressed his acceptance of the payment plan.
3. However, after the contract had been closed on 24th of June and before the delivery of the
vessel, it sunk on June 25 at 3pm in a total loss as a result of a severe storm.
4. Roman then demanded from Grimalt the payment of the purchase price where the latter failed
to pay.
5. Grimalt in his answer, narrated the events that took place during the negotiation in which he
alleged that there was neither a perfected sale that came into existence.
6. They have not arrived into an agreement because at the time of the sale, Roman was not the
owner of the vessel because its papers states that the real owner was certain Paulina Giron.
7. Roman failed to perfect the title, thereby there was no contract of sale agreed upon.
8. While the purchase price and the method of payment had been agreed upon, the condition to
perfect the title to show ownership of the vessel was not provided within the time before the
incident happened.
II. Contention of the Petitioner:
Pedro Roman, the Petitioner, complaint in the Court of First Instance of this city against
Andres Grimalt, praying that judgment be entered in his favor and against Grimalt for the
purchase price of the schooner vessel, to wit, 1,500 pesos or its equivalent in Philippine
currency, payable by installments in the manner stipulated; for legal interest on the installments
due on the dates set forth in the complaint; for costs of proceedings; and for such other and
further remedy as might be considered just and equitable.
III. Contention of the Respondent:

Andres Grimalt, the Respondent, who denied the other allegations of Roman inconsistent
with his own allegations and further denied the complaint of Roman 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.

IV. Issue/s:
Whether or not Grimalt is still liable to pay the purchase price of the vessel provided that
the only agreement they have arrived with was the purchase price and the method of payment
and the condition to fully execute the sale was not made effective?
V. Ruling:
NO. It is a settled rule under Article 1450 that a sale shall be considered perfected and binding
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. In the case at bar,
the sale of the vessel was not perfected because Roman failed to perfect his title to show
ownership over the vessel, which gives him the right to subject it for sale. The vessel still shows
under the ownership of another person. Neither Grimalt consented to the execution of the deed of
transfer and made it to public instrument, which could have served as equivalent to the delivery
of the thing, which is the object of the contract. The vessel sunk in the bay before Roman has
complied with the condition exacted by Grimalt to perfect his title. In the absence of a contract of
sale agreed by both parties, Grimalt was under no obligation to pay for the price of the vessel.

SUN BROS. APPLIANCES V PEREZ

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

I.Facts:

Sun bros and Perez entered into a Conditional Sale Agreement of an Admiral air conditioner, the
price of which is 1,678php. The agreement contains the ff. stipulations:” 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:” 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;”
Pursuant to the contract, sun bros. delivered the item and was received by Perez. Perez made a
down payment of 274php and the item was installed by sun bro representatives. The said air
conditioner was burned where it was installed by the plaintiff (no details about the fire in the
case). The defendant claims that the destruction was due to force majeure. Perez did not pay any
of the monthly installments leaving a balance of 1,404php.

II. Contention of the Petitioner:

The petitioner -- Sun Borothers Appliances, Inc. demands to recover the remaining balance
of the air conditioner Perez purchased. The item was delivered to the buyer and had it installed
on his office, yet the said air-conditioner was loss by fire.

III. Contention of the Respondent:

Damaso Perez, the respondent contends that he should not pay the remaining balance of the
air conditioner the purchased after it was burned by the fire. He claims that the item was
destroyed due to fortuitous event.

IV. Issue:

Whether or not loss by fire extinguishes the obligation of Perez to pay Sun Bros.
Appliances the subsequent installments.

V. Ruling:

No. Where goods are sold and delivered to the buyer under an agreement that the title is
to remain in the vendor until full payment, the loss and destruction of the property while in the
possession of the vendor before payment, does not relieve the buyer from the obligation to pay
the price as he therefore suffers the loss. Several basis of this rule are:
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.
2. 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.
3. The policy of providing an incentive to care properly for the goods, they being
exclusively under the
control and dominion of the vendee.
In the case at bar, it was expressly stated in the agreement that the buyer shall keep said property
in good condition and properly protected against the elements. If said property (airconditioner) 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 the
Buyer’s risk after delivery. The terms “any cause” used in the agreement include a fortuitous
event, and an express stipulation making the vendee, Perez, responsible is valid. The happening
of the fire, a fortuitous event, which destroyed the air conditioner, does not relieved Perez to pay
the price of the property. Moreover, even if the title remains with the vendor while the
fortuituous event happened, making Perez still liable to pay the price is neither contrary to law
nor to morals or public policy. Therefore, his obligation is not extinguished and he shall pay the
price.
Documents of title
LEE HONG HOK V ANIANO DAVID
G.R. No. L-30389, Dec. 27, 1972

I. Facts:

Aniano David acquired lawful title thereto, pursuant to his miscellaneous sales
application. After approval of his application, the Director of Lands issued an order of award and
issuance of sales patent, on June 18, 1958, covering Lot 2892. On the basis of the order of award
of the Director of Lands the Undersecretary of Agriculture and Natural Resources issued on
August 26, 1959, Miscellaneous Sales Patent No. V-1209 pursuant to which Original Certificate
of Title (OCT) No. 510 was issued by the Register of Deeds of Naga City on October 21, 1959.
During all this time, Lee Hong Kok did not oppose nor file any adverse claim.

