Chapter VIII. Property Relations Between Spouses
ORDINARY DONATIONS
1. Ordinary wedding gifts given after the celebration of the marriage
2. Donations in favor of future spouses made before marriage but not in consideration thereof
3. Donations made in favor of persons other than the spouses even if founded on the intended marriage
Who may donate—
1. Spouses to each other
2. Parents of one or both spouses 3. 3rdpersons to either or both spouses
Moreover, in donations propter nuptias, the marriage is really a consideration but not in the sense of giving birth to the obligation.
There can be a valid donation even if the marriage never took place. However, the absence of marriage is a ground for the revocation of the donation. (Solis v. Barroso, (1928))
Donations propter nuptias are without onerous consideration, marriage being merely the occasion or motive for the donation, not its cause. Being liberalities, they remain subject to reduction for inofficiousness upon the donor’s death, if they should infringe the legitime of a forced heir. (Mateo v. Lagua, (1969))
Rules to Follow in Donation Propter Nuptias—
1. Family Code provisions (Arts. 82-87)
2. Ordinary Donation provisions (Art. 83, FC;
Title III of Book III of the NCC)
3. Provisions on testamentary succession and the formalities of wills for donations on future property (Art. 84, par. 2)
Distinguished from Ordinary Donations—
DONATIONS PROPTER NUPTIAS
ORDINARY DONATIONS Does not require express
acceptance May be made by minors
(Art. 78)
Cannot be made by minors
May include future property
Cannot include future property
If present property is donated and property is not absolute community, limited to 1/5 (Art. 84)
No limit to donation of present property provided legitimes are not impaired
Grounds for revocation -In Art. 86
Grounds for revocation -in donation laws
Rules—
1. Before Marriage General Rule:
Future spouses cannot donate to each other more than 1/5 of their present property (excess shall be considered void) (Art. 84, FC)
Exception:
If they are governed by ACP 2. During Marriage
General Rule:
Spouses cannot donate to each other, directly or indirectly (donations made by spouses to each other during the marriage are void) (Art. 87, FC)
Exception:
Moderate gifts on the occasion of any family rejoicing.
Matabuena v Cervantes, (1971)
The donation between common-law spouses falls within the provision prohibiting donations between spouses during marriage.
Harding v. Commercial Union, (1918) The prohibition on donations can only be assailed by persons who bear such relation to the parties or the property itself, that their rights are being interfered with. Here, the insurance company of the donated car cannot assail the validity of the donation. In addition, the codal exception of “moderate gifts” depends on the income class of the spouses and a car could be considered a
“moderate gift” that does not infringe the prohibition of donation between spouses.
Sumbad v. CA, (1999)
The donation made by a man to a woman was held valid because no proof was shown that they were still living in a common-law relationship at the time of the donation.
Donation of Property Subject to Encumbrances—
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1. Are considered valid.
2. In case of foreclosure
a. if property value < obligation, donee shall not be liable
b. if property value > obligation, donee shall be entitled to the excess (Art. 85, FC)
Grounds for Revocation of Donation Propter Nuptias (Art. 86, FC) (CAVaLRI)—
1. If the marriage is not celebrated or judicially declared void ab initio, except donations made in settlements.
2. When the marriage takes place without the consent of the parents or guardians, as required by law.
3. When the marriage is annulled, and the donee acted in bad faith.
4. Upon legal separation, if the donee is the guilty spouse.
5. If there is a resolutory condition, and it is not complied with.
6. When donee has committed an act of ingratitude: (Art. 765, CC) (PCS)
a. An offense against person or property of donor, or his wife or children under parental authority.
b. An imputation to the donor of any criminal offense, or any act involving moral turpitude, even if proven, unless the crime is committed against the donee, his wife or children under his authority.
c. Refusing to support the donor, if he/she is legally required to do so.
*The action for filing for revocation of donation prescribes.
III. Absolute Community of Property
A. In General(Asked in ’98 and ’07 bar exams) When it commences—
At the precise moment of the celebration of the marriage (Art. 88, FC). However, if the marriage is celebrated before the Family Code took effect (1988), the default property regime is the Conjugal Partnership of Gains (CPG).
Waiver of Rights (Art. 89, FC)—
General Rule: NOT ALLOWED
Exceptions
a. When there is judicial separation of property
b. When there is legal separation
c. When the marriage is dissolved (by death of one of the spouses)
d. When the marriage is annulled Supplementary Rules to Follow—
Co-ownership (Art. 90, FC)
B. What Constitutes Community Property What it consists—
All the property owned by the spouses at the time of the celebration of the marriage or acquired thereafter. (Art. 91, FC)
Under the ACP, spouses cannot exclude specific properties from the regime.
