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1) Property acquired during the marriage by gratuitous title by either spouse, and the fruits as well as the income thereof, if any, unless it is expressly provided by the donor, testator or

grantor that they shall form part of the community property;

2) Property for personal and exclusive use of either spouse. However, jewelry shall form part of the community property;

3) Property acquired before the marriage by either spouse who has legitimate descendants by a former marriage, and the fruits as well as the income, if any, of such property.

Article 93. Property acquired during the marriage is presumed to belong to the community, unless it is proved that it is one of those excluded therefrom.

• 4 exclusions are as provided in marriage settlements and statutory exclusions under Article 92:

o Marriage settlements – should be within the limits provided by the Code o Gratuitous Title

! Must be valid – donations should not involve substantial amount of separate properties (Article 87 provides that any donation between spouses, direct or indirect, is void except moderate gifts)

o Personal and exclusive use

! Except jewelry, which involves substantial amount ! General rule – interpreted in terms of value ! “Value” pertains to jewelry (Maam Ampy)

! i.e. Mercedes Benz for personal use must be considered as part of ACP if net worth of the family shows that the spouses are not even very rich to afford a Benz

o Property from previous marriage

! legitimate “descendants” - includes grandchildren, great-grandchildren and all other descendants

! if previous marriage is declared null and void because the parties are blood relatives, thereby making the children illegitimate, and thereafter, one of the parties validly marries again, the properties which such party might have acquired as a result of liquidation of the previous marriage and all other properties derived from other sources shall belong to the ACP of the subsequent marriage (except children from void marriage under Article 54)

• Previous marriage terminated by death, no liquidation – complete separation of property • Exclusions are only those provided in Articles 91 and 92. No other exclusions are provided

by law

o A marriage settlement stating that Php 1M won by husband shall remain separate is valid. But if Php 1M is used to buy a house, the latter is part of ACP (in relation to Article 93)

o House is donated to the husband who consequently sold the house to a 3rd party. The money derived from sale is part of ACP.

o Any property exchanged or merely bartered for another property will be part of ACP; UNLESS, proven to be of personal and exclusive use

Section 3 : Charges upon and obligations of the absolute community Article 94

The absolute community of property shall be liable for:

1) The support of the spouses, their common children and 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 community, or by both spouses, or by one spouse with the consent of the other;

3) Debts and obligations contracted by either spouses 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 community property;

5) All taxes and expenses for mere preservation made during marriage upon the separate property of either spouse used by the family;

6) Expenses to enable either spouse to commence or complete a professional or vocational course, or other activity for self-improvement;

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

8) The value of what 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;

9) Antenuptial debts of either spouse other than those falling under paragraph (7) of this Article, the support of the illegitimate children of either spouse, and liabilities incurred by either spouse by reason of crime or a quasi-delict, in case of absence or insufficiency of the exclusive property of the debtor-spouse, the payment of which shall be considered as advances to be deducted from the share of te debtor-spouse upon liquidation of the community; and

10) Expenses of litigation between the spouses unless the suit is found to be groundless. If the community property is insufficient to cover the foregoing liabilities, except those falling under paragraph (9), the spouses shall be solidarily liable for the unpaid balance with ther separate

properties.

• Note : par 1, “Legitimate children” - law does not distinguish if from previous or subsequent marriage. As long as legitimate, support is chargeable against the ACP

• Illegitimate children are adversely affected by the ACP – support not chargeable to ACP and should be taken from separate property of parent-spouse (Maam Ampy). If the latter is insufficient, support can be advanced from ACP

• Support is the most sacred and important of all obligations; should never fail unless with valid cause (refer to Article 194 for legal inclusions)

• General Rule : debts and obligations incurred BEFORE or DURING marriage, which redound to the benefit of the family is chargeable to ACP, with or without consent of the other spouse

o PROOF that obligation is for the benefit of the family must be shown

o If debt and obligation incurred during marriage do not redound to the benefit of the family, ACP will be liable if contracted by both spouses or anyone of them with consent f the other.

! Consent may be expressed and implied. A spouse's signature in an agreement manifests consent (Marmont Resort Hotel v Guiang)

o If without consent, ACP will be liable only to the extent that family benefited. o Any loss resulting from exercise of a profession or family business by any of the

spouses shall be chargeable to ACP (Ayala Investment v CA)

o Debts and obligations should be incurred DIRECTLY for the benefit of the family. Any personal undertaking by a spouse, such as becoming a surety or guarantor in relation to an obligation of a 3rd _{party cannot be presumed to be for}

the benefit of the family – >Indirect

• All taxes, liens, charges and expenses, including minor and major repairs, upon the community, is chargeable to ACP, even without consent of the other spouse (in accordance with the rule on co-ownership)

• Expenses for the preservation of the separate property of any spouse USED BY THE FAMILY is chargeable to ACP (in CPG: whether used by the family or not, preservation is chargeable to CPG)

• Donation for self-improvement activities should be done by BOTH spouses. Otherwise, it will be prohibited under Article 87 - “donations between spouses, direct or indirect, are void except moderate gifts....”

