EFFECTS OF THE CONTRACT WHEN THE THING SOLD HAS BEEN LOST

LOSS (1493-1494)

ARTICLE 1493. If at the time the contract of sale is perfected, the thing which is the object of the contract
has been entirely lost, the contract shall be without any effect.

But if the thing should have been lost in part only, the vendee may choose between withdrawing from the
contract and demanding the remaining part, paying its price in proportion to the total sum agreed upon.

ARTICLE 1494. Where the parties purport a sale of specific goods, and the goods without the knowledge of
the seller have perished in part or have wholly or in a material part so deteriorated in quality as to be
substantially changed in character, the buyer may at his option treat the sale:

(1) As avoided; or

(2) As 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.

Loss

It is understood that the thing is lost when it perishes, goes out of commerce, or disappears in such a way
that its existence is unknown or it cannot be recovered. The phrase risk of loss determines who is liable
for the thing if it perishes; is lost; destroyed or stolen. In general, the risk of loss in a contract of sale is
transferred when the ownership of the determinate thing is transferred through delivery. Thus the
transfer of ownership of the determinate thing is a pivotal event in determining the rights and obligations
of the parties in case of its loss.

A.) Determinate Thing

The object of a contract of sale is a determinate thing.

GENERAL RULE: If the determinate thing perishes or is lost, destroyed or stolen, the risk of the loss is
borne by the owner of the thing at the time of the loss under the principle of res perit domino.

The principle of res perit domino is a civil law concept, where ownership is the basis for reconsideration of
who bears the risk of loss. Based on the principle, the risk of loss of the determinate thing due to
fortuitous event is transferred from the seller to the buyer at the time of delivery.

EXCEPTION: When a law specifically provides for a separate rule in determining the person who shall bear
the risk of loss.

B.) Generic Thing

“ARTICLE 1263”. In an obligation to deliver a generic thing, the loss or destruction of anything of the same
kind does not extinguish the obligation.”

Article 1263 points out that a generic obligation is not extinguished by the loss or destruction of a thing
that belongs to a particular genus or class. If the obligation is to deliver thing in a generic sense, this
obligation is not extinguished by its lost. This is in accordance with the principle of genus nonquan perit or
a genus of thing can never perish.