Chapter 4 - Property Relations

PROPERTY
RELATIONS
- Philippine laws do not require the agreement
between the future spouses to be registered in a
government office to be binding between the
parties
- However, as a security for the properties which
may be affected by the agreement, and in order to
bind third parties, Philippine law requires the
recording of the prenuptial agreement in the
Local Civil Registry where the marriage is
celebrated, AND at the Register of Deeds of the
province where the affected property is located.
- Prenuptial agreement must be writing, should be executed prior to the celebration
of marriage and signed by the future spouses
- Any modification or amendment thereto may only be allowed before the
celebration of the marriage.
PROPERTY RELATIONS
- Used to distinguish a conjugal or community property from an exclusive property.
The property relationship between husband and wife shall be governed in the
following order:
1. By marriage settlements executed before the marriage
2. By provisions of law
3. By local custom
TYPES OF PROPERTY RELATIONS

1. Absolute community of Property (ACP)
2. Conjugal partnership of gains (CPG)
3. Complete separation of property
4. Any other regime
In the event the couple had not adopted or agreed upon a system before their
marriage, the rule is
• Marriage before August 03, 1988 - CPG (governed by provisions of the

civil code)
• On or after August 03, 1988 - ACP (governed by New Family Code
– E.O. No. 209)
ABSOLUTE COMMUNITY OF PROPERTY (ACP)
 Most common regime in Philippine marital property relations
 If the spouses do not have a valid marriage settlement, this system will govern the
property relations of the couple
 The provisions on co-ownership shall apply to ACP
 Spouses become co-owners of all properties they bring into the marriage and
whose acquired by each or both of them during marriage, save for the exceptions
expressly enumerated by law.
 Shall commence at the precise moment that the marriage is celebrated. Any
stipulation, express or implied, for the commencement of the community regime at
any other time shall be void (Art. 88)
Community Property under ACP
 In general, property will be presumed to belong to the community, unless it can be
proven to be exclusive property.
 Unless provided or in the marriage settlements, the community property shall
consist of ALL property owned by the spouses at the time of the celebration of the
marriage or acquired thereafter.
Exclusive Property under ACP
The following shall be excluded from the community property:

