Net Profits of Property Regime

ABSOLUTE COMMUNITY OF PROPERTY

(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 dissolution of the absolute community constitutes the “market value at dissolution.”

(b) Thus, when the petitioner and the respondent finally were legally separated, all the properties which remained will be liable for the debts and obligations of the community.  Such debts and obligations will be subtracted from the “market value at dissolution.”

(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 asset.  And from such net asset/remainder of the petitioner and respondent's remaining properties, the market value at the time of marriage will be subtracted and the resulting totality constitutes the “net profits.”

(d) Since both husband and wife have no separate properties, and nothing would be returned to each of them, what will be divided equally between 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 children.  Thus, if we use Article 102 in the instant case (which should not be the case), nothing is left to the petitioner since both parties entered into their marriage without bringing with them any property.

CONJUGAL PARTNERSHIP OF GAINS 

In the normal course of events, the following are the steps in the liquidation of the properties of the spouses:

(a) An inventory of all the actual properties shall be made, separately listing the couple's conjugal properties and their separate properties.   In the instant case, the trial court found that the couple has no separate properties when they married.

(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;  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.

(c) Subsequently, the couple's conjugal partnership shall pay the debts of the conjugal partnership; while the debts and obligation of each of the spouses shall be paid from their respective separate properties.  But if the conjugal partnership is not sufficient to pay all its debts and obligations, the spouses with their separate properties shall be solidarily liable.

(d) Now, what remains of the separate or exclusive properties of the husband and of the wife shall be returned to each of them.   In the instant case, since it was already established by the trial court that the spouses have no separate properties,  there is nothing to return to any of them.  The listed properties above are considered part of the conjugal partnership.  Thus, ordinarily, what remains in the above-listed properties should be divided equally between the spouses and/or their respective heirs. However, since the trial court found the petitioner the guilty party, his share from the net profits of the conjugal partnership is forfeited in favor 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 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 (Brigido B. Quia Vs. Rita C. Quiao, et al., G.R. No. 176556. July 4, 2012).