• Requisites to make advancement from ACP, which should be reimbursed upon liquidation: o Debts and obligations arising from crime or quasi-delict, support for illegitimate

child and antenuptial debts incurred not for the benefit of the family --- exclusive list right? So personal debts incurred during marriage, not satisfying any requirement above-listed cannot be advanced??

o there is an absence or insufficiency of the exclusive property of the debtor-spouse ! on quasi-delict – obligation imposed is demandable not only for one's

own acts or omissions but also for those persons for whom one is responsible.

! Example in the book – The head of a family that lives in a building or part thereof is responsible for the damages caused by

things thrown or falling from the same.

! Question : so this means it's not chargeable to the ACP?? only an advancement even if the family lives in that building???

• ACP is liable for expenses arising from litigation between husband and wife that is not groundless and also for those NOT involving a case between husband and wife as long as suit benefits the family.

o In an adultery case, SC ruled that legal fees spent by wife who was ACQUITTED should be charged to ACP

o If the spouse is convicted, ACP is not liable. Guilty spouse should reimburse the expenses upon litigation (Maam Ampy)

o Stipulation in lawyer-client agreement, wherein client bound herself or assumed personal obligation to pay by way of contingent fees, 20% of her share in the partnership, does not bind the CPG

• Solidary obligations – those where several creditors or debtors or both concur, and where each creditor has the right to demand and each debtor is bound to perform, in its entirety, the prestation constituting the object of the obligation.

o Spouses are solidarily liable for unpaid balance with their separate properties if the community property is insufficient to cover liabilities for which ACP is liable. Solidary liability does not include 94(9).

• Insolvency of Spouses

o So long as the ACP subsists, its property shall not be among the assets to be taken possession of by the assignee for the payment of the insolvent debtor's obligations, EXCEPT if the latter redounded to the benefit of the family

o In an insolvency proceeding:

! court appoints an ASSIGNEE to represent the insolvent and the creditors, whether voluntary or involuntary

! Assignee takes all properties of the insolvent and obtain their title, and speedily as possible convert the estate, real or personal, into money to settle debts

o 2nd sentence of Article 2238, Civil Code, “if it is the husband who is insolvent, the administration of the CPG or ACP may, by order of the court, be transferred to the wide or to a third person other than the assignee” !purpose is to prevent the husband who usually acts as administrator, from dissipating or transferring the assets of the community property.

! Still consistent with Family code's provision on Joint Administration. In case of disagreement, the decision of the husband prevails (in the meantime) but the wife can seek the annulment of the contract if she desires.

! Under Family Code, If one becomes insolvent, the right of the insolvent spouse to jointly administer the community property may be legally curtailed by the court. The non-insolvent spouse becomes the sole administrator. However, the court can appoint a third person, other than the assignee and administrator

Article 95 Whatever may be lost during the marriage in any game or chance, betting, sweepstakes, or any other kind of gambling, whether permitted or prohibited by law, shall be borne by the loser and shall not be charged to the community but any winnings therefrom shall form part of the community property

• Protects the community from useless depletion of resources

• Activities enumerated necessarily connote that the spouses parted with some valuable consideraton hoping that some valuable return will be gained

o i.e. stranger giving one of the spouses a sweepstake ticket which eventually won and such spouse was paid the prize money, the winning shall be considered separate property (Article 92(1)), unless donor expressly provided that it shall form part of the ACP. The winning prize is considered “income” derived from the ticket

Section 4: Ownership, Administration, Enjoyment and Disposition of the Community Property Article 96

The administration and enjoyment of the community property shall belong to both spouses jointly. In case of disagreement, the husband's decision shall prevail, subject to the 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 the one spouse is incapacitated or otherwise unable to participate in the administration of the common 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.

