notes by atty reena nieva

7/30/2019 Notes by Atty Reena Nieva

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Notes to Supplement TextBooksAtty. Reena N. Nieva

ABSOLUTE COMMUNITY PROPERTY

Art. 88 Commencement of the Absolute Community Property is at theprecise moment the marriage is celebrated : Any stipulation for thecommencement of the ACS at any other time shall be void.

Except : Agreement to revive former property regime byreconciling spouses after a decree of legal separation . (Art.66 and 67 FC). But See Sections 23(c) and Sec, 24(a) Rules on LegalSeparation (AM No. 02-11-11-SC) permitting spouses to adopt any otherpropertyregime.

Art. 89 Prohibition Against Waiver of rights interests share and effectsof community property during marriage except in cases of judicialseparation of property.

A person who renounces must actually have the right whichhe renounces. A person cannot waive an inchoate right. Since the rightof either spouse to the net assets of community property vests onlyafter dissolution of the marriage or after dissolution and liquidation ofcommunity property , it follows that a waiver of such right is voidn ifmade 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 halfof it was properly levied upon as the shareof the husband .

SC said : This contention is without merit. The right of thehusband to one-half of the property of the conjugal partnershipdoes not vest until the dissolution of the marriage, when theconjugal partnership is also dissolved.

Distinguish between WAIVER of ABSOLUTE COMMUNITY PROPERTY andWAIVER OF ITS BENEFITS . The former is valid only if made in marriage

settlements. The latter is valid only after dissolution of the propertyregime.

Art 90 Suppletory Application of the Rules on Co-Ownership.

What rules apply ?

First : Marriage Settlements (if there is one, and its provision arevalid )

Second : Family CodeThen : Civil Code on Co-ownership (Art. 484 to 501 , Civil Code)

Arts 91 and 92 . What Constitutes Community Property ?

1. All property owned by Spouses at the time of celebration ofmarriage ;

2. and all property acquired thereafter .


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EXCEPT :

1. property excluded by the marriage settlements (ifthere is one and is valid)

2. property acquired during the marriage by gratuitoustitle by either spouse , and its fruits and income ;3. property for personal and exclusive use of either

spouse; but jewelry forms part of community property4. property acquired before marriage by either spouse

who has legitimate descendants by a formermarriage , 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 likewiseexcluded? NO. unless fruits / income of excluded property,before and during marriage, are likewise expressly excluded .

2. Gratuitous title = by donation or testamentary provision. Notethat if the donation is silent , (it does not expressly providethat it should form part of the community property ), thenit is separate property of the donee-spouse. Willfruits/income from the donated property likewise be separateproperty? YES , thats what the law says.

3. How about properties acquired through legal or intestatesuccession, during the marriage? This is acquisition bygratuitous title. See: Munoz , Jr. Vs Ramirez GR 156125 (Aug. 232010) and Muller vs Muller GR No. 149615 Aug. 29, 2006.

4. But if acquired through succession, before the marriage, then itwould form part of the community property because it would beproperty owned prior to the marriage.

5. Suppose predecessor died before the marriage but the estatewas settled only after the marriage ? Will the inherited property

form part of the community property? YES. Reckoning point isthe death of predecessor because Succession opens at themoment of death. (Art. 777). This is the point at which the rightto the inheritance is vested.

6. Suppose there is substitution (effected during the marriage) ofthe separate property , i.e the property is sold and converted tocash, or the price is used to purchase another property. Whatwill be the character of the property in substitution ? Still separateor 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 stillTolentinos. . Tolentino says that the property insubstitution retains its character as separate property.The mere alienation of separate property of a spouse doesnot convert the price or property acquired thereby intocommunity property. Recent decisions of the Supreme Courthave taken this view, though not a direct issue in the cases.


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7. Suppose community funds are used in the improvement ofseparate property? Go to Art. 120 of the Family Code (Remember, this provision is applied retroactively and affects even thosemarriages before the Family Code.). Art. 120 FC, says (1) If

improvement results in increase in value , the entireproperty becomes community property subject toreimbursement to owner spouse of value of property . (2)if no increase in value results, the separate character ofthe property is retained, subject to reimbursement by ownerspouse of value of improvements.