1. Art. 92(1) of the Family Code – Property acquired (together with fruits as well as
income thereof) during marriage by gratuitous title, unless the donor, testator, or
grantor expressly provided that it be part of community.
• Under ACP, the classification of fruits or income shall depend on the classification of
the principal or source of the fruits. But fruits from labor of either spouse shall always
form part of community or conjugal property.
2. Art. 92 (2) of the Family Code – Property for personal and exclusive use of either
spouse (Note: Jewelry shall form part of the community property)
3. Art. 92 (3) of the Family Code - Property acquired before the marriage who has
legitimate descendants by a former marriage, and the fruits as well as the income,
if any of such property.
PROPERTY CLASSIFICATION
Acquired BEFORE marriage
1 ALL properties owned before marriage or brought to the marriage Community
Acquired DURING marriage
2 Property acquired during marriage (other than inheritance or donation); Art. 91 Community
3 Property acquired during marriage through gratuitous transfer (inheritance or
Exclusive
donation)
4 Property acquired during marriage through gratuitous transfer (inheritance or
donation) where the donor, testator or grantor provided that they shall form Community
part of' the community property [Art. 92(1)]
5 Property acquired using common fund Community
6 Property for personal and exclusive use, except jewelry Exclusive
JEWELRY Community
NOTE: The classification of the fruit or income of the property shall follow the classification the source of the fruit
or income.
CONJUGAL PARTNERSHIP OF GAINS (CPG)
 Husband and wife place in a common fund the proceeds, products, fruits, and
income from their separate properties. It applies:
• When future spouses agree to it in the marriage settlement
• Established CPG before the effectivity of the New Family Code (Aug 03, 1988)
Exclusive Property under CPG
1. Brought to the marriage as his/her own
2. Acquires during the marriage by gratuitous title
3. Acquired by right of redemption or by exchange with property belonging to only
one of the spouses
4. Those purchased with the exclusive money of husband/wife
Conjugal Property under CPG
1. Acquired by onerous title during the marriage at the expense of common fund
2. Obtained by labor, industry, or work or profession of either or both of the spouses
3. Fruits received or due during the marriage coming from the common property or
from the exclusive property of each spouse. (Note: under CPG, fruits regardless of the
source, are classified as conjugal property)
4. Share in the hidden treasure discovered during marriage
5. Property acquired by occupation such as hunting or fishing by spouses or by
either of them
6. Livestock existing upon the dissolution of the partnership in excess of the number
of each kind brought to the marriage by either spouse, and
7. Those which acquired by chance, such as winnings from gambling or betting.
However, losses therefrom shall be borne exclusively by the loser-spouse.
PROPERTY CLASSIFICATION
Acquired BEFORE marriage
1 ALL properties owned before marriage or brought to the marriage Exclusive
Acquired DURING marriage
2 Property acquired through onerous title using common fund Conjugal
3 Property acquired through gratuitous transfer (inheritance or donation) Exclusive
4 Property acquired using exclusive fund Exclusive
NOTE: Under CPG, the fruit or income of the property shall be classified as conjugal property (Art 106 of FC)
A decedent died on September 29, 2022. The following assets were provided for the
purpose of determining the decedent's gross estate. If the item is an inclusion in the
gross estate of the decedent, classify the same as exclusive by writing "E" or
community/conjugal property by writing "C" under the regime of conjugal
partnership of gain (CPG) and absolute community property (ACP), If the item is an
exclusion from the gross estate, mark the item as "X"
ITEM PROPERTY CPG ACP
1 Cash owned by the decedent before the marriage E C
2 Commercial building owned before marriage E C
3 Income from item no.2 C C
4 Commercial building inherited during marriage E E
5 Income from item no.4 C E
6 Personal property received by the surviving spouse as gift before the marriage X C
8 Property acquired by the decedent with cash owned before the marriage E C
9 Personal belongings used exclusively by the decedent E E
10 Property unidentified when and by whom acquired C C
12 Cash from compensation income of the decedent C C
13 Lot acquired before the marriage by the surviving spouse (surviving spouse had a E E
previous marriage and legitimate children in that previous marriage)
ITEM PROPERTY CPG ACP
14 Income from the lot (item no. 13) C E
15 Exclusive property was sold, and was repurchased using conjugal property C C
16 Residential house built using the salary of the surviving spouse during the marriage. C C
(House was built on the exclusive lot of the decedent)
17 Lot described in item no. 16 E E
18 Livestock brought into marriage E C
