CHAPTER 3

EFFECTS of the CONTRACT

WHEN the THING SOLD HAS
BEEN LOST
Art. 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. (1460a)
Effect of loss of thing at the time of sale.
The loss or injury referred to in this article 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.

(1) Thing entirely lost. — Where the thing is entirely lost at the time
of perfection, the contract is inexistent and void (Art. 1409[3].)
because there is no object. (Art. 1318, par. 2.) There being no
contract, there is no necessity to bring an action for annulment.
(2) Thing only partially lost. — If the subject matter is only partially
lost, the vendee may elect between withdrawing from the
contract and demanding the remaining part, paying its
proportionate price. (Art. 1493, par. 2.)
EXAMPLES:
(1) S sold his car to B. Unknown to both of them, 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. S, as owner, bears the loss and B does
not have to pay for the price.

(2) If the car sold is only partially destroyed, there still

remains of the object. However, since it is not of the
character or in the condition contemplated by the
parties, the buyer may withdraw from the contract or
demand the delivery of the car, paying its proportionate
price.
The thing is 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. (Art.
1189[2].)

The word “perishes” is sufficiently inclusive as to cover

a case where there has been material deterioration or
complete change in the nature of the thing in such a
manner that it loses its former utility taking into
consideration the time the contract was entered into.
Art. 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. (n)
Effect of loss in case of specific goods.
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.” (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, namely: to rescind or withdraw from the
contract or to give it legal effect, paying the
proportionate price of the remaining object.
(1) Sale divisible. — The second option is available only if the sale is
divisible. (Art. 1494, par. 2.)
(1) A contract is divisible when its consideration is made up of several
parts. (see Art. 1420.)
(2) When the consideration is entire and single, the contract is indivisible.

(2) Sale indivisible. — Suppose the sale is not divisible, what price is
the buyer to pay for the remaining goods if he elects to continue
with the sale?

It is believed that the buyer should be made to pay only the

proportionate price of the remaining goods as provided for in
paragraph 2 of the preceding article.

If the sale is indivisible, the object thereof may be considered as a

specific thing.
EXAMPLE: Suppose the subject matter sold was 100 cavans
of rice in the warehouse of S at P1,000.00 per cavan or for a
total price of P100,000.00. If 60 cavans of rice were lost, B
may, at his option, withdraw from the contract without the
obligation to pay for the rice; or demand the delivery of the
40 cavans, but binding him to pay the agreed price thereof
which is P40,000.00.
If the contract is indivisible, that is, the 100 cavans of rice
were sold for P100,000.00 fixed without consideration of
the number of cavans, B should be made to pay only the
proportionate price of 40 cavans which is also P40,000.00.