Conjugal Partnership of Gains

Art. 105. In case the future spouses agree In the marriage settlements that the regime of conjugal
partnership of gains shall govern their property relations during marriage, the provisions In this
Chapter shall be of supplementary application.

WHEN APPLY?

(1) The property relations of conjugal partnership of gains applies  only when the future spouses agree
to it in the marriage settlement, if any.
(2) It also applies to conjugal partnerships of gains already established between spouses before the
effectivity of the Family Code, without prejudice to vested rights. This is the default property
relationship under the Civil Code, which was changed to that of absolute community of property
under the Family Code.

Art. 106. Under the regime of conjugal partnership of gains, the husband-and-wife place in a common
fund the I proceeds, products, fruits and income from their separate properties and those acquired by
either or both spouses through their efforts or by chance, and upon dissolution of the marriage or of
the partnership, the net gains or benefits I; obtained by either or both spouses shall be divided equally
between them, unless otherwise agreed in the marriage settlements

Concept of Conjugal Partnership of Gains:

(1) Husband and wife place in common fund:

(a) the proceeds, products, fruits and income of their separate properties.

(b) everything acquired by them through their efforts (i.e., their work, labor, or industry, whether singly
or jointly);

and (c) everything acquired by them through chance (like winnings from gambling, hidden treasure, and
those acquired through fishing and hunting).

(3) Upon dissolution of the marriage or of the partnership, the net gains or benefits from the
partnership shall be divided equally between the spouses, unless they have agreed on another
manner of division in their marriage settlement.

Difference of Conjugal Partnership from the System of Absolute Community

CONJUGAL PARTNERSHIP
Each spouse retains or her property before the
marriage, and only the fruits and income of such
properties become part of the conjugal
properties during the marriage
The separate properties of the spouses are
returned upon the dissolution and only the net
ABSOLUTE COMMUNNITY
All properties owned by the spouses at the time
of marriage become community property
Net remainder is equally divided between the
spouses or their heirs upon the dissolution
profits are equally divided between the spouses
and their heir
The properties or the capital of the spouses are It was based essentially on mutual trust and
separate and distinct from the benefits acquired confidence between the spouses and fosters
by them during marriage oneness and unity between them
The exclusive properties will be identified and It is easier to liquidate
returned.

Difference of Conjugal Partnership from Ordinary Partnership

Conjugal Partnership Ordinary Partnership

No Personality Partnership is a person
Partnership commences a precise moment the Begins at any time agreed upon by the parties
marriage is celebrated
Regulated by Law Regulated by Agreement
Not for Profit For Profit
Divided Equally Divided according to the proportion
Dissolved upon the death The surviving partners may decide to continue
Liquidation of profits until dissolution There be a division of profits without dissolution

Note: The spouses are not co-owners of the conjugal properties during the marriage and cannot
alienate the supposed one-half interest of each in said properties. The interest of the spouses in the
conjugal properties is only inchoate or a mere expectancy and does not ripen into title until it
appears after the dissolution and liquidation of the partnership that there are net assets. If
therefore, during the liquidation of the partnership, it appears that there is no conjugal property to
divide 9 between the spouses, there will be no share for either husband or wife (Nable Jose v. Nable
Jose, 41 Phil. 713).

Art. 107. The rules provided In Articles 88 and 89 shall also apply to the conjugal partnership of
gains, (n)

The provision of Art. 88 as to when the absolute community between the spouses begins also applies
to the conjugal partnership of gains, i.e., at the precise moment (not day) the marriage is celebrated.
The rule in Art. 89 as to waiver of rights, interests, share and effects of the absolute community of
property during the marriage by one spouse, is also applicable to the conjugal partnership of gains.

Art. 108. The conjugal partnership shall be governed by the rules on the contract of partnership In
all that is not in conflict with what Is expressly determined In this Chapter or by the spouses in
their marriage settlements
Exclusive Property of Each Spouse

Art. 109. The following shall be the exclusive property of each spouse:

(1) That which is brought to the marriage as his or her own;

a. Properties brought into the Marriage.

Under the conjugal partnership regime, all properties like house and lot or car etc.
brought into the marriage by contacting parties belong to each of them exclusively.
›The partnership does not produce the merger of the properties of each spouse.

