Republic of the Philippines WHEREFORE, viewed from the foregoing considerations, judgment is hereby

SUPREME COURT rendered declaring the legal separation of plaintiff Rita C. Quiao and defendant-
Manila respondent Brigido B. Quiao pursuant to Article 55.

SECOND DIVISION As such, the herein parties shall be entitled to live separately from each other, but
the marriage bond shall not be severed.
G.R. No 176556 July 4, 2012
Except for Letecia C. Quiao who is of legal age, the three minor children, namely,
BRIGIDO B. QUIAO, Petitioner, Kitchie, Lotis and Petchie, all surnamed Quiao shall remain under the custody of the
vs. plaintiff who is the innocent spouse.
RITA C. QUIAO, KITCHIE C. QUIAO, LOTIS C. QUIAO, PETCHIE C. QUIAO,
represented by their mother RITA QUIAO, Respondents. Further, except for the personal and real properties already foreclosed by the RCBC,
all the remaining properties, namely:
DECISION
1. coffee mill in Balongagan, Las Nieves, Agusan del Norte;
REYES, J.:
2. coffee mill in Durian, Las Nieves, Agusan del Norte;
The family is the basic and the most important institution of society. It is in the family
where children are born and molded either to become useful citizens of the country 3. corn mill in Casiklan, Las Nieves, Agusan del Norte;
or troublemakers in the community. Thus, we are saddened when parents have to
separate and fight over properties, without regard to the message they send to their 4. coffee mill in Esperanza, Agusan del Sur;
children. Notwithstanding this, we must not shirk from our obligation to rule on this
case involving legal separation escalating to questions on dissolution and partition of 5. a parcel of land with an area of 1,200 square meters located in Tungao,
properties. Butuan City;

The Case 6. a parcel of agricultural land with an area of 5 hectares located in Manila
de Bugabos, Butuan City;
This case comes before us via Petition for Review on Certiorari1 under Rule 45 of the
Rules of Court. The petitioner seeks that we vacate and set aside the Order 2 dated 7. a parcel of land with an area of 84 square meters located in Tungao,
January 8, 2007 of the Regional Trial Court (RTC), Branch 1, Butuan City. In lieu of the Butuan City;
said order, we are asked to issue a Resolution defining the net profits subject of the
forfeiture as a result of the decree of legal separation in accordance with the
8. Bashier Bon Factory located in Tungao, Butuan City;
provision of Article 102(4) of the Family Code, or alternatively, in accordance with
the provisions of Article 176 of the Civil Code.
shall be divided equally between herein [respondents] and [petitioner] subject to the
respective legitimes of the children and the payment of the unpaid conjugal liabilities
Antecedent Facts
of [₱]45,740.00.

On October 26, 2000, herein respondent Rita C. Quiao (Rita) filed a complaint for
[Petitioner’s] share, however, of the net profits earned by the conjugal partnership
legal separation against herein petitioner Brigido B. Quiao (Brigido). 3 Subsequently,
is forfeited in favor of the common children.
the RTC rendered a Decision 4 dated October 10, 2005, the dispositive portion of
which provides:
He is further ordered to reimburse [respondents] the sum of [₱]19,000.00 as
attorney's fees and litigation expenses of [₱]5,000.00[.]
SO ORDERED.5 On July 7, 2006, or after more than nine months from the promulgation of the
Decision, the petitioner filed before the RTC a Motion for Clarification, 12 asking the
Neither party filed a motion for reconsideration and appeal within the period RTC to define the term "Net Profits Earned."
provided for under Section 17(a) and (b) of the Rule on Legal Separation. 6
To resolve the petitioner's Motion for Clarification, the RTC issued an Order 13 dated
7
On December 12, 2005, the respondents filed a motion for execution which the trial August 31, 2006, which held that the phrase "NET PROFIT EARNED" denotes "the
court granted in its Order dated December 16, 2005, the dispositive portion of which remainder of the properties of the parties after deducting the separate properties of
reads: each [of the] spouse and the debts."14 The Order further held that after determining
the remainder of the properties, it shall be forfeited in favor of the common children
"Wherefore, finding the motion to be well taken, the same is hereby granted. Let a because the offending spouse does not have any right to any share of the net profits
writ of execution be issued for the immediate enforcement of the Judgment. earned, pursuant to Articles 63, No. (2) and 43, No. (2) of the Family Code. 15 The
dispositive portion of the Order states:
SO ORDERED."8
WHEREFORE, there is no blatant disparity when the sheriff intends to forfeit all the
remaining properties after deducting the payments of the debts for only separate
Subsequently, on February 10, 2006, the RTC issued a Writ of Execution 9 which reads
properties of the defendant-respondent shall be delivered to him which he has none.
as follows:

The Sheriff is herein directed to proceed with the execution of the Decision.
NOW THEREFORE, that of the goods and chattels of the [petitioner] BRIGIDO B.
QUIAO you cause to be made the sums stated in the afore-quoted DECISION [sic],
together with your lawful fees in the service of this Writ, all in the Philippine Currency. IT IS SO ORDERED.16

But if sufficient personal property cannot be found whereof to satisfy this execution Not satisfied with the trial court's Order, the petitioner filed a Motion for
and your lawful fees, then we command you that of the lands and buildings of the Reconsideration17 on September 8, 2006. Consequently, the RTC issued another
said [petitioner], you make the said sums in the manner required by law. You are Order18 dated November 8, 2006, holding that although the Decision dated October
enjoined to strictly observed Section 9, Rule 39, Rule [sic] of the 1997 Rules of Civil 10, 2005 has become final and executory, it may still consider the Motion for
Procedure. Clarification because the petitioner simply wanted to clarify the meaning of "net
profit earned."19 Furthermore, the same Order held:
You are hereby ordered to make a return of the said proceedings immediately after
the judgment has been satisfied in part or in full in consonance with Section 14, Rule ALL TOLD, the Court Order dated August 31, 2006 is hereby ordered set aside. NET
39 of the 1997 Rules of Civil Procedure, as amended.10 PROFIT EARNED, which is subject of forfeiture in favor of [the] parties' common
children, is ordered to be computed in accordance [with] par. 4 of Article 102 of the
Family Code.20
On July 6, 2006, the writ was partially executed with the petitioner paying the
respondents the amount of ₱46,870.00, representing the following payments:
On November 21, 2006, the respondents filed a Motion for
Reconsideration,21 praying for the correction and reversal of the Order dated
(a) ₱22,870.00 – as petitioner's share of the payment of the conjugal share;
November 8, 2006. Thereafter, on January 8, 2007,22 the trial court had changed its
ruling again and granted the respondents' Motion for Reconsideration whereby the
(b) ₱19,000.00 – as attorney's fees; and
Order dated November 8, 2006 was set aside to reinstate the Order dated August 31,
2006.
(c) ₱5,000.00 – as litigation expenses.11
Not satisfied with the trial court's Order, the petitioner filed on February 27, 2007
this instant Petition for Review under Rule 45 of the Rules of Court, raising the
following:
 Issues Section 3. Period of ordinary appeal. - The appeal shall be taken within fifteen (15)
days from notice of the judgment or final order appealed from. Where a record on
I appeal is required, the appellant shall file a notice of appeal and a record on appeal
within thirty (30) days from notice of the judgment or final order.
IS THE DISSOLUTION AND THE CONSEQUENT LIQUIDATION OF THE COMMON
PROPERTIES OF THE HUSBAND AND WIFE BY VIRTUE OF THE DECREE OF LEGAL The period of appeal shall be interrupted by a timely motion for new trial or
SEPARATION GOVERNED BY ARTICLE 125 (SIC) OF THE FAMILY CODE? reconsideration. No motion for extension of time to file a motion for new trial or
reconsideration shall be allowed.
II
In Neypes v. Court of Appeals,25 we clarified that to standardize the appeal periods
WHAT IS THE MEANING OF THE NET PROFITS EARNED BY THE CONJUGAL provided in the Rules and to afford litigants fair opportunity to appeal their cases, we
PARTNERSHIP FOR PURPOSES OF EFFECTING THE FORFEITURE AUTHORIZED UNDER held that "it would be practical to allow a fresh period of 15 days within which to file
ARTICLE 63 OF THE FAMILY CODE? the notice of appeal in the RTC, counted from receipt of the order dismissing a motion
for a new trial or motion for reconsideration."26
III
In Neypes, we explained that the "fresh period rule" shall also apply to Rule 40
governing appeals from the Municipal Trial Courts to the RTCs; Rule 42 on petitions
WHAT LAW GOVERNS THE PROPERTY RELATIONS BETWEEN THE HUSBAND AND
for review from the RTCs to the Court of Appeals (CA); Rule 43 on appeals from quasi-
WIFE WHO GOT MARRIED IN 1977? CAN THE FAMILY CODE OF THE PHILIPPINES BE
judicial agencies to the CA and Rule 45 governing appeals by certiorari to the
GIVEN RETROACTIVE EFFECT FOR PURPOSES OF DETERMINING THE NET PROFITS
Supreme Court. We also said, "The new rule aims to regiment or make the appeal
SUBJECT OF FORFEITURE AS A RESULT OF THE DECREE OF LEGAL SEPARATION
period uniform, to be counted from receipt of the order denying the motion for new
WITHOUT IMPAIRING VESTED RIGHTS ALREADY ACQUIRED UNDER THE CIVIL CODE?
trial, motion for reconsideration (whether full or partial) or any final order or
resolution."27 In other words, a party litigant may file his notice of appeal within a
IV
fresh 15-day period from his receipt of the trial court's decision or final order denying
his motion for new trial or motion for reconsideration. Failure to avail of the fresh
WHAT PROPERTIES SHALL BE INCLUDED IN THE FORFEITURE OF THE SHARE OF THE 15-day period from the denial of the motion for reconsideration makes the decision
GUILTY SPOUSE IN THE NET CONJUGAL PARTNERSHIP AS A RESULT OF THE ISSUANCE or final order in question final and executory.
OF THE DECREE OF LEGAL SEPARATION?23
In the case at bar, the trial court rendered its Decision on October 10, 2005. The
Our Ruling petitioner neither filed a motion for reconsideration nor a notice of appeal. On
December 16, 2005, or after 67 days had lapsed, the trial court issued an order
While the petitioner has raised a number of issues on the applicability of certain laws, granting the respondent's motion for execution; and on February 10, 2006, or
we are well-aware that the respondents have called our attention to the fact that the after 123 days had lapsed, the trial court issued a writ of execution. Finally, when the
Decision dated October 10, 2005 has attained finality when the Motion for writ had already been partially executed, the petitioner, on July 7, 2006 or after 270
Clarification was filed.24 Thus, we are constrained to resolve first the issue of the days had lapsed, filed his Motion for Clarification on the definition of the "net profits
finality of the Decision dated October 10, 2005 and subsequently discuss the matters earned." From the foregoing, the petitioner had clearly slept on his right to question
that we can clarify. the RTC’s Decision dated October 10, 2005. For 270 days, the petitioner never raised
a single issue until the decision had already been partially executed. Thus at the time
The Decision dated October 10, 2005 has become final and executory at the time the petitioner filed his motion for clarification, the trial court’s decision has become
