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Notes to Supplement TextBooks Atty. Reena N.

Nieva

ABSOLUTE COMMUNITY PROPERTY Art. 88 Commencement of the Absolute Community Property is at the precise moment the marriage is celebrated : Any stipulation for the commencement of the ACS at any other time shall be void. Except : Agreement to revive former property regime by reconciling spouses after a decree of legal separation . (Art. 66 and 67 FC). But See Sections 23(c) and Sec, 24(a) Rules on Legal
Separation (AM No. 02-11-11-SC) permitting spouses to adopt any other property regime.

Art. 89 Prohibition Against Waiver of rights interests share and effects of community property during marriage except in cases of judicial separation of property. A person who renounces must actually have the right which he renounces. A person cannot waive an inchoate right. Since the right of either spouse to the net assets of community property vests only after dissolution of the marriage or after dissolution and liquidation of community property , it follows that a waiver of such right is voidn if made during the marriage. See: Ansaldo vs Sherriff (G.R. No. 43257, Feb. 19, 1937) Conjugal Funds were levied upon to pay personal debts of husband. It is contended that half of it was properly levied upon as the share of the husband . SC said : This contention is without merit. The right of the husband to one-half of the property of the conjugal partnership does not vest until the dissolution of the marriage, when the conjugal partnership is also dissolved. Distinguish between WAIVER of ABSOLUTE COMMUNITY PROPERTY and WAIVER OF ITS BENEFITS . The former is valid only if made in marriage settlements. The latter is valid only after dissolution of the property regime. Art 90 Suppletory Application of the Rules on Co-Ownership.

What rules apply ? First : Marriage Settlements (if there is one, and its provision are valid ) Second : Family Code Then : Civil Code on Co-ownership (Art. 484 to 501 , Civil Code) Arts 91 and 92 .
1.

What Constitutes Community Property ?

All property owned by Spouses at the time of celebration of marriage ; 2. and all property acquired thereafter .

Notes to Supplement TextBooks Atty. Reena N. Nieva

EXCEPT : 1. property excluded by the marriage settlements (if there is one and is valid) 2. property acquired during the marriage by gratuitous title by either spouse , and its fruits and income ; 3. property for personal and exclusive use of either spouse; but jewelry forms part of community property 4. property acquired before marriage by either spouse who has legitimate descendants by a former marriage , and its fruits and income Application of Rules :
1.

If , for instance a building is excluded in the marriage settlements , will its income (i.e. rental payments) be likewise excluded? NO. unless fruits / income of excluded property, before and during marriage, are likewise expressly excluded . Gratuitous title = by donation or testamentary provision. Note that if the donation is silent , (it does not expressly provide that it should form part of the community property ), then it is separate property of the donee-spouse. Will fruits/income from the donated property likewise be separate property? YES , thats what the law says. succession, during the marriage? This is acquisition by gratuitous title. See: Munoz , Jr. Vs Ramirez GR 156125 (Aug. 23 2010) and Muller vs Muller GR No. 149615 Aug. 29, 2006.

2.

3. How about properties acquired through legal or intestate

4.

But if acquired through succession, before the marriage, then it would form part of the community property because it would be property owned prior to the marriage. Suppose predecessor died before the marriage but the estate was settled only after the marriage ? Will the inherited property form part of the community property? YES. Reckoning point is the death of predecessor because Succession opens at the moment of death. (Art. 777). This is the point at which the right to the inheritance is vested. Suppose there is substitution (effected during the marriage) of the separate property , i.e the property is sold and converted to cash, or the price is used to purchase another property. What will be the character of the property in substitution ? Still separate or does it become community property? There are several views , some even making distinctions as to the mode the original property became separate property. But the best view is still Tolentinos. . Tolentino says that the property in substitution retains its character as separate property. The mere alienation of separate property of a spouse does not convert the price or property acquired thereby into community property. Recent decisions of the Supreme Court have taken this view, though not a direct issue in the cases.

5.

6.

Notes to Supplement TextBooks Atty. Reena N. Nieva 7.

Suppose community funds are used in the improvement of separate property? Go to Art. 120 of the Family Code (Remember , this provision is applied retroactively and affects even those marriages before the Family Code.). Art. 120 FC, says (1) If improvement results in increase in value , the entire property becomes community property subject to reimbursement to owner spouse of value of property . (2) if no increase in value results, the separate character of the property is retained, subject to reimbursement by owner spouse of value of improvements.

ART. 93 ESTABLISHES A DISPUTABLE PRESUMPTION IN FAVOR OF COMMUNITY PROPERTY. NOW THE CASES : Muoz, Jr vs Ramirez GR 156125 Aug. 25, 2010