II. Contention of the Petitioner:

The petitioner - Lee Hong Hok claim that the Torrens Title of Respondent David over the
disputed land (which is part of the Naga Cadastre) should be declared null and void. The CA
found no legal justification for nullifying the right of David over the disputed land arising from
the grant made in his favor by appropriate public officials.

III. Contention of the Respondent:

The respondent – David, the respondent had acquired lawful title over said land. The
Director of Lands awarded him an order for issuance of a sales patent pursuant to his
miscellaneous sales application. Subsequently, on the basis of such order, the Undersecretary of
Agricultural and Natural Resources issued a Miscellaneous Sales Patent and an OCT was issued
by the Register of Deeds of Naga City in favor of the respondent.

IV. Issue:

Whether or not Lee Hong Hok may question the government grant?

V. Ruling:
 NO. Only the Government, represented by the Director of Lands or the Secretary of
Agriculture and Natural Resources, can bring an action to cancel a void certificate of title issued
pursuant to a void patent. This was not done by said officers but by private parties like
the plaintiffs, who cannot claim that the patent and title issued for the land involved are void
since they are not the registered owners thereof nor had they been declared as owners in the
cadastral proceedings after claiming it as their private property.
The fact that the grant was made by the government is undisputed. Whether the grant was
in conformity with the law or not is a question which the government may raise, but until it is
raised by the government and set aside, the defendant cannot question it. The legality of the grant
is a question between the grantee and the government. The decision of respondent Court of
Appeals of January 31, 1969 and its resolution of March 14, 1969 are affirmed.

Distinction between IMPERIUM and DOMINIUM

Only the government can question a void certificate of title issued pursuant to a
government grant.

IMPERIUM vs. DOMINIUM: The government authority possessed by the State which is
appropriately embraced int eh concept of sovereignty comes under the heading of imperium; its
capacity to own or acquire property under dominium. The use of this term is appropriate with
reference to lands held by the State in its proprietary character. In such capacity, it may provide
for the exploitation and use of lands and other natural resources, including their disposition,
except as limited by the Constitution.

Carino v Insular Government

R. No. 2869 (1907)

I. Facts:

Mateo Cariño, on February 23 , 1904, filed his petition in the Court of Land Registration
for a title to a parcel of land consisting of 40 hectares, 1 are, and 13 centares in the town of
Baguio, Province of Benguet. This was heard with a petition for a title for a portion of the land.
The Insular Government opposed the granting of these petitions, because they alleged that the
whole parcel of land is public property of the Government and that the same was never acquired
in any manner or through any title of egresion from the State.
According to Carino, in 1884, he erected and utilized as a domicile a house on the property
situated to the north of that property now in question. They said that during the year 1893 Cariño
sold said house to one Cristobal Ramos, who in turn sold the same to Donaldson Sim. Carino
abandoned the house and lived on the land in question.

II. Contention of the Petitioner:

 Mateo Cariño, the appellant herein, argues that the Court of Land Registration should grant
him the title to a parcel of land. He claims that his grandfather had lived upon it, and had
maintained fences sufficient for the holding of cattle. According to the custom of the country and
they all had been recognized as owners by the Igorots, and he had inherited or received the land
from his father. However, no document of title of the land, had issued from the Spanish Crown.

III. Contention of the Respondent:

Insular Government objected to the petitions being granted, alleging that the whole parcel of
land is government property and that it was never obtained in any way or by any title of egresion
from the State.

IV. Issue:

Whether or not is Carino the rightful possessor of the land.

