LIQUIDATION OF THE ABSOLUTE COMMUNITY ASSETS AND LIABILITES  Payments made by the absolute community of property due to the

e absolute community of property due to the insufficiency

of the separate property of the debtor spouse for ante-nuptial debts which did
Art. 102. Upon dissolution of the absolute community regime, the following procedure not redound to the benefit of the family, the support of illegitimate children of
shall apply: the debtor-spouse, and liabilities incurred by such debtor-spouse by reason of
a crime or quasi-delict, are considered as advances to be deducted from the
1. An INVENTORY shall be prepared, listing separately all the properties of the share of the debtor-spouse upon liquidation of the community property.
absolute community and the exclusive properties of each spouse;
Moreover, in case of insufficiency of the absolute community of property, the
2. The debts and obligations of the absolute community shall be PAID out of spouses shall be solidarily liable for the unpaid balance with their separate
its assets. In case of insufficiency of assets, the spouses shall be solidarily liable properties.
for the unpaid balance with their separate properties in accordance with the
provisions of the 2nd paragraph of Art. 94;  NET ASSETS – net remainder of the community after undertaking the first 3
steps provided in Art. 102.
3. Whatever remains of the exclusive properties of the spouses shall
thereafter be delivered to each of them; Art. 103. Upon the termination of the marriage by DEATH, the community property
shall be liquidated in the same proceeding for the settlement of the estate of the
4. The NET REMAINDER of the properties of the absolute community shall deceased.
constitute its net assets, which shall be divided equally between husband
and wife, unless: If no judicial settlement or proceeding is instituted – the surviving spouse shall
a. A different proportion or division was agreed upon in the marriage liquidate the community property either judicially or extra-judicially within 1 year from
settlements; or the death of the deceased spouse.
b. There has been a voluntary waiver of such share. If upon the lapse of the said period, no liquidation is made – any disposition or
For purposes of computing the NET PROFITS subject to forfeiture in encumbrance involving the community property of the terminated marriage shall be void.
accordance with Arts. 43, No. 2 and 63, No. 2, the said profits shall be the
increase in value between the market value of the community property at the Should the surviving spouse contract a subsequent marriage without
time of the celebration of the marriage and the market value at the time of its compliance with the foregoing requirement – a MANDATORY REGIME OF
dissolution; COMPLETE SEPARATION OF PROPERTY shall govern the property relations of the
subsequent marriage.
5. The PRESUMPTIVE LEGITIMES of the common children shall be delivered
upon partition, in accordance with Art. 51;  It is only after liquidation and partition when specific properties are definitely
and physically determined that a sale of such allotted property can be made.
6. Unless otherwise agreed upon by the parties, in the PARTITION OF Hence, although, after the death of the decedent, the heirs can sell, waive or
PROPERTIES, the CONJUGAL DWELLING and the LOT on which it is even alienate their interest to the property they inherit, they cannot sell a
situated shall be adjudicated to the spouse with whom the majority of the specific property as the same can only be determined after liquidation and
common children choose to remain. Children below the age of 7 years are partition.
deemed to have chosen the mother, unless the court has decided otherwise. In
case there is no such majority, the court shall decide, taking into consideration  As a co-owner, the spouse or heirs can undertake any act of dominion over their
the best interest of said children. interest, share or participation, but not over a SPECIFIC CONCRETE
PROPERTY.
 Liquidation occurs upon the termination of the absolute community of
property, as provided for in Art. 99.  All claims chargeable against the community or conjugal partnership, which has
already been dissolved, must therefore be claimed and paid in the settlement
of estate proceedings of the deceased spouse.
Art. 104. Whenever the liquidation of the community properties of 2 or more  “A partner is a co-owner with the other partners of specific partnership
marriages contracted by the same person BEFORE THE EFFECTIVITY of this property.” In a co-ownership, co-owners may bring actions for the recovery of
Code is carried out simultaneously, the respective capital, fruits and income of co-owned property without the necessity of joining all the other co-owners as
each community shall be determined upon such proof as may be considered according co-plaintiffs because the suit is presumed to have been filed for the benefit of
to the rules of evidence. his co-owners.
In case of doubt as to which community the existing properties belong – the
same shall be divided between or among the different communities in proportion to the EXCLUSIVE PROPERTY OF EACH SPOUSE
capital and duration of each.
Art. 109. The following shall be the EXCLUSIVE PROPERTY OF EACH SPOUSE:
CONJUGAL PARTNERSHIP OF GAINS BAAP
1. Brought to the marriage as his or her own;
When does CONJUGAL PARTNERSHIP OF GAINS apply? 2. Acquired during the marriage by gratuitous title;
1. In case future spouses agree in the marriage settlements that such regime shall 3. Acquired by right of redemption, by barter or by exchange rbe with property
govern their property relations; or belonging to only one of the spouses; and
2. Marriages before the effectivity of the Family Code. 4. Purchased with exclusive money of the wife or the husband.