FACTS : Erlinda inherited the residential lot from her father . A house was built thereon using conjugal funds. Marriage was before effectivity of Family Code. The CA held that the residential lot became conjugal when the house was built thereon through conjugal funds, applying the second paragraph of Article 158 of the Civil Code and Calimlim-Canullas. ISSUES : Is lot exclusive or conjugal ? SC RULED : Pursuant to Articles 92 and 109 of the Family Code, properties acquired by gratuitous title by either spouse, during the marriage, shall be excluded from the community property and be the exclusive property of each spouse. The residential lot, therefore, is Erlinda's exclusive paraphernal property. CA misapplied Calimlim-Canullas and Art. 158 of Civil Code . Article 120 of the Family Code supersedes Article 158 of the Civil Code. Thus, in determining the nature of the subject property, we refer to the provisions of the Family Code, and not the Civil Code, except with respect to rights then already vested. Art. 120 provides when the cost of the improvement made by the conjugal partnership and any resulting increase in value are more than the value of the property at the time of the improvement, the entire property of one of the spouses shall belong to the conjugal partnership, subject to reimbursement of the value of the property of the owner-spouse at the time of the improvement; otherwise, said property shall be retained in ownership by the owner-spouse, likewise subject to reimbursement of the cost of the improvement. The SC also said that the husband paid only a portion towards the construction of the house , and that it is fairly reasonable to assume that the value of the residential lot is considerably more than what the husband paid . Therefore the subject property remained the exclusive paraphernal property of Erlinda at the time she contracted with the petitioner; the written consent of Husband to the transaction was not necessary. The NBI finding that Husband's signatures in the special power of attorney and affidavit were forgeries was immaterial.

Notes to Supplement TextBooks Atty. Reena N. Nieva

Analysis : From this case , we also deduce : (1) owner spouse of separate property may, during the marriage , deal with it even without the consent of the other . (Also: Art. 111 FC) This is logical since Art. 120 says that ownership (of the property shall be vested (in the community or conjugal partnership ) only upon reimbursement at the time of liquidation. (2) Also, note that there is no similar provision respecting improvements to separate property in an absolute community regime, so this rule is also applicable to ACP regimes.

MULLER VS MULLER

GR NO. 149615 AUG. 29 2006

FACTS: Petition for Separation of Property. Elena and Helmut married in Germany on Sept. 22, 1989 and thereafter took up residence in the Philippines . During the marriage, Helmut inherited from his parents property in Germany which he sold and with the proceeds bought property in Antipolo. The Antipolo property was registered in name of Elena (Filipina). They separated and , in this petition, the trial court granted the dissolution of their absolute community property , ruling that the Antipolo property was separate property of Helmut because it was purchased with proceeds from sale of inherited property . ISSUE : Can Helmut get the value of at least half of the Antipolo property which is admittedly his separate property ? SC SAID : Reversed CA and reinstated Trial Courts Decision to wit : pursuant to Article 92 of the Family Code, properties acquired by gratuitous title by either spouse during the marriage shall be excluded from the community property. The real property, therefore, inherited by petitioner in Germany is excluded from the absolute community of property of the herein spouses. Necessarily, the proceeds of the sale of said real property as well as the personal properties purchased thereby, belong exclusively to the petitioner. However, the part of that inheritance used by the petitioner for acquiring the house and lot in this country cannot be recovered by the petitioner, its acquisition being a violation of Section 7, Article XII of the Constitution which provides that "save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations or associations qualified to acquire or hold lands of the public domain." The law will leave the parties in the situation where they are in without prejudice to a voluntary partition by the parties of the said real property . See Also : CHEESEMAN VS IAC G.R. No. 74833, January 21, 1991

FACTS : Cheeseman (American) seeks to annul sale effected by Wife (Filipino) of conjugal property without his consent . SC RULED: the fundamental law prohibits the sale to aliens of residential land. Section 14, Article XIV of the 1973 Constitution ordains that, "Save in cases of hereditary succession, no private land shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain."[30] Petitioner Thomas Cheesman was, of course, charged with knowledge of this prohibition. Thus, assuming that it was his intention that the lot in question be purchased by him and his wife, he acquired no right

Notes to Supplement TextBooks Atty. Reena N. Nieva

whatever over the property by virtue of that purchase; and in attempting to acquire a right or interest in land, vicariously and clandestinely, he knowingly violated the Constitution; the sale as to him was null and void.[31] In any event, he had and has no capacity or personality to question the subsequent sale of the same property by his wife on the theory that in so doing he is merely exercising the prerogative of a husband in respect of conjugal property. To sustain such a theory would permit indirect controversion of the constitutional prohibition. If the property were to be declared conjugal, this would accord to the alien husband a not insubstantial interest and right over land, as he would then have a decisive vote as to its transfer or disposition. This is a right that the Constitution does not permit him to have.

CHARGES AND OBLIGATIONS OF THE ACP Art. 94 . Except as to paragraphs (9) and (10) , The test is : whether or not the expense redounded to the benefit of the family regardless of the time (before or during marriage) when the expense was made. If it did , then the Community Property is liable, otherwise, it is not. The law establishes presumptions : (1) if by obtained by one spouse with consent of the other or (2) if obtained by both spouses, then in these situations a presumption arises that it was for the benefit of the family. Note that even if the debt was obtained by the administrator-spouse, solely , there is no such presumption. Paragraph ( 9), are liabilities/ obligations properly chargeable against the separate property of the spouse obliged to pay it , thus (a) ante-nuptial debts that did not redound to the familys benefit (b) support of illegitimate children , and (c) damages arising out of crime and quasi-delict. The community property becomes liable to third parties in this instances, only if the spouse obliged to pay it has no separate property, or if there is , it is insufficient. But , if paid out of community property , these are considered advances to be eventually deducted from the share of the debtor spouses upon liquidation. Paragraph (10) speaks of a suit between the spouses. This will definitely not redound to the benefit of the family but the law says, litigation expenses are chargeable against community property if the suit is NOT GROUNDLESS.

