Unless there is a Marriage Settlement (Prenuptial Agreement) executed before you married, then Philippine Law dictates your Conjugal Property Regime based on your year of marriage.

If you were married prior to August 3, 1988 then Conjugal Partnership of Gains applies

If you were married on or after August 3, 1988 then Absolute Community of Property applies.

So, if you have no Prenuptial Agreement, the date you were married determines your Conjugal Property Regime.

In a Conjugal Partnership of Gains, the Conjugal Property is the income or property generated by both Spouses during the lifetime of the marriage.

Any separate property either Spouse had prior to their marriage remains theirs alone.

This was the Default Marriage Regime before August 3, 1988. It’s Effectivity is when the marriage was celebrated.

A Conjugal Partnership of Gains can be waived before marriage through a Marriage Settlement or Prenuptial Agreement.

 

With Absolute Community of Property, properties separately held before the marriage become part of the Conjugal Property once the marriage has taken place.

While in Conjugal Partnership of Gains, only the income and properties accumulated during the marriage are considered Conjugal Property.

Conjugal Partnership of Gains can be rather complicated when you actually sit down to calculate it.

 

For instance, what happens when a property is bought on installment before the marriage with exclusive funds?  In this situation, it is part of Conjugal Property if ownership was transferred before the marriage.

When ownership was not transferred before the marriage, then it becomes a discussion. Case facts have to be analyzed and an assessment prepared.

Things can quickly become complicated.

The full text of Art 116 to Art 120 of the Family Code dictate what Conjugal Property is in a marriage governed by Conjugal Partnership of Gains.

 

Are there properties that are excluded from the Conjugal Partnership of Gains?

Yes, properties excluded from Conjugal Partnership of Gains are:

• Exclusive Properties owned before marriage
• Properties transferred by Gratuitous Title during the marriage, or
• Those bought with the exclusive money/property of one of the Spouses.

 

Just to reiterate –

Property owned by one Spouse before marriage remains the property of that Spouse even after marriage.

 

Property that has been obtained with the exclusive money of one Spouse is the property of only that Spouse.

And Property that was donated or Inherited by a Spouse during the marriage remains that Spouse’s property.

Basically, everything that is exclusively acquired by either Spouse or before during the marriage or transferred through Gratuitous Title is separate property in Conjugal Partnership of Gains.

 

What happens to the Conjugal Property under Conjugal Partnership of Gains when a marriage ends?

 

When a marriage ends Exclusive Property continues to belong to the owner Spouse, while Conjugal Property is divided jointly in Annulment, or awarded to the Innocent Spouse in Legal Separation.

Let me explain:

First, Exclusive Property is property that belonged to the Spouse prior to the marriage or was bought with the Spouse’s Exclusive Property or funds. It also is property that was transferred by Gratuitous Title. Exclusive Property can be complicated to determine so please talk to a lawyer or contact us for questions.

What remains after Exclusive Property is removed is Conjugal Property.

Conjugal Property can be given to one or both of the Spouses depending on the case used to end the marriage.

If the marriage ended through Annulment, the net proceeds of the marriage are divided jointly.

If the marriage ended through Legal Separation however, the net proceeds of the marriage are awarded to the Innocent Spouse.

These are very different outcomes and very different cases.

Legal Separation is costly, time-consuming and risky as it is possible that one Spouse completely loses all rights to the Conjugal Property. Annulment is cheaper and easier, even though the property ends up being split evenly.

Read more in: How is the marriage property divided in Legal Separation?  This explains how properties under Conjugal Partnership of Gains are separated in Legal Separation cases.

Either way, dividing property under the marriage regime of Conjugal Partnership of Gains can be very complex and you do need legal counsel for this.

Absolute Community of Property means that all property owned by either Spouse becomes Conjugal Property when the marriage is celebrated.

Absolute Community of Property is the Default Marriage Regime for all marriages on or after August 3, 1988.

What does this mean, exactly?

Say you bought a condo prior to your marriage. Meanwhile, your partner owned a car before the marriage.

After your marriage, your partner has a right to half of the condo while you have the right to half the car.

 

This happens automatically when the marriage is celebrated.  This can be problematic. Especially if a marriage starts to fail.

If you have any property or income that you wish to keep solely yours you will need to execute a Prenuptial Agreement before the marriage. A Prenuptial Agreement executed after the marriage has no effect.

(Just FYI, You can still separate out property after the marriage through Judicial Separation of Property but it is recommended both Spouses agree to this court case before filing.)

 

Are there properties that are excluded from the Conjugal Property under Absolute Community of Property?

Yes!

Properties acquired by Gratuitous Title, personal property and properties from a former marriage with children are excluded from Conjugal Property under Absolute Community of Property.

To explain this in more detail, properties which are excluded are:

• • Properties acquired during the marriage by Gratuitous Title.
    Gratuitous means “without pay”. In this case, these are properties inherited or donated during the marriage.
  • Property for Personal Use
    Personal Properties mean property which is of personal use of each Spouse such as clothing. The exception is jewelry – although it is personal property, it forms part of the Conjugal Property in Absolute Community of Property.
  • Property acquired before that marriage by either Spouse who has children by a former marriage.
    This is to protect the Inheritance of the children of the previous marriage but this can end up being quite complicated.

 

These are very narrow classes of property.
The vast majority of property in an Absolute Community Marriage will usually fall under Conjugal Property

What happens to property under Absolute Community of Property when a marriage ends?

If a marriage formed under Absolute Community of Property ends then Conjugal Property would be awarded to the Innocent Spouse in Legal Separation or would be divided between them in Annulment. Each Spouse’s Exclusive Property would remain theirs.

