A simpler way to divide conjugal property

Legal separation can be a clumsy, acrimonious way to end marriage relations. It falls short of actual divorce, and it is a problematic process even as a way to divide conjugal properties between husband and wife.

Because legal separation requires that one spouse (and only one, not both) must be at fault for it to be granted, legal separation is punitive, protracted, usually contested, and quite draconian in its consequences.

But there is a simpler way for husband and wife to divide their properties. The spouses can, without going through the bitter battle of legal separation, just file a Petition for the division of their conjugal property. And, especially if they file this Petition jointly, the court process can go a lot more smoothly.

The effect of this judicial process is a complete separation of property.

Content

What is conjugal property?
How is property divided under legal separation?
How is legal separation different from judicial separation of property?
What are the grounds for judicial separation of property?
What is the process in Court?
What are the effects of judicial separation of property?
What does this separation of property mean for the inheritance of their children?
Can the marital property regime be revived after a judicial separation of property?

What is conjugal property?

Let us first define conjugal property. What does conjugal property include?

In the absence of a prenuptial agreement, Philippine law sets the property relations between spouses. If the spouses choose no other property regime before they marry, then theirs will be an absolute community of property.[1]

Under absolute community of property, husband and wife become joint owners of all the properties of the marriage. Whatever property each spouse brought into the marriage, and all properties acquired during the marriage (with some exceptions) form the common mass of the conjugal property.

And, if the couple’s community of property is legally dissolved, this common mass is divided between the spouses. It is divided equally or in the proportion the parties have established, irrespective of the value each one may have originally owned.

The only properties exempted from the absolute community are the following:

  1. Property acquired during the marriage by either spouse through inheritance, gift, or donation, and the fruits as well as the income of that property, unless the giver specified that the property 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.[2]

 

How is property divided under legal separation?

I’ve written on this before. It’s quite harsh. To summarize:

For legal separation to be granted, there must be one guilty spouse. And the rule is that the guilty spouse has no right to the net profits of the conjugal property. The guilty spouse’s share of the net profits is forfeited in favor of the children or the innocent spouse.

The net profits of the conjugal property are defined as the increase between the market value of that conjugal property at the time of the marriage and its market value at the time of dissolution.

This is significant. It means that, if the spouses had no assets when they married young, and they built up their assets over the decades since, then the guilty spouse will have no share in any of these assets because they are all classified as forfeited net profits.

It makes the entire exercise a winner take all contest which discourages compromise. For this reason, among others, legal separation is often disputed, protracted, punitive, and quite draconian.

Nonetheless, legal separation is what people often think of when they wish their property to part ways from the property of their spouse. But there is another way, and that is through a judicial separation of property.

 

How is legal separation different from judicial separation of property?

The two are different remedies based on different parts of the Family Code.[3]

Under legal separation, aside from the dissolution of the conjugal property, the spouses become entitled to live separately from each other and their obligation of mutual support ceases.

In contrast, judicial separation of property is concerned primarily with splitting the conjugal property. The other marital obligations are unaffected. In fact, under judicial separation of property, the spouses themselves are not necessarily separated; they may wish to simply separate their property.

 

What are the grounds for judicial separation of property?

Judicial separation of property can be either voluntary or for sufficient cause.

Voluntary separation of property involves both the spouses filing a joint Petition to separate their common properties. This means that they agreed to divide their property between them. Their common agreement is ground enough for the separation. They then submit their proposal to the Court for how to divide the property.

On the other hand, in separation of property for sufficient cause, just one of the spouses can file for judicial separation of property on the basis on sufficient cause.

The following are sufficient cause for judicial separation of property:

(1)        That the spouse of the petitioner has been sentenced to a penalty which carries with it civil interdiction;

(2)        That the spouse of the petitioner has been judicially declared an absentee;

(3)        That loss of parental authority of the spouse of petitioner has been decreed by the court;

(4)        That the spouse of the petitioner has abandoned the latter or failed to comply with his or her obligations to the family as provided for in Article 101;

(5)        That the spouse granted the power of administration in the marriage settlements has abused that power; and

(6)        That at the time of the petition, the spouses have been separated in fact for at least one year and reconciliation is highly improbable.

In the cases provided for in Numbers (1), (2) and (3), the presentation of the final judgment against the guilty or absent spouse is enough basis to grant the petition.[4]

As an aside, (6) is of significant interest because, as with voluntary separation, it offers the spouses a de facto no fault separation of property.

 

What is the process in Court?

A sworn Petition, either jointly or singly, is filed with the Family Court.[5]

All creditors of the marriage, as well as the personal creditors of the spouses, must be listed in the petition and notified that it was filed in court. The court shall take measures to protect the creditors and other persons with a pecuniary interest in the marital property.[6]

The absolute community or the conjugal partnership shall pay for the support of the spouses and their children while the case is pending.[7]

The Petition will be heard by the Family Court.

