“When you realize you want to spend the rest of your life with somebody, you want the rest of your life to start as soon as possible.” — When Harry Met Sally
Most people lock in their love with marriage. Some people marry after long years of being together, whereas others marry even just after a short time of dating. However, as the saying goes, marriage is not all rainbows and butterflies. Some couples know this for a fact and tend to make a prenuptial agreement in case the inevitable happens.
Future spouses are free to choose what property regime would govern their property relations—absolute community property, conjugal partnership of gains, complete separation of property, or any other regime. This is commonly expressed in a marriage settlement agreement—commonly known as “pre-nuptial agreement”—which primarily governs the property relations of the parties. Discussions of each property regime are made below for reference.
- Absolute Community of Property (ACP)
Some Filipino couples who get married do not bother to make a marriage settlement because either they are not interested in discussing it with each other, just not comfortable discussing it at all, or worse—they do not know that these things exist.
Without a marriage settlement, the property regime of the future spouses will automatically be governed by the ACP. This applies to marriage celebrated on or after 3 August 1988—the effectivity of the Family Code. Accordingly, the ACP regime commences to be effective at the very moment of the celebration of marriage and any other agreement shall be void.
Under the ACP regime, all the property owned by the spouses at the time of the celebration of marriage or acquired thereafter is considered community property. Thus, in case of termination or dissolution of the marriage, the spouses will generally each get one-half of the community property. For instance, if the husband owns PHP 5 million cash in bank and the wife owns PHP 95 million worth of cash, property, and other assets, there is a total of PHP 100 million of community property. Thus, upon the termination of the marriage, each spouse’s share in the community property is PHP 50 million, i.e., PHP 100 million divided by two. This would make the husband richer by PHP 45 million at the expense of the wife who will lose PHP 45 million worth of assets.
However, note that the Family Code excludes the following from the community property:
- Property acquired during marriage by gratuitous title (i.e., through donation or inheritance), and the fruits as well as income thereof, if any. However, it may form part of the community property if the donor, testator, or grantor expressly so provides;
- Property for personal and exclusive use of either spouse, except pieces of jewelry which is part of the ACP;
- Property acquired before marriage by either spouse who has legitimate descendants from a former marriage, and the fruits as well as the income, if any of such property.
This means that the exempted properties will remain to be the exclusive property of each spouse, notwithstanding the marriage.
Meanwhile, if the marriage is celebrated before 3 August 1988, the regime of conjugal partnership of gains governs their property relations in case none was agreed upon.
- Conjugal Partnership of Gains (CPG)
Under the CPG regime, only the net gains or benefits obtained by either or both spouses from the proceeds, products, fruits and income from their separate properties, and those acquired by them through their efforts or by chance will be divided equally between them. Net gains refer to the balance after deducting the expenses necessary to cover the administration of the separate properties.
An issue mostly discussed with regard to CPG is an instance when a property is bought through installment prior to the marriage and the payment has only been completed during the marriage, using money partly from the spouse’s exclusive funds and partly from the conjugal funds. In this case, if full ownership was vested before the marriage—e.g., if a contract of sale was perfected before the marriage and full payment was made during marriage using conjugal funds—it will belong to the buyer-spouse. On the other hand, if full ownership was vested during the marriage—e.g., a contract to sell entered into before the marriage but ownership was only transferred during marriage—it will belong to the conjugal partnership. In either case, any amount advanced by the partnership or by either or both spouses shall be reimbursed by the owner or owners upon liquidation of the partnership.
Like in ACP, the Family Code also provides for the properties which are excluded from the CPG and thus remains to be the exclusive property of each spouse, as:
- That which is brought to the marriage as his/her own;
- That which each acquires during the marriage by gratuitous title;
- That which is acquired by right of redemption, by barter, or by exchange with property belonging to only one of the spouses; and
- That which is purchased with exclusive money of the wife or of the husband.
- Complete Separation of Property
The Family Code provides that in the absence of an express declaration on the marriage settlements, the separation of property between spouses during the marriage shall not take place except by judicial order—either voluntary or for sufficient cause.
The mandatory regime of complete separation of property shall govern the property relations of the subsequent marriage in case the surviving spouse contracts a subsequent marriage without liquidating the absolute community of property or the conjugal partnership of gains, as the case may be, as prescribed under the Family Code.
“Separation of property may refer to present or future property, or both. It may be total or partial. In the latter case, the property not agreed upon as separate shall pertain to the absolute community.” (FAMILY CODE, Article 144)
“[E]ach spouse in marriages covered by the regime of complete separation of property may exercise complete dominion over his or her exclusive estate. No permission or consent is required before one spouse can exercise acts of ownership or administration (Abid-Babano v. Executive Secretary, G.R. No. 201176 (2019)). “To each spouse shall belong all the 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” (FAMILY CODE, Article 145). As to the family expenses, both spouses shall bear them in proportion to their income, or the current market value of their separate properties.
Future spouses should determine which property regime suits them best, for even if as many people would say, “Life is not fair,” at least the division of properties between the spouses—if the time comes—could be the one that they would consider fair.
The regimes of ACP, CPG, and Complete Separation of Property are governed by the Family Code, specifically Articles 88 –104, 105 – 133, and 134 – 146, respectively.
For any legal assistance you may need, you may send your inquiries and other legal concerns to info@gqlaw.com.ph.