They can exercise all rights of dominion or of ownership over these exclusive
properties.
›The said properties cannot be encumbered, alienated nor dispose of by the spouse
without the consent of the owner spouse.

(2) That which each acquires during the marriage by gratuitous title;

a. Property Acquired by Gratuitous Title

Anything received by each spouse from any source by way of an act of liberality of the
giver, such as a donation or a gift, shall belong exclusively to the spouse-recipient and
will not belong to the conjugal property.

(3) That which is acquired by right of redemption, by barter or by exchange with

property belonging to only one of the spouses; and

a. Property Acquired by Right of Redemption, Barter, or Exchange with Exclusive

Property:

(a) Barter: Property inherited by wife from her father was exchanged by her with another
property.

(b) Redemption: The property shall belong to the spouse who has the right to
redeem regardless of whether he or she uses personal funds.
 (c) Exchange:  Property acquired by exchange made by one of the spouses using his or
her exclusive property shall remain the separate property of such spouse.

(4) That which is purchased with exclusive money of the wife or of the husband.

a. Property purchase with the exclusive money of either spouse.

›Property purchased using the exclusive money of one spouse shall belong to the
spouse.

›However, when property is purchased using the exclusive money of one spouse, but
the title is taken in the spouse’s joint names, the circumstances shall determine whether
it shall result in a gift from the spouse whose money was used to effect the purchase, or
a trust in favor of such spouse.

Art. 110. The spouses retain the ownership, possession, administration, and enjoyment of
their exclusive properties. Either spouse may, during the marriage, transfer thfe
administration of his or her exclusive property to the other by means of a public
instrument, which shall be recorded in the registry of property of the place where the
property is located.

 Administration shall include entering a contract regarding the use of the property.
Engaging in the litigation, and the collection of the fruits, profits arising from the
separate property.
 The owner spouse may during the marriage transfer the administration of his or
her property to other spouse if they will register it to Civil Registry of Properties
where the property is located.
 Owner spouse may transfer the administration with a stranger without the
consent of the other spouse.

Art. 111. A spouse of age may mortgage, encumber, alienate, or otherwise dispose of his or
her exclusive property, without the consent of the other spouse, and appear alone in court
to litigate with regard to the same,

(1) The rights to mortgage, encumber, alienate or otherwise dispose of his or her property belong
to the owner-spouse and are consequences of his or her right of ownership. Hence, the owner-
spouse can exercise these rights without the consent of the other.

(2) The owner-spouse can also appear alone in court to litigate with respect to his or her
exclusive property.
Art. 112. The alienation of any exclusive property of a spouse administered by the other
automatically terminates the administration over such property and the proceeds of the
alienation shall be turned over

Example:

“X” and “Z” are husband and wife. “X” owned a condo unit in Makati which is under the
administration of “Z” and once the property was sold the administration of “Z” over the
property shall be automatically terminated and the proceeds of the sale shall be turned over to
“X” who is the owner-spouse of the property.  

Art. 113. Property donated or left by wil! to the spouses, jointly and with designation of
determinate shares, shall pertain to the doneespouse as his or her own exclusive property,
and in the absence of designation, share and share alike, without prejudice to the right of
accretion when proper.

Example:
The wife refuses to accept her share in the donation of a piece of land made to her and her
husband. The latter would then get the wife's share by accretion unless the donor has provided
otherwise in the deed of donation.

Art. 114. If the donations are onerous, the amount of the charges shall be borne by the
exclusive property of the donee-spouse, whenever they have been advanced by the conjugal
partnership of gains.

Although the conjugal partnership paid for the amount of charges imposed by the donor on the
husband or wife in an onerous donation to either, the property donated is still the exclusive
property of the donee-spouse, but he or she has an obligation to reimburse the amount advanced
by the conjugal partnership for the charges on the property at the time of liquidation of the
partnership

Art. 115. Retirement benefits, pensions, annuities, gratuities, usufructs and similar benefits
shall be governed by the rules on gratuitous or onerous acquisitions as may be proper in
each case.

