Song Fo & Co. v. Manuel Oria

Summary

Song Fo & Co. sued Manuel Oria for the P16,500 purchase price of a launch sold under an installment contract. The launch shipwrecked en route to Samar before any payments were made. Oria claimed Song Fo & Co. should bear the loss for failing to insure the vessel. The Supreme Court held that while the contract authorized Song Fo & Co. to insure the launch and charge premiums to Oria, this created only a duty to take reasonable measures as a prudent person would for their own property. Since Song Fo & Co. made bona fide attempts to secure insurance but were prevented by circumstances beyond their control, they were not liable for the uninsured loss. Applying Article 1129 of the Civil Code, the Court ruled that when the security (the launch) was lost through vis major without substitute security, the debtor lost the right to benefit from the payment term, making the entire purchase price immediately due.