If the Petition is voluntary (i.e. jointly filed by the spouses), it need not even give the spouses’ reason for the separation of property because the agreement of the spouses is enough. But if the reason given is found to be against public policy, the court must reject the agreement.[8]

The Petition to separate the property may even propose exactly how the properties are to be separated. If this proposal is not contrary to law and public policy, it shall be granted by the court. The agreement for the division of the community property must be equal unless a different division has been agreed upon in the prenuptial agreement or unless a waiver of this share is allowed by the court.[9]

Once the separation of property has been decreed, the marriage properties will be liquidated in accordance with the Family Code.[10] The Family Code describes the process of liquidating the conjugal properties thus:

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

(2)        The debts and obligations of the marriage shall be paid out of its conjugal property. In case these assets are insufficient, the spouses shall each be solidarily liable for the unpaid balance.

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

(4)        The net remainder of the conjugal properties are its net assets. These will 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.

[Involuntary forfeiture of the net profits by a guilty spouse is not provided for under judicial separation of property. It is a specific consequence only in cases of legal separation or of bigamous marriages in bad faith.][11]

(5)        The presumptive legitimes of the common children shall be delivered upon partition. [M. Sta. Maria (2010) is of the opinion that this is an optional provision which need not be complied with.]

(6)        Unless otherwise agreed upon by the parties the conjugal dwelling and the lot on which it is situated shall 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 in no such majority, the court shall decide, taking into consideration the best interests of said children.

The petition and the final judgment granting it shall both be recorded in the proper local civil registries and registries of property.[12]

 

What are the effects of judicial separation of property?

After dissolution of the absolute community or of the conjugal partnership, the provisions on complete separation of property shall apply.[13]

This means that each spouse shall own, dispose of, possess, administer and enjoy his or her own separate estate, without need of the consent of the other. To each spouse shall belong all earnings from his or her profession, business or industry and all fruits, natural, industrial or civil, due or received during the marriage from his or her separate property.[14]

Both spouses shall bear the subsequent family expenses in proportion to their income, or, in case of insufficiency or default thereof, to the current market value of their separate properties.

However, the liabilities of the spouses to creditors for family expenses shall be solidary and the separation of property shall not prejudice the rights previously acquired by creditors.[15]

 

What does this separation of property mean for the inheritance of their children?

By one interpretation of the Family Code, upon judicial separation of property, the value of the mandatory inheritance (known as the legitime) of all common children shall be delivered to them in cash, property or sound securities unless the parties have already provided for such matters by a court approved mutual agreement.

The value of the presumptive legitimes is computed as of the date of the final judgment of the trial court. The children, their guardian, or the trustee of their property may ask for the enforcement of the judgment.

This delivery of the presumptive legitimes shall not prejudice the ultimate successional rights of the children upon the death of either parent. However, the value of the properties already received shall be considered as advances on their legitime.[16]

[Note however that Professor Melencio S. Sta. Maria, in his book on Persons and Family Relations Law (2010), is of the opinion that these provisions on legitime are optional and need not be complied with.]

 

Can the marital property regime still be revived afterward?

What if, years later, the spouses want to join their property in common again? Can they revive the dissolved property regime?

Yes. The spouses may file a motion in court for a decree reviving the property regime that existed before the separation of property in any of the following instances:

(1)        When the civil interdiction terminates;

(2)        When the absentee spouse reappears;

(3)        When the court, being satisfied that the spouse granted the power of administration in the marriage settlements will not again abuse that power, authorizes the resumption of said administration;

(4)        When the spouse who has left the conjugal home without a decree of legal separation resumes common life with the other;

(5)        When parental authority is judicially restored to the spouse previously deprived thereof;

(6)        When the spouses who have separated in fact for at least one year, reconcile and resume common life;

(7)        When, after voluntary dissolution of the conjugal community has been judicially decreed, the spouses jointly petition for the revival of the former property regime.

If the separation of property was voluntary, it can only be granted once. This means that if the spouses do decide to revive their marital property regime, they afterwards will not be allowed to voluntarily separate it again.[17]

For one reason or another, married couples may want to end their community of property. But they can find this difficult to do because Philippine law prohibits divorce, and because the conditions for legal separation are so onerous. Judicial separation of property offers an alternative for them to consider.

 

Atty. Francesco C. Britanico

 

[1]       Article 75 of the Family Code of the Philippines
[2]       Article 92
[3]       Legal separation is found in Articles 55 to 67 while judicial separation of property is found in Articles 134 to 141
[4]       Article 135
[5]       Article 136
[6]       Article 136
[7]       Article 137
[8]       Sta. Maria, M.S., 2010. Persons and Family Relations Law. 5th ed. Manila: Rex, p. 564
[9]       Ibid.
[10]       Articles 137, 102, and 129
[11]       Articles 63 and 43(2)
[12]     Article 139
[13]     Article 138
[14]     Article 145
[15]     Articles 146 and 140
[16]     Article 51
[17]     Article 141

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