What is Excluded (BGM) (Art. 92, FC)—
1. Properties acquired by a gratuitous title, i.e.
donation, inheritance by testate and intestate succession, including the fruits of such properties
EXCEPT: When it was expressly provided by the donor or testator that the property shall form part of the ACP
2. Properties for personal use
EXCEPT: Jewelry - they form part of the ACP
3. Properties acquired before the marriage, for those with legitimate descendants with a former marriage (to protect rights of children by a former marriage)
Presumption—
All properties acquired during the marriage form part of the ACP, unless it be proven that they are excluded. (Art. 93, FC)
C. Charges Upon the ACP (Art. 94, FC) (4 debts, 2 taxes, 2 expenses, support, donation)
(asked in ’76 bar exam) 1. Support
Spouses
Even if not living together except when a spouse leaves conjugal home without just cause
Even during pendency of action for legal separation or annulment of marriage
Common children
Legitimate children of previous marriage
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Illegitimate children - follow the provisions on Support and (9) 2. Debts and Obligations Contracted During
Marriage
Either by both spouses or one of them, with the consent of the other.
In (2) and (3), creditors need not prove that the debts benefited the family.
3. Debts Contracted by one Spouse Without Consent of the other
ACP liable only to the extent that the debt benefited the family.
4. Tax, Liens, Repairs on Community Property
Includes both major and minor repairs 5. Taxes and Expenses for Mere preservation
of Separate properties
Applies only to separate properties by either spouse being used by the family, not those that do not benefit the family.
Expenses limited to minor repairs.
6. Expenses for professional, Vocational, or Self-Improvement Course of Spouses 7. Ante-nuptial Debts that Benefited the Family
If the ante-nuptial debt did not benefit the family, applicable rule is (9).
8. Donations by Both Spouses to Common Legitimate Children
Purpose: professional, vocational courses or activities for self-improvement
9. Ante-Nuptial Debts not under (7), Support of Illegitimate Children, Liabilities of Either Spouse Arising from Crime or Quasi-Delict
Only ff the debtor-spouse has no exclusive property or his or her property is insufficient.
The payments by the ACP are deemed advances to be deducted from the share of the guilty spouse upon the liquidation of the absolute community.
10. Expenses of Litigation between Spouses
Except when suit is groundless
If community property is insufficient except in (9), spouses are solidarily liable for the unpaid balance from their separate properties.
Gambling losses shall be borne by the losing spouse’s separate property, winnings shall accrue to the community property. (Art. 95, FC)
D. Administration, Ownership and Disposition of ACP
Administration of property—
Belongs to both spouses jointly. If they disagree the husband’s decision prevails. However, the wife has five years from the date of the decision to go to court for recourse. Otherwise, it is
presumed that she agreed with the husband’s decision. (Art. 96, FC)
Except—
When the other spouse is incapacitated, or unable to participate in the administration (e.g.
when abroad). The powers refer solely to administration; disposition or encumbrance requires consent of the absent or incapacitated spouse.
Homeowners Savings & Loan Bank v. Dailo (2005)—
In the absence of (court) authority or written consent of the other spouse, any disposition or encumbrance of the conjugal property shall be void.
Disposition of Property—
Either spouse may, through a will, dispose his/her interest in the community property. (Art.
97, FC) However, the will should refer only to his/her own share in the community property Donation of Property—
General Rule
Donation of one spouse without the consent of the other is not allowed (Art. 98, FC)
Exceptions
a. Moderate donations to charity due to family rejoicing or distress;
b. Moderate gifts by each spouse to the other due to family rejoicing. (Note:
What’s moderate depends on the socio-economic status of the family)
E. Dissolution of ACP
ACP terminates upon (Art. 99, FC)—
1. Death of either spouse – follow rules in Art.
103
2. Legal Separation – follow rules in Arts. 63 and 64
3. Annulment or judicial declaration of nullity – follow rules in Arts. 50 to 52
4. Judicial separation of property during marriage – follow rules in Arts. 134 to 138 Rules on De Facto Separation (ART. 100, FC)—
De facto separation does not affect the ACP;
EXCEPT that:
1. Spouse who leaves the conjugal home without just cause shall not be entitled to support. He/She, however, is still required to support the other spouse and the family.
2. If consent is necessary for transaction but is withheld or otherwise unobtainable,
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authorization may be obtained from the court.
