Sun Brothers Appliances v. Perez
REITERATIONFacts
The Antecedents: Plaintiff-appellee, Sun Brothers Appliances, Inc., filed an action against defendant-appellant, Damaso P. Perez, to recover P1,404.00 representing the unpaid balance for an Admiral Air Conditioner sold under a conditional sale agreement dated December 6, 1958. The plaintiff delivered the air conditioner on December 14, 1959, and the defendant made a down payment of P274.00. The defendant claimed the air conditioner was destroyed by fire on December 28, 1958, constituting a loss by force majeure, thus absolving him from liability. Procedural History: The Court of First Instance ruled in favor of the plaintiff, ordering the defendant to pay the full amount demanded, including interest and attorney's fees. The defendant appealed directly to the Supreme Court. The Petition: The defendant-appellant argued that since title to the property remained with the vendor until full payment, the risk of loss should also remain with the vendor, and the phrase "for any cause" in the contract should not include fortuitous events. The plaintiff-appellee countered that the stipulation making the buyer liable for any loss, even by fortuitous event, is valid under Article 1174 of the Civil Code and public policy.
Issue(s)
Whether the loss of the air conditioner by fire, a fortuitous event, extinguishes the defendant's obligation to pay the remaining balance under the conditional sale agreement. Whether the stipulation in the conditional sale agreement making the buyer liable for loss "for any cause" includes fortuitous events.
Ruling
The Supreme Court affirmed the decision of the Court of First Instance, holding the defendant liable for the unpaid balance. The Court ruled that the stipulation in the conditional sale agreement, wherein the buyer assumes the risk of loss for any cause, including fortuitous events, is valid and binding.
Ratio Decidendi
On the issue of whether the loss by fire extinguishes the obligation: The Court held that the loss of the air conditioner by fire, even if considered a fortuitous event, did not extinguish the defendant's obligation to pay the balance. This is because the parties expressly stipulated in the conditional sale agreement that the buyer shall bear the risk of loss for any cause whatsoever after delivery. The Court cited American jurisprudence and the Uniform Sales Act and Uniform Conditional Sales Act, which support the rule that in conditional sales where title remains with the vendor, the loss of the property while in the vendee's possession, without the vendor's fault, does not relieve the vendee from the obligation to pay the price. On the interpretation of the stipulation "for any cause": The Court found that the phrase "for any cause" in paragraph 3 of the conditional sale agreement clearly encompassed fortuitous events. The stipulation explicitly stated that "said property remains at Buyer's risk after delivery." This express agreement, making the buyer responsible for any loss, even if the title remained with the vendor, was deemed valid and sanctioned by Article 1174 of the Civil Code. The Court reiterated that such stipulations are not contrary to law, morals, or public policy, citing its own ruling in Government vs. Amechazurra.
Main Doctrine
In a conditional sale agreement, a stipulation that the buyer shall bear the risk of loss for any cause, even fortuitous events, is valid and binding, provided it is not contrary to law, morals, or public policy.