AGUIRRE V. PHENANG

In specification, if both parties are in good faith, the principal owner may acquire such property, provided that he pay reimbursements made by the laborer for his expenses. Without reimbursements, there is an unjust enrichment in favor of the petitioner.

FACTS:

Spouses Aldaba sold to Jesus Aguirre a circular bolted steel tank for Php900, which was not physically possessed by petitioner due to prevention by the municipality where the tank was located. The spouses sold again the same tank to Zosimo Gabriel for the same price, who sold it to Leonora and Company for Php2,500, who made an improvement (investment and expenses) thereto worth Php11,299 and sold it Nassco (National Shipyards and Steel Corporation) for Php14,500. Aguirre filed a case against the spouses and L&C where it was held that he is the absolute owner. While the above case was pending, L&C filed a case against Nassco for its non-payment, with petitioner as intervenor. It was held that petitioner must reimburse L&C Php11,299 or upon failure to deliver, Nassco must pay petitioner Php900 and L&C Php14500.

ISSUE:

Whether petitioner may acquire such property without reimbursements.

RULING:

Since there was alteration of such tank, Specification took place. The court found that L&C was in good faith when it made the improvements over the property. Since both parties are in good faith, the principal owner may acquire such property, provided that pays reimbursements made by the laborer for his expenses. Without reimbursements, there is an unjust enrichment in favor of the petitioner.