19 Livestock in excess of what was brought into the marriage after the dissolution of the C C
marriage
20 Property acquired by barter using the exclusive property of the decedent E E
CONJUGAL DEDUCTIONS
1. Support of the spouses, their common children, and legitimate children of either
spouse
2. All debts and obligations contracted during the marriage with the consent of the
other
3. Debts and obligations contracted by either spouse without the consent of other to the
extent that the family may have benefited
4. Taxes, liens , charges, and expenses including major and minor repairs upon conjugal
property
5. All taxes and expenses for mere preservation, made during the marriage, upon the
separate property of either spouse.
6. Expenses to enable either spouse to commence or complete a professional, vocational,
or other activity for self improvement
7. Debts before marriage of either spouse in so far as they have rebounded to the benefit
of the family
CONJUGAL DEDUCTIONS
8. Value of what is donated or promised by both spouse 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
9. Expenses of litigation between spouses, unless the suit is found to be groundless
• Obligations contracted during marriage are presumed to have benefited the family and
therefore conjugal deductions. While obligations contracted by either spouse before
marriage are exclusive deductions unless shown that the family gained benefits from the
said obligations.
• Share of the surviving spouse (1/2 of net conjugal property), family home, medical
expenses, and standard deduction are deductions to be made from the net estate (total of
net conjugal estate and net exclusive estate) to arrive at the net taxable estate.
• Other deductions are either conjugal or exclusive deductions depending on whether
chargeable against conjugal property or exclusive property, or depending on whether the
property to which the deduction is related is conjugal or exclusive property.
• Wagering loss during marriage Shall be borne by the loser. Winnings, however, shall form
part of conjugal property.
• Fines and pecuniary damages or indemnities imposed upon either spouse shall be charges
against exclusive property.
Pro-forma computation of Net Taxable Estate Conj./Comm. Exclusive Total
GROSS ESTATE:
Real or immovable property xx xx
Tangible personal property xx xx
Intangible property* xx xx
Certain transfers** xx xx
Total xx xx xx
LESS: ORDINARY DEDUCTIONS
Losses/Indebtedness/Taxes (xx) (xx)
Transfer for public use - (xx)
Vanishing deductions (ACP) (xx) (xx)
Vanishing deductions (CPG)*** --- (xx) (xx)
Net Community/Exclusive before special deductions xx xx
LESS: SPECIAL DEDUCTIONS
Standard deductions (xx)
Family Home (xx)
Amount received under RA4917 (xx)
NET ESTATE before share of the surviving spouse xx
LESS: 1/2 share of the surviving spouse on the net conj./comm. property (xx)
NET TAXABLE ESTATE xx
Pro-forma computation of Net Taxable Estate Conj./Comm. Exclusive Total
NET TAXABLE ESTATE xx
X Estate Tax Rate 6%
ESTATE TAX DUE xx
NOTE:
*Intangible properties including rights accruing before death, claims against insolvent person, RA4917,
and receivable as proceeds from life insurance taken out by the decedent
**Refer to certain transfers made before death but will take effect upon death (transfer mortis causa) as
well as revocable transfers.
***Always an exclusive deduction under CPG
Transfer for public use shall be classified as exclusive deductions unless expressly provided otherwise.
Case A – Decedent is married; Family Home is conjugal valued Exclusive Conjugal Total
at more than P10,000,000
Conjugal properties:
Real and personal properties P14,000,000
Family Home 30,000,000
Exclusive properties P6,000,000 _________
Gross Estate P6,000,000 P44,000,000 P50,000,000
Less: Ordinary Deductions:
Conjugal ordinary deductions (2,000,000) (2,000,000)
Exclusive ordinary deductions (1,000,000) _________ (1,000,000)
Net Estate before special deductions 5,000,000 42,000,000 47,000,000
Special deductions
Family Home (P30M/2); Maximum of P10M (10,000,000)
Standard deduction (5,000,000)
Net estate before share of the surviving spouse 32,000,000
Less: share of the surviving spouse (half of conjugal property) (42M/2) (21,000,000)
Net taxable estate 11,000,000
Case B – Decedent is married; Family Home is conjugal valued Exclusive Conjugal Total
at below P10,000,000
Family Home 9,000,000
Exclusive properties P6,000,000 _________
Gross Estate P6,000,000 P23,000,000 P29,000,000
Special deductions
Family Home (P9M/2); lower between 4.5M and max. P10M (4,500,000)
Less: share of the surviving spouse (half of conjugal property) (21M/2) (10,500,000)
Case C – Decedent is married; Family Home is exclusive valued Exclusive Conjugal Total
at more than P10,000,000
Family Home P30,000,000
Exclusive properties 6,000,000 _________
Gross Estate P36,000,000 P14,000,000 P50,000,000
Special deductions
Family Home (maximum of P10M) (10,000,000)
Less: share of the surviving spouse (half of conjugal property) (12M / 2) (6,000,000)
COMPLETE SEPARATION OF PROPERTY
 The spouses shall be governed by complete separation of property if the