Notes to Supplement TextBooks Atty. Reena N. Nieva

So : if the suit is not groundless (therefore with basis) litigation expenses are charged against community property, but whose litigation expenses may be charged ? The term litigation expenses is so broad , and is not defined by the law. Used in its ordinary sense it could include lawyers fees, expenses going to and from court, costs of suit , expenses of research and private investigation , etc. Definitely, the plaintiffspouse may recover in this situation , However, if the suit is groundless may litigation expenses of defendant - spouse be charged against community funds? GO VS YAMANE G.R. NO. 160762, May 03, 2006 ] Facts : Counsel sought to enforce charging lien on property registered on wifes name alone. Husband opposed as property was conjugal. (Case counsel handled was for wife and her sisters). Issues : Paraphernal or Conjugal ? Can Counsels charging lien be enforced against conjugal property if case was for wifes interest alone? SC RULED : (1) Conjugal , acquired during marriage , the mere registration of a property in the name of one spouse does not destroy its conjugal nature. Hence, it cannot be contended in the present case that, simply because the title and the Deed of Sale covering the parcel of land were in the name of wife alone, it was therefore her personal and exclusive property.

(2) Charging Lien Not Chargeable Against Conjugal Property. because Wife was acting privately for her exclusive interest in hiring the services of counsel to handle a case for them. So , whatever expenses were incurred by her in the litigation are for her private and exclusive interests, and are her exclusive responsibility and certainly cannot be charged against the contested conjugal property.Even on the remote assumption that the conjugal property could be held liable, levy on execution of the same property should still be denied in accordance with the ruling in Luzon Surety Co., Inc. v. De Garcia that before a conjugal property could be held liable for the obligation contracted by a spouse, there must be a showing of some advantage or benefit that accrued to the conjugal partnership. . This counsel failed to do.
Note : Decisions of the SC on principles governing charges against conjugal properties are also applicable to community property.

ARTS. 96 TO 98 Administration , encumbrance and disposition of community property or conjugal properties is now JOINT between the Spouses. This rule applies retroactively , so even to those marriages celebrated before effectivity of the Family Code.

Notes to Supplement TextBooks Atty. Reena N. Nieva

But note that in case of disagreement, it is still the husbands decision that prevails, subject of course to recourse to courts by the wife , within five years from execution of the contract implementing the husbands decision. (As an aside, the wife can just withhold spousal consent and refuse to sign the contract , then any contract of disposition by the husband will be void). THE RULE ON DISPOSITION : Neither Spouse may alienate (1) community property (2) his/her share in community property or conjugal property (3) in any community property . Alienation includes any act of disposition, i.e. sale, donation, mortgage, lease for more than a year , exchange, or any act of encumbrance upon the property. If the other refuses to give spousal consent, or is absent , the remedy is to obtain authority from the courts. REMEMBER THAT THIS RULES APPLIES TO ALL DISPOSTIONS AFTER EFFECTIVITY OF FC. EVEN TO SPOUSES WHO MARRIED BEFORE THE FC. EXCEPT ONLY IF THE RETROACTIVE APPLICATION WILL AFFECT VESTED RIGHTS. ABALOS VS MACATANGAY G.R. No. 155043, September 30, 2004

HOW MUST SPOUSAL CONSENT BE GIVEN? FACTS: For Specific Performance. Arturo and Esther, married to each other are registered owners of a parcel of land. Arturo, with fake SPA from Esther, sold property to Macatangay. (evidenced by RMOA , Receipt and Memorandum of Agreement). Subsequently, Esther executed SPA in favor of her sister who then executed a Contract to Sell in favor of the same person Macatangay. Two contracts, respectively executed by each spouse, in favor of the same person, respecting the same property. ISSUE : Was spousal consent present in either of the contracts for specific performance instituted by the buyer to prosper? SC SAID : NO. SPOUSAL CONSENT NOT PRESENT IN EITHER. The congruence of the wills of the spouses is essential for the valid disposition of conjugal property. Where the conveyance is contained in the same document which bears the conformity of both husband and wife, there could be no question on the validity of the transaction. But when there are two documents on which the signatures of the spouses separately appear, textual concordance of the documents is indispensable. Hence, in this case where the wifes putative consent to the sale of conjugal property appears in a separate document which does not, however, contain the same terms and conditions as in the first document signed by the husband, a valid transaction could not have arisen. Significantly, the Family Code has introduced some changes particularly on the aspect of the administration of the conjugal partnership. The new law provides that the administration of the conjugal partnership is now a joint undertaking of the husband and the wife. In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the

Notes to Supplement TextBooks Atty. Reena N. Nieva

conjugal partnership, the other spouse may assume sole powers of administration. However, the power of administration does not include the power to dispose or encumber property belonging to the conjugal partnership. In all instances, the present law specifically requires the written consent of the other spouse, or authority of the court for the disposition or encumbrance of conjugal partnership property without which, the disposition or encumbrance shall be void.[37] Inescapably, the action for specific performance must fail. Even on the supposition that the parties only disposed of their respective shares in the property, the sale, assuming that it exists, is still void for as previously stated, the right of the husband or the wife to one-half of the conjugal assets does not vest until the liquidation of the conjugal partnership. Nemo dat qui non habet. No one can give what he has not. HOMEOWNERS VS DAILO G.R. NO. 153802, March 11, 2005 Facts : During his lifetime, without the knowledge and consent of his wife, Marcelino constituted a real estate mortgage on the subject property, which formed part of their conjugal partnership. ISSUES : 1) is mortgage executed by Marcelino valid as to his undivided share in the property? 2) should the conjugal partnership be liable for the loan obtained by Marcelino ? SC SAID : 1. By express provision of Article 124 of the Family Code, in the absence of (court) authority or written consent of the other spouse, any disposition or encumbrance of the conjugal property shall be void. 2. The burden of proof that the debt was contracted for the benefit of the conjugal partnership of gains lies with the creditorparty litigant claiming as such. There is nothing from the records of the case to compel a finding that, indeed, the loan obtained by the late Marcelino redounded to the benefit of the family. Consequently, the conjugal partnership cannot be held liable for the payment of the principal obligation. BAUTISTA VS SILVA (502 SCRA 334 (2006) Facts : Husband sold conjugal property using fake SPA purportedly given by wife. Issues: Is sale valid? husband only? Or otherwise , is is valid as to the share of

