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Sun Brother’s Company v.

Jose Velasco and Co Kang Chiu Facts: SBC delivered to Lopez and Admiral refrigerator under a conditional sale agreement. Of the 1700 pesos purchase price, a down payment of 500 pesos was made. It was stipulated that Lopez cannot remove the refrigerator without the written consent of SBC. It also remains as an absolute property of SBC until the full payment of the price. Its violation would grant SBC the right to rescind the contract and forfeit the down payment. Without SBC’s knowledge, Lopez, misrepresenting himself as the owner, sold it to J.V. Trading which was owned by Velasco. The latter in turn sold it to Co who transferred the refrigerator to his home. SBC filed a writ of replevin at the municipal court which the latter issued in its favor. However, it was not executed because Co filed a counter-bond with the court. Co filed a cross-claim against Velasco and a counter-claim against SBC. In the CFI, Velasco and Co’s answers were reproduced. It held SBC as the rightful owner of the refrigerator. Velasco and Co appealed.

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ISSUE: who has the better right? Ratio: 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. In the case at bar, Lopez had no title because he acquired the title under a conditional sale and he failed to give the full payment of the price to SBC. The sale to Velasco also did not vest him any title because of his negligence. As a merchant engaged in the business of selling refrigerators, he should have inquired into the title of Lopez because the latter is a private person not engaged in such business. The real conflict is between SBC and Co. Since Co bought it from the J.V. Trading, a merchant store, the exception in Art. 1505 applies. Co, being an innocent purchaser in good faith and for value, acquired a better right to the refrigerator. Art. 559 does not apply because SBC neither lost the property nor was it unlawfully deprived of such. The proper remedy for SBC is a claim for indemnity against Lopez.

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