RULES ON RISK OF LOSS AND DETERIORATION:

Article 1504. Unless otherwise agreed, the goods remain at the sellers risk until the
ownership therein is transferred to the buyer, but when the ownership therein is
transferred to the buyer the goods are at the buyers risk whether actual delivery has
been made or not, xxx
When the thing sold is lost before perfection of the contract, the seller bears the loss.
When the thing sold is lost at the time of perfection of the contract, it is void or
inexistent.
If when the thing sold is lost after perfection of the contract, but before delivery: differing
The general rule is, who bears the risk of loss is governed by the stipulations in the
contract.
In the absence of any stipulation the buyer bears the loss as an exception to the rule
of res perit domino.
EXCEPTIONS: when object sold consists of fungible goods for a price fixed according
to weight, number or measure seller is guilty of fraud, negligence, default or violation of
contractual terms object sold is generic. Buyer would have been the one to profit from
the thing had it not been lost or destroyed.
On the other hand where the ownership is transferred by delivery, as in our code, the
application of the axiom res perit domino, imposes the risk of loss upon the vendor,
hence, if the thing is lost by fortuitous event before delivery, the vendor suffers the loss
and cannot recover the price from the vendee .The thing is lost after delivery which
means buyer bears the loss.
If one of the party involved does not comply, the other do not need to pay but it only
apply when the seller is able to deliver but does not.
The Effect of loss at the time of sale:
If the thing was entirely lost at the time of perfection, the contract is void and
inexistent
If the thing was only partially lost, vendee may elect between withdrawing from
the contract or demanding the remaining part, paying its proportionate price