ART. 93 ESTABLISHES A DISPUTABLE PRESUMPTION IN FAVOR OFCOMMUNITY PROPERTY.

NOW THE CASES :

Muoz, Jr vs Ramirez GR 156125 Aug. 25, 2010

FACTS : Erlinda inherited the residential lot from her father . A housewas built thereon using conjugal funds. Marriage was before effectivity ofFamily Code. The CA held that the residential lot became conjugal whenthe house was built thereon through conjugal funds, applying the secondparagraph of Article 158 of the Civil Code and Calimlim-Canullas.

ISSUES : Is lot exclusive or conjugal ?

SC RULED : Pursuant to Articles 92and 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 exclusiveproperty of each spouse.The residential lot, therefore, is Erlinda's exclusiveparaphernal property.

CA misapplied Calimlim-Canullas and Art. 158 of Civil Code .Article 120 of the Family Code supersedes Article 158 of the CivilCode. Thus, in determining the nature of the subject property, we refer to

the provisions of the Family Code, and not the Civil Code, except withrespect to rights then already vested. Art. 120 provides when the costof the improvement made by the conjugal partnership and any resultingincrease in value are more than the value of the property at the time of theimprovement, the entire property of one of the spouses shall belong to theconjugal partnership, subject to reimbursement of the value of the property ofthe owner-spouse at the time of the improvement; otherwise, said propertyshall be retained in ownership by the owner-spouse, likewise subject toreimbursement 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 thevalue of the residential lot is considerably more than what the husband paid .Therefore the subject property remained the exclusive paraphernal property ofErlinda at the time she contracted with the petitioner; the written consentof Husband to the transaction was not necessary. The NBI findingthat Husband's signatures in the special power of attorney andaffidavit were forgeries was immaterial.


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Analysis : From this case , we also deduce : (1) owner spouse ofseparate property may, during the marriage , deal with it even without theconsent of the other . (Also: Art. 111 FC) This is logical since Art. 120says that ownership (of the property shall be vested (in the community orconjugal partnership ) only upon reimbursement at the time of liquidation.

(2) Also, note that there is no similar provision respecting improvements toseparate property in an absolute community regime, so this rule is alsoapplicable to ACP regimes.

MULLER VS MULLER GR NO. 149615 AUG. 29 2006

FACTS: Petition for Separation of Property. Elena and Helmut marriedin Germany on Sept. 22, 1989 and thereafter took up residence in thePhilippines . During the marriage, Helmut inherited from his parentsproperty in Germany which he sold and with the proceeds bought propertyin Antipolo. The Antipolo property was registered in name of Elena (Filipina).They separated and , in this petition, the trial court granted the dissolutionof their absolute community property , ruling that the Antipolo property wasseparate property of Helmut because it was purchased with proceeds fromsale of inherited property .

ISSUE : Can Helmut get the value of at least half of the Antipolo propertywhich is admittedly his separate property ?

SC SAID : Reversed CA and reinstated Trial Courts Decision towit : pursuant to Article 92 of the Family Code, properties acquired by

gratuitous title by either spouse during the marriage shall be excluded fromthe community property. The real property, therefore, inherited by petitioner inGermany is excluded from the absolute community of property of the hereinspouses. Necessarily, the proceeds of the sale of said real property as well asthe personal properties purchased thereby, belong exclusively to thepetitioner. However, the part of that inheritance used by the petitioner foracquiring the house and lot in this country cannot be recovered by thepetitioner, its acquisition being a violation of Section 7, Article XII of theConstitution which provides that "save in cases of hereditary succession, noprivate 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 inwithout prejudice to a voluntary partition by the parties of the said realproperty .

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 ofhereditary succession, no private land shall be transferred or conveyed exceptto individuals, corporations, or associations qualified to acquire or hold lands ofthe public domain."[30] Petitioner Thomas Cheesman was, of course, chargedwith knowledge of this prohibition. Thus, assuming that it was his intentionthat the lot in question be purchased by him and his wife, he acquired no right


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whatever over the property by virtue of that purchase; and in attempting toacquire a right or interest in land, vicariously and clandestinely, he knowinglyviolated 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 ofthe 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. Tosustain such a theory would permit indirect controversion of the constitutionalprohibition. If the property were to be declared conjugal, this would accord tothe alien husband a not insubstantial interest and right over land, as he wouldthen have a decisive vote as to its transfer or disposition. This is a right thatthe 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 ornot the expense redounded to the benefit of the familyregardlessof the time (before or during marriage) when the expense wasmade. If it did , then the Community Property is liable, otherwise, it isnot.

