SALES | B2015 CASES

Sun Bros. Appliances, Inc. vs. Perez

April 30, 1963 Labrador, J. SUMMARY: Sun Bro Appliances and Perez entered into a Conditional Sale Agreement on an air conditioner. The agreement states that the buyer shall bear the loss for any cause, but the title is not transferred until full payment. The item was burned, Perez refused to pay the balance invoking fortuitous event as cause of loss. The court ordered Perez to pay. DOCTRINE: 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. SELLER BUYER Sun Brothers Appliances, Inc. Perez SUBJECT PROPERTY: DOCUMENT: Admiral Air Conditioner Conditional Sale Agreement

ACTION AND PRAYER: Action to recover the balance of the items price CFI RULING: Ordered Perez to pay 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 Points of Contention The contract stipulates that title would vest only upon full payment of the price The phrase for any cause in the agreement Buyers interpretation It follows that the vendor bears the loss in this case (bec. Full payment not yet made) Should not be interpreted to include fortuitous events. Although 1174, CC recognizes an exception to FE when parties expressly stipulate, for any cause did not indicate such intention Sellers interpretation The risk of loss was expressly stipulated to be undertaken by the buyer, even if the title to the property sold remained 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 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

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: "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;" Pursuant to the contract, sun bros. delivered the item and was received by Perez Perez made a downpayment 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

ISSUE: Who should bear the loss? - Buyer RATIO: I. 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. II. Citing American decisions, the court held that the loss did not relieve the buyer from his obligation to pay III. Reason for the rule:

SALES | B2015 CASES

1. 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 under the control and dominion of the vendee

3. Providing an incentive to care properly for the goods, they being exclusively
DISPOSITIVE: Judgment of lower court affirmed.