Chapter 4.

Conjugal Partnership of Gains

Section 1. General Provisions

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

The provisions of this Chapter shall also apply to conjugal partnerships of gains
already established between spouses before the effectivity of this Code, without
prejudice to vested rights already acquired in accordance with the Civil Code or
other laws, as provided in Article 256. (n)

Conjugal partnership of gains (CPG)

Definition That formed by a husband and his wife whereby they place a
common fund and the fruits of their separate property, and the
income from their work or industry, the same to be divided
between them EQUALLY upon the dissolution of the marriage
Duration It is supposed to last until:
(a) The dissolution of the marriage, like death or annulment
(b) The dissolution of the partnership, like legal separation or
JSP
Existence Only when the marriage settlement provided for such regime
Inchoate right Possessed by the spouse in a CPG
Mere expectancy
If it will be discovered during liquidation that there is NO
conjugal property, there will be no share for the husband and
wife.

Conjugal Partnership Ordinary Partnership

1) NO juridical personality
2) regulated generally by LAW
3) generally managed by the husband
4) purpose is NOT particularly profit
5) few grounds for dissolution
1) HAS juridical personality
2) regulated by agreement between the
parties and only subsidiarily by law
3) management depends on the stipulation
of the parties
4) purpose is for PROFIT
5) many grounds for dissolution

Art. 106. Under the regime of conjugal partnership of gains, the husband and wife
place in a common fund the 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 obtained by either or both spouses shall be divided
equally between them, unless otherwise agreed in the marriage settlements.
(142a)

*Properties covered by CPG

PROCEEDS, PRODUCTS, FRUITS, INCOME from separate properties
Property acquired by the spouses by their efforts
Property acquired by the spouses by chance

Art. 107. The rules provided in Articles 88 and 89 shall also apply to conjugal
partnership of gains. (n)
Commencement From the moment the marriage is
celebrated
Prohibition on waiver No waiver shall be allowed during the
regime
 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. (147a)

ACP Suppletory Law: Co-ownership

CPG Shall be governed by Law on partnership

*Liability (pro-rata) of partners

liable PRO-RATA for the satisfaction of their obligations in the satisfaction of the
partner’s indebtedness

Section 2. 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;
(2) That which each acquires during the marriage by gratuitous title;
(3) That which is acquired by right of redemption, by barter or by exchange
with property belonging to only one of the spouses; and
(4) That which is purchased with exclusive money of the wife or of the
husband. (148a)

*Paraphernal property—another term for EXCLUSIVE property

Par. 1 –Brought to the marriage (Direct acquisition)

Description *Partnership does not produce merger of the properties of each spouse
*Other spouse cannot exercise disposition/encumbrance
Examples *Property paid by the owner-spouse even before the marriage

Par. 2—Acquired during the marriage by gratuitous (lucrative) title (Direct acquisition)
Description *Anything received by the spouse as a donation or as a gift
Examples *Property inherited during the marriage
*Remissions and donations
*NOT hidden treasure
*NOT those acquired by occupation

*Gratuities and pensions

If given by the government for previous work = gratuity/separate
If no liberality on the part of the government, merely savings or
deductions = pension/conjugal

*Unearned increment (increase in the value of paraphernal property)

*Damage because of an accident

Physical/moral of the injured spouse = separate
Loss of expected salary or for hospitalization = conjugal

Par. 3—Acquired by right of redemption (Property by substitution)

Description *Property shall belong to the spouse who has a right to redeem, WON she
used personal funds are used
*But if conjugal funds are used, such spouse shall be liable to the
partnership for reimbursement
Examples

Par. 3—Acquired by EXCHANGE with other property belonging to only one of the spouses
Description *Exchange generally means BARTER, not purchase or sale
*Barter is limited to goods
Examples *A wife brings a Jaguar to the marriage and exchanges it for a diamond ring
= paraphernal
*A wife brings a Jaguar to the marriage and exchanges it for another car,
with added costs from the CPG = conjugal
 Par. 4—Purchased with exclusive money of either spouse
Description *Who makes the purchase is NOT important; what matters is whose money
was used
Example

Art. 110. The spouses retain the ownership, possession, administration and
enjoyment of their exclusive properties.