The law establishes presumptions : (1) if by obtained by one spousewith consent of the other or (2) if obtained by both spouses, then inthese situations a presumption arises that it was for the benefit of

the family. Note that even if the debt was obtained by theadministrator-spouse, solely , there is no such presumption.

Paragraph ( 9), are liabilities/ obligations properly chargeable against theseparate property of the spouse obliged to pay it , thus (a) ante-nuptialdebts that did not redound to the familys benefit (b) support of illegitimatechildren , and (c) damages arising out of crime and quasi-delict. Thecommunity property becomes liable to third parties in this instances, onlyif the spouse obliged to pay it has no separate property, or ifthere is , it is insufficient. But , if paid out of community property ,

these are considered advances to be eventually deducted from theshare of the debtor spouses upon liquidation.

Paragraph (10) speaks of a suit between the spouses. This willdefinitely not redound to the benefit of the family but the law says,litigation expenses are chargeable against community property ifthe suit is NOT GROUNDLESS.


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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 termlitigation 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 ofresearch and private investigation , etc. Definitely, the plaintiff-spouse may recover in this situation ,

However, if the suit is groundless may litigation expenses ofdefendant - spouse be charged against community funds?

GO VS YAMANEG.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 propertyif case was for wifes interest alone?

SC RULED : (1) Conjugal , acquired during marriage ,the mereregistration of a property in the name of one spouse does notdestroy its conjugal nature. Hence, it cannot be contended in the presentcase 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 andexclusive property.

(2) Charging Lien Not Chargeable Against Conjugal Property. becauseWife was acting privately for her exclusive interest in hiring theservices of counsel to handle a case for them. So , whatever expenseswere incurred by her in the litigation are for her private and exclusive interests,and are her exclusive responsibility and certainly cannot be charged against thecontested conjugal property.Even on the remote assumption that the conjugalproperty could be held liable, levy on execution of the same property should stillbe 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 obligationcontracted by a spouse, there must be a showing of some advantage orbenefit that accrued to the conjugal partnership. . This counsel failed todo.

Note : Decisions of the SC on principles governing chargesagainst conjugal properties are also applicable to communityproperty.

ARTS. 96 TO 98

Administration , encumbrance and disposition of community property orconjugal properties is now JOINT between the Spouses. This ruleapplies retroactively , so even to those marriages celebrated beforeeffectivity of the Family Code.


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But note that in case of disagreement, it is still the husbands decision thatprevails, subject of course to recourse to courts by the wife , withinfive years from execution of the contract implementing thehusbands decision. (As an aside, the wife can just withhold spousalconsent 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 conjugalproperty (3) in any community property . Alienation includes any act ofdisposition, 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 isto obtain authority from the courts.

REMEMBER THAT THIS RULES APPLIES TO ALL DISPOSTIONS AFTEREFFECTIVITY OF FC. EVEN TO SPOUSES WHO MARRIED BEFORE THE FC.EXCEPT ONLY IF THE RETROACTIVE APPLICATION WILL AFFECT VESTEDRIGHTS.

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 fromEsther, sold property to Macatangay. (evidenced by RMOA , Receipt andMemorandum of Agreement). Subsequently, Esther executed SPA in favor ofher sister who then executed a Contract to Sell in favor of the sameperson Macatangay. Two contracts, respectively executed by eachspouse, in favor of the same person, respecting the sameproperty.

ISSUE : Was spousal consent present in either of the contracts forspecific performance instituted by the buyer to prosper?

