EN BANC

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

LAWYERS COOPERATIVE PUBLISHING COMPANY , plaintiff-appellee,

vs . PERFECTO A. TABORA , defendant-appellant.

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

Tabora & Concon for defendant-appellant.

SYLLABUS

1. SALES; INSTALLMENT SALES; STIPULATION THAT OWNERSHIP REMAIN

WITH SELLER BUT LOSS AFTER DELIVERY TO BE BORNE BY BUYER. — In a contract of
sale where the seller agreed that the ownership of the books sold shall remain with it
until the purchase price shall have been fully paid, it is held that such stipulation cannot
make the seller liable in case of loss, not only because such was agreed merely to
secure performance by the buyer of his obligation but also because in the very contract
it was agreed that the loss or damage to the books after delivery to the buyer shall be
borne by the buyer.
2. OBLIGATIONS AND CONTRACTS; RULE EXEMPTING OBLIGOR FROM
LIABILITY FOR LOSS NOT APPLICABLE TO PECUNIARY OBLIGATIONS. — The rule that
an obligor should be held exempt from liability when the loss occurs thru a fortuitous
event 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. It does
not apply when the obligation is pecuniary in nature and the obligor binds himself to
assume the loss after delivery of the goods to him.
3. DAMAGES; NO LIQUIDATED DAMAGES IN ABSENCE OF BAD FAITH. — A
debtor should not be made to pay liquidated damages when his denial to pay the
balance of the account is not due to bad faith.

DECISION

BAUTISTA ANGELO , J : p

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 at Ignacio Building, Naga City.

In the midnight of the same date, however, a big re broke out in that locality
which destroyed and burned all the buildings standing on one whole block including
that where the law o ce and library of Tabora were located. As a result, the books
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 bought from the company as above stated, together with Tabora's important
documents and papers, were burned during the con agration. 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 good will it sent to Tabora free
of charge volumes 75, 76, 77 and 78 of the Philippine Reports. As Tabora failed to pay
the 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 costs 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 re 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 ling of
the complaint, plus a sum equivalent to 25% of the total amount due as liquidated
damages, and the costs of action.
Defendant took the case to the Court of Appeals, but the same is now before us
by virtue of a certi cation 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 rule, the loss is always
borne by the owner. Moreover, even assuming that the ownership of the books was
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.
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 and the contract entered into on the matter argue
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
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 damage to the books after delivery to the buyer shall be borne by the buyer." And such
stipulation is sanctioned by Article 1504 of our Civil Code, which in part provides:
"(1) Where delivery of 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 nd comfort in the claim that since the books were
destroyed by re 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 quali cations 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 damage because his
denial to pay the balance of the account is not due to bad faith.
WHEREFORE, the decision appealed from is modi ed by eliminating that portion
which refers to liquidated damages. No costs.
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.

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