Art. 106. Under the regime of conjugal partnership of gains, the husband and wife place  Properties brought into the marriage – the nature of the property as
in a common fund the Proceeds, Products, Fruits and Income PPFI from their separate property shall remain, unless the contrary is proved by positive and
SEPARATE PROPERTY and those acquired by either or both spouses thru their convincing evidence.
efforts or by chance, and upon the dissolution of the marriage or of the partnership,
the net gains or benefits obtained by either or both spouses shall be divided  PLATA v. YATCO – in the event that property was purchased by a spouse
equally between them, unless otherwise agreed in the marriage settlements. previous to the marriage and it was only after the marriage that the said
property was registered under the name of the owner-spouse but together with
 In other words, they shall place in a common fund: FI the other spouse as co-owner, such property is still the exclusive property of
a. The Fruits of their separate properties; and the spouse who bought it by his or her exclusive funds prior to the marriage.
b. The Income from their work or industry. The registration after the marriage of the certificate of title under the co-
ownership of the spouses to both spouse only creates a trust, thereby
 The conjugal nature of a property is determined by law and not by the will of necessitating the restoration to the real owner-spouse of the subject property
the parties. upon liquidation.

Art. 107. The rules provided in Art. 88 and 89 shall also apply to conjugal partnership  Gratuitous title – anything received by each spouse from any source by way
of gains. of an act of liberality of the giver, such as a donation or a gift, shall belong
exclusively to the spouse-recipient and will not belong to the conjugal
 Commences at the precise moment when the marriage ceremony is celebrated. partnership property.
 No waiver of rights, interests, shares, and effects of the conjugal partnership of
gains can be made during the marriage except upon judicial separation of Includes, among others, the following:
property. 1. Moderate gifts given by one spouse to another during family occasions.
2. Honorarium.
Art. 108. The conjugal partnership shall be governed by the rules on the 3. Property acquired by way of succession, regardless of whether it was
CONTRACT OF PARTNERSHIP in all that is not in conflict with what is expressly acquired before or after the marriage.
determined in this Chapter or by the spouses in their marriage settlements.
The income and fruits of property acquired by gratuitous title shall be considered
conjugal.
  In case of REDEMPTION, the property shall belong to the spouse who has the  Art. 753. When a donation is made to several persons jointly, it is understood
right to redeem regardless of whether or not he or she uses personal funds. to be in equal shares, and there shall be no right of accretion among them,
If and when the conjugal funds are used to effect the REDEMPTION, the unless the donor has otherwise provided.
spouse making the redemption thru conjugal find shall be liable to the conjugal The preceding paragraph shall not be applicable to donations made to husband
partnership for reimbursement of the amount used to redeem his or her and wife jointly, between whom there shall be a right of accretion, if the contrary
exclusive property. has not been provided by the donor.

