SUN BROS. & CO. v VELASCO
Lopez obviously
FACTS: Sun Brothers sold an Admiral Refrigerator to Lopez
upon the agreement that ownership will only pass to the latter
upon payment of the full purchase price. The stipulated price
was 1,700 pesos and Lopez paid only the down payment worth
500 pesos. Thereafter, Lopez sold the same to JV Trading
(owned by Jose Velasco) for 850 pesos and was displayed in
the latter’s store. It was thereafter bought by Co Kang Chiu
from JV Trading for 950 pesos. Sun Brothers sought to
recover the refrigerator.
CFI ruled in favor of Sun Brothers and order Co Kang Chiu to
return the refrigerator.
ISSUE: W/N Sun Brothers may recover the thing?
HELD: NO. Under Art. 1505, sale of goods by one who is an
owner does not vest a better title to the buyer. However, where
purchases were made in a merchant’s store, or in fairs, or
markets, such rule
does not apply.
As applied in the case at bar, it is true that where a person who
is not the owner of a thing sells the same, the buyer acquires
no better title than the seller has. In this case.
had no title to the goods for having failed to pay the full price.
It only follows that JV Trading had no title thereto as Velasco
was not in good faith. He should have inquired if Lopez had
good title to it—the same not being engaged in the business of
selling appliances.
The exception to the foregoing rule is the purchase in good
faith in a merchant store or a fair or a market. This rule fosters
stability to commerce and business transactions. Thus, when
the refrigerator passed to Co Kang Chiu, the latter acquired
valid title thereto. Co Kang Chiu purchased the refrigerator in
a merchant store—and for value and in good faith. Thus, he is
protected by the law.
The rights and interests of an innocent buyer for value should
be protected when it comes into clash with the rights and
interests of a vendor. This is embodied in NCC 1505 (3) to
facilitate commercial sales of movables and to give stability to
business transactions.
SBC’s recourse should be a claim for indemnity against
Lopez, and not recovery upon reimbursement, since SBC did
not lose ref nor was the company unlawfully deprived of it.