G.R. No. L-55684 December 19, 1984
Chrysler Philippines Corporation, petitioner, vs. The Honorable Court of Appeals and Sambok Motors Co. (Bacolod), respondents.

FACTS

Petitioner Chrysler Philippines Corporation, a vehicle assembler and seller, filed a complaint for damages against respondent Sambok Motors Co. (Bacolod), its dealer, along with a forwarding agent and a shipping company. Chrysler alleged that on October 2, 1970, Sambok Bacolod ordered automotive products worth P30,909.61. Chrysler delivered the goods to its forwarding agent for shipment via Negros Navigation Company’s vessel to Sambok Bacolod. When Chrysler sought payment, Sambok Bacolod refused, claiming non-receipt of the merchandise. Demands against the carrier and forwarder were also denied.
The Trial Court dismissed the case against the forwarding agent and the carrier. However, it held Sambok Bacolod liable, finding that its refusal to take delivery from the carrier upon notification, despite having received the Bill of Lading, constituted wrongful neglect. The Court of Appeals reversed this decision, dismissing Chrysler’s complaint. The appellate court found that Chrysler failed to perform its obligation by shipping the goods to Bacolod instead of Iloilo, as allegedly designated in the order form, constituting misdelivery and causing the loss.

ISSUE

Whether respondent Sambok Motors Co. (Bacolod) is liable for damages for breach of contract arising from its refusal to accept and pay for the shipped automotive products.

RULING

The Supreme Court affirmed the Court of Appeals’ decision dismissing the complaint, but on a different legal ground. The Court found the issue of misdelivery (shipment to Bacolod instead of Iloilo) not decisive for resolving Sambok Bacolod’s liability. The core reason for absolving the respondent was the seller’s (Chrysler’s) failure to effect complete delivery of the goods to the buyer.
The evidence showed that when Sambok Bacolod, upon receipt of the Bill of Lading, attempted to take delivery from Negros Navigation, the carrier could not produce the complete shipment, advising that missing parts would be located. The goods were only found four years later, deteriorated and valueless. Consequently, Sambok Bacolod cannot be faulted for refusing acceptance years after shipment when the carrier could not deliver the merchandise. Under Article 1522 of the Civil Code, a buyer may reject goods if the seller delivers a quantity less than contracted.
The risk of loss remained with Chrysler as the seller. Applying the principle of res perit domino (the thing perishes with the owner) under Article 1504 of the Civil Code, the risk did not pass to the buyer because the goods were never placed in the buyer’s control and possession. The loss resulted from non-delivery by the carrier, for which Chrysler, having failed to comply with conditions precedent to sue the carrier, must bear the consequence. Thus, Chrysler, not Sambok Bacolod, must shoulder the loss.