Section 6. Liquidation of the Absolute Community Assets

and Liabilities

Article 102. Upon dissolution of the absolute community regime, the following procedure shall apply:

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

(2)       The debts and obligations of the absolute community shall be paid out of its 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 the second paragraph of Article 94.

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

(4)       The net remainder of the properties of the absolute community shall constitute its net assets, 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 of such share as provided in this Code. For purposes of computing the net profits subject to forfeiture in accordance with Articles 43, No. (2) and 63, No. (2), the said profits shall be the increase in value between the market value of the community property at the time of the celebration of the marriage and the market value at the time of its dissolution.

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

(6)       Unless otherwise agreed upon by the parties, in the partition of the properties, the conjugal dwelling and the lot on which it is situated shall be adjudicated to the spouse with whom

Separate listing of:

Ø  Absolute community

Ø  Exclusive properties of each spouse

Payment of Debts and Obligations of the Absolute Community

Ø  Absolute community assets; and

Ø  If insufficient, the separate properties (solidarily)

The rule of forfeiture is that the absolute community of property or the conjugal partnership, as the case may be, shall be dissolved and liquidated, but if either spouse contracted said marriage in bad faith, his or her share of the net profits of the community property or conjugal partnership property shall be forfeited in favor of the common children or, if there are none, the children of the guilty spouse by a previous marriage or in default of children, the innocent spouse.

Another rule is that the absolute community or the conjugal partnership shall be dissolved and liquidated but the offending spouse shall have no right to any share of the net profits earned by the absolute community or the conjugal partnership, which shall be forfeited in accordance with the provisions of Article 63(2) of the Family Code.

Sources: 
Family Code of the Philippines by Albano