SC SAID : NO. SPOUSAL CONSENT NOT PRESENT IN EITHER. Thecongruence of the wills of the spouses is essential for the validdisposition of conjugal property. Where the conveyance iscontained in the same document which bears the conformity of bothhusband and wife, there could be no question on the validity of thetransaction. But when there are two documents on which thesignatures of the spouses separately appear, textual concordance ofthe documents is indispensable. Hence, in this case where thewifes putative consent to the sale of conjugal property appears in aseparate document which does not, however, contain the sameterms 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 onthe aspect of the administration of the conjugal partnership. The new lawprovides that the administration of the conjugal partnership is now a jointundertaking of the husband and the wife. In the event that one spouse isincapacitated or otherwise unable to participate in the administration of the


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conjugal partnership, the other spouse may assume sole powers ofadministration. However, the power of administration does not include thepower to dispose or encumber property belonging to the conjugalpartnership. In all instances, the present law specifically requires thewritten 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 thesupposition that the parties only disposed of their respective shares in theproperty, the sale, assuming that it exists, is still void for as previouslystated, the right of the husband or the wife to one-half of the conjugal assetsdoes not vest until the liquidation of the conjugal partnership. Nemo dat quinon 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 hiswife, Marcelino constituted a real estate mortgage on thesubject property, which formed part of their conjugalpartnership.

ISSUES : 1) is mortgage executed by Marcelino valid as to his undividedshare 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 otherspouse, any disposition or encumbrance of the conjugal property shallbe void.

2. The burden of proof that the debt was contracted for thebenefit of the conjugal partnership of gains lies with the creditor-party litigant claiming as such. There is nothing from the records ofthe 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 theprincipal obligation.

BAUTISTA VS SILVA (502 SCRA 334 (2006)

Facts : Husband sold conjugal property using fake SPA purportedlygiven by wife.

Issues: Is sale valid? Or otherwise , is is valid as to the share ofhusband only?

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


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DISSOLUTION AND LIQUIDATION OF THE ABSOLUTECOMMUNITY PROPERTY

ACP TERMINATES :

Upon death of either spouseWhen there is decree of legal separationWhen marriage is annulledWhen marriage is judicially declared voidIn case of judicial separation of property under Arts. 134-138

Note: that the regime of Absolute Community Property may exist only ina valid, or at least voidable marriage. So if a void marriage is

judicially declared as such, the property relations of the parties willbe that under Art. 147 or 148 (unions without marriage).

So, To which Void Marriage does Art . 99(3) refer ? Statedotherwise, when can the regime of absolute community propertyexist in a void marriage?

Under Art. 36 , psychological incapacity = No. Arts 147 or 148applies.

Subsequent Marriage (in case of Absence of one Spouse) where bothparties acted in bad faith . (See Art. 44) = No. Articles 147 or 148applies.

Subsequent marriage where there is failure to register (Art 53). No.Art. 147 or 148 applies

Subsequent Void Marriage contracted before declaration of nullity ofprevious marriage. (Art.50 in relation Art. 40) YES . this is the onlycase 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, theexclusive property of each spouseListing of debts and obligations of the ACP, then payment. If ACPinsufficient , then separate properties solidarily liable, observing Art. 94Separate properties, or their remainder is then delivered to the owner-spouseNET REMAINDER = NET ASSETS of the Community Property this is dividedequally between husband and wife unless they agreed to a differentproportion in the marriage settlements , or if there is a voluntary waiver ofsuch share.Delivery of Presumptive Legitimes, if anyRecording in the Proper Registry


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Note : Liquidation must be made WITHIN ONE YEAR of the from death of theother spouse OTHERWISE ANY DISPOSITION OR ENCUMBRANCE SHALL BEVOID. This may be done judicially or extrajudically. But in practice,disposition or encumbrance must be preceded by a SETTLEMENT ANDPARTITION of the estate.

NOTE ALSO : THAT THIS ARTICLE (103) IMPOSES A MANDATORYCOMPLETE SEPARATION OF PROPERTY OF THE SECOND MARRIAGE IFTHE PROPERTY OF THE FIRST MARRIAGE HAS NOT BEENLIQUIDATED.

NOW CROSS REFER THIS TO ART. 53 ( And ART. 52) WHICHDECLARES THE SUBSEQUENT MARRIAGE NULL AND VOID IF THEREIS FAILURE TO REGISTER THE PARTITION AND DISTRIBUTION OF THEPROPERTIES OF THE SPOUSES, AND THE DELIVERY OF PRESUMPTIVELEGITIMES BEFORE THE SECOND MARRIAGE TAKES PLACE.