SC SAID: It is well-settled that the nullity of the sale of conjugal property contracted by the husband without the marital consent of the wife affects the entire property, not just the share of the wife. We see no reason to deviate from this rule.

Notes to Supplement TextBooks Atty. Reena N. Nieva

DISSOLUTION AND LIQUIDATION OF THE ABSOLUTE COMMUNITY PROPERTY


ACP TERMINATES : Upon death of either spouse When there is decree of legal separation When marriage is annulled When marriage is judicially declared void In case of judicial separation of property under Arts. 134-138 Note: that the regime of Absolute Community Property may exist only in a valid, or at least voidable marriage. So if a void marriage is judicially declared as such, the property relations of the parties will be that under Art. 147 or 148 (unions without marriage). So, To which Void Marriage does Art . 99(3) refer ? Stated otherwise, when can the regime of absolute community property exist in a void marriage? Under Art. 36 , psychological incapacity = applies. No. Arts 147 or 148

Subsequent Marriage (in case of Absence of one Spouse) where both parties acted in bad faith . (See Art. 44) = No. Articles 147 or 148 applies. Subsequent marriage where there is failure to register (Art 53). Art. 147 or 148 applies No.

Subsequent Void Marriage contracted before declaration of nullity of previous marriage. (Art.50 in relation Art. 40) YES . this is the only case where property relations may be governed by ACP OR CGP) Incestuous Marriages or Marriages Void for reasons of public policy . No. Art 148 applies. STEPS IN LIQUIDATION ART. 102 . Preparation of inventory, listing community property and separately, the exclusive property of each spouse Listing of debts and obligations of the ACP, then payment. If ACP insufficient , then separate properties solidarily liable, observing Art. 94 Separate properties, or their remainder is then delivered to the owner-spouse NET REMAINDER = NET ASSETS of the Community Property this is divided equally between husband and wife unless they agreed to a different proportion in the marriage settlements , or if there is a voluntary waiver of such share. Delivery of Presumptive Legitimes, if any Recording in the Proper Registry

Notes to Supplement TextBooks Atty. Reena N. Nieva

Note : Liquidation must be made WITHIN ONE YEAR of the from death of the other spouse OTHERWISE ANY DISPOSITION OR ENCUMBRANCE SHALL BE VOID. This may be done judicially or extrajudically. But in practice, disposition or encumbrance must be preceded by a SETTLEMENT AND PARTITION of the estate. NOTE ALSO : THAT THIS ARTICLE (103) IMPOSES A MANDATORY COMPLETE SEPARATION OF PROPERTY OF THE SECOND MARRIAGE IF THE PROPERTY OF THE FIRST MARRIAGE HAS NOT BEEN LIQUIDATED. NOW CROSS REFER THIS TO ART. 53 ( And ART. 52) WHICH DECLARES THE SUBSEQUENT MARRIAGE NULL AND VOID IF THERE IS FAILURE TO REGISTER THE PARTITION AND DISTRIBUTION OF THE PROPERTIES OF THE SPOUSES, AND THE DELIVERY OF PRESUMPTIVE LEGITIMES BEFORE THE SECOND MARRIAGE TAKES PLACE. Registration necessarily implies previous liquidation , otherwise , how can you partition, distribute the properties and deliver presumptive legitimes?

NET PROFITS (subject to forfeiture under Arts 43(20 and 63(3) , NET ASSETS (which shall be divided between the Spouses) . These two are not to be confused.

VS.

Net Assets = what remains after payment of community debts and liabilities. Net Profits (subject of forfeiture) = The simplistic There are two views.

computation according to law .

Net Profiits = increase in value between the market value of the property at the time of celebration of marriage and the market value at the time of dissolution Thus : 500,000.00 - value at time of dissolution 200,000.00 - value at time of celebration of marriage ________________________________________________ 300,000.00 - NET PROFIT

Tolentinos view (the better one but is not in accord with express provision of law) Net Profits = difference between the market value of the net assets at the time of dissolution and the market value of the assets at the time of marriage : Thus: 500,000.00 - value at dissolution less 100,000.00 - debts and obligations paid ----------------------------------------------------------400,000.00 - net assets Less 300,000.00 - value at time of celebration of marriage ------------------------------------------------------

Notes to Supplement TextBooks Atty. Reena N. Nieva

100,000.00 - Net profits (1/2 of which is share of guilty spouse subject of forfeiture, if proper) PRESUMPTIVE LEGITIME OF COMMON CHILDREN computed from : The value of the separate property of the Spouse His her share in the NET ASSETS . Note that a common child will have presumptive legitime from both of his parents, computed separately. But delivery of presumptive legitime WILL NOT APPLY if the dissolution of the community property is caused by the death of one of the spouses. is to be

