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18 SUPREME COURT REPORTS ANNOTATED

Aguirre vs. Pheng

No. L-20851. September 3, 1966.

JESUS AGUIRRE, petitioner, vs. VICTOR S. PHENG, in his

capacity as General Manager of the LEONORA :& COMPANY, and
NATIONAL SHIPYARDS AND STEEL CORPORATION,
respondents.

Ownership; Effect of accession by specification.—It is clear that we

have here a case of accession by specif ication: Leonora :& Company, as
purchaser acting in good faith, spending P11,299.00 for the reconditioning
of the tank which is later adjudged to belong to petitioner Aguirre. Although
ordinarily, therefore, Aguirre as owner of the tank, would be entitled to any
accession thereto, the rule is different where the works or improvements or
the accession were made on the property by one who acted in good faith
(Art. 466 of the New Civil Code). He should reimburse to Leonora :&
Company the sum of P11,-299.00.
Judgments; Effect of finality of judgment; Res judicata.—It must also
be remembered that the judgment in Civil Case No. 24914 of the Court of
First Instance of Manila wherein the Nassco was directed to pay to Aguirre
the sum of P900.00, in case delivery of the same tank is no longer possible,
has already

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VOL. 18, SEPTEMBER 3, 1966 19

Aguirre vs. Pheng

become final. This ruling cannot be disregarded in the present proceeding

which involves the same parties and practically the same issue, arising from
the same set of facts,

PETITION for review by certiorari of a decision of the Court of

Appeals.
The facts are stated in the opinion of the Court.
     Sisenando Villaluz for petitioner.

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          M. C. Virata for respondent National Shipyards and Steel

Corporation.

BARRERA, J.:

Antecedents.—On June 28, 1954, Vicente Aldaba and Teresa V.

Aldaba sold to Jesus Aguirre a circular bolted steel tank with a
capacity of 5,000 gallons, for the sum of P900.00, for which the
latter delivered to the sellers. duly endorsed, Security Bank :& Trust
Company check No. 281012, in the amount of P900.00. Aguirre,
however, failed 'to take physical possession' of the tank, having been
prevented from' doing so by the municipal authorities of Los Baños,
Laguna (where the tank was located), in view of the claim of
ownership being made by the Bureau of Public Highways. It
appears, however, that Vicente 'and Teresa Aldaba again sold the
same tank on December 2, 1954 to Zosimo Gabriel, for P900.000.
Gabriel, in turn, sold it to the Leonora :& Company on December 5,
1954, for " P2,500.00. After some alterations and improvements
made on the tank, Leonora :& Company was able to sell the tank to
1
National Shipyards :& Steel Corporation (Nassco), for P14,500.00.
Aguirre immediately filed with Nassco a formal notice of his
claim of ownership of the tank, as a consequence of which, payment
of the purchase price to Leonora :& Company was suspended.
.Then, Aguirre instituted Civil Case No. 24914 in the Court of First
Instance of Manila, against Leonora :& Company and' the Aldabas,
for delivery to 'him of the tank, with damages. On the other hand,
because of the suspension of payment of the purchase price, Leonora
& Company filed Civil Case No. 27988, against

_______________

1 The sale made to Nassco was the result of a public bidding won by Leonora &
Company.

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20 SUPREME COURT REPORTS ANNOTATED

Aguirre vs. Pheng

the Nassco, praying for the delivery of the purchase price of*
P14,500.00, or the reimbursement of the sum of P2,299.-00
allegedly representing the actual investment and expenses made and
incurred to put the tank in usable condition. Jesus Aguirre
intervened in this proceeding. These two cases were jointly heard by
the trial court.
Thereafter, decision was rendered in Civil Case No. 24914, the
dispositive portion of which reads as follows:

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"IN VIEW OF THE FOREGOING, the Court hereby declares Jesus Aguirre
the absolute owner of the property described in his complaint. The
subsequent sale made by defendants Aldaba to Zosimo Gabriel, the sale
made by Zosimo Gabriel to defendant Leonora and Co.; and the sale made
by defendant Leonora and Co. to the National Shipyards and Steel
Corporation, are hereby declared null and void and of no ef ffect.
Defendants Aldaba and Leonora and Co. and the National Shipyards and
Steel Corporation, are hereby ordered to deliver to plaintiff Jesus Aguirre
the tank in question. Failure to make such delivery, defendant National
Shipyards and Steel Corporation, in whose possession the tank is at present,
shall pay to the said Jesus Aguirre the original purchase price of the tank in
the amount of P900.00."

No appeal having been perfected on time, this decision became final.