Registration necessarily implies previous liquidation , otherwise , how canyou partition, distribute the properties and deliver presumptive legitimes?

NET PROFITS (subject to forfeiture under Arts 43(20 and 63(3) , VS.NET ASSETS (which shall be divided between the Spouses) .

These two are not to be confused.

Net Assets = what remains after payment of community debts andliabilities.

Net Profits (subject of forfeiture) = There are two views.

The simplistic computation according to law .

Net Profiits = increase in value between the market value of theproperty at the time of celebration of marriage and the marketvalue at the time of dissolution

Thus : 500,000.00 - value at time of dissolution200,000.00 - value at time of celebration of marriage

________________________________________________300,000.00 - NET PROFIT

Tolentinos view (the better one but is not in accord with expressprovision of law)

Net Profits = difference between the market value of the netassets at the time of dissolution and the market value ofthe assets at the time of marriage :

Thus: 500,000.00 - value at dissolutionless 100,000.00 - debts and obligations paid

-----------------------------------------------------------400,000.00 - net assets

Less 300,000.00 - value at time of celebration of marriage------------------------------------------------------


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100,000.00 - Net profits (1/2 of which is share ofguilty spouse subject of forfeiture,if proper)

PRESUMPTIVE LEGITIME OF COMMON CHILDREN is to be

computed from :

The value of the separate property of the SpouseHis her share in the NET ASSETS .

Note that a common child will have presumptive legitime fromboth of his parents, computed separately. But delivery ofpresumptive legitime WILL NOT APPLY if the dissolution of thecommunity property is caused by the death of one of the spouses.

CONJUGAL PARTNERSHIP OF GAINS

Family Code Provisions apply retroactively to marriages celebratedbefore 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 beforemarriage, and only the fruits and income from these become conjugal;

In ACP what is divided is the net remainder (or net assets) aftyer paymentof debts of the community regime.

In CGP , all the exclusive properties of the spouses or their values mustbe 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 topay 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


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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

propertyShare in hidden treasureOccupation such as fishing or huntingLivestock in excess of number brought into marriageAcquired by chance

Acquired by installment , if ownership vested during marriage, subjectto reimbursementInterests on loans (where principal belongs to one spouse) falling dueduring the marriageSeparate property , in case improvements were made using conjugalfunds , or through efforts of one or both spouses if cost of

improvement and resulting increase in value is more than the value ofthe separate property at time of improvement. Note however thatownership will vest on CPG only after reimbursement at the time ofliquidation.

So , in the CGP Regime, there would be three (3) patrimonies : (a)paraphernal property of the wife (b) capital of the husband (3) and conjugalproperties.

Also: Art. 116 establishes a disputable presumption. All property acquiredduring 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 beneficiaryunder another persons policy , gratuity, even if paid during themarriage;

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 VSRAMIREZ 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 theFamily Code to be reimbursed for the cost of the improvements, theobligation to reimburse rests on the spouse upon whom ownership of theentire property is vested. There is no obligation on the part of the purchaser of


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the property, in case the property is sold by the owner-spouse.

Indeed, Article 120 provides the solution in determining the ownership of theimprovements that are made on the separate property of the spouses at theexpense of the partnership or through the acts or efforts of either or both

spouses. Thus, when the cost of the improvement and any resulting increasein value are more than the value of the property at the time of theimprovement, the entire property of one of the spouses shall belong to theconjugal partnership, subject to reimbursement of the value of the property ofthe owner-spouse at the time of the improvement; otherwise, said propertyshall be retained in ownership by the owner-spouse, likewise subject toreimbursement of the cost of the improvement. The subject property wasprecisely 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 thename of Felimon Torela, married to Graciana Gallego, it must be presumedto be the conjugal property of Felimon and Graciana so that one-half thereofshould be adjudicated to them as their inheritance from their mother.

HELD : While it is true that all property of the marriage is presumed to beconjugal, as above stated, nonetheless the party who invokes thepresumption must first prove that the property was acquired duringthe marriage. This proof is a condition sine qua non for theapplication 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; 36SCRA 289.)