CONJUGAL PARTNERSHIP OF GAINS Family Code Provisions apply retroactively to marriages celebrated before its effectivity subject only to non-impairment of vested rights. Distinctions between ACP and CGP SEE; SEMPIO DY

In ACP all properties owned by the spouses at the time they got married (except those in Art. 92) become community property. In CGP the Spouses retain ownership of their properties owned before marriage, and only the fruits and income from these become conjugal; In ACP what is divided is the net remainder (or net assets) aftyer payment of debts of the community regime. In CGP , all the exclusive properties of the spouses or their values must be returned to them and only the net profits (after payment of debts) are equally divided between them. The ACP is liable for obligations which would otherwise be the separate obligation of one spouse such as damages for crimes or quisi delict, support of illegitimate children. In CGP only the exclusive property of the spouse who is obliged to pay is liable for these. The rules on co-owernship is suppletorily applicable to ACP. The rules on partnership is suppletorily applicable to CGP. WHAT CONSTITUTES CONJUGAL PARTNERSHIP OF GAINS ? Art. 106 (1) proceeds, products, fruits and income from their separate properties; (2) those acquired by either or both (during marriage) through their efforts or by chance

Notes to Supplement TextBooks Atty. Reena N. Nieva

Specifically , those enumerated under Art. 117, 118, 119, 120 ; Acquisitions during marriage using conjugal funds; Obtained from labor, industry, work or profession; Fruits and income of separate property; fruits and income of conjugal property Share in hidden treasure Occupation such as fishing or hunting Livestock in excess of number brought into marriage Acquired by chance Acquired by installment , if ownership vested during marriage, subject to reimbursement Interests on loans (where principal belongs to one spouse) falling due during the marriage Separate property , in case improvements were made using conjugal funds , or through efforts of one or both spouses if cost of improvement and resulting increase in value is more than the value of the separate property at time of improvement. Note however that ownership will vest on CPG only after reimbursement at the time of liquidation. So , in the CGP Regime, there would be three (3) patrimonies : (a) paraphernal property of the wife (b) capital of the husband (3) and conjugal properties. Also: Art. 116 establishes a disputable presumption. All property acquired during the marriage is presumed to be conjugal though contracted in the name of only one spouse. ART. 109 Separate Property of the Spouses :

Properties owned prior to marriage Acquired by gratuitous title during the marriage . ( inheritance, devise, legacy or donation, also , insurance proceeds as beneficiary under another persons policy , gratuity, even if paid during the marriage; Acquired by right of redemption, by barter, exchange, during marriage Purchased with exclusive money of a spouse. DETERMINATION OF OWNERSHIP under ART. 120 SEE : MUNOZ VS RAMIREZ discussed earlier. FERRER VS FERRER G.R. NO. 166496, November 29, 2006 FACTS : Husband owned capital property on which improvements using conjugal funds were made. Husband sold the property , then died. Wife sued Buyers for reimbursement of the expenses on the improvement. HELD: While the spouse has the right, as contemplated in Article 120 of the Family Code to be reimbursed for the cost of the improvements, the obligation to reimburse rests on the spouse upon whom ownership of the entire property is vested. There is no obligation on the part of the purchaser of

Notes to Supplement TextBooks Atty. Reena N. Nieva

the property, in case the property is sold by the owner-spouse. Indeed, Article 120 provides the solution in determining the ownership of the improvements that are made on the separate property of the spouses at the expense of the partnership or through the acts or efforts of either or both spouses. Thus, when the cost of the improvement and any resulting increase in value are more than the value of the property at the time of the improvement, the entire property of one of the spouses shall belong to the conjugal partnership, subject to reimbursement of the value of the property of the owner-spouse at the time of the improvement; otherwise, said property shall be retained in ownership by the owner-spouse, likewise subject to reimbursement of the cost of the improvement. The subject property was precisely declared as the exclusive property of Husband on the basis of Art. 120 of the Family Code. TORELA VS TORELA G.R. No. L-27843, October 11, 1979 FACTS : Petitioners claim that since the lot in question was registered in the name of Felimon Torela, married to Graciana Gallego, it must be presumed to be the conjugal property of Felimon and Graciana so that one-half thereof should be adjudicated to them as their inheritance from their mother. HELD : While it is true that all property of the marriage is presumed to be conjugal, as above stated, nonetheless the party who invokes the presumption must first prove that the property was acquired during the marriage. This proof is a condition sine qua non for the application of the presumption. (Cobb-Perez vs. Lantin, L-22320, May 22, 1968, 23 SCRA 637; Ponce de Leon vs. RFC, L-24571, Dec. 18, 1970; 36 SCRA 289.) CHARGES UPON THE CGP ARTS. 121 AND 122 FC The charges upon the CGP are the same as the charges upon the ACP (Art 94). Antenuptial debts of spouses in CGP is governed by Art. 122 FC. As in the ACP, the common thread is : whether or not the obligation or expenses redounded to the benefit of the family. Antenuptial debts that did not redound to the benefit of the family, fines and indemnities imposed on only one of the spouses, and support of illegitimate children may still be charged against the CGP is the spouse who is bound has no sufficient separate property and ONLY after the CGP satisfies the charges enumerated in Art. 121.

