SONG FO & CO. vs.
MANUEL ORIA On the contrary, the language of the contract which authorized Song
J. Carson | December 24, 1915
TOPIC: Risk of Loss: After Delivery (Art. 1504)
FACTS
Song Fo sold a launch to Oria for P16,500 payable in quarterly
installments of P1,000 with an interest rate of 10% per year.
The launch was delivered to Oria in Manila but was shipwrecked and
became a total loss while en route to Oria’s place of business in
Samar.
No part of the purchase price has ever been paid. This action was
instituted for the recovery of the total amount the price.
TC: In favor of Song Fo
Ordered Oria to pay P6,000 plus interest
Oria: Contends that under the terms of sale, Song Fo obligated
themselves to insure the launch and since Song Fo failed, they
should suffer the loss resulting from the shipwreck of the
launch without insurance.
ISSUE: WON Song Fo, failing to insure the launch, should
suffer the loss resulting from the shipwreck?
RATIO
NO. An examination of the terms of sale discloses that Song Fo did
not expressly obligate themselves to insure the launch. The contract
only expressly authorized them to insure it in their own name.
There is nothing in the record which would hold that Song Fo
obligated themselves to insure the launch at all events. There is
nothing in the written contract which justifies an inference that there
was any though in the mind of the parties that Song Fo, as vendor,
would insure the launch against loss or damage during the long period
allowed for the payment of the price.
Fo to take out insurance in their own name and to charge the amount
of the premium to Oria, when read in light of the transaction, imposed
at most a duty upon Song Fo to take such reasonable measures as
might be required of a prudent man in connection with the insurance
of his own property.
Song Fo did in fact make an attempt to insure the launch but due to
the dangerous nature of the coast of Samar and due to some lack of
confidence in the owner of the launch, the local agents of the marine
insurance companies declined to accept the risk without
communicating it to their principals.
It also appears that Oria, who had exclusive control of the operation of
the vessel, sent it from Manila to Samar knowing that it had not yet
been insured and that Song Fo had not power to keep the vessel in
port pending insurance application.
Under these circumstances, Song Fo were not responsible under the
contract for the loss of the launch without insurance and that the
contentions of Oria in this regard furnish no defense to the action
against him for the purchase agreed in the sale.
The trial judge erred in declining to render judgment in favor of Song
Fo for the total amount of the purchase price of the launch. He erred
to rely on CC 1125 without taking CC 1129 into consideration. (SEE
NOTES)
The security for the payment of the price of the launch itself having
disappeared as a result of an unforeseen event, and no other security
having been substituted therefor, Song Fo were clearly entitled to
recover not only for the installments of the indebtedness due but also
for all installments which, but for the loss of the vessel had not
matured at the time. (Meaning, they are entitled not only to the P6,000
which already matured, but to the whole price of P16,500 since the
vessel is already lost)
DISPOSITIVE TC judgment is MODIFIED
P16,500 + 10% interest per year
 NOTES

1125. Obligations, the fulfillment of which has been fixed for a certain
day, are exigible only when such day arrives.

By a certain day is understood one which shall necessarily arrive,

even when the date of arrival is unknown.

When the uncertainty consists in the arrival or non-arrival of the day,

then the obligations is conditional and shall be controlled by the
proceeding section.

1129. The debtor shall lose all right to profit by the term:

1. When, after the obligation has been contracted, it appears that

he is insolvent, unless he gives security for the debt.

2. When he does not give to the creditor the security he is bound

to give.

3. When by his own acts, he acts, he has reduced such security

after giving it, or when it disappears through an unforeseen event (vis
major), unless it is immediately substituted by a new one equally safe.