I’ve discussed Exclusive Property in the preceding section. (Personal property, Properties transferred under Gratuitous Title, and Properties from a former marriage in which there were children). Exclusive Property is not part of Conjugal Property.

I’ll go through this in a little more detail.

Now, what happens to the Conjugal Property of this marriage?

If the case used to end the marriage is Annulment, then the following would happen:

• Net Conjugal Property is divided between the Spouses
• The family home goes to the Spouse with whom the children live
• Exclusive Properties are returned to the Spouses.

 

If the marriage ends through Legal Separation Philippines, then the “Innocent” Spouse is awarded all the Conjugal Properties.

It is the court who determines who the Innocent Spouse is so filing this case entails a risk that you would lose your share of the Conjugal Property. It is also an expensive, long and difficult case so think carefully if you wish to do this.

 

Complete Separation of Properties is exactly as stated.  It means that there is no Conjugal Property.

Instead, whatever was Exclusively Owned prior to the marriage is retained by the owner-Spouse after and during the marriage.

This pertains to any income or livelihood as well as to property.

This can be done with a Prenuptial Agreement that must be executed before the marriage.

Before marriage, Philippine law allows the future spouses to determine the property regime they want to govern their marriage. Note that this can only be done before the marriage, NOT after.

Having a Prenuptial Agreement can ‘protect’ an inheritance or property and help you avoid the default Conjugal Property Regime. [Family Code, Art 80]

A Prenuptial Agreement or Marriage Settlement must be drawn up, signed, notarized and executed before the marriage takes place. It must also be filed in the appropriate government offices.

Before you marry you may decide on any one of the 3 Regimes available:

1. Absolute Community of Property
This means all property owned by either Spouse becomes Conjugal Property when the marriage is celebrated except for Exclusive Property*.

2. Conjugal Partnership of Gains
The Conjugal Property is only the income or property generated by both Spouses during the marriage except for Exclusive Property.

3. Complete Separation of Property
Each Spouse keeps individual ownership of any property they had prior to the marriage as well as any property they acquire individually during the marriage

* Exclusive Property is property which is donated or inherited after the marriage. Exclusive Property should be transferred to your name after the marriage, NOT before. If transferred to your name before the marriage, it forms part of Conjugal Property.

If a Prenuptial Agreement was not formed then the Default Property Regime comes into play based on the year of marriage (Conjugal Partnership of Gains applies if you were married prior to 3 August 1988. Absolute Community of Property for marriages after 3 August 1988).

 

 

Additionally, the law provides a vague 4th option of “Any Other Regime” but only as long as the Regime opted for is a valid one.

A Valid Regime is a regime that doesn’t break Philippine laws, which means that it is wise to get expert advice to draft it.

A side note: These Property Regimes may not apply in certain instances. For instance, when there are 2 foreign Spouses or when a contract is executed regarding property outside the Philippines.

 

 

Things are straightforward when the marriage is between 2 Filipinos and concerns only Philippine property. But what happens when there is a foreign element?

Well, then things get a little tricky.

In cases where a foreigner is married to a Filipino or a there is foreign property, a Prenuptial Agreement has to decide how to address inevitable conflicts in foreign law. It may be possible to exclude these but you should really consult with legal counsel for cases like this.

In addition, you might want to consult counsel when you want to create a special Pre-nup due to particular family situations.

This might be when you have an interest in a family Corporation and are executing the Pre-nup to protect the company.

Or, it may occur for properties you want to personally hold for sentimental or other reasons.

 

Is inheritance part of Conjugal Property?  Well, it depends when you received your inheritance.

In Absolute Community of Property, Conjugal Partnership of Gains and Complete Separation of Property, properties inherited during the marriage are excluded from Conjugal Property.

However, inherited property does form part of Conjugal Property IF you inherited it prior to marriage and the Estate was already settled.

There are ways to protect your inherited property in the event of a separation and you would be best served discussing this with a Lawyer.

It is admittedly a bit difficult so its really best to try to avoid the issue altogether by simply having a Prenuptial Agreement in place before the marriage.

This depends on the facts.

An Illegitimate child is entitled to inherit from his parent as he is a Compulsory Heir.

His parent’s portion will depend on the type of Conjugal Property Regime in place.

 

If Absolute Community is the Property Regime, half of the total Conjugal Property is the parent’s portion. Some exceptions may apply such as when a Pre-nup Agreement is in place, when there is Exclusive Property, or when other provisions have been made.

If Conjugal Partnership of Gains is involved, then the parent’s share is half of the total income and assets generated during the marriage. This can be complicated to compute depending on how many assets there are and how long the marriage was.

In Complete Separation of Property, there is no Conjugal Property. Each Spouse owns his own property and assets and the Illegitimate child will inherit from that in line with Philippine Inheritance Law.

From his parent’s share, an Illegitimate child usually inherits ½ the share of a Legitimate child.

When a Spouse passes away, the Conjugal Property of Absolute Community ends and the property is shared among the Heirs.

Philippine law determines who the Heirs are and how much they inherit.

Even Wills are subject to these laws, and must provide for the Legal Heirs or risk being void.

Wills are only allowed to determine the Inheritor for the so-called “free-portion” of the Estate. However, Inheritance is not automatic.

Estate Taxes and other administrative items have to be accomplished for land to be retitled or shares transferred. Inheritance through a Will will also require Probate.

You can read more about Heirs and Inheritance Law here.

Read more in: How to transfer land to heirs in the Philippines which discusses this 7-step process in detail.

Atty.Francesco C. Britanico, FCB Law Office
Lawyers in The Philippines