CARLOS VS ABELARDO

G.R. No. 146504, April 09 , 2002

Facts : (1) there was a check in the amount of US$25,000.00 issued by petitioner; (2) this amount was received by respondent and his wife and given to a certain Pura Vallejo for the full payment of a house and lot located at #19952 Chestnut Street, Executive Heights Village, Paranaque, Metro Manila; (3) this house and lot became the conjugal dwelling of respondent and his wife; and (4)

Notes to Supplement TextBooks Atty. Reena N. Nieva

respondents wife executed an instrument acknowledging the loan but which respondent did not sign. SC HELD : the loan is the liability of the conjugal partnership pursuant to Article 121 of the Family Code: Article 121. The conjugal partnership shall be liable for: (2) All 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; 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. While respondent did not and refused to sign the acknowledgment executed and signed by his wife, undoubtedly, the loan redounded to the benefit of the family because it was used to purchase the house and lot which became the conjugal home of respondent and his family. Hence, notwithstanding the alleged lack of consent of respondent, under Art. 121 of the Family Code, he shall be solidarily liable for such loan together with his wife.

What does it mean to be liable SOLIDARILY? This means that a creditor can proceed against only one of the debtor-spouses for the payment of the entire obligation subject to reimbursement from the other of his/her share. So, assume that the community property cannot pay a debt of 500K. The creditor enforce payment for the whole amount of 500K from only one of the spouses, lets say from the husband. But the husband can proceed against wife for her share of 250k. Thats what it means to be liable solidarily. So if the wife doesnt have the money , the husband, in this example will bear the burden of the entire debt. Art. 122 FC . What debts and obligations contracted by the husband alone are considered for the benefit of the conjugal partnership which are chargeable against the conjugal partnership? Is a surety agreement or an accommodation contract entered into by the husband in favor of his employer within the contemplation of the said provision? AYALA INVESTMENT VS COURT OF APPEALS G.R. No. 118305, February 12, 1998

Notes to Supplement TextBooks Atty. Reena N. Nieva

Facts : PBM obtained million million loan from Ayala and CHING, then VP of PBM signed as surety and made himself jointly and severally liable with PBM for the loan. PBM defaulted so Ayala sued. In short, Ayala won and the sheriff levied on three (3) properties belonging to the conjugal partnership of CHING and his wife. Issue: Will the conjugal partnership be liable for this obligation ? contracted by the husband alone? SC RULED : Conjugal Property Not Liable. No proof that it actually redounded to familys benefit (A)If the husband himself is the principal obligor in the contract, i.e., he directly received the money and services to be used in or for his own business or his own profession, that contract falls within the term x x x x obligations for the benefit of the conjugal partnership. Here, no actual benefit may be proved. It is enough that the benefit to the family is apparent at the time of the signing of the contract. From the very nature of the contract of loan or services, the family stands to benefit from the loan facility or services to be rendered to the business or profession of the husband. It is immaterial, if in the end, his business or profession fails or does not succeed. Simply stated, where the husband contracts obligations on behalf of the family business, the law presumes, and rightly so, that such obligation will redound to the benefit of the conjugal partnership. (B) On the other hand, if the money or services are given to another person or entity, and the husband acted only as a surety or guarantor, that contract cannot, by itself, alone be categorized as falling within the context of obligations for the benefit of the conjugal partnership. The contract of loan or services is clearly for the benefit of the principal debtor and not for the surety or his family. No presumption can be inferred that, when a husband enters into a contract of surety or accommodation agreement, it is for the benefit of the conjugal partnership. Proof must be presented to establish benefit redounding to the conjugal partnership. Thus, the distinction between the Cobb-Perez case, and we add, that of the three other companion cases, on the one hand, and that of Ansaldo, Liberty Insurance and Luzon Surety, is that in the former, the husband contracted the obligation for his own business; while in the latter, the husband merely acted as a surety for the loan contracted by another for the latters business. The evidence of petitioner indubitably show that co-respondent Alfredo Ching signed as surety for the P50M loan contracted on behalf of PBM. Petitioner should have adduced evidence to prove that Alfredo Chings acting as surety redounded to the benefit of the conjugal partnership. The reason for this is as lucidly explained by the respondent court: The loan procured from respondent-appellant AIDC was for the advancement and benefit of Philippine Blooming Mills and not for the benefit of the conjugal partnership of petitioners-appellees. Philippine Blooming Mills has a personality distinct and separate from the family of petitioners-appellees - this despite the fact that the members of the said family happened to be stockholders of said corporate entity.

Notes to Supplement TextBooks Atty. Reena N. Nieva

Note that under the Family Code , the rules for ACP in so far as charges and obligations, administration , disposition and alienation, dissolution and liquidation are the same for CGP . Only in the constitution , i.e. of these regimes do they differ. SINCE THERE IS A MERGING OF PROPERTIES IN ACP , AND THE NET ASSETS ARE DIVIDED BETWEEN THE SPOUSES AT DISSOLUTION AND LIQUIDATION , THE PROPERTIES DEFINITELY WILL CROSS OWNERSHIP LINES. Theoretically , by way of illustration : Suppose there is no ante nuptial agreement and the Husband owns two commercial buildings inherited from late father. While Wife has no assets. The ACP, at the moment of celebration of their marriage would be the 2 commercial buildings . Husband dies a week later leaving behind his mother and his wife only . WIFE here gets 1 building (as her share in the community property , plus of the other building . What goes to husbands mother is only of one building. IF WIFE DIES , too , and is survived by her own mother and is childless , the One Building plus of the other goes to wifes mother. So , in this situation, husbands mother-in-law would end up with more than husbands own mother. There is here reversal of fortunes with properties crossing lines. The effect would be different if the regime was CONJUGAL PARTNERSHIP OF GAINS. For then, under the same facts, the 1 and buildings will ascend to Husbands mother (so it is kept in the same property line), while the wife gets only of one building (roughly of the husbands estate) as her inheritance. So in case of the subsequent death of wife, her own mother gets only that building. So , there is here preservation of the property lines.