3. Support for family will be taken from the ACP.
4. If ACP is insufficient, spouses shall be solidarily liable.
5. If it is necessary to administer or encumber separate property of spouse who left, spouse present may ask for judicial authority to do this.
6. If ACP is not enough and one spouse has no separate property, spouse who has property is liable for support, according to provisions on support.
Abandonment (Art. 101, FC)—
Present spouse may petition the court for:
1. receivership;
2. judicial separation of property; or
3. authority to be the sole administrator of the absolute community, subject to precautionary conditions that the court may impose.
Spouse is prima facie considered to have abandoned the other spouse and the family if:
1. he/she has left for a period of three months, 2. he/she has failed to inform his/her
whereabouts for a period of three months.
F. Liquidation of Assets and Liabilities (asked in ’89 and ’99)
Process of liquidation of ACP (Art. 102, FC)—
1. Inventory of assets of ACP and of spouses, with market values.
2. Obligations are paid with community property, and separate obligations not charged to ACP paid by respective assets of spouses.
a. If obligations exceed the assets of the ACP, nothing is divided. Creditors can go after the separate properties of the spouses, which are solidarily liable for the deficiency.
3. Delivery of whatever remains in their exclusive property.
4. Balance, or net remainder is divided equally between the spouses, irrespective of how much each brought into the community.
5. If personal obligations of a spouse exceed his/her separate property, creditor can go after the share of the spouse on the net remainder of the ACP, without prejudice to
the provisions of law on forfeitures and delivery of presumptive legitimes.
6. After covering all community obligations and obligations of spouses, balance of separate properties shall be delivered to respective spouses or their heirs, and they will also divide into two equal shares whatever is left of the community assets, without prejudice to the provisions of law on forfeitures and delivery of presumptive legitimes.
Rules in Case of Termination of Marriage by Death of One of the Spouses (Art. 103, FC)—
1. The community property shall be liquidated in the same proceeding for the settlement of the estate of the deceased spouse.
2. If no such judicial settlement proceeding is instituted, surviving spouse shall liquidate the community property either judicially or extra-judicially within one year from the death of the deceased spouse.
a. If no liquidation is made within the period, any disposition or encumbrance involving community property of the terminated marriage shall be void.
b. Non-compliance with liquidation procedures would mean that a subsequently contracted marriage will follow a regime of complete separation of property.
Procedure for Liquidation of Community Properties of Two Marriages (Art. 104, FC)—
1. Determine the capital, fruits, and income of each community upon such proof as may be considered according to the rules of evidence.
2. In case of doubt as to which community the existing properties belong, they shall be divided between two communities in proportion to the capital and duration of each.
Onas v. Javillo, (1934)
Javillo contracted 2 marriages. SC ruled that each absolute community should be considered owner of the parcels of land acquired during its existence. Death discontinues ACP.
Vda. De Delizo v. Delizo, (1976
In case of doubt as to which community the existing properties belong, the same shall be divided between the different communities in proportion to the capital and duration of each.
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IV. Conjugal Partnership of Gains
(Asked in ’79 bar exam)CPG Ordinary partnership
1. Existence Exists with the mere fact of marriage Comes into existence according to agreement between parties
2. Purpose,
duration, and rules
Predetermined by legislator, the law fixing its conditions.
Determined by will of partners.
3. Profits Divided equally between spouses, irrespective of the amount of capital that they bring into marriage
Depends upon respective capitals of partners, or upon their agreement 4. Equality No equality between spouses in control,
management, and disposition, because the law grants the husband some predominance.
General rule is that all partners have equal rights in administration, management, and control of partnership.
5. Personality No juridical personality Considered a juridical person 6. Commencement At precise moment of celebration of
marriage
At the time agreed upon by partners
7. Regulation By law By agreement of parties; subsidiarily,
by law 8. Purpose Not particularly for profit For profit 9. Causes for
dissolution
Death, legal separation, annulment, JDN, judicial separation of property
Death, insolvency, civil interdiction, termination of term, express will of any partner, etc. (Arts 1830-1931)
10. Effect of death of a partner
Dissolution of partnership Surviving partners may choose to continue partnership
11. Division of properties
Only upon dissolution There can be division of profits without dissolution
12. Management Joint; in case of disagreement, the husband’s decision shall prevail, wife has recourse to courts
Same as individual partners, except when one or more partners designated as managers.
