CHAPTER

CONJUGAL PARTNERSHIP OF GAINS  

Section 7. Liquidation of the Conjugal Partnership Assets and Liabilities

Article 129. Upon the dissolution of the conjugal partnership regime, the following procedure shall apply:

(1)       An inventory shall be prepared, listing separately all the properties of the conjugal partnership and the exclusive properties of each spouse.

(2)       Amounts advanced by the conjugal partnership in payment of personal debts and obligations of either spouse shall be credited to the conjugal partnership as an asset thereof.

(3)       Each spouse shall be reimbursed for the use of his or her exclusive funds in the acquisition of property or for the value of his or her exclusive property, the ownership of which has been vested by law in the conjugal partnership.

(4)       The debts and obligations of the conjugal partnership shall be paid out of the conjugal assets. In case of insufficiency of said assets, the spouses shall be solidarily liable for the unpaid balance with their separate properties, in accordance with the provisions of paragraph (2) of Article 121.

(5)       Whatever remains of the exclusive properties of the spouses shall thereafter be delivered to each of them.

(6)       Unless the owner had been indemnified from whatever source, the loss or deterioration of movables used for the benefit of the family, belonging to either spouse, even due to fortuitous event, shall be paid to said spouse from the conjugal funds, if any.

(7)       The net remainder of the conjugal partnership properties shall constitute the profits, which shall be divided equally between husband and wife, unless a different proportion or division was agreed upon in the marriage settlements or unless there has been a voluntary waiver or forfeiture of such share as provided in this Code.

(8)       The presumptive legitimes of the common children shall be delivered upon partition in accordance with Article 51.

(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 choose to remain. Children below the age of seven years are deemed to have chosen the mother, unless the court has decided otherwise. In case there is no such majority, the court shall decide, taking into consideration the best interests of said children. (181a, 182a, 183a, 184a, 185a)

Note: 

* In the dissolution of the conjugal partnership regime, it is necessary in the inventory to separate the listing of the conjugal and the separate assets. 

* In reference with the provision number three, if one of the spouses owns a lot where a building was built with conjugal funds, on the assumption that the value of the building is more than that of the land, the conjugal partnership shall reimburse the spouse owning the land during the liquidation of the partnership. This is so because, it is only  when the value of the land has been paid to the  spouse that ownership shall be vested in the partnership. 




Reference: 
Family Code of the Philippines by Albano