UNIONS WITHOUT MARRIAGE ARTICLES 147 AND 148 OF THE FAMILY CODE Requisites for Application of Co-0wnership under Article 147 : 1)
2)

3) 4)

Man and woman have capacity to marry each other They Cohabit . Their cohabitation is exclusive There is no marriage or the marriage is void.

Notes to Supplement TextBooks Atty. Reena N. Nieva

On the other hand, Art. 148 applies where the parties who cohabit are not capacitated to marry each other . IMPT : INCAPACITY here refers to an existing marriage and those under Articles 37 (incest) and 38 (public policy). SEE: VALDES VS RTC, below . So if the nullity is because of psychological incapacity , Art. 147 applies . Suppose, non-age is the cause of nullity (and the parties are therefore not capacitated to marry each other , following the ruling in Valdes, Art. 148 should still apply. Nature /Scope of Property Relations under ART. 147.
1. Their Wages and Salaries during the cohabitation 2. Properties acquired through work or industry of both or either during

the cohabitation 3. If only one actually worked , the efforts of one party towards care and maintenance of home and family, deemed to be his/her contribution to the co-ownership . Par. 2 of Art. 147 establishes presumption of equal co-ownership re: property acquired during cohabitation . (Same presumption under Arts. 93 and 116 FC) Effects : 1. 2. Parties share equally in these properties Parties cannot dispose of their shares in the co-ownership without the others consent prior to termination of the relationship 3. The share in the co-ownership of the party in bad faith is forfeited in favor of the common children, or if none, the innocent party. Nature and Scope of Proeprty Relations under Art. 148 ?
1. Only properties acquired by the parties through their ACTUAL JOINT

CONTRIBUTION OF MONEY, PROPERTY OR INDUSTRY. In the absence of proof as to the amount or value of the actual contribution, the contributions are deemed equal . But if there is evidence that the wife made no actual contribution, then she gets nothing. (Agapay vs Palang, 276 SCRA 341. Effects : 1. If one party is validly married to another, his/her share in the coownership accrues to the ACP or CGP existing in such marriage. 2. If a party is in bad faith , his share is forfeited in favor of their common children or if none, the innocent party. Now, the married party could also be the one in bad faith, in such a situation , does he share in the co-ownership accrue to the ACP or CGP of his existing marriage, or should it be forfeited in favor of the common children of the illicit relationship?

Notes to Supplement TextBooks Atty. Reena N. Nieva

Share of Party in bad faith should accrue to ACP or CGP of existing marriage because such regime is properly the owner of subject share, applying the rules in determination of what property constitutes the ACP or CGP ; (also see Valdes vs RTC, below) APPLICATION OF THE RULES IN 147 AND 148. RULE : IN A VOID MARRIAGE , REGARDLESS OF THE CAUSE OF NULLITY, PROPERTY RELATIONS CANNOT BE GOVERNED BY ACP OR CPG BUT BY ART. 147 ORN 148 . THE SOLE EXCEPTION IS MARRIAGE CONTRACTED BEFORE DECLARATION OF NULLITY OF PRIOR MARRIAGE ( ART. 50 IN RELATION TO ART. 40).

VALDES VS RTC

G.R. No. 122749, July 31, 1996

FACTS : Marriage was declared null and void under Art. 36. (psychological incapacity). In the disposition of the Family Dwelling, Trial Court applied Art. 147. Petitioner insists that it should be Articles 50, 51 and 52 in relation to Articles 102 and 129 that should apply in the adjudication of conjugal dwelling . HELD : Trial Court is right. This peculiar kind of co-ownership under Art. 147 of the Family Code applies when a man and a woman, suffering no legal impediment to marry each other, so exclusively live together as husband and wife under a void marriage or without the benefit of marriage. The term "capacitated" in the provision (in the first paragraph of the law) refers to the legal capacity of a party to contract marriage, i.e., any "male or female of the age of eighteen years or upwards not under any of the impediments mentioned in Articles 37 and 38 of the Code. Under this property regime, property acquired by both spouses through their work and industry shall be governed by the rules on equal co-ownership. Any property acquired during the union is prima facie presumed to have been obtained through their joint efforts. A party who did not participate in the acquisition of the property shall still be considered as having contributed thereto jointly if said party's "efforts consisted in the care and maintenance of the family household. Unlike the CGP , the fruits of the couples separate property are not included in the co-ownership. When the common-law spouses suffer from a legal impediment to marry or when they do not live exclusively with each other (as husband and wife ),only the property acquired by both of them through their actual joint contribution of money, property or industry shall be owned in common and in proportion to their respective contributions. Such contributions and corresponding shares, however, are prima facie presumed to be equal. The share of any party who is married to another shall accrue to the absolute community or conjugal partnership, as the case may be, if so existing under a valid marriage. If the party who has acted in bad faith is not validly married to another, his or her share shall be forfeited in the manner already heretofore expressed. The rules set up to govern the liquidation of either the absolute community (Art. 102) or the conjugal partnership of gains, (Art.129) are irrelevant to the liquidation of the co-ownership that exists between common-law spouses.

