Delivery was delayed through the seller's own fault and the goods were then destroyed. Who bears the loss?

The starting rule: risk follows ownership

Article 1504 begins with a general principle: the goods remain at the seller's risk until the ownership therein is transferred to the buyer, and once transferred, the goods are at the buyer's risk whether actual delivery has been made or not. So ordinarily the question of who loses when goods are destroyed is answered by asking who owned them at that moment. Risk rides with ownership, not necessarily with physical possession. If ownership had passed to you before the goods were destroyed, the plain rule would put the loss on you even though you never physically received them. But that is only the starting point, not the whole picture.

Fault-caused delay flips the risk

The article then sets out exceptions, and the second is decisive here. It says: Where actual delivery has been delayed through the fault of either the buyer or seller the goods are at the risk of the party in fault. This rule overrides the ownership-based default when a party's own fault held up delivery. The idea is fairness: a party who wrongly delays getting the goods to the buyer should not be allowed to push the risk of that delay onto the innocent side. Whoever caused the hold-up is made to carry the danger of loss for the period their fault kept the goods where they should not have been.

On your facts, the seller carries the loss

Apply that to what happened. Delivery was delayed, and the delay was the seller's own fault; the goods were then destroyed while still undelivered because of that delay. Under the exception, the goods were at the seller's risk during the delay, so the seller, the party in fault, bears the loss. This holds even if, under the general rule, ownership or its incidents might otherwise have pointed to you. The seller's fault is what the law fixes on.

The limits worth checking

Two qualifications matter. First, the whole article operates Unless otherwise agreed, so the parties can allocate risk differently by contract; check whether your agreement contains its own risk or delivery terms that change this result. Second, the exception depends on the delay being genuinely due to the seller's fault. If the delay was actually your fault as buyer, the risk would swing to you instead; and if neither side was at fault, the ordinary ownership rule governs again. So the key facts to establish are that delivery was in fact delayed and that the seller's conduct, not yours or mere chance, caused that delay.

Cases citing this provision

These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.

• Spouses Noel John M. Kaw And Josephine Caseres-Kaw vs. Heirs of Marilyn Nodalo, et al, G.R. No. 263047, November 27, 2024 — read the decision on LawPhil →
• Aerospace Chemical Industries vs. Court of Appeals, et al, G.R. No. 108129, September 23, 1999 — read the decision on LawPhil →
• Asset Privitazation Trust vs. T.J. Enterprises, G.R. No. 167195, May 8, 2009 — read the decision on LawPhil →
• Gaisano Cagayan, Inc. vs. Insurance Co. of North America, G.R. No. 147839, June 8, 2006 — read the decision on LawPhil →

Related provisions

• Civil Code, Article 1504 — Risk of Loss Follows Ownership