Norkis Distributors, Inc. v. CA

Facts:

Petitioner Norkis Distributors, Inc. is the distributor of Yamaha motorcycles in Negros Occidental. Alberto Nepales bought from the Norkis Bacolod branch a brand new Yamaha Wonderbike motorcycle. The price of P7,500 was payable by means of a Letter of Guaranty from the DBP, which Norkis’ Branch Manager Labajo agrred to accept. Hence, credit was extended to Nepales for the price of the motorcycle payable by DBP upon release of his motorcycle loan. As security for the loan, Nepales would execute a chattel mortgage on the motorcycle in favor of DBP. Branch Manager Labajo issued Norkis Sales Invoice No. 0120 (Exh.1) showing that the contract of sale of the motorcycle had been perfected. Nepales signed the sales invoice to signify his conformity with the terms of the sale. In the meantime, however, the motorcycle remained in Norkis' possession.

The motorcycle was then registered in the Land Transportation Commission in the name of Alberto Nepales. The motorcycle was delivered to a certain Julian Nepales who was allegedly the agent of Alberto Nepales but the latter denies it. The motorcycle met an accident and an investigation conducted by the DBP revealed that the unit was being driven by a certain Zacarias Payba at the time of the accident. The unit was a total wreck, was returned, and stored inside Norkis' warehouse.

DBP released the proceeds of private respondent's motorcycle loan to Norkis in thetotal sum of P7,500. As the price of the motorcycle later increased to P7,828 in March, 1980, Nepalespaid the difference of P328 and demanded the delivery of the motorcycle. When Norkis could not deliver,he filed an action for specific performance with damages against Norkis in the RTC of Negros Occidental.He alleged that Norkis failed to deliver the motorcycle which he purchased, thereby causing himdamages. Norkis answered that the motorcycle had already been delivered to private respondent beforethe accident, hence, the risk of loss or damage had to be borne by him as owner of the unit.

Issue:

WON there had already been a transfer of ownership of the motorcycle to Alberto Nepales at the time it was destroyed

Held:

No. The issuance of a sales invoice does not prove transfer of ownership of the thing sold to the buyer. An invoice is nothing more than a detailed statement of the nature, quantity and cost of the thing sold and has been considered not a bill of sale. In all forms of delivery, it is necessary that the act of delivery whether constructive or actual, be coupled with the intention of delivering the thing. The act, without the intention, is insufficient.

When the motorcycle was registered by Norkis in the name of private respondent, Norkis did not intend yet to transfer the title or ownership to Nepales, but only to facilitate the execution of a chattel mortgage in favor of the DBP for the release of the buyer's motorcycle loan. The Letter of Guarantee (Exh. 5) issued by the DBP, reveals that the execution in its favor of a chattel mortgage over the purchased vehicle is a pre-requisite for the approval of the buyer's loan. If Norkis would not accede to that arrangement, DBP would not approve private respondent's loan application and, consequently, there would be no sale.

In other words, the critical factor in the different modes of effecting delivery, which gives legal effect to the act, is the actual intention of the vendor to deliver, and its acceptance by the vendee. Without that intention, there is no tradition.

Article 1496 of the Civil Code which provides that "in the absence of an express assumption of risk by the buyer, the things sold remain at seller's risk until the ownership thereof is transferred to the buyer," is applicable to this case, for there was neither an actual nor constructive delivery of the thing sold, hence, the risk of loss should be borne by the seller, Norkis, which was still the owner and possessor of the motorcycle when it was wrecked. This is in accordance with the well-known doctrine of res perit domino.