the Motion for Clarification was filed on July 7, 2006. final and executory. A judgment becomes final and executory when the reglementary
period to appeal lapses and no appeal is perfected within such period. Consequently,
Section 3, Rule 41 of the Rules of Court provides: no court, not even this Court, can arrogate unto itself appellate jurisdiction to review
a case or modify a judgment that became final.28
The petitioner argues that the decision he is questioning is a void judgment. Being and unalterable. What we can only do is to clarify the very question raised below and
such, the petitioner's thesis is that it can still be disturbed even after 270 days had nothing more.
lapsed from the issuance of the decision to the filing of the motion for clarification.
He said that "a void judgment is no judgment at all. It never attains finality and cannot For our convenience, the following matters cannot anymore be disturbed since the
be a source of any right nor any obligation."29 But what precisely is a void judgment October 10, 2005 judgment has already become immutable and unalterable, to wit:
in our jurisdiction? When does a judgment becomes void?
(a) The finding that the petitioner is the offending spouse since he cohabited
"A judgment is null and void when the court which rendered it had no power to grant with a woman who is not his wife;38
the relief or no jurisdiction over the subject matter or over the parties or both." 30 In
other words, a court, which does not have the power to decide a case or that has no (b) The trial court's grant of the petition for legal separation of respondent
jurisdiction over the subject matter or the parties, will issue a void judgment or Rita;39
a coram non judice.31
(c) The dissolution and liquidation of the conjugal partnership;40
The questioned judgment does not fall within the purview of a void judgment. For
sure, the trial court has jurisdiction over a case involving legal separation. Republic
(d) The forfeiture of the petitioner's right to any share of the net profits
Act (R.A.) No. 8369 confers upon an RTC, designated as the Family Court of a city, the
earned by the conjugal partnership;41
exclusive original jurisdiction to hear and decide, among others, complaints or
petitions relating to marital status and property relations of the husband and wife or
(e) The award to the innocent spouse of the minor children's custody; 42
those living together.32 The Rule on Legal Separation33 provides that "the petition [for
legal separation] shall be filed in the Family Court of the province or city where the
petitioner or the respondent has been residing for at least six months prior to the (f) The disqualification of the offending spouse from inheriting from the
date of filing or in the case of a non-resident respondent, where he may be found in innocent spouse by intestate succession;43
the Philippines, at the election of the petitioner." 34 In the instant case, herein
respondent Rita is found to reside in Tungao, Butuan City for more than six months (g) The revocation of provisions in favor of the offending spouse made in the
prior to the date of filing of the petition; thus, the RTC, clearly has jurisdiction over will of the innocent spouse;44
the respondent's petition below. Furthermore, the RTC also acquired jurisdiction
over the persons of both parties, considering that summons and a copy of the (h) The holding that the property relation of the parties is conjugal
complaint with its annexes were served upon the herein petitioner on December 14, partnership of gains and pursuant to Article 116 of the Family Code, all
2000 and that the herein petitioner filed his Answer to the Complaint on January 9, properties acquired during the marriage, whether acquired by one or both
2001.35 Thus, without doubt, the RTC, which has rendered the questioned judgment, spouses, is presumed to be conjugal unless the contrary is proved;45
has jurisdiction over the complaint and the persons of the parties.
(i) The finding that the spouses acquired their real and personal properties
From the aforecited facts, the questioned October 10, 2005 judgment of the trial while they were living together;46
court is clearly not void ab initio, since it was rendered within the ambit of the court's
jurisdiction. Being such, the same cannot anymore be disturbed, even if the (j) The list of properties which Rizal Commercial Banking Corporation (RCBC)
modification is meant to correct what may be considered an erroneous conclusion of foreclosed;47
fact or law.36 In fact, we have ruled that for "[as] long as the public respondent acted
with jurisdiction, any error committed by him or it in the exercise thereof will amount (k) The list of the remaining properties of the couple which must be
to nothing more than an error of judgment which may be reviewed or corrected only dissolved and liquidated and the fact that respondent Rita was the one who
by appeal."37 Granting without admitting that the RTC's judgment dated October 10, took charge of the administration of these properties; 48
2005 was erroneous, the petitioner's remedy should be an appeal filed within the
reglementary period. Unfortunately, the petitioner failed to do this. He has already
(l) The holding that the conjugal partnership shall be liable to matters
lost the chance to question the trial court's decision, which has become immutable
included under Article 121 of the Family Code and the conjugal liabilities
 totaling ₱503,862.10 shall be charged to the income generated by these Art. 119. The future spouses may in the marriage settlements agree upon absolute
properties;49 or relative community of property, or upon complete separation of property, or upon
any other regime. In the absence of marriage settlements, or when the same are void,
(m) The fact that the trial court had no way of knowing whether the the system of relative community or conjugal partnership of gains as established in
petitioner had separate properties which can satisfy his share for the this Code, shall govern the property relations between husband and wife.
support of the family;50
Thus, from the foregoing facts and law, it is clear that what governs the property
(n) The holding that the applicable law in this case is Article 129(7);51 relations of the petitioner and of the respondent is conjugal partnership of gains. And
under this property relation, "the husband and the wife place in a common fund the
(o) The ruling that the remaining properties not subject to any encumbrance fruits of their separate property and the income from their work or industry." 56 The
shall therefore be divided equally between the petitioner and the husband and wife also own in common all the property of the conjugal partnership
respondent without prejudice to the children's legitime; 52 of gains.57