future spouses agree in the marriage settlements that their property relations
during the marriage shall be governed by the regime of separation of
property.
 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.
 Both spouses shall bear the family expenses in proportion to their income,
or, in case of insufficiency or default thereof, to the current market value of
their separate properties. The liability of the spouses to creditors for family
expenses shall, however, be solidary.
PROPERTY REGIME OF UNIONS WITHOUT MARRIAGE
CAPACITATED TO MARRY
When a man and a woman who are capacitated to marry each other, live exclusively
with each other as husband and wife without the benefit of marriage or under a void
marriage, the following rules shall apply:
1. Wages and salaries shall be owned by them in equal shares.

2. Property acquired by both of them through their work or industry shall be governed
by the rules on co-ownership.
 In the absence of proof to the contrary, properties acquired while they lived together shall be
presumed to have been obtained by their joint efforts, work or industry, and shall be owned by them
in equal shares.
3. Neither party can encumber or dispose by act inter-vivos his or share in the property
acquired during cohabitation and owned in common, without the consent of the
other, until after the termination of their cohabitation.
PROPERTY REGIME OF UNIONS WITHOUT MARRIAGE
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. (if silent, assume equal shares)
2. The share of any party who is married to another shall accrue to the absolute or
conjugal partnership, as the case may be, if existing under the valid marriage.
Classify the following as exclusive or conjugal property under Absolute Community of Property (ACOP) and
Conjugal Partnership of Gains (CPC). Write "C" in the space provided if the property is classified as common property
and write "E" if the property is classified as exclusive.
ITEM PROPERTY ACP CPG
1 Properties owned by the spouses before the marriage C E
2 Rental income on a property acquired before marriage. C C
3 Property acquired during marriage C C
4 Income on property described in #3 C C
5 Property acquired by gift before marriage C E
7 Property inherited during marriage E E
8 Income on property described in #7 E C
9 Property acquired during marriage from common fund C C
11 Car purchased during marriage using funds derived from practice of profession C C
12 Property owned before marriage for personal and exclusive use of the decedent. E E
13 Jewelry items during marriage for personal and exclusive use by the decedent C E
14 Real property acquired during marriage with decedent's own income E C
15 Car inherited during marriage E E
Illustration 1
From the records of the estate of a citizen-decedent who died in 2022:

• Properties- Land inherited from mother (during marriage) P24,000,000 two (2) years before death;
valued at P15M when inherited 24,000,000
• Other personal property owned before marriage 16,000,000

• Other personal property acquired during marriage 5,000,000
Deductions claimed:
• Casualty losses 500,000
• Unpaid taxes 400,000
• Claims against the estate 600,000
• Funeral expenses 300,000
• Medical expenses, incurred and paid within one year before death 400,000
• Unpaid medical expenses, incurred within one year before death 300,000
• Judicial expenses 120,000
ABSOLUTE COMMUNITY OF PROPERTY Exclusive Common Total
Land inherited during marriage P24,000,000
Other personal property owned before marriage P16,000,000
Other personal property acquired during marriage __________ 5,000,000
Total P24,000,000 P21,000,000 P45,000,000
Deductions: Casualty loss (500,000)
Funeral expenses (no longer allowed under TRAIN Law) –
Judicial expenses (no longer allowed under TRAIN Law) –
Unpaid Taxes (400,000)
Claims against the estate (600,000)
Vanishing deduction** (11,600,000) ___________ (13,100,000)
Net estate before special deduction and share of the
surviving spouse P12,400,000 P19,500,000 P31,900,000
Medical expenses (no longer allowed under TRAIN Law) -
Share of the Surviving Spouse (19,500,000/2) (9,750,000)
NET TAXABLE ESTATE P17,150,000
VANISHING DEDUCTION**
Value to Take/Initial Basis P15,000,000
Proportional Deduction (15M/45M x P1,500,000) (500,000)
Final Basis P14,500,000
x Vanishing Deduction % 80%
Vanishing Deduction P11,600,000
CONJUGAL PARTNERSHIP OF GAINS
Exclusive Common Total
Land inherited during marriage P24,000,000
Other personal property owned before marriage 16,000,000
Other personal property acquired during marriage 5,000,000
Total P40,000,000 P5,000,000 P45,000,000
Deductions:
Unpaid Taxes (400,000)
Claims against the estate (600,000)
Casualty Loss (500,000)
Funeral expenses –
Judicial expenses –
Vanishing deduction (same computation) (11,600,000) (13,100,000)
Net estate before special deduction and share of
the surviving spouse P28,400,000 P3,500,000 P31,900,000
Medical expenses –
NET TAXABLE ESTATE P25,150,000
ILLUSTRATION 2
A non-resident alien, married, died on September 25, 2022. He left the following:
• Conjugal properties, Philippines P 5,000,000
• Exclusive properties, Philippines 2,000,000
• Conjugal properties, USA 10,000,000
• Exclusive properties, USA 5,000,000
The following deductions were claimed:
• Actual funeral expenses P1,250,000
• Judicial expenses 800,000
• Claims against the estate 1,725,000
• Transfer for public use 200,000
• Medical expenses 875,000
Included in the Philippines gross estate (conjugal) were the following:
• Domestic shares P 500,000
• Share in a partnership 1,000,000
• Other tangible personal properties 3,500,000
The Philippine exclusive properties were all tangible personal properties. These included a car, which was inherited 3 1/2
years before the present decedent's death, and had a fair market value of P500,000.
Determine the following:

a) Net exclusive property of the decedent
b) Net community property
c) Net Taxable estate
d) Estate tax due
Exclusive properties, Phils. P2,000,000
Conjugal properties, Phils.* P5,000,000 P7,000,000
LIT** (548,864)
Vanishing Deductions *** (178,604)
Transfer for Public Use **** (200,000)________________________________
Net Estate P1,621,396 P4,451,136 P6,072,532
Standard deduction (500,000)
Net Taxable Estate P3,346,964
x Estate Tax Rate 6%
Estate Tax Due P 200,818
*The problem is silent as to reciprocity, hence, the gross estate should include tangible and intangible properties
within the Philippines.
**LIT: Funeral expenses - ***VANISHING DEDUCTIONS:
Value to take P500,000
Judicial expenses - 1st Deduction: Mortgage paid –
Claim against the estate 1,725,000 Initial basis P500,000
TOTAL ELIT 1,725,000 2nd Deduction: Proportionate deduction
X 7M/22M (500/7,000) x (548,864 + 200,000) (53,490)
Final Basis P446,510
ALLOWABLE ELIT 548,864 x Vanishing rate 40%
Vanishing Deduction P178,604
**** Since the properties were already classified as exclusive and common, it should be
assumed that the exclusive properties were already inclusive of transfer for public use
ILLUSTRATION 3
JL Cruz died intestate on September 30, 2021. He was survived by his wife and his two children. He left the following
properties:
• Land (1 ,000 sq. m.) inherited from his father 15 months before JL's death. Fair market value per tax declaration at the time
of JL's death, P20,000,000; Zonal value at the time of JL's death, P30,000 per sq. m.
• House and lot (Family Home) acquired during the marriage, FMV, P50,000,000
• Other tangible personal properties (mode of acquisition unknown), FMV, P22,000,000;
The following were considered as deductions from the gross estate

• Actual funeral expenses, P480,000
• Judicial expenses, P1,000,000
• Other claims against the conjugal properties; P5,000,000
• Claims against insolvent persons, P500,000
• Medical expenses, P1,200,000
The estate of the decedent’s father paid the estate tax on the land at the fair value of P25,000,000. During the marriage, JL
mortgaged the inherited land for P7,000,000 for the benefit of the family. He paid P3,500,000 before he died.
Exclusive Conjugal Total
Land P30,000,000
House and Lot (Family Home) P50,000,000
Other tangible personal properties 22,000,000
Claims against insolvent persons 500,000 P102,500,000
Ordinary deductions:
Other claims against conjugal properties (5,000,000)
Claims against insolvent persons (500,000)
Unpaid mortgage** (3,500,000)
VANISHING DEDUCTION* (18,243,902) (13,560,976)
Net exclusive/conjugal P11,756,098 P63,500,000 P75,256,098
Special deductions:
Family Home (10,000,000)
Share of the surviving spouse ½ of 63.5M (31,750,000)
TAXABLE ESTATE P28,506,098
Estate Tax Due (P28,506,098 x 6%) P1,710,366
** P7,000,000 – 3,500,000 = P3,500,000
Value to take/Initial Basis*** P25,000,000 ***The value to take shall be lower amount between the valuation at the
2nd Deduction: (25,000/102,500 )x 9,000,000 (2,195,122) time of death and the valuation upon inheritance (P30M vs P25M).
Final Basis P22,804,878 Likewise, the amount paid on the mortgage should not be considered in
x VD rate 80% computing the vanishing deduction because the amount pertains to a
mortgage entered into by Pedro during his lifetime. To be considered in
Vanishing Deduction* P18,243,902.4*
computing the VD, the mortgage should have been assumed on the
property at the time of inheritance or donation
ILLUSTRATION 4
A resident alien. Single died intestate on October 10, 2022. the following data were provided to you:
House and lot. USA (family home) P20,000,000
Investment in stock, Philippines 8,000,000
Investment in stock. USA 10,000,000
Investment in bonds, USA (85% of the business of the USA Corp. is in the Philippines)
7,000,000
Cash in bank. Philippines 3,000,000
Cash on hand. Philippines 500,000
Accounts receivable from a debtor who resides in USA (fully uncollectible) 2,000,000
Vehicles In the Philippines 8,000,000
Actual funeral expenses 1,500,000
Judicial expenses 3,000,000
Unpaid Philippine income tax for income in 2021 1,200,000
Loss on December 31, 2021 due to theft 800,000
Devise to Quezon City for children's playground 700,000
Medical expenses 5,000,000
DETERMINE THE FOLLOWING:

a) Net Taxable estate
b) Estate tax due
House and lot, USA * P20,000,000
Investment in stock, Philippines 8,000,000
Investment in stock, USA 10,000,000
Investment in bonds, USA 7,000,000
Cash in bank, Philippines 3,000,000
Cash on hand, Philippines 500,000
Claim against insolvent person (fully uncollectible) 2,000,000
Car, Philippines 8,000,000
Devise to Quezon City for children’s playground** 700,000
Total Gross Estate P59,200,000
Ordinary Deductions:
Funeral expenses -
Judicial expenses -
Unpaid Philippine income tax for income in 2021 1,200,000
Loss on December 31, 2021 due to theft 800,000
Devise to Quezon City for children’s playground 700,000
Claim against insolvent person (fully uncollectible) *** 2,000,000 (4,700,000)
Special Deductions:
Net Taxable Estate P49,500,000
Estate Tax Due (P49,500,000 x 6%) P2,970,000
*Family home is not allowed as a deduction for single decedent

**To be deductible, the legacy/devise should be included first in the decedent’s gross estate
***Assume the debtor is an insolvent person
TRUE OR FALSE
1. FALSE 6. FALSE 11. TRUE
2. TRUE 7. TRUE 12. TRUE
3. TRUE 8. TRUE 13. TRUE
4. FALSE 9. FALSE 14. FALSE
5. FALSE 10. FALSE 15. TRUE
NOTE :
#1: The statement is applicable to CPG
#4: Under CPG, property brought into marriage is classified as exclusive property
#5: Shall be ½ of the net conjugal property
#6: The properties described in the problem shall be classified as exclusive properties.
#7: If the problem is silent or unless the type of property relationship is specifically provided in the
problem, the term “community” property is generally used in case of Absolute Community Property
regime. Thus, the statement in #7 is correct. On the other hand, unless provided otherwise, the term
“conjugal” property is generally used in case of Conjugal Partnership of Gains regime.
#9: Shall be before marriage

#10; May be deductible from either exclusive or community properties
#14; Applicable to ACoP
MULTIPLE CHOICE
1. A 6. D 11. B 16. D 21. B 26. D
2. B 7. D 12. D 17. C 22. C 27. D
3. A 8. B 13. C 18. C 23. D 28. A
4. C 9. D 14. D 19. A 24. A 29. B
5. D 10. C 15. C 20. D 25. A 30. D
(No. 19 & 20)

Gross Estate (CPG): Exclusive Conjugal
Rest House in Batangas P2,500,000
Car 1,000,000
Commercial land 5,000,000
Income from the commercial land 500,000
Income from exclusive property of the spouse 200,000
Jewelry owned before the marriage 300,000
Other properties at the time of her death 1,000,000
Gross Estate P8,800,000 P1,700,000
(No. 21 & 22)
Gross Estate (ACoP): Exclusive Common
Rest House in Batangas 2,500,000
Car 1,000,000
Commercial land 5,000,000
Income from the commercial land 500,000
Jewelry owned before the marriage 300,000
Other properties at the time of her death 1,000,000
Gross Estate 2,500,000 7,800,000
(No. 23)
Conjugal properties 20,000,000
Conjugal Deductions**:
Funeral and judicial expenses (no longer allowed) -
Casualty losses (3,500,000)
Unpaid taxes (2,000,000)
Claim against the estate (4,500,000)
Net Conjugal properties before special deductions 10,000,000
Divide 2
Share of the Surviving Spouse 5,000,000
(No. 24)
Real property, Philippines 7,000,000
Real property, USA 5,000,000
Claim against insolvent persons 50,000
Claim against insolvent persons (50,000)
Unpaid taxes (50,000)
Balance 11,950,000
Standard Deductions (5,000,000)
Family Home (P1,500,000/2) (750,000)
Share of the surviving spouse (P11,950,000/2) (5,975,000)
Net Taxable Estate 225,000
25 Exclusive Common Total
Conjugal real properties 7,000,000
Conjugal family home 5,000,000
Paraphernal properties
(excluded; exclusive of the surviving spouse)
Exclusive properties 2,500,000 0
Total 2,500,000 12,000,000 14,500,000
Ordinary Deductions:
Unpaid taxes
Casualty losses (from excl.property) (100,000)
Other losses (P1M x 75%) (750,000) (850,000) (850,000)
Net Estate before Special Deductions 2,400,000 11,250,000 13,650,000
Special Deductions:
Standard Deductions (5,000,000)
Medical expenses -
Family Home (5,000,000/2) (2,500,000)
Net Taxable Estate 525,000
(No. 26 and 27) ABSOLUTE COMMUNITY OF PROPERTY
Exclusive Common
Properties-Land 24,000,000
Other personal property acquired during marriage 5,000,000
Gross Estate 24,000,000 21,000,000
Vanishing deduction (11,200,000)
Losses (1,000,000)
Net conjugal before special deductions 18,000,000
Share of surviving spouse (P1,800,000/2) 9,000,000
(No. 28) CONJUGAL PARTNERSHIP OF GAINS
Properties-Land 24,000,000
Other personal property acquired during marriage**** 5,000,000
Gross Estate 40,000,000 5,000,000 45,000,000
Ordinary Deductions
Losses (1,000,000)
Vanishing Deductions***** (11,200,000) 0
Net Estate Before Special Deductions 28,800,000 2,000,000
****If silent or unless the problem clearly illustrate that it is exclusive, assume the property is a common
property.
Value to take 15,000,000