In Civil Case No. 27988, the court rendered decision based on a
stipulation of facts by the parties, wherein the existence of Civil
Case No. 24914 was admitted, the dispositive portion of which
provides:

"IN VIEW OF THE FOREGOING AGREEMENT, judgment is hereby

rendered as follows:
"Intervenor Jesus Aguirre, as we have already declared in Civil Case No.
24914, is hereby adjudged owner of the oil tank in question. Defendant
National Shipyards and Steel Corporation is hereby ordered to deliver to the
said Jesus Aguirre such tank, but in the event that delivery is not possible, to
pay to Aguirre the purchase price of P900.00, and to Leonora and Co. the
amount of P11,299.00 which represents the costs of the improvements made
by the said Leonora :& Co.
"In the event that the National Shipyards and Steel Corporation shall
deliver the oil tank to Jesus Aguirre as it is, the latter shall pay to Leonora
and Co. the amount of P1 1,299.00 which, as already stated, was spent by
Leonora and Co. for the improvement of the tank."

_______________

* Editors note: P11,299.00(?)

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VOL. 18, SEPTEMBER 13, 1966 21

Aguirre vs. Pheng

From this decision, Aguirre perfected an appeal to the Court of

Appeals.
The present case.—On January 9, 1963, the Court of Appeals
rendered decision affirming the judgment of the lower court in Civil
Case No. 27988, to return to intervenor Aguirre the sum of P900.00
in case delivery of the tank to him will not be possible—

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"because this was all the amount that Aguirre had parted with when he
purchased said tank. It was Leonora &' Co. who had spent the sum of P1
1,299.00 for the rehabilitation of said tank and against this amount Aguirre
has no rightful claim whatsoever. Of course, in the event of .delivery of the
tank to Aguirre as improved, it would be just for him to reimburse Leonora
:& Co. the sum of ey 11,299.00. The trial court, therefore, acted properly in
denying Aguirre's claim to be paid the fair and reasonable value of the tank
as improved in case the same could no longer be delivered to him."

Aguirre filed the present petition for review, alleging that the
judgment of the Court of Appeals, ordering the return to him of the
sum of P900.00 (when the value of the property is at least
P14,500.00), nullifies the declaration of his ownership of the tank.
He contends that under Article 440 of the Civil Code, his ownership
of the property entitles him to everything that is produced thereby, or
is incorporated or attached thereto, either naturally or artificially.
Thus, he reiterates the claim to the fair and reasonable value of the
tank at the time of its delivery to Nassco, which is P14,500.00.
It is clear that we have here a case of accession by specification:
Leonora and Company, as purchaser acting in good faith, spending
P11,299.00 for the reconditioning of the tank which is later adjudged
to belong to petitioner Aguirre, There is no showing that without the
works made by Leonora :& Company, the tank in its original
condition when Aguirre paid P900.00 therefor, would command the
price of P14,500 which Nassco was willing to pay. Although
ordinarily, therefore, Aguirre, as owner of the tank, would be
entitled to any accession thereto, the rule is different where the
works or improvements or the accession was made on the property
by one who acted in good

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Aguirre vs. Pheng

2
faith. And, it is not contended that the making of the improvements
and incurring" of expenses amounting to P11,299.00 by Leonora :&
Company was done in bad faith. Furthermore, to uphold petitioner's
contention that he is entitled to the sum of P14,500.00 the price of
the tank in its present condition, would be to allow him to enrich
himself at the expense of another. The lower courts, therefore, acted
correctly in ordering the reimbursement to Leonora :& Company of
the expenses it made on the tank.
It must also be remembered that the judgment in Civil Case No.
24914 of the Court of First Instance of Manila, wherein Nassco was
directed to pay to Aguirre the sum of P900.00, in case delivery of
the same tank is no longer possible, has already become final. This
ruling cannot be disregarded in the present proceeding which
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involves the same parties and practically the same issue, arising
from the same set of facts.
Nassco cannot also be compelled to pay more than P14,500.00
for the tank, the bid offered by Leonora :& Company and accepted
by this buyer, and which must be the actual market value of the
property at the time of its delivery to the latter. It has nothing to do
at all with the various transactions or sales and the deprivation of
Aguirre's right to possession of the tank, which culminated in this
legal suit.
Wherefore, finding no error in the decision of the Court of
Appeals under review, the present petition is hereby dismissed, with
costs against the petitioner. So ordered.

          Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal,

Bengzon, J.P., Zaldivar, Sanchez and Castro, JJ., concur.

Judgment affirmed.

_______________

2 "ART, 466. Whenever two movable things belonging to different owners are,
without bad faith, united in such a way that they form a single object, the owner of the
principal thing acquires the accessory, indemnifying the former owner thereof for its
value." (new Civil Code). Which provision is applicable to all modes of accession.

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