Retirement benefits, pensions, annuities, gratuities, usufructs, and similar benefits may be
gratuitous or onerous. If they are gratuitous, they are the exclusive property of the spouse to
whom they are given. If they are onerous (as when the spouse who receives the same contributes
to a pension fund or pays for the benefit out of his salary every month), then such benefits are
conjugal.
 (2) Annuity: The husband bought a life annuity for PI 00,000 before he got married, with the
agreement that the insurance company would give him a monthly pension of P500 as long as he
lives. The pensions received by the husband during the marriage are conjugal, but his right to the
annuity itself is his exclusive property. Hence, if his wife dies, the pensions he will receive
thereafter will again be his exclusive property.

(3) Usufruct: A man was given by a friend the usufruct over a coconut plantation for 10 years.
One year after the usufruct was given to him, he got married. The harvests of the plantation
during the marriage are conjugal, but after his wife dies, pJ; all the harvests will again become
the husband's ^ exclusive property.

(4) Pension: The pension of a government employee that he receives from GSIS upon his
compulsory retirement is conjugal because he pays for that pension monthly from his salary.

(5) Gratuity: A gratuity that is given by an employer to his employee out of liberality for the
latter's long, faithful, and loyal service to the former Is exclusive property of the employee, the
same being gratuitous

Art. 116. All property acquired during the marriage, whether the acquisition appears to
have been made, contracted or registered in the name of one or both spouses, is presumed
to be conjugal unless the contrary is proved.

Although the husband left his wife and children and cohabited w ith his mistress, land
acquired by the spouses during their cohabitation is presumed conjugal. (Villanueva V. C.A., GR
143286, April 14, 2004)

CONJUGAL PARTNERSHIP PROPERTIES

Art. 117. The following are conjugal partnership properties:

(1) Those acquired by onerous title during the marriage at the expense of the common fund,
whether the acquisition be for the partnership, or for only one of the spouses;

(2) Those obtained from the labor, industry, work or profession of either or both of the spouses;

(3) The fruits, natural, industrial or civil, due or received during the marriage from the common
property, as well as the net fruits from the exclusive property of each spouse;
(4) The share of either spouse in the hidden treasure which the law awards to the finder or
owner of the property where the treasure is found;

(5) Those acquired through occupation such as fishing or hunting;

(6) Livestock existing upon the dissolution of the partnership in excess of the number of each
kind brought to the marriage by either spouse; and

(7) Those which are acquired by chance, such as winnings from gambling or betting. However,
losses therefrom shall be borne exclusively by the loser-spouse. (153a, 154, 155, 159)

Article 117 Explained

Properties Acquired bv Onerous Title during the Marriaqe at Expense of Common Fund

Example: (1) Car bought by the husband for the family with conjugal funds is conjugal.

(2) Car bought by the husband for the use of the wife with conjugal funds, placing the car
in her name, is still conjugal.

PROPERTY ACQUIRED THROUGH INDUSTRY, LABOR AND PROFESSIONAL AND

THROUGH OCCUPATION.

-the law provides that anything obtained from the labor, industry, work and profession of
either or both of the spouses is conjugal. It likewise provides that those acquired
through occupation such as fishing or hunting are conjugal.

FRUITS AND EARNINGS FROM PROPERTIES.

-Fruits of the common property and net fruits of the exclusive property belong to the co

HIDDEN TREASURE

-the share of either spouse in the hidden treasure which the law awards to the finder or
owner of the property where the treasure is found is conjugal partnership property.

LIVESTOCK
-Livestock existing upon the dissolution of the partnership in excess of the number of
each kind brought to the marriage by either spouse shall be conjugal.

CHANCE

-Those obtained through the chance are considered conjugal. Losses from gambling or
betting shall be borne exclusively by the loser-spouse.

Art. 118. Property bought on instalments paid partly from exclusive funds of
either or both spouses and partly from conjugal funds belongs to the buyer or
buyers if full ownership was vested before the marriage and to the conjugal
partnership if such ownership was vested during the marriage.In either case, any
amount advanced by the partnership or by either or both spouses shall be
reimbursed by the owner or owners upon liquidation of the partnership.

If the property was bought on installment by a spouse before the marriage and the contract of
sale is such that ownership was already vested on the buyer-spouse at the time of the execution
of the contract, the property is exclusive property of said buyer-spouse, even if installments on
the price up to full payment came from the conjugal funds. The amounts paid by the conjugal
partnership shall, however, be reimbursed to it by the owner-spouse at the time of the liquidation
of the partnership. If, however, the contract of sale on installment is such that ownership did not
vest on the buyer at the time of the execution of the sale and ownership vested only after the
whole price was paid during the marriage and out of conjugal funds, the property is conjugal but
the partnership shall reimburse the buyer-spouse the installments paid by him or her before the
marriage.