V. Ruling:

No, petition denied. Under the express provisions of law, a parcel of land being of
common origin, presumptively belonged to the State during its sovereignty, and, in order to
perfect the legitimate acquisition of such land by private persons, it was necessary that the
possession of the same pass from the State.
There was no proof of title of egresion of this land from the domain of the Spanish Government.
The possessory information was not the one authorized in substitution for the one in adjustment
of the royal decree of February 13, 1894. This was due to:
1. the land has been in an uninterrupted state of cultivation during a period of six years last past;
or that the same has been possessed without interruption during a period of twelve years and has
been in a state of cultivation up to the date of the information and during the three years
immediately preceding such information; or that such land had been possessed openly without
interruption during a period of
thirty or more years, notwithstanding the land had not been cultivated
Or such land had been possessed openly without interruption during a period of thirty or more
years, notwithstanding the land had not been cultivated
2. Under Spanish law, there was a period of one year allowable to verify the possessory
information. After the expiration of this period of the right of the cultivators and persons in
possession to obtain gratuitous title thereto lapses and the land together with full possession
reverts to the state, or, as the case may be, to the community, and the said possessors and
cultivators or their assigns would simply have rights under universal or general title of average in
the event that the land is sold within a period of five years immediately following the
cancellation. The possessors not included under this chapter can only acquire by time the
ownership and title to unappropriated or royal lands in accordance with common law.
In accordance with the preceding provisions, the right that remained to Cariño, if it be certain
that he was the true possessor of the land in question, was the right of average in case the
Government or State could have sold the same within the period of five years immediately
following for example, if the denouncement of purchase had been carried out by Felipe Zafra or
any other person, from the record of the case
The right of possession in accordance with civil law remained at all times subordinate to the
Spanish administrative law, inasmuch as it could only be of force when pertaining to royal
transferable or alienable lands even until after February 13, 1894.
3. The advent of American sovereignty necessarily brought a new method of dealing with lands
and particularly as to the classification and manner of transfer and acquisition of royal or
common lands then appropriated, which were thenceforth merely called public lands, the
alienation of which was reserved to the Government, in accordance with the Organic Act of 1902
and other laws like Act No. 648, herein mentioned by the petitioner.
Section 6 of Act No. 627 admits prescription, as a basis for obtaining the right of ownership.
"The petitioners claim the title under the period of prescription of ten years established by that
act, as well as by reason of his occupancy and use from time immemorial. But said act admits
such prescription for the purpose of obtaining title and ownership to lands not exceeding more
that 16 hectares in extent." Under Sec. 6 of said act. The land claimed by Cariño is 40 hectares in
extent, if we take into consideration his petition, or an extension of 28 hectares, therefore it
follows that the judgment denying the petition herein and now appealed from was strictly in
accordance with the law invoked.
And of the 28 hectares of land as set out in the possessory information, one part of same,
according to the testimony of Cariño, belongs to Vicente Valpiedad, the extent of which is not
determined. From all of which it follows that the precise extent has not been determined in the
trial of this case on which judgment might be based in the event that the judgment and title be
declared in favor of the petitioner, Mateo Cariño. And we should not lose sight of the fact that,
considering the intention of Congress in granting ownership and title to 16 hectares, that Mateo
Cariño and his children have already exceeded such amount in various acquirements of lands, all
of which is shown in different cases decided by the said Court of Land Registration.