(p) The holding that the petitioner's share of the net profits earned by the Second, since at the time of the dissolution of the petitioner and the respondent's
conjugal partnership is forfeited in favor of the common children;53 and marriage the operative law is already the Family Code, the same applies in the instant
case and the applicable law in so far as the liquidation of the conjugal partnership
assets and liabilities is concerned is Article 129 of the Family Code in relation to
(q) The order to the petitioner to reimburse the respondents the sum of
Article 63(2) of the Family Code. The latter provision is applicable because according
₱19,000.00 as attorney's fees and litigation expenses of ₱5,000.00. 54
to Article 256 of the Family Code "[t]his Code shall have retroactive effect insofar as
it does not prejudice or impair vested or acquired rights in accordance with the Civil
After discussing lengthily the immutability of the Decision dated October 10, 2005,
Code or other law."58
we will discuss the following issues for the enlightenment of the parties and the
public at large.
Now, the petitioner asks: Was his vested right over half of the common properties of
the conjugal partnership violated when the trial court forfeited them in favor of his
Article 129 of the Family Code applies to the present case since the parties' property
children pursuant to Articles 63(2) and 129 of the Family Code?
relation is governed by the system of relative community or conjugal partnership
of gains.
We respond in the negative.
The petitioner claims that the court a quo is wrong when it applied Article 129 of the
Indeed, the petitioner claims that his vested rights have been impaired, arguing: "As
Family Code, instead of Article 102. He confusingly argues that Article 102 applies
earlier adverted to, the petitioner acquired vested rights over half of the conjugal
because there is no other provision under the Family Code which defines net profits
properties, the same being owned in common by the spouses. If the provisions of the
earned subject of forfeiture as a result of legal separation.
Family Code are to be given retroactive application to the point of authorizing the
forfeiture of the petitioner's share in the net remainder of the conjugal partnership
Offhand, the trial court's Decision dated October 10, 2005 held that Article 129(7) of
properties, the same impairs his rights acquired prior to the effectivity of the Family
the Family Code applies in this case. We agree with the trial court's holding.
Code."59 In other words, the petitioner is saying that since the property relations
between the spouses is governed by the regime of Conjugal Partnership of Gains
First, let us determine what governs the couple's property relation. From the record, under the Civil Code, the petitioner acquired vested rights over half of the properties
we can deduce that the petitioner and the respondent tied the marital knot on of the Conjugal Partnership of Gains, pursuant to Article 143 of the Civil Code, which
January 6, 1977. Since at the time of the exchange of marital vows, the operative law provides: "All property of the conjugal partnership of gains is owned in common by
was the Civil Code of the Philippines (R.A. No. 386) and since they did not agree on a the husband and wife."60 Thus, since he is one of the owners of the properties
marriage settlement, the property relations between the petitioner and the covered by the conjugal partnership of gains, he has a vested right over half of the
respondent is the system of relative community or conjugal partnership of said properties, even after the promulgation of the Family Code; and he insisted that
gains.55 Article 119 of the Civil Code provides: no provision under the Family Code may deprive him of this vested right by virtue of
Article 256 of the Family Code which prohibits retroactive application of the Family the Family Code.67 Thus, the petitioner cannot claim being deprived of his right to due
Code when it will prejudice a person's vested right. process.

