SUN BROS V. VELASCO

FACTS:

The petitioner delivered to Lopez an Admiral refrigerator under a “Conditional Sale Agreement”. Out of the P1,700 purchase price, only P500 was paid as downpayment. They stipulated that Lopez shall not remove the refrigerator from his address nor part possession therewith without the express written consent of Sun brothers. In violation thereof, Sun Brothers may rescind the sale, recover possession and the amounts paid shall be forfeited. The refrigerator shall remain the absolute property of Sun Brothers until Lopez has fully paid the purchase price.

Lopez sold the refrigerator to JV Trading (owned by Jose Velasco) without knowledge of Sun brothers for P850, misrepresented himself as Jose Lim and executed a document stating that he is the absolute owner. Thereafter, Velasco displayed the refrigerator in his store abd Co Kang Chui bought it for P985.

 ISSUE:

W/N Co Kang Chiu, an innocent buyer from a store, has a better right as owner than Sun Brothers, a conditional vendor

 RULING:

Article 1505 of the Civil Code provides:

“Subject to the provisions of this Title, where goods are sold by a person who is not the owner thereof, and who does not sell them under authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner if the goods is by his conduct precluded from denying the seller’s authority to sell.

“Nothing in this Title, however, shall affect:

(3) Purchases made in a merchant’s store, or in fairs, or markets, …”

            Since Co Kang Chui purchased the refrigerator from JV Trading, a merchant store and displayed thereat, the 3rd paragraph of Art. 1505 applies, from which Co Kang Chui should be declared as having acquired a valid title to the refrigerator, although his predecessors in interest did not have any right of ownership over it. This is a case of imperfect or void title ripening into a valid one, as a result of some intervening causes. The policy of the law which we do not feel justified to deviate, has always been that where the rights and interests of a vendor comes into clash with that of an innocent buyer for value, the latter must be protected.

Co Kang Chui who is now is possession of the refrigerator should be adjudged the owner thereof, because he bought it at a merchant’s store in good faith and for value.

Digest Credit: Abby Parwani