Article 1493-1494 of the New Civil Code contemplate the effects of loss or injury of the thing

subject of the sale before or at the time the contract of sale is perfected. However, it must be duly
noted that the loss or injury referred to in these articles is one which has taken place before or at
the time the contract of sale is perfected. It must be distinguished from the loss or injury
mentioned in Articles 1480 and 1504 which occurs after the contract is perfected but prior to the
time of delivery.
Before dwelling into the details, the question of: “when is a thing considered lost?” and “what
type of “thing/object” is being referred to in the articles must first be answered. As to the former,
a thing is considered 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”, according to Article 1189(2).
Meanwhile, the second question pertains to a sale of specific thing or goods. Thus, Article 1493
applies when the object of the sale is a specific or determinate thing like Jack's only horse named
Tony, Kawasaki Raider with plate number HX1123; and as for goods, a different article but with
the same principles applies which is the succeeding article, Article 1494.
Article 1493 constitutes two cases: first, if the thing or object of the contract of sale has been
entirely lost, the contract is inexistent and void because there is an absence of an essential
element which is the object to begin with. There being no contract, there is no necessity to bring
an action for annulment. Thus, the seller bears the loss and the buyer will not have to pay the
price. To illustrate, here is an example:
Tim sold his Honda Civic Type R car with the plate number of MJ6789 to Anton.
Unknown to both parties, the car has been totally destroyed before they agreed on the sale. In
this case, there is no valid contract of sale for lack of object hence the effect of the contract is
void so Tim, as owner, bears the loss and Anton does not have to pay for the price.
Second, if the thing or object of the contract of sale has only been partially lost, the vendee or
buyer may elect between 1) withdrawing from the contract and 2) demanding the remaining part,
paying in proportion to the total sum agreed upon. To illustrate, here is another example but with
the same object as the previous one:
Now, if the Honda Civic car owned by Tim is only partially destroyed leaving some parts
of it that are still functional. However, since it is not of the character or in the condition
contemplated by the parties, Anton may withdraw from the contract or demand the delivery of
the car, paying its proportionate price.
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”, according to 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 which are to rescind or
withdraw from the contract or to give it legal effect, paying the proportionate price of the
remaining object. However, the remedies mentioned in Article 1494 apply differently under two
grounds whether if the sale is divisible or indivisible.
If the sale is divisible, then the contract is valid in all of the existing goods or in so much thereof
as have not deteriorated and binding as to the buyer to pay the agreed price for the goods in
which the ownership will pass. However, if the sale is indivisible and the buyer opts to continue
with the sale, the buyer should be made to pay only the proportionate price of the remaining
goods as provided for in paragraph 2 of Art. 1494. If the sale is indivisible, the object thereof
may be considered as a specific thing. To illustrate, here is an example:
Michelle sold 500 packs of brown sugar to Kate at P 50.00 per pack. If 90 packs of brown sugar
were lost, Kate may, at his option, withdraw from the contract without the obligation to pay for
the packs of brown sugar; or demand the delivery of the 410 packs, but binding her to pay the
agreed price thereof which is P20,500.00. If the contract is indivisible, where 500 packs of
brown sugar were sold by Michelle at a fixed and single amount of P25,000.00, Kate should be
made to pay only the proportionate price of 410 packs which is also P20,500.00.
To recap, the effects of loss or injury of the thing subject of the sale before or at the time the
contract of sale is perfected are as follows:
1) If the object of sale is a specific thing (Art. 1493)
a) The thing is entirely lost- contract is without effect or void
b) The thing is partially lost- the buyer may choose between:
b.1 withdrawal
b. 2 demanding the remaining part, paying its proportionate price
2) If the object of sale are specific goods (Art. 1494)
The remedies available to the buyer are:
1) Avoidance
2) 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.

References
Books
Law on Sales, Agency and Credit Transactions by Hector S. De Leon
Sales, Agency and Bailments by Atty. Andrix D. Dominggo, CPA, MBA

Handouts
Topic 5- Handouts, Topic 5 (TRANSCRIPT NOTES) by Atty. Dente