CHARGES UPON THE CGP

ARTS. 121 AND 122 FC

The charges upon the CGP are the same as the charges upon the ACP (Art94). Antenuptial debts of spouses in CGP is governed by Art. 122 FC. As inthe 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 andindemnities imposed on only one of the spouses, and support of illegitimatechildren may still be charged against the CGP is the spouse who is boundhas no sufficient separate property and ONLY after the CGP satisfies thecharges 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 bypetitioner; (2) this amount was received by respondent and his wife and given toa certain Pura Vallejo for the full payment of a house and lot located at #19952Chestnut Street, Executive Heights Village, Paranaque, Metro Manila; (3) thishouse and lot became the conjugal dwelling of respondent and his wife; and (4)


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respondents wife executed an instrument acknowledging the loan but whichrespondent did not sign.

SC HELD : the loan is the liability of the conjugal partnership pursuant toArticle 121 of the Family Code:

Article 121. The conjugal partnership shall be liable for:

(2) All debts and obligations contracted during the marriage by thedesignated administrator-spouse for the benefit of the conjugal partnershipof 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 ofthe 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 separateproperties.

While respondent did not and refused to sign the acknowledgmentexecuted and signed by his wife, undoubtedly, the loan redounded tothe benefit of the family because it was used to purchase the houseand 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 suchloan 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-spousesfor the payment of the entire obligation subject to reimbursement from theother of his/her share.

So, assume that the community property cannot pay a debt of 500K. Thecreditor enforce payment for the whole amount of 500K from only one of thespouses, 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 ifthe wife doesnt have the money , the husband, in this example will bearthe burden of the entire debt.

Art. 122 FC . What debts and obligations contracted by the husbandalone are considered for the benefit of the conjugal partnershipwhich are chargeable against the conjugal partnership?

Is a surety agreement or an accommodation contract entered into bythe 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


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Facts : PBM obtained million million loan from Ayala and CHING, then VPof PBM signed as surety and made himself jointly and severallyliable with PBM for the loan. PBM defaulted so Ayala sued. Inshort, Ayala won and the sheriff levied on three (3) propertiesbelonging 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 actuallyredounded to familys benefit

(A)If the husband himself is the principal obligor in the contract, i.e., hedirectly received the money and services to be used in or for his ownbusiness or his own profession, that contract falls within the term x x x xobligations for the benefit of the conjugal partnership. Here, no actual

benefit may be proved. It is enough that the benefit to the family isapparent at the time of the signing of the contract. From the very natureof the contract of loan or services, the family stands to benefit from theloan facility or services to be rendered to the business or profession ofthe husband. It is immaterial, if in the end, his business or profession failsor does not succeed. Simply stated, where the husband contractsobligations on behalf of the family business, the law presumes, andrightly so, that such obligation will redound to the benefit of the conjugalpartnership.

(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, thatcontract cannot, by itself, alone be categorized as falling withinthe context of obligations for the benefit of the conjugalpartnership. The contract of loan or services is clearly for the benefitof the principal debtor and not for the surety or his family. Nopresumption can be inferred that, when a husband enters into a contractof surety or accommodation agreement, it is for the benefit of theconjugal partnership. Proof must be presented to establish benefitredounding 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 husbandcontracted the obligation for his own business; while in thelatter, the husband merely acted as a surety for the loancontracted by another for the latters business.

The evidence of petitioner indubitably show that co-respondent AlfredoChing signed as surety for the P50M loan contracted on behalf of PBM.Petitioner should have adduced evidence to prove that Alfredo Chingsacting 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 theadvancement and benefit of Philippine Blooming Mills and not for thebenefit of the conjugal partnership of petitioners-appellees. PhilippineBlooming Mills has a personality distinct and separate from the family ofpetitioners-appellees - this despite the fact that the members of the saidfamily happened to be stockholders of said corporate entity.


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Note that under the Family Code , the rules for ACP in sofar as charges and obligations, administration , dispositionand 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 THENET ASSETS ARE DIVIDED BETWEEN THE SPOUSES ATDISSOLUTION AND LIQUIDATION , THE PROPERTIES DEFINITELYWILL CROSS OWNERSHIP LINES.