Either spouse may, during the marriage, transfer the 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 the property is located. (137a,
168a, 169a)

*Administration of Exclusive properties

Includes entering into contracts regarding the use of property, engaging in
litigation and the collection of fruits, profits and income arising from the separate property

*Transfer of administration of exclusive property

Made through a PUBLIC INSTRUMENT

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. (n)

*AGE OF MAJORITY IS NOW 18. No emancipation by marriage

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 to the owner-spouse. (n)

*Termination of administration
Any spouse who alienates his or her exclusive separate property will terminate the
administration of the other spouse over such property
Proceeds shall be turned over to the owner

Art. 113. Property donated or left by will to the spouses, jointly and with
designation of determinate shares, shall pertain to the donee-spouses 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. (150a)

*A donor or testator may donate or provide in a will property to the spouses JOINTLY.
*He may designate the respective determinate share of each spouse. In the absence
thereof, they shall share and share alike (1/2).

*Accretion
It is the INCORPORATION or ADDITION of property to another property
General rule: One could not accept independently of his co-donee for there is no
right of accretion
Exception: When a joint donation is in favor of H and W
Example: If donor sets ¼ property goes to W, and ¾ goes to H, but W does not
accept, accretion will set in favor of H.
But if NO ACCRETION shall be available to H, ¾ property lang 

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. (151a)
 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. (n)

*Nature of PENSIONS, ANNUITIES and GRATUITIES

Conjugal or separate? It depends on how it was obtained and the circumstances.

GRATUITY *An act of pure liberality (i.e. a donation or

a gift)
*An annuity is NOT gratuity if it is a
matter of right
PENSIONS *Compensation for services previously
rendered for which full and adequate
compensation was not received

Section 3. Conjugal Partnership Property

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. (160a)

*Presumption is applicable only for properties acquired DURING THE MARRIAGE

Upon proof of acquisition during the marriage is shown, presumption of conjugality
arises regardless on whose name the property is registered
Applies even though the spouses live separately
Also when a husband bought property in installments and thereafter contracted a
bigamous marriage
*Quantum to overcome presumption: STRONG, CLEAR, CONVINCING evidence

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, 154a, 155, 159)

*What constitutes CPG

Property Description
1) Acquired by onerous title *That which is acquired with the money of the conjugal funds
from common fund belongs to the CPG
*Car bought by the husband from the CPG for the benefit of the
family
*House bought by the husband from the CPG for the exclusive use
of the wife
2) Acquired through industry,
labor, profession
*A husband during his marriage earned P1M a year, the marriage
lasted for 5 years. After the dissolution, the husband continued
earning such amount. He died 5 years after the dissolution. There
were no expenses incurred and there was no liquidation. What part
belongs to CPG? What part belongs to exclusive property of H?
5M (during marriage)/2 = 2.5 M conjugal share of H
5M (after marriage) + 2.5 exclusive = 7.5M

*In case of a Japanese backpay

CPG since it is considered salary of H
3) Fruits, rents, interests *Net fruits are referred to because the FRUITS OF THE SEPARATE
PROPERTY shall first be applied to administration of said property
*Remaining fruits are considered conjugal

*A woman owned a house and leased it to a tenant who paid

in advance rent for 5 years. One year after the lease was
started, she got married.
Rent payment for 1st year= paraphernal, rent payment for 2nd to
5th year= conjugal

*Fruits that accrue after the death of either spouse= paraphernal

because death extinguishes partnership
4) Hidden treasure *Artifacts or objects which have undergone transformation from
their original raw state, such as earrings, necklace, bracelets, and
the like
5) Acquired through *Fishing/hunting
occupation
6) Livestock
7) Acquired by chance *Gambling, betting, sweepstakes
*Stranger gave a ticket to a spouse without consideration, it won
CPG because it is considered income (???)

Art. 118. Property bought on installments 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. (n)
*Installment Purchases
Contemplates a situation when installment was initiated BEFORE the marriage and
ended DURING the marriage
Ownership is determined based on the time the title was vested
Note the NEED for reimbursement

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 the conjugal partnership. (156a, 157a)

*Payment in favor of creditor spouse payable on installment during the marriage

Shall belong to his exclusive property= installments are not considered as fruits
But the interests shall belong to CPG
Example: A wife lent a friend a sum of 1M payable within 10 years with an interest
of 6% per annum. Three years after the loan was contracted, she got married. The marriage
lasted for 5 years. The wife continued collecting for the remaining 2 yrs.

Payment and interest for 1st 3 years Separate property of the wife—she was not
yet married
Payment for 5 years during the marriage Separate property
Payment for 5 years INTEREST during the CPG
marriage
Payment and interest for last 2 years Separate property
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 owner-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)