CPG ACP
1. Property acquired before marriage.
Each spouse retains his/her property;
only fruits part of conjugal property
Properties become part of community property
2. Property acquired during marriage
Part of conjugal property Becomes community property 3. Upon dissolution
of marriage
Separate properties are returned; net profits divided between spouses or heirs
Net remainder of ACP divided equally between spouses or heirs
4. Basis Capital and properties of spouses kept separate and distinct from benefits;
insurmountable obstacle to presumption of solidarity
Mutual trust and confidence between spouses; fosters oneness of spouses
5. Liquidation Exclusive properties will have to be identified and returned, and sometimes, identification is difficult.
Easier to liquidate because net remainder of community properties are simply divided between spouses or heirs.
A. Where It Applies (Art. 105)
1. For marriages before the implementation of the Family Code.
2. For marriages after the Family Code, if agreed to by the parties through a marriage settlement.
Note: CPG begins at the precise moment the marriage celebrated (Art 107)
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B. Husband and Wife Place in Common Fund (PIPF-EC) (Art. 106)
1. The proceeds, products, fruits, and income of their separate properties;
2. Everything acquired by them within marriage through their own efforts;
3. Everything acquired by them by chance
C. Exclusive Properties of the Spouses 1. Art 109 (OGRE)
Directly acquired or originally exclusive
(1) Property brought into marriage by each spouse as his/her own
(2) Property acquired by either spouse during the marriage by gratuitous title Property
by
substitution
(3) Property acquired by right of redemption, by barter, or by exchange with property belonging to either spouse (4) Property purchased with exclusive money of either spouse
2. Other Separate Property: (CSI)
a. Collection of credits belonging to one spouse exclusively but the interests shall belong to the CPG (Art 119) b. Sale of separate property of a spouse c. Indemnity paid in case of expropriation
of separate property or under an insurance policy covering separate property.
Spouses retain the ownership, possession, administration and enjoyment of their exclusive properties (Art 110, par 1.)
Possession by one spouse of the separate property the other spouse does not affect ownership
Transfer of administration of a spouse’s exclusive property to the other spouse must be made in a public instrument recorded in the registry of property of the place where the property is located (Art 110, FC) but ownership is not conferred to the administrator – spouse (Rodriguez v. de la Cruz, 1907).
D. What Constitutes the CPG (Art. 117) (asked ’75, ’76, ’78, ‘85’, and ’87 bar exams) (OLF-N-HOLC)
1. Acquired by Onerous Title during the Marriage at Expense of Common Fund 2. Acquired through the Labor, Industry, Work,
Profession of Either or both Spouses
3. Fruits from common property and net fruits of exclusive property of each spouse
4. Share of either spouse in hidden treasure, whether as finder or owner of property where treasure is found
5. Acquired through occupation such as fishing or hunting
6. Livestock existing at dissolution of partnership in excess of what is brought by either spouse to the marriage
7. Acquired by chance, such as winnings from gambling or betting
Moral damages arising from a contract paid from CPG are also awarded to the CPG (Zulueta v. Pan-Am, 1973).
Loans contracted during the marriage are conjugal, and so is any property acquired therefrom (Mendoza v. Reyes, 1983).
E. Rules
1. presumption that property is conjugal: all property acquired during the marriage, whether made, contracted, or registered in the name of one spouse, are presumed conjugal unless the contrary is proven (Art.
116, FC).
As a condition sine qua non for the operation of the presumption in favor of the conjugal partnership the party who invokes the presumption must first prove that the property was acquired during the marriage. (Acabal v. Acabal, 2005)
"X married to Y" as it appears in land titles is not conclusive of the conjugal status of the property (Jocson v. CA, 1989).
Exclusive property brought into a second marriage remains exclusive property of that spouse under CPG regime; ACP is not retroactive for marriages celebrated under the Civil Code (Francisco v. CA, 1998).
2. property purchased by installment (paid partly with conjugal funds and partly with exclusive funds) – Art. 118:
conjugal property if full ownership was vested during the marriage – CPG shall reimburse the owner-spouse
exclusive property if full ownership was vested before the marriage – owner-spouse shall reimburse the CPG
Exclusive property brought into a second marriage remains exclusive property under CPG regime. ACP is not retroactive for marriages celebrated under the Civil Code (Castillo v. Pasco, 1964).
Even if the installment is completed after the marriage, the property is exclusive if
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ownership was vested in one spouse before the marriage (Lorenzo v. Nicolas, 1952).
3. rules on improvement on exclusive property: (Art. 120)
accession - if original value is greater than new value (value of land + value of improvements + net change in value), then land remains exclusive property of the owner-spouse; subject to reimbursement of the cost of
accession - if original value is greater than new value (value of land + value of improvements + net change in value), then land remains exclusive property of the owner-spouse; subject to reimbursement of the cost of