Theoretically , by way of illustration : Suppose there is no ante nuptialagreement and the Husband owns two commercial buildingsinherited from late father. While Wife has no assets. The ACP, at

the moment of celebration of their marriage would be the 2commercial buildings . Husband dies a week later leaving behind hismother and his wife only . WIFE here gets 1 building (as her sharein the community property , plus of the other building . What goesto husbands mother is only of one building. IF WIFE DIES , too ,and is survived by her own mother and is childless , the One Buildingplus of the other goes to wifes mother. So , in this situation,husbands mother-in-law would end up with more than husbands ownmother. There is here reversal of fortunes with properties crossinglines.

The effect would be different if the regime was CONJUGALPARTNERSHIP OF GAINS. For then, under the same facts, the 1 and buildings will ascend to Husbands mother (so it is kept in the sameproperty line), while the wife gets only of one building (roughly of the husbands estate) as her inheritance. So in case of thesubsequent 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) Man and woman have capacity to marry each other2) They Cohabit .3) Their cohabitation is exclusive4) There is no marriage or the marriage is void.


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On the other hand, Art. 148 applies where the parties who cohabitare not capacitated to marry each other .

IMPT : INCAPACITY here refers to an existing marriageand those under Articles 37 (incest) and 38 (public policy).

SEE: VALDES VS RTC, below . So if the nullity is because ofpsychological incapacity , Art. 147 applies .

Suppose, non-age is the cause of nullity (and the partiesare therefore not capacitated to marry each other , following theruling in Valdes, Art. 148 should still apply.

Nature /Scope of Property Relations under ART. 147.

1. Their Wages and Salaries during the cohabitation2. Properties acquired through work or industry of both or either during

the cohabitation3. If only one actually worked , the efforts of one party towards care and

maintenance of home and family, deemed to be his/her contributionto the co-ownership .

Par. 2 of Art. 147 establishes presumption of equal co-ownership re:property acquired during cohabitation . (Same presumption underArts. 93 and 116 FC)

Effects :

1. Parties share equally in these properties2. Parties cannot dispose of their shares in the co-ownership without

the others consent prior to termination of the relationship3. 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 JOINTCONTRIBUTION OF MONEY, PROPERTY OR INDUSTRY.

In the absence of proof as to the amount or value of the actualcontribution, the contributions are deemed equal . But if there isevidence that the wife made no actual contribution, then she getsnothing. (Agapay vs Palang, 276 SCRA 341.

Effects :

1. If one party is validly married to another, his/her share in the co-ownership 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 theircommon children or if none, the innocent party.

Now, the married party could also be the one in badfaith, in such a situation , does he share in the co-ownershipaccrue to the ACP or CGP of his existing marriage, or should itbe forfeited in favor of the common children of the illicitrelationship?


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Share of Party in bad faith should accrue to ACP or CGP ofexisting marriage because such regime is properly the owner ofsubject share, applying the rules in determination of what propertyconstitutes 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 OFNULLITY, PROPERTY RELATIONS CANNOT BE GOVERNED BY ACP ORCPG BUT BY ART. 147 ORN 148 . THE SOLE EXCEPTION IS MARRIAGECONTRACTED 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. (psychologicalincapacity). In the disposition of the Family Dwelling, Trial Court appliedArt. 147. Petitioner insists that it should be Articles 50, 51 and 52 inrelation to Articles 102 and 129 that should apply in the adjudication ofconjugal dwelling .

HELD : Trial Court is right. This peculiar kind of co-ownership under Art. 147of the Family Code applies when a man and a woman, suffering no legalimpediment to marry each other, so exclusively live together as husband andwife under a void marriage or without the benefit of marriage. The term

"capacitated" in the provision (in the first paragraph of the law) refersto the legal capacity of a party to contract marriage, i.e., any "male orfemale of the age of eighteen years or upwards not under any of theimpediments mentioned in Articles 37 and 38 of the Code.

Under this property regime, property acquired by both spouses through theirworkand industryshall be governed by the rules on equal co-ownership. Anyproperty acquired during the union isprima facie presumed to have beenobtained through their joint efforts. A party who did not participate in theacquisition of the property shall still be considered as having contributed theretojointly if said party's "efforts consisted in the care and maintenance of the family

household. Unlike the CGP , the fruits of the couples separate propertyare not included in the co-ownership.