• Spouses are co-owners of the properties introduced into the marriage and those acquired thereafter except those enumerated in Article 92.

o However, the administration of the property may be validly delegated to only one spouse in a marriage settlement executed prior to the marriage

• Joint administration does not require that husband and wife always act together. Each spouse may exercise power alone, subject to intervention of the court in proper cases

o Signature of one spouse is enough for the validity of the certification of non- forum shopping

o each spouse may act individually even without the consent of the other in cases of repairs to the properties

! Unlike in the co-owership chapter of the Civil code, which requires the consent of the other spouse in doing any repairs or alterations, the Family code provides that even without the consent of the other spouse, any alteration redounding to the benefit of the family is valid and therefore chargearble to ACP. ---> Provisions on ACP prevails over rules on co- ownership

• In case of disagreement, husband's decision temporarily prevails in accordance with the Filipino culture and tradition.

o However, wife may go to court for adequate relief thru summary proceeding • Article 96 (2) – the assumption of powers of a spouse has been limited and restricted so

as not to include the power of disposition, alienation and encumbrance when the latter is incapacitated

o Family code does not provide a situation wherein one of the spouses disposes, alienates or encumbers any of the common property without the consent of the other spouse who is likewise capacitated. The Code commission considers the latter actions under the ambit of the phrase “administration and enjoyment” in article 96(1)

o Implication : Power to administer is broadly treated under the first paragraph of Article 96, but may be limited by law as in the case of the second paragraph of the same article.

o “Incapacitated” - incompetent who is in a comatose or semi-comatose condition, a victim of stroke, cerebrovascular accident, without motor or mental faculties o Relief can be sought thru judicial guardianship. Adminitrator-spouse must

perform duties of a guardian.

! Spouse who assumed power of administration cannot dispose or encumber property without judicial approval or the written consent of the incapacitated spouse. Otherwise, it will be void. However, void transaction is to be treated as a continuing offer between consenting spouse and third person

! Effectivity of the contract shall take effect only upon such written acceptance or court authorization

• Any disposition completely without the knowledge and consent of the other spouse – null and void; hence the action to nullify such will not have a prescriptive period

o Before the Family Code, such would only be voidable

The remedy of the aggrieved spouse is to compel the erring spouse to account for the proceeds of the sale as it is part of the ACP

o If third party acts in bad faith, sale can be voided.

• If there was knowledge but without consent of the other spouse – annullable at the instance of the wife.

o If wife ratifies the contract by any express or implied act, she cannot seek annulment of contract even within the 5 yr period

o Wife has the right to nullify or annul not only her share in the property involved, but also the entire contract itself

o Husband can also go to the court to seek proper relief, like the wife, if the latter enters a contract without the consent of the husband

• NOTE : Flores vs. Indo, Apr 13, 2001 – Let's review and discuss

o Held : execution of SPA is the acceptance of the other spouse in the continuing offer.

• NOTE : Sps Agabao vs Parulan, Sept 1, 2010

o Held : Acts of administration does not include alienation, encumbrance and disposition of properties. There is no distinction whether on not the spouse has consented.

Article 97 Either spouse may dispose by will of his or her interest in the community property

• Will – an act whereby one person is permitted, with the formalities prescribed by law, to control to a certain degree the disposition of his estate, to take effect after his death.

o Grant shall not encroach on the lawful legitimes of the compulsory heirs • ACP is a co-ownership; hence, a spouse can only dispose his or her interest in the

community and not in a specific property.

o Disposition made in a will of an interest in the community is not considered a waiver which is prohibited under Article 89.

o Act of disposition – intent of the testator to control the property to take effect after death

Article 98 Neither spouse may donate any community property without the consent of the other. However, either spouse may, without the consent of the other, make moderate donations from the community property for charity or on occasions of family rejoicing or family distress.

• Purpose – protect the share of the spouse from prodigality of a reckless or faithless spouse o Donations by both spouses or by one spouse with the consent of the other will

generally be valid, subject to revocation or reduction should such donations turn out to be inofficious or they infringe on the legitime or successional rights of another compulsory heir

• Even with consent of the other spouse, the donor-spouse cannot make substantial donations, direct or indirect to the consenting spouse during the marriage (Article 87)

o Whether a donation is moderate or not depends upon the financial situation of the spouses and the ACP regime

Section 5: Dissolution of the Absolute Community Property

Article 99

The absolute community terminates: 1) Upon the death of either spouse;

2) When there is a decree of legal separation; 3) When the marriage is annulled or declared void; or

• Termination of ACP does not necessarily mean the termination of the marriage. But termination of a marriage simultaneously results in dissolution of the ACP.

o Dissolution ! liquidation and partition • Death

o Civil personality is extinguished by death and the effect of death upon the rights and obligations of the deceased is determined by law, by contract and by will (Article 42, Civil Code).

• Legal Separation decree

o One of the effects is ACP or CPG shall be dissolved and liquidated but the offending spouse shall have no right to any share of the net profits earned by the ACP or CPG. Forfeiture: common children ! children of guilty spouse ! innocent spouse

o However, upon reconciliation, spouses may agree to revive the property regime in accordance to Art 67.

• Annulment decree

o Final judgment provides for the liquidation, partition and distribution of properties of the spouses, custody and support of common children and the delivery of