However, the petitioner's claim of vested right is not one which is written on stone. Furthermore, we take note that the alleged deprivation of the petitioner's "vested
In Go, Jr. v. Court of Appeals,61we define and explained "vested right" in the following right" is one founded, not only in the provisions of the Family Code, but in Article 176
manner: of the Civil Code. This provision is like Articles 63 and 129 of the Family Code on the
forfeiture of the guilty spouse's share in the conjugal partnership profits. The said
A vested right is one whose existence, effectivity and extent do not depend upon provision says:
events foreign to the will of the holder, or to the exercise of which no obstacle exists,
and which is immediate and perfect in itself and not dependent upon a contingency. Art. 176. In case of legal separation, the guilty spouse shall forfeit his or her share of
The term "vested right" expresses the concept of present fixed interest which, in right the conjugal partnership profits, which shall be awarded to the children of both, and
reason and natural justice, should be protected against arbitrary State action, or an the children of the guilty spouse had by a prior marriage. However, if the conjugal
innately just and imperative right which enlightened free society, sensitive to partnership property came mostly or entirely from the work or industry, or from the
inherent and irrefragable individual rights, cannot deny. wages and salaries, or from the fruits of the separate property of the guilty spouse,
this forfeiture shall not apply.
To be vested, a right must have become a title—legal or equitable—to the present or
future enjoyment of property.62(Citations omitted) In case there are no children, the innocent spouse shall be entitled to all the net
profits.
In our en banc Resolution dated October 18, 2005 for ABAKADA Guro Party List
Officer Samson S. Alcantara, et al. v. The Hon. Executive Secretary Eduardo R. From the foregoing, the petitioner's claim of a vested right has no basis considering
Ermita,63 we also explained: that even under Article 176 of the Civil Code, his share of the conjugal partnership
profits may be forfeited if he is the guilty party in a legal separation case. Thus, after
The concept of "vested right" is a consequence of the constitutional guaranty of due trial and after the petitioner was given the chance to present his evidence, the
process that expresses a present fixed interest which in right reason and natural petitioner's vested right claim may in fact be set aside under the Civil Code since the
justice is protected against arbitrary state action; it includes not only legal or trial court found him the guilty party.
equitable title to the enforcement of a demand but also exemptions from new
obligations created after the right has become vested. Rights are considered vested More, in Abalos v. Dr. Macatangay, Jr.,68 we reiterated our long-standing ruling that:
when the right to enjoyment is a present interest, absolute, unconditional, and
perfect or fixed and irrefutable.64 (Emphasis and underscoring supplied) [P]rior to the liquidation of the conjugal partnership, the interest of each spouse in
the conjugal assets is inchoate, a mere expectancy, which constitutes neither a legal
From the foregoing, it is clear that while one may not be deprived of his "vested nor an equitable estate, and does not ripen into title until it appears that there are
right," he may lose the same if there is due process and such deprivation is founded assets in the community as a result of the liquidation and settlement. The interest of
in law and jurisprudence. each spouse is limited to the net remainder or "remanente liquido" (haber ganancial)
resulting from the liquidation of the affairs of the partnership after its dissolution.
In the present case, the petitioner was accorded his right to due process. First, he Thus, the right of the husband or wife to one-half of the conjugal assets does not vest
was well-aware that the respondent prayed in her complaint that all of the conjugal until the dissolution and liquidation of the conjugal partnership, or after dissolution
properties be awarded to her.65 In fact, in his Answer, the petitioner prayed that the of the marriage, when it is finally determined that, after settlement of conjugal
trial court divide the community assets between the petitioner and the respondent obligations, there are net assets left which can be divided between the spouses or
as circumstances and evidence warrant after the accounting and inventory of all the their respective heirs.69 (Citations omitted)
community properties of the parties.66 Second, when the Decision dated October 10,
2005 was promulgated, the petitioner never questioned the trial court's ruling Finally, as earlier discussed, the trial court has already decided in its Decision dated
forfeiting what the trial court termed as "net profits," pursuant to Article 129(7) of October 10, 2005 that the applicable law in this case is Article 129(7) of the Family
Code.70 The petitioner did not file a motion for reconsideration nor a notice of appeal.
Thus, the petitioner is now precluded from questioning the trial court's decision since processes used under the dissolution of the conjugal partnership regime under
it has become final and executory. The doctrine of immutability and unalterability of Article 129 of the Family Code.
a final judgment prevents us from disturbing the Decision dated October 10, 2005
because final and executory decisions can no longer be reviewed nor reversed by this Let us now discuss the difference in the processes between the absolute community
Court.71 regime and the conjugal partnership regime.