When the common-law spouses suffer from a legal impediment tomarry or when they do not live exclusively with each other (as husbandand wife ),only the property acquired by both of them through theiractual joint contribution of money, property or industry shall be ownedin common and inproportion to their respective contributions. Suchcontributions and corresponding shares, however, areprima faciepresumed to be equal. The share of any party who is married to anothershall accrue to the absolute community or conjugal partnership, as the

case may be, if so existing under a valid marriage. If the party who hasacted in bad faith is not validly married to another, his or her shareshall 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 theliquidation of the co-ownership that exists between common-law spouses.


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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 voidablemarriages 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 isa special rule that somehow recognizes the philosophy and an old doctrine thatvoid marriages are inexistent from the very beginning and no judicial decree isnecessary to establish their nullity. In now requiring for purposes of remarriage,the declaration of nullity by final judgment of the previously contracted voidmarriage, the present law aims to do away with any continuing uncertainty onthe status of the second marriage. It is not then illogical for the provisions ofArticle 43, in relation to Articles 41 and 42, of the Family Code, on the effects ofthe termination of a subsequent marriage contracted during the subsistence of aprevious marriage to be made applicable pro hac vice. In all other cases, it is notto 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 spousesof void marriages, leaving to ordain, in the latter case, the ordinary rules on co-ownership subject to the provision of Article 147 and Article 148 of the FamilyCode. It must be stressed, nevertheless, even as it may merely state theobvious, that the provisions of the Family Code on the "family home," i.e., theprovisions found in Title V, Chapter 2, of the Family Code, remain in force andeffect 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 liquidationand partition, court awarded to Wife of the Retirement/Separation of Payof Husband and of the Husbands Shares of Stock in two big companiesas 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 hershare 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 TrialCourt also Ordered h dissolution of conjugal partnership ofproperty and decreed a regime of complete separation ofproperty between the said spouses. Trial Court later retractedbut excluded a condominium unit purchased on installment by thecouple from the properties to be partitioned. Trial Court alsoapproved 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 propertiesof the co-ownership (naturally , as it was property presumed to beacquired through their joint effort) and overturned the 3-waypartition. The properties should be divided according to the rules onco-ownership pursuant to Art. 147, FC.


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SEE ALSO : MALLILLIN VS CASTILLO 333 SCRA 628 ,INVOLVING A BIGAMOUS MARRIAGE AND THE COURT APPLIEDART. 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 propertyrelation 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 declarednull and void under Art. 36 FC. RTC also ordered the dissolutionof their conjugal partnership of gains. In 1997 , WIFE mortgagedthe Makati Property Metrobank. In short, Wife failed to pay soMetrobank forclosed on Makati Property. Husband learned of it ,hence this case for for declaration of nullity of the mortgage andforclosure.

SO, the Court went on to declare that the property in question wasCONJUGAL and that the Dissolution of the Conjugal Partnership of Gains

did not destroy its conjugal character. It further ruled that pending itsliquidation following its dissolution, the conjugal partnership of gains isconverted into an implied ordinary co-ownership and that Art. 493of the Civil Code shall govern the property relationship between theformer spouses, where:Each co-owner shall have the full ownership of his part and of thefruits and benefits pertaining thereto, and he may thereforealienate, assign or mortgage it, and even substitute another personin its enjoyment, except when personal rights are involved. But theeffect of the alienation or the mortgage, with respect to the co-owners, 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 tomortgage or even sell her one-half (1/2) undivided interest inthe disputed property even without the consent of Husband .However, the rights of Metrobank, as mortgagee, are limited only to the1/2 undivided portion that WIFE owned. Accordingly, the mortgagecontract insofar as it covered the remaining 1/2 undivided portion of thelot is null and void, Nicholson not having consented to the mortgage ofhis undivided half. It said that pending the liquidation of the CPG butafter its dissolution

UNDER ART. 148

- Proof of actual joint contribution is required . (VILLANUEVA VSCA, 427 SCRA ; JOAQUINO VS REYES 434 SCRA 260; FRANCISCO VSMASTER IRON WORKS, 451 SCRA


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

notes by atty reena nieva

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