SUN BROS. & CO. v VELASCO
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. Lopez
obviously 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.