G.R. No. L-9954; March 22, 1915

FACTS:
Lim Jocsing, a merchant from Malitbog, Leyte, entered into a written contract with the firm of F.M. Yaptico (also known as Chiat Seng) of Cebu. Under this contract, Yaptico opened a current account for Lim Jocsing and extended him a credit line of P15,000 to be used for purchasing abaca and copra. The contract stipulated, among other things, that all abaca and copra acquired by Lim Jocsing were to be delivered to Yaptico, with their value credited to Lim Jocsing’s account. A key provision (paragraph five) stated: “The abaca and copra that I may deliver to be received on board by his agent shall be for the account of Yaptico, except in case I should otherwise expressly provide in writing.”

Pursuant to the contract and upon Lim Jocsing’s request, Yaptico sent the steamer Bais to Malitbog carrying cash and goods for him. In return, Lim Jocsing loaded 430 piculs of abaca onto the Bais, consigned to Yaptico in Cebu. This abaca was insured for P10,320 in the name of Yaptico, who paid the premium. The steamer subsequently wrecked, resulting in the loss of the abaca and the death of Lim Jocsing. Yaptico collected the insurance proceeds and retained them, claiming ownership of the lost abaca.

Carlos de Lizardi, as administrator of Lim Jocsing’s estate, filed an action to recover the insurance proceeds, arguing that the abaca belonged to Lim Jocsing and was merely consigned to Yaptico for sale on commission. The Court of First Instance of Cebu ruled in favor of the administrator. Yaptico appealed.

ISSUE:
Who was the owner of the abaca lost in the shipwreck and, consequently, who is entitled to the proceeds of the insurance covering said abaca?

RULING:
The Supreme Court REVERSED the judgment of the lower court and ABSOLVED the defendant, F.M. Yaptico, from the complaint.

The Court held that under the clear terms of the contract, particularly paragraph five, the abaca delivered by Lim Jocsing to Yaptico’s agent on board the steamer became the property of Yaptico. The contract established that upon delivery and receipt of the goods, their value was to be credited to Lim Jocsing’s account. This arrangement meant that Yaptico, having effectively advanced the value of the shipment through prior credits of cash and goods, became the owner upon delivery. The loss, therefore, would have fallen on Yaptico had the abaca not been insured.

The Court found no inconsistency in the contract’s other clauses, which obligated Lim Jocsing to pay freight, commission, storage, and insurance expenses. These obligations were justified as Yaptico furnished business capital to Lim Jocsing without charging interest or premium. The creditor (Yaptico) was therefore reasonably entitled to recoup operational costs and earn a commission.

Since Yaptico was the owner of the abaca, he had an insurable interest in it. The insurance was properly taken in his name, and he rightfully collected the proceeds upon the loss. The estate of Lim Jocsing had no right to the insurance money.