PROPERTY RELATIONS

PROPERTY RELATIONS

Definitions:
Marriage – a special contract of permanent union
between a man and a woman in accordance with
law. (Family Code, Art. 1)
Pre-nuptial agreement – an agreement whereby
couples provide for their property relations during
marriage. (
https://divinalaw.com/settling-first-things-first/)
Also known as marriage settlement.
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Conjugal property – property owned by both

spouses.

Exclusive property – property owned either by the

husband or the wife.

Capital property – exclusive property of the

husband.

Paraphernal property – exclusive property of the

wife.
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The property relationship between husband and wife

shall be governed in the following order (New
Family Code, Art. 74):

1. By marriage settlements executed before marriage

2. By the provisions of law
3. By the local custom
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Types of property relations (NFC, Art. 75):

1. Absolute community of property (ACoP)
2. Conjugal partnership of gains (CPG)
3. Complete separation of property or
4. Any other regime
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If there is no agreed upon settlements, the rule is:

 Before August 3, 1988 = CPG

 On or after August 3, 1988 = ACoP
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When a modification of marriage settlement may be

valid:
1. Must be made before the celebration of the marriage
2. Must be made in writing
3. Signed by the parties
4. Must not prejudice third persons unless they are
registered in the local civil registry where the
marriage contract is recorded as well as in the proper
registries of properties
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Law governing property relations:

1. Marriage on or after August 3, 1988 – provisions of the
New Family Code (EO 209)
2. Marriage before August 3, 1988 – provisions of the civil
code
3. Stipulations in the settlements or contracts in consideration
of a future marriage, including donations between the
prospective spouses shall be rendered void if the marriage
does not take place.
4. Stipulations that do not depend upon the celebration of the
marriage shall be valid.
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Absolute community of property (ACoP):

General rule:

 The provisions on co-ownership shall apply to the

absolute community of property between the
spouses except those expressly enumerated by law.
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Property acquired before marriage (community property):

 General rule: property owned by the spouses before or
upon celebration of marriage and brought into the
marriage, including those inherited or received as
donation before the marriage become part of the
community property.
 Exception: property acquired before marriage by either
spouse who has legitimate descendants by the former
marriage and the fruits as well as income shall be
classified as exclusive property.
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Property acquired during marriage:

 Presumed to belong to the community unless it can

be proven to be exclusive property.
 Property acquired during marriage by onerous title
from a common fund or from income of either of
the spouses is community property.
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Community property under ACoP:

1. Family home unless originally an exclusive property
2. Proceeds of life insurance if included in the gross
estate
 Exclusive property if premium was paid from exclusive
funds
 Conjugal property if premium was paid from conjugal
funds or from income of either spouse during marriage
3. Claim against insolvent person
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Exclusive property under ACoP (NCC, Art. 92):

1. Property acquired during marriage by gratuitous title by
either spouse and the fruits as well as the income thereof
unless the donor, testator, or grantor expressly provided
that it be part of community.
2. Property for personal and exclusive use of either spouse
except jewelry.
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.
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Conjugal partnership of gains (CPG):

 Property relations between the spouses under which
the husband and wife place in a common fund the
proceeds, products, fruits, and income from their
separate properties and those acquired by either or
both spouses through their efforts or by chance, and
upon dissolution of the marriage or of the partnership,
the net gains or benefits obtained by either or both
spouses shall be divided equally between them, unless
otherwise agreed in the marriage settlements.
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When to apply CPG:

1. When the future spouses agree to it in the

marriage settlement; or
2. To conjugal partnerships of gains already
established between spouses before the
effectivity of the New Family Code
(08/03/1988), without prejudice to vested
rights.
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Exclusive property under CPG:

1. That which is brought to the marriage as his or her
own.
2. That which each acquires during the marriage by
gratuitous title.
3. That which is acquired by right of redemption or by
exchange with property belonging to only one of the
spouses.
4. That which is purchased with the exclusive money of
one of the spouses.
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Conjugal property under CPG:

1. That which is acquired by onerous title during the
marriage at the expense of the common fund.
2. That which is obtained by labor, industry, or work or
profession of either or both of the spouses.
3. The fruits received or due during the marriage coming
from the common property or from the exclusive property
of each spouse.
4. The share in the hidden treasure discovered during
marriage which the law awards to the spouses or to either
of them as finder or proprietor.
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5. Property acquired by occupation such as hunting or

fishing by either or both of the spouses.
6. Improvements on the separate property of the
spouses at the expense of the partnership or through
the industry of either or both of the spouses.
 Family home
 Proceeds of life insurance policy when included in the
gross estate, except if premium was paid out of
exclusive funds.
 Claims against insolvent person may be either conjugal
or exclusive.
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Conjugal expenses/deductions:
1. Funeral expenses; and
2. Judicial expenses
3. Others:
a. The support of the spouses, their common
children, and legitimate children of either spouse.
b. All debts and obligations contracted during
marriage by the designated administrator-spouse
for the benefit of the conjugal partnership.
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c. Debts and obligations contracted by either spouse

without the consent of the other to the extent that the
family may have benefited.
d. All taxes, liens, charges, and expenses including major
and minor repairs upon conjugal property.
e. All taxes and expenses for mere preservation, made
during marriage, upon the separate property of either
spouse.
f. Expenses to enable either spouse to commence or
complete a professional, vocational, or other activity
for self improvement.
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g. Debts before marriage of either spouse in so far as

they have redounded to the benefit of the family.
h. The value of what is donated or promised by both
spouses in favor of their common legitimate
children for the exclusive purpose of commencing
or completing a professional or vocational course
or activity for self improvement.
i. Expenses of litigation between spouses unless the
suit is found to be groundless.
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Pro-forma computation of net taxable estate and

estate tax due if decedent was married with surviving
spouse:
Conj/Comm. Exclusive Total
GROSS ESTATE
• Real or immovable property P xxx P xxx
• Tangible personal property xxx xxx
• Intangible property xxx xxx
• Certain transfers xxx xxx
Total xxx xxx P xxx
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Conj/Comm. Exclusive Total

LESS: ORDINARY DEDUCTIONS
• Losses/Indebtedness/Taxes (xxx) (xxx)
• Transfer for public use - (xxx)
• Vanishing deduction (xxx) (xxx) (xxx)
Net community/exclusive xxx xxx
before special deductions
LESS: SPECIAL DEDUCTONS
• Standard deduction (xxx)
• Family home (xxx)
• Amount received under RA 4917 (xxx)
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Conj/Comm. Exclusive Total

NET ESTATE before share of surviving spouse xxx
LESS: ½ SHARE OF SURVIVING SPOUSE on net
conj./comm. Property before special deductions (xxx)
NET TAXABLE ESTATE xxx
x ESTATE TAX RATE 6%
ESTATE TAX DUE P xxx
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Complete separation of property:

 Applicable if the future spouses agree on this in the
marriage settlements.
 Characteristic: to each spouse shall belong all earnings
from his/her profession, business, or industry and all fruits
due or received during the marriage from his or her separate
property.
 Both spouses bear the family expenses in proportion to their
income or to the current market value of their properties.
 Liability of the spouses to creditors for family expenses
shall be solidary.
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Unions without marriage:

A. Rules when couple are capacitated to marry:
1. Wages and salaries shall be owned by them in equal
shares.
2. Property acquired by both through their work or
industry shall be governed by the rules on co-ownership.
3. Neither party can encumber or dispose by act inter-vivos
his or share in the property acquired during co-
habitation and owned in common without the consent of
the other, until after the termination of their co-
habitation.
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B. Rules when the couple are incapacitated to marry:

1. Only the property acquired by both of them
through their actual joint contribution of money,
property, or industry shall be owned in common
in proportion to their respective contributions.
2. The share of any party who is married to
another shall accrue to the absolute community
or conjugal partnership, as the case may be, if
existing under the valid marriage.