Republic of the Philippines, Benguet & Atok vs. Court of Appeals & De La Rosa
G.R. No. L-43938, April 15, 1988
I. Facts:
These cases arose from the application for registration of a parcel of land filed on February 11,
1965, by Jose de la Rosa on his own behalf and on behalf of his three children, Victoria,
Benjamin and Eduardo.
The land, situated in Tuding, Itogon, Benguet Province, was divided into 9 lots and covered by
plan Psu-225009. According to the application, Lots 1-5 were sold to Jose de la Rosa and Lots 6-
9 to his children by Mamaya Balbalio and Jaime Alberto, respectively, in 1964.
The application was separately opposed by Benguet Consolidated, Inc. as to Lots 1-5, Atok Big
Wedge Corporation, as to Portions of Lots 1-5 and all of Lots 6-9, and by the Republic of the
Philippines, through the Bureau of Forestry Development, as to lots 1-9.
In support of the application, both Balbalio and Alberto testified that they had acquired the
subject land by virtue of prescription Balbalio claimed to have received Lots 1-5 from her father
shortly after the Liberation.
Benguet opposed on the ground that the June Bug mineral claim covering Lots 1-5 was sold to it
on September 22, 1934, by the successors-in-interest of James Kelly, who located the claim in
September 1909 and recorded it on October 14, 1909. From the date of its purchase, Benguet had
been in actual, continuous and exclusive possession of the land in concept of owner, as
evidenced by its construction of adits, its affidavits of annual assessment, its geological
mappings, geological samplings and trench side cuts, and its payment of taxes on the land. For
its part, Atok alleged that a portion of Lots 1-5 and all of Lots 6-9 were covered by the Emma
and Fredia mineral claims located by Harrison and Reynolds on December 25, 1930, and
recorded on January 2, 1931, in the office of the mining recorder of Baguio. These claims were
purchased from these locators on November 2, 1931, by Atok, which has since then been in
open, continuous and exclusive possession of the said lots as evidenced by its annual assessment
work on the claims, such as the boring of tunnels, and its payment of annual taxes thereon.
The Bureau of Forestry Development also interposed its objection, arguing that the land sought
to be registered was covered by the Central Cordillera Forest Reserve under Proclamation No.
217 dated February 16, 1929. Moreover, by reason of its nature, it was not subject to alienation
under the Constitutions of 1935 and 1973.
The trial court denied the application, holding that the applicants had failed to prove their claim
of possession and ownership of the land sought to be registered.
The applicants appealed to the respondent court, which reversed the trial court and recognized
the claims of the applicant, but subject to the rights of Benguet and Atok respecting their mining
claims. In other words, the Court of Appeals affirmed the surface rights of the de la Rosas over
the land while at the same time reserving the sub-surface rights of Benguet and Atok by virtue of
their mining claims. Both Benguet and Atok have appealed to this Court, invoking their superior
right of ownership.
II.Contention of the Petitioner:
Republic of the Philippines (Director of Forest Development), the Petitioner, who
claimed that the application was separately opposed by Benguet Consolidated, Inc. as to Lots 1-
5, Atok Big Wedge Corporation, as to Portions of Lots 1-5 and all of Lots 6-9, and by the
Republic of the Philippines, through the Bureau of Forestry Development, as to lots 1-9.
Moreover, The Bureau of Forestry Development also interposed its objection, arguing that the
land sought to be registered was covered by the Central Cordillera Forest Reserve under
Proclamation No. 217 dated February 16, 1929.
III.Contention if the Respondent:
Hon. Court of Appeals (Third Division) and Jose Y. De La Rosa, the Respondent,
Appeals affirmed the surface rights of the de la Rosas over the land while at the same time
reserving the sub-surface rights of Benguet and Atok by virtue of their mining claims. Both
Benguet and Atok have appealed to this Court, invoking their superior right of ownership.
IV.Issue:
Whether respondent court’s decision, i.e. “the surface rights of the de la Rosas over the
land while at the same time reserving the sub-surface rights of Benguet and Atok by virtue of
their mining claim,” is correct.
V. Ruling:
No. Our holding is that Benguet and Atok have exclusive rights to the property in
question by virtue of their respective mining claims which they validly acquired before the
Constitution of 1935 prohibited the alienation of all lands of the public domain except
agricultural lands, subject to vested rights existing at the time of its adoption. The land was not
and could not have been transferred to the private respondents by virtue of acquisitive
prescription, nor could its use be shared simultaneously by them and the mining companies for
agricultural and mineral purposes. It is true that the subject property was considered forest land
and included in the Central Cordillera Forest Reserve, but this did not impair the rights already
vested in Benguet and Atok at that time. Such rights were not affected either by the stricture in
the Commonwealth Constitution against the alienation of all lands of the public domain except
those agricultural in nature for this was made subject to existing rights. The perfection of the
mining claim converted the property to mineral land and under the laws then in force removed it
from the public domain. By such act, the locators acquired exclusive rights over the land, against
even the government, without need of 6 any further act such as the purchase of the land or the
obtention of a patent over it. As the land had become the private property of the locators, they
had the right to transfer the same, as they did, to Benguet and Atok. The Court of Appeals
justified this by saying there is “no conflict of interest” between the owners of the surface rights
and the owners of the sub-surface rights. This is rather doctrine, for it is a well-known principle
that the owner of piece of land has rights not only to its surface but also to everything underneath
and the airspace above it up to a reasonable height. Under the aforesaid ruling, the land is
classified as mineral underneath and agricultural on the surface, subject to separate claims of
title. This is also difficult to understand, especially in its practical application. The Court feels
that the rights over the land are indivisible and that the land itself cannot be half agricultural and
half mineral. The classification must be categorical; the land must be either completely mineral
or completely agricultural. In the instant case, as already observed, the land which was originally
classified as forest land ceased to be so and became mineral — and completely mineral — once
the mining claims were perfected. As long as mining operations were being undertaken thereon,
or underneath, it did not cease to be so and become agricultural, even if only partly so, because it
was enclosed with a fence and was cultivated by those who were unlawfully occupying the
surface. This is an application of the Regalian doctrine which, as its name implies, is intended for
the benefit of the State, not of private persons. The rule simply reserves to the State all minerals
that may be found in public and even private land devoted to “agricultural, industrial,
commercial, residential or (for) any purpose other than mining.” Thus, if a person is the owner of
agricultural land in which minerals are discovered, his ownership of such land does not give him
the right to extract or utilize the said minerals without the permission of the State to which such
minerals belong. The flaw in the reasoning of the respondent court is in supposing that the rights
over the land could be used for both mining and non-mining purposes simultaneously. The
correct interpretation is that once minerals are discovered in the land, whatever the use to which
it is being devoted at the time, such use may be discontinued by the State to enable it to extract
the minerals therein in the exercise of its sovereign prerogative. The land is thus converted to
mineral land and may not be used by any private party, including the registered owner thereof,
for any other purpose that will impede the mining operations to be undertaken therein, For the
loss sustained by such owner, he is of course entitled to just compensation under the Mining
Laws or in appropriate expropriation proceedings.