From the above discussions, Article 129 of the Family Code clearly applies to the On Absolute Community Regime:
present case since the parties' property relation is governed by the system of relative
community or conjugal partnership of gains and since the trial court's Decision has When a couple enters into a regime of absolute community, the husband and the
attained finality and immutability. wife becomes joint owners of all the properties of the marriage. Whatever property
each spouse brings into the marriage, and those acquired during the marriage (except
The net profits of the conjugal partnership of gains are all the fruits of the separate those excluded under Article 92 of the Family Code) form the common mass of the
properties of the spouses and the products of their labor and industry. couple's properties. And when the couple's marriage or community is dissolved, that
common mass is divided between the spouses, or their respective heirs, equally or in
The petitioner inquires from us the meaning of "net profits" earned by the conjugal the proportion the parties have established, irrespective of the value each one may
partnership for purposes of effecting the forfeiture authorized under Article 63 of the have originally owned.73
Family Code. He insists that since there is no other provision under the Family Code,
which defines "net profits" earned subject of forfeiture as a result of legal separation, Under Article 102 of the Family Code, upon dissolution of marriage, an inventory is
then Article 102 of the Family Code applies. prepared, listing separately all the properties of the absolute community and the
exclusive properties of each; then the debts and obligations of the absolute
What does Article 102 of the Family Code say? Is the computation of "net profits" community are paid out of the absolute community's assets and if the community's
earned in the conjugal partnership of gains the same with the computation of "net properties are insufficient, the separate properties of each of the couple will be
profits" earned in the absolute community? solidarily liable for the unpaid balance. Whatever is left of the separate properties
will be delivered to each of them. The net remainder of the absolute community is
Now, we clarify. its net assets, which shall be divided between the husband and the wife; and for
purposes of computing the net profits subject to forfeiture, said profits shall be the
First and foremost, we must distinguish between the applicable law as to the increase in value between the market value of the community property at the time
property relations between the parties and the applicable law as to the definition of of the celebration of the marriage and the market value at the time of its
"net profits." As earlier discussed, Article 129 of the Family Code applies as to the dissolution.74
property relations of the parties. In other words, the computation and the succession
of events will follow the provisions under Article 129 of the said Code. Moreover, as Applying Article 102 of the Family Code, the "net profits" requires that we first find
to the definition of "net profits," we cannot but refer to Article 102(4) of the Family the market value of the properties at the time of the community's dissolution. From
Code, since it expressly provides that for purposes of computing the net profits the totality of the market value of all the properties, we subtract the debts and
subject to forfeiture under Article 43, No. (2) and Article 63, No. (2), Article 102(4) obligations of the absolute community and this result to the net assets or net
applies. In this provision, net profits "shall be the increase in value between the remainder of the properties of the absolute community, from which we deduct the
market value of the community property at the time of the celebration of the market value of the properties at the time of marriage, which then results to the net
marriage and the market value at the time of its dissolution."72 Thus, without any iota profits.75
of doubt, Article 102(4) applies to both the dissolution of the absolute community
regime under Article 102 of the Family Code, and to the dissolution of the conjugal Granting without admitting that Article 102 applies to the instant case, let us see
partnership regime under Article 129 of the Family Code. Where lies the difference? what will happen if we apply Article 102:
As earlier shown, the difference lies in the processes used under the dissolution of
the absolute community regime under Article 102 of the Family Code, and in the (a) According to the trial court's finding of facts, both husband and wife have
no separate properties, thus, the remaining properties in the list above are
 all part of the absolute community. And its market value at the time of the Considering that the couple's marriage has been dissolved under the Family Code,
dissolution of the absolute community constitutes the "market value at Article 129 of the same Code applies in the liquidation of the couple's properties in
dissolution." the event that the conjugal partnership of gains is dissolved, to wit:

(b) Thus, when the petitioner and the respondent finally were legally Art. 129. Upon the dissolution of the conjugal partnership regime, the following
separated, all the properties which remained will be liable for the debts and procedure shall apply:
obligations of the community. Such debts and obligations will be subtracted
from the "market value at dissolution." (1) An inventory shall be prepared, listing separately all the properties of the
conjugal partnership and the exclusive properties of each spouse.
(c) What remains after the debts and obligations have been paid from the
total assets of the absolute community constitutes the net remainder or net (2) Amounts advanced by the conjugal partnership in payment of personal
asset. And from such net asset/remainder of the petitioner and debts and obligations of either spouse shall be credited to the conjugal
respondent's remaining properties, the market value at the time of marriage partnership as an asset thereof.
will be subtracted and the resulting totality constitutes the "net profits."
(3) Each spouse shall be reimbursed for the use of his or her exclusive funds
(d) Since both husband and wife have no separate properties, and nothing in the acquisition of property or for the value of his or her exclusive property,
would be returned to each of them, what will be divided equally between the ownership of which has been vested by law in the conjugal partnership.
them is simply the "net profits." However, in the Decision dated October 10,
2005, the trial court forfeited the half-share of the petitioner in favor of his (4) The debts and obligations of the conjugal partnership shall be paid out
children. Thus, if we use Article 102 in the instant case (which should not be of the conjugal assets. In case of insufficiency of said assets, the spouses
the case), nothing is left to the petitioner since both parties entered into shall be solidarily liable for the unpaid balance with their separate
their marriage without bringing with them any property. properties, in accordance with the provisions of paragraph (2) of Article 121.