Art. 119. Whenever an amount or credit payable within a period of time belongs to one of
the spouses, the sums which may be collected during the marriage In partial payments or
by installments on the principal shall be the exclusive property of the spouse. However,
Interests falling due during the marriage on the principal shall belong to tho conjugal
partnership.

When one of the spouses has a credit or amount payable to his or her favour, the partial
or whole payment of the capital amount is an exclusive property of the spouse.
Subsequently all interest earned by the capital during the marriage shall belong to the
conjugal partnership.

Art. 120. The ownership of Improvements, whether for utility or adornment, 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, shall pertain to the conjugal
partnership, or to the original o w ner-spouse, subject to the following rules:
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. In either case, the ownership of the entire property
shall be vested upon the reimbursement, which shall be made at the time of the
liquidation of the conjugal partnership. (158a)

For example, the land belonging to the wife has a value of P 100,000, and the conjugal
partnership constructed a building thereon at a cost of P50,000, so that the entire property (both
land and building} is now worth PI 50,000. But because of the construction by the spouses of a
building on the land, the value of the whole property went up to P180,000, resulting in an:
increase in value or "plus value" of P30,000. But since the cost of the building (50,000) and the
"plus value" total only P80,000 or less than the value of the land of P 100,000, then both land
and building would belong to the wife, with an obligation on her part to reimburse the conjugal
partnership the value of the building at the time it was constructed, the reimbursement to be
made at the time of the liquidation of the conjugal partnership.

CHARGES UPON AND OBLIGATIONS OF THE CONJUGAL

PARTNERSHIP

Art. 121. The conjugal partnership be liable for:

(1) The support of the spouses, their common children and the legitimate children of either
spouse; however, the support of illegitimate children shall be governed by the provisions of this
Code on Support;

(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;
(4) All taxes, liens, charges and expenses, including major or minor repairs upon the conjugal
partnership property;

(5/ All taxes and expenses for mere preservation made during the marriage upon the separate
property of either spouse;

{6} Expenses to enable either spouse to commence or complete a professional, vocational, or

other activity for self-improvement;

(7) Antenuptial debts of either spouse insofar as they have redounded to the benefit o f the
family;

(8) The value of which is donated or promised by both spouses in favor of their common
legitimate children for the exclusive purpose of commencing or completing a professional or
vocational course or other activity for self-improvement; and

(9) Expenses of litigation between the spouses unless the suit if found to be groundless. If the
conjugal partnership is insufficient to cover the foregoing-llabilities, the spouses shall be
solidarify liable for the unpaid balance with their separate properties

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.

Importance of conjugal partnerships in terms of debts and obligation

If the conjugal partnership is insufficient to cover the foregoing liabilities, the spouses
shall be solidarily liable for the unpaid balance with their separate properties.

The liabilities shall be chargeable to the conjugal partnership if it benefits the same. If
there is a debt by the husband and wife the conjugal partnership property should not go
against as payment for the debt because it is prohibited by the law.

ADMINISTRATION OF THE CONJUGAL PARTNERSHIP PROPERTY

Article 124. The administration and enjoyment of the conjugal partnership property shall
belong to both spouses jointly. In case of disagreement, the husband’s decision shall prevail,
subject to recourse to the court by the wife for a proper remedy, which must be availed of
within five years from the date of the contract implementing such decision.

In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the conjugal properties, the other spouse may assume sole powers of
administration. These powers do not include the powers of disposition or encumbrance
which must have the authority of the court or the written consent of the other spouse. In the
absence of such authority or consent, the disposition or encumbrance shall be void. However,
the transaction shall be construed as a continuing offer on the part of the consenting spouse
and the third person and may be perfected as a binding contract upon the acceptance by the
other spouse or authorization by the court before the offer is withdrawn by either or both
offerors.

Article 125. Neither spouse may donate any conjugal partnership without the consent of the
other. However, either spouse may, without the consent of the other, make moderate
donations from the conjugal partnership property for charity or on occasions of family
rejoicing or family