G.R. No. 206534. October 05, 2016
JULIA LIM ROSARIO, MERCEDES LIM CUSTODIO AS REPRESENTED BY DONNO CUSTODIO, NORMA LICARDO, AND LEILA ESPIRITU, PETITIONERS, VS. ALFONSO LIM, RESPONDENT.

FACTS

Brigida Aquino Lim acquired a leasehold right over a government lot in Baguio City in 1973. A commercial building was constructed on the property. Brigida executed documents in 1992 and 1995 waiving her rights over the lot and building in favor of her son, respondent Alfonso Lim. However, in 1996, she executed a contradictory affidavit, asserting that she and her late husband Luis were the real owners, that the construction was financed from their conjugal funds, and that Alfonso did not pay for it. She alleged the prior waivers were executed under duress.
Upon Brigida’s death, her children, including Alfonso and petitioners (his sisters), executed an extrajudicial settlement excluding the disputed property. Years later, petitioners filed a complaint for judicial partition, accounting, and damages, claiming the property formed part of their parents’ conjugal estate. The Regional Trial Court ruled in favor of petitioners, declaring the parties as co-owners and ordering equal partition. The Court of Appeals reversed, remanding the case to apply Articles 448 and 546 of the Civil Code on good faith builders, requiring a determination of whether Alfonso built in good faith and the corresponding indemnity.

ISSUE

Whether the disputed property, including the building, forms part of the conjugal estate of Brigida and Luis Lim, and is thus subject to partition among their heirs, or whether the rules on a builder in good faith apply.

RULING

The Supreme Court granted the petition and reinstated the RTC decision. The Court held that the property is conjugal and belongs to Brigida’s estate. The legal logic is anchored on property accession and the presumption of conjugality. The leasehold right was acquired during Brigida’s marriage, making it conjugal property. The building, constructed using conjugal funds as evidenced by Brigida’s 1996 affidavit, is an improvement that follows the ownership of the land by right of accession under Article 445 of the Civil Code. Since the land (via leasehold) is conjugal, the building attached to it also becomes conjugal.
The Court found the CA erred in applying Articles 448 and 546, which govern a builder in good faith on another’s land. These provisions are inapplicable because Alfonso cannot be considered a builder in good faith. He constructed on land owned by his parents, not a stranger. A child building on a parent’s property is presumed to be aware of the ownership, negating good faith. Therefore, the property and improvements correctly form part of the conjugal estate, to be partitioned equally among the compulsory heirs. The RTC’s order for partition and accounting was proper.