On Conjugal Partnership Regime: (5) Whatever remains of the exclusive properties of the spouses shall
thereafter be delivered to each of them.
Before we go into our disquisition on the Conjugal Partnership Regime, we make it
clear that Article 102(4) of the Family Code applies in the instant case for purposes (6) Unless the owner had been indemnified from whatever source, the loss
only of defining "net profit." As earlier explained, the definition of "net profits" in or deterioration of movables used for the benefit of the family, belonging to
Article 102(4) of the Family Code applies to both the absolute community regime and either spouse, even due to fortuitous event, shall be paid to said spouse
conjugal partnership regime as provided for under Article 63, No. (2) of the Family from the conjugal funds, if any.
Code, relative to the provisions on Legal Separation.
(7) The net remainder of the conjugal partnership properties shall constitute
Now, when a couple enters into a regime of conjugal partnership of gains under the profits, which shall be divided equally between husband and wife, unless
Article 142 of the Civil Code, "the husband and the wife place in common fund the a different proportion or division was agreed upon in the marriage
fruits of their separate property and income from their work or industry, and divide settlements or unless there has been a voluntary waiver or forfeiture of such
equally, upon the dissolution of the marriage or of the partnership, the net gains or share as provided in this Code.
benefits obtained indiscriminately by either spouse during the marriage." 76 From the
foregoing provision, each of the couple has his and her own property and debts. The
(8) The presumptive legitimes of the common children shall be delivered
law does not intend to effect a mixture or merger of those debts or properties
upon the partition in accordance with Article 51.
between the spouses. Rather, it establishes a complete separation of capitals. 77
(9) In the partition of the properties, the conjugal dwelling and the lot on
which it is situated shall, unless otherwise agreed upon by the parties, be
 adjudicated to the spouse with whom the majority of the common children spouses shall be paid from their respective separate properties. But if the
choose to remain. Children below the age of seven years are deemed to conjugal partnership is not sufficient to pay all its debts and obligations, the
have chosen the mother, unless the court has decided otherwise. In case spouses with their separate properties shall be solidarily liable.83
there is no such majority, the court shall decide, taking into consideration
the best interests of said children. (d) Now, what remains of the separate or exclusive properties of the
husband and of the wife shall be returned to each of them. 84 In the instant
In the normal course of events, the following are the steps in the liquidation of the case, since it was already established by the trial court that the spouses
properties of the spouses: have no separate properties,85 there is nothing to return to any of
them. The listed properties above are considered part of the conjugal
(a) An inventory of all the actual properties shall be made, separately listing partnership. Thus, ordinarily, what remains in the above-listed properties
the couple's conjugal properties and their separate properties. 78 In the should be divided equally between the spouses and/or their respective
instant case, the trial court found that the couple has no separate heirs.86 However, since the trial court found the petitioner the guilty party,
properties when they married.79 Rather, the trial court identified the his share from the net profits of the conjugal partnership is forfeited in favor
following conjugal properties, to wit: of the common children, pursuant to Article 63(2) of the Family Code. Again,
lest we be confused, like in the absolute community regime, nothing will be
1. coffee mill in Balongagan, Las Nieves, Agusan del Norte; returned to the guilty party in the conjugal partnership regime,
because there is no separate property which may be accounted for in the
guilty party's favor.
2. coffee mill in Durian, Las Nieves, Agusan del Norte;

In the discussions above, we have seen that in both instances, the petitioner is not
3. corn mill in Casiklan, Las Nieves, Agusan del Norte;
entitled to any property at all. Thus, we cannot but uphold the Decision dated
October 10, 2005 of the trial court. However, we must clarify, as we already did above,
4. coffee mill in Esperanza, Agusan del Sur;
the Order dated January 8, 2007.

5. a parcel of land with an area of 1,200 square meters located in

WHEREFORE, the Decision dated October 10, 2005 of the Regional Trial Court,
Tungao, Butuan City;
Branch 1 of Butuan City is AFFIRMED. Acting on the Motion for Clarification dated
July 7, 2006 in the Regional Trial Court, the Order dated January 8, 2007 of the
6. a parcel of agricultural land with an area of 5 hectares located in Regional Trial Court is hereby CLARIFIED in accordance with the above discussions.
Manila de Bugabos, Butuan City;
SO ORDERED.
7. a parcel of land with an area of 84 square meters located in
Tungao, Butuan City;

8. Bashier Bon Factory located in Tungao, Butuan City.80

(b) Ordinarily, the benefit received by a spouse from the conjugal

partnership during the marriage is returned in equal amount to the assets
of the conjugal partnership;81 and if the community is enriched at the
expense of the separate properties of either spouse, a restitution of the
value of such properties to their respective owners shall be made.82

(c) Subsequently, the couple's conjugal partnership shall pay the debts of
the conjugal partnership; while the debts and obligation of each of the