Notes to Supplement TextBooks Atty. Reena N. Nieva

The first paragraph of Article 50 of the Family Code, applying paragraphs (2 ), (3 ),(4) and (5) of Article 43, relates only, by its explicit terms, to voidable marriages and, exceptionally, to void marriages under Article 40 of the Code, i.e., the declaration of nullity of a subsequent marriage contracted by a spouse of a prior void marriage before the latter is judicially declared void. The latter is a special rule that somehow recognizes the philosophy and an old doctrine that void marriages are inexistent from the very beginning and no judicial decree is necessary to establish their nullity. In now requiring for purposes of remarriage, the declaration of nullity by final judgment of the previously contracted void marriage, the present law aims to do away with any continuing uncertainty on the status of the second marriage. It is not then illogical for the provisions of Article 43, in relation to Articles 41 and 42, of the Family Code, on the effects of the termination of a subsequent marriage contracted during the subsistence of a previous marriage to be made applicable pro hac vice. In all other cases, it is not to be assumed that the law has also meant to have coincident property relations, on the one hand, between spouses in valid and voidable marriages (before annulment) and, on the other, between common-law spouses or spouses of void marriages, leaving to ordain, in the latter case, the ordinary rules on coownership subject to the provision of Article 147 and Article 148 of the Family Code. It must be stressed, nevertheless, even as it may merely state the obvious, that the provisions of the Family Code on the "family home," i.e., the provisions found in Title V, Chapter 2, of the Family Code, remain in force and effect regardless of the property regime of the spouses.

BUENAVENTURA VS CA

G.R. NO. 127358, March 31, 2005

Facts: Marriage was declared null and void under Art. 36. In the liquidation and partition, court awarded to Wife of the Retirement/Separation of Pay of Husband and of the Husbands Shares of Stock in two big companies as her share in the conjugal partnership of gains. Held: Quoting Valdes vs CA, the court applied Art. 147 of the Family Code. It sustained the award of to WIFE but not a s share in the CPG but as her share in the co-ownership UNDER Art. 148.

MERCADO-FHER

VS FHER , G.R. No. 152716, October 23, 2003

FACTS : Marriage was declared void ab inito under Art. 36. But Trial Court also Ordered h dissolution of conjugal partnership of property and decreed a regime of complete separation of property between the said spouses. Trial Court later retracted but excluded a condominium unit purchased on installment by the couple from the properties to be partitioned. Trial Court also approved the three-way partition of the properties. 1/3 to Husband, 1/3 to Wife and 1/3 to common children. HELD : SC said condominium unit should be included in the properties of the co-ownership (naturally , as it was property presumed to be acquired through their joint effort) and overturned the 3-way partition. The properties should be divided according to the rules on co-ownership pursuant to Art. 147, FC.

Notes to Supplement TextBooks Atty. Reena N. Nieva

SEE ALSO : MALLILLIN VS CASTILLO 333 SCRA 628 , INVOLVING A BIGAMOUS MARRIAGE AND THE COURT APPLIED ART. 148

METROBANK VS PASCUAL G.R. No. 163744, February 29, 2008 (Divergence from above rules) NOTE : The court in this case ruled on the premise that the property relation of the parties , whose marriage was declared null under Art. 36 , was governed by the regime on conjugal partnership of gains. FACTS : Husband and Wife married in 1985. During their union , they purchased valuable property in Makati. Title was issued to name of WIFE married to HUSBAND. In 1994, their marriage was declared null and void under Art. 36 FC. RTC also ordered the dissolution of their conjugal partnership of gains. In 1997 , WIFE mortgaged the Makati Property Metrobank. In short, Wife failed to pay so Metrobank forclosed on Makati Property. Husband learned of it , hence this case for for declaration of nullity of the mortgage and forclosure. SO, the Court went on to declare that the property in question was CONJUGAL and that the Dissolution of the Conjugal Partnership of Gains did not destroy its conjugal character. It further ruled that pending its liquidation following its dissolution, the conjugal partnership of gains is converted into an implied ordinary co-ownership and that Art. 493 of the Civil Code shall govern the property relationship between the former spouses, where: Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with respect to the coowners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership. So the Court went further and declared that WIFE had the right to mortgage or even sell her one-half (1/2) undivided interest in the disputed property even without the consent of Husband . However, the rights of Metrobank, as mortgagee, are limited only to the 1/2 undivided portion that WIFE owned. Accordingly, the mortgage contract insofar as it covered the remaining 1/2 undivided portion of the lot is null and void, Nicholson not having consented to the mortgage of his undivided half. It said that pending the liquidation of the CPG but after its dissolution UNDER ART. 148 - Proof of actual joint contribution is required . (VILLANUEVA VS CA, 427 SCRA ; JOAQUINO VS REYES 434 SCRA 260; FRANCISCO VS MASTER IRON WORKS, 451 SCRA

Notes to Supplement TextBooks Atty. Reena N. Nieva

-But if there is proof of actual joint contribution, the shares are presumed equal. (BORROMEO VS DESCALLER 580 SCRA 175.