If, however, there is no right of redemption belonging to either of the spouses,  Art. 1016. In order that right of accretion may take place in testamentary
whoever buys or procures something using his or her own funds shall exclusively succession, it shall be necessary:
own what was purchased. 1. That 2 or more persons be called to the same inheritance, or to the same
portion thereof, pro indiviso; and
 If the separate property of a spouse is used as part of the purchase price of a 2. That one of the persons thus called (1) die before the testator, or (2)
new property in addition to the conjugal funds spent for the said purchase, the renounce the inheritance, or (2) be incapacitated to receive it.
new property shall be considered conjugal.
 Art. 1017. The words “one-half for each” or “in equal shares” or any others
Art. 110. The spouses retain ownership, possession, administration and enjoyment of which, though designating an aliquot part, do not identify it by such description
their exclusive properties. as shall make each the exclusive owner of determinate property, shall not
exclude the right of accretion.
Either spouse may, during the marriage, transfer the administration of his or her in case of money or fungible goods, if the share of each heir is not earmarked,
exclusive property to the other by means of a PUBLIC INSTRUMENT, RECORDED there shall be a right of accretion.
in the ROP of the place where the property is located.
 Art. 1020. The heirs to whom the inheritance accrues shall succeed to all the
 Even after administration is transferred, the owner spouse can still exercise rights and obligations which the heir who renounced or could not receive it
ownership rights. He or she need not obtain the consent of the other spouse. would have had.

Art. 111. A spouse of age may mortgage, encumber, alienate or otherwise dispose of Art. 115. Retirement benefits, pensions, annuities, gratuities, usufructs and similar
his or her exclusive property, without the consent of the other spouse, and appear alone benefits shall be governed by the rules on gratuitous or onerous acquisitions as
in court to litigate with regard to the same. may be proper in each case.

Art. 112. The alienation of any exclusive property of a spouse administered by  Annuity is not a gratuity. If the requirements of the law are complied with in
the other AUTOMATICALLY TERMINATES THE ADMINISTRATION over such order to claim an annuity, such person is entitled to the annuity as a matter of
property and the PROCEEDS of the alienation shall be turned over to the owner right.
spouse.
 Pensions are in the nature of compensation for services previously rendered for
Art. 113. PROPERTY DONATED OR LEFT BY WILL to the spouses, JOINTLY and which full and adequate compensation was not received at the time of the
with DESIGNATION of determinate shares, shall pertain to the done-spouse as his rendition of the service.
or her own exclusive property, and in the absence of designation, share and share
alike, without prejudice to the right of accretion when proper.  BPI v. POSADAS – even if the life insurance taken out by the deceased person
is made payable to the deceased estate, the proceeds of said insurance shall
Art. 114. If the donations are ONEROUS, the amount of the charges shall be borne still be considered conjugal property if the life insurance policy is paid out of the
by the exclusive property of the done-spouse, whenever they have been advanced by conjugal funds.
the conjugal partnership of gains. However, if the insurance policy were paid partly by conjugal funds and partly
by separate funds, the proceeds of the insurance shall be owned by the conjugal
 partnership and the separate property proportionately in accordance with the However, in cases of damages awarded to one of the spouses as a result of
amount of contribution. physical injuries inflicted by a third party, said damages exclusively belong
to the said injured spouse.
CONJUGAL PARTNERSHIP PROPERTY
Art. 118. Property bought on installments paid partly from exclusive funds of
Art. 116. ALL PROPERTY ACQUIRED DURING THE MARRIAGE, whether either or both spouses and partly from conjugal funds belongs to:
acquisition appears to have been made, contracted or registered in the name of one or 1. the buyer or buyers – if full was vested before the marriage; and
both spouses, is presumed to be conjugal unless the contrary is proved. 2. the conjugal partnership – if such ownership was vested during the marriage.
In either case, any amount advanced by the partnership or by either or both spouses
 The party who invokes this presumption must first prove that the property in shall be reimbursed by the owner or owners upon liquidation of the partnership.
controversy was acquired during the marriage. It is a condition sine qua non
for the operation of the presumption.  Ownership of the property is determined by the time when the title is vested.

 MARAMBA v. LOZANO – if there is no showing as to when the property in Art. 119. Whenever an AMOUNT OR CREDIT PAYABLE within a period of time
question was acquired, the fact that the title is in the wife’s name alone is belongs to one of the spouses, the sums which may be collected during the marriage
determinative. in partial payments or by installments on the principal shall be the exclusive property
of the spouse.
 MAGALLON v. MANTEJO – an inscription in a Torrens Title stating “X married However, INTERESTS falling due during the marriage on the principal shall
to Y,” the phrase “married to Y” is merely descriptive of civil status and does belong to the conjugal partnership.
not necessarily prove that the land is conjugal.
Art. 120. The ownership of IMPROVEMENTS, whether for utility or adornment, made
 WONG v. IAC – the presumption of the conjugal nature of properties subsists on the SEPARATE PROPERTY of the spouses at the expense of the PARTNERSHIP
in the absence of clear, satisfactory and convincing evidence to or thru the acts or efforts of either or both spouses shall pertain to the conjugal
overcome said presumption or to prove that the properties are exclusively partnership, or to the original-owner spouse, subject to the following rules:
owned by one spouse.
When the COST OF THE IMPROVEMENT + RESULTING INCREASE IN VALUE are
The following are conjugal partnership properties: Art. 117 AOF-SALA more than the VALUE OF THE PROPERTY AT THE TIME OF IMPROVEMENT – the
1. Acquired by onerous title during the marriage at the expense of the common entire property of one of the spouses shall belong to the conjugal partnership, subject
fund; to reimbursement of the value of the property of the owner-spouse at the time of
2. Obtained from labor, industry, work or profession of either or both of the improvement; otherwise, said property shall be retained in ownership by the owner-
spouses; spouse, likewise subject to reimbursement of the cost of the improvement.
3. Fruits due or received during the marriage from the common property, as well
as the net fruits from the exclusive property of each spouse; In either case, the OWNERSHIP of the entire property shall be VESTED UPON THE
4. Share of either spouse in the hidden treasure; REIMBURSEMENT which shall be made at the time of liquidation of the conjugal
5. Acquired thru occupation; partnership.
6. Livestock existing upon the dissolution of the partnership in excess of the
number of each kind brought to the marriage by either spouse; and CHARGES UPON AND OBLIGATIONS OF THE CONJUGAL PARTNERSHIP
7. Acquired by chance. However, losses therefrom shall be borne exclusively by
the loser-spouse. Art. 121. The conjugal partnership shall be liable for:
1. Support of the spouses, their common children, and the legitimate children of
 Rights accruing Damages, which arose from breach of the contract of either spouse; however, the support of illegitimate children shall be governed
carriage incurred during the marriage, belong to the conjugal partnership of by the provisions of this Code on Support;
the spouses.
 2. Debts and obligations contracted during the marriage by the designated
administrator-spouse for the benefit of the conjugal partnership of gains, or by
both spouses or by one of them with the consent of the other;
3. Debts and obligations contracted by either spouse without the consent of the
other to the extent that the family may have been benefited;
4. Taxes, liens, charges and expenses, including major or minor repairs upon the
conjugal partnership property;
5. Taxes and expenses for mere preservation made during the marriage upon the
separate property of either spouse;
6. Expenses to enable either spouse to commence or complete a profession,
vocational, or other activity for self-improvement;
7. Antenuptial debts of either spouse insofar as they have redounded to the benefit
of the family;
8. Value of what is donated or promised by both spouses in favor of their common
legitimate children for the exclusive purpose of commencing or completing a
professional or vocational course or other activity for self-improvement; and
9. Litigation expenses (between the spouses) unless the suit is found to be
groundless.
If the conjugal partnership is insufficient to cover the foregoing liabilities, the
spouses shall be SOLIDARILY LIABLE for the unpaid balance with their separate
properties.

 The burden of proof that a debt was contracted for the benefit of the conjugal
partnership lies with the creditor. The benefit must be a direct result of the
obligation.
It cannot simply be a by-product or a spin-off of the obligation or loan itself.

 AYALA INVESTMENT v. CA – the mere signing of a person to act as surety

or guarantor of another person does not make him automatically engaged in
the profession or business of suretyship or guaranty such that any loss arising
from the same should be chargeable to the conjugal partnership.
However, if both spouses signed the surety agreement, then the conjugal
partnership shall be liable.

 PELAYO v. PEREZ – the signature of a wife as a mere witness and not as a

party to a contract nevertheless showed her implied consent to a contract of
sale executed by her husband.

 The separate properties of the husband and wife may also be solidarily held
liable if both of them expressly made themselves liable in a solidary manner in
any obligation contracted by them for the benefit of the absolute community of
property or conjugal partnership of gains.