1st Deduction: Mortgage paid -
Initial basis 15,000,000
2nd Deduction: Proportionate deduction
(15,000 / 45,000) x 300,000 (1,000,000)
Final Basis 14,000,000
x Vanishing rate 80%
Vanishing Deduction 11,200,000 *****
(No. 29 and 30) ACOP
GROSS ESTATE:
Real properties inherited during marriage from his father 5,000,000
Real property abroad given as gift by his uncle during marriage 15,000,000
Land received as donation during the marriage 5,000,000
House built on the donated land using communal fund 9,000,000
Income from the real property received as gift 1,000,000
Real property received by the surviving spouse before the marriage 18,000,000
Real property acquired by the spouses during the marriage 15,000,000
Personal properties acquired during the marriage 10,000,000
Claims against an insolvent person 500,000
Donation mortis causa to the City of Manila (TFPU) 1,500,000 0
TOTAL 27,500,000 52,500,000 80,000,000
ORDINARY DEDUCTIONS:
Obligations incurred that benefited the community properties (2,500,000)
Claims against an insolvent debtor (500,000)
Unpaid mortgage on inherited land (650,000)
Loss of vehicle due to theft on December 31, 2021 (3,000,000)
Unpaid realty tax on real property received as gift from his uncle (300,000)
Transfer for Public Use (Donation mortis causa to City of Manila) (1,500,000)
Vanishing Deduction*** (858,600) (9,308,600)
Net Estate Before Special Deductions and Share of the Surviving Spouse 24,191,400 46,500,000 70,691,400
(No. 29 and 30) ACOP
Net Estate Before Special Deductions and Share of the Surviving Spouse 24,191,400 46,500,000 70,691,400
SPECIAL DEDUCTIONS:
Standard Deduction (5,000,000)
Family Home [(P5M) + (P9M/2)] (9,500,000)
Share of the Surviving Spouse (P46.5M/2) (23,250,000)
NET TAXABLE ESTATE 32,941,400
Multiply: Estate Tax Rate 6%
ESTATE TAX DUE 1,976,484
Vanishing Deduction – Real property inherited:

Value to take 3,000,000
1st Deduction: Mortgage paid (1,400,000)
Initial basis 1,600,000
2nd Deduction: Proportionate deduction
(P1,600/P80,000) x P8,450,000 (169,000)
Final Basis 1,431,000
x Vanishing rate 60%
Vanishing Deduction 858,600 *****
• The real property abroad received as gift 4 ½ years before death is not subject to vanishing deduction.
• The donated land received 6 years before death is not subject to vanishing deduction

Chapter 4 - Property Relations

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Chapter 4 - Property Relations

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PROPERTY

TYPES OF PROPERTY RELATIONS

• Marriage before August 03, 1988 - CPG (governed by provisions of the

The following shall be excluded from the community property:

 The spouses shall be governed by complete separation of property if the

1. Wages and salaries shall be owned by them in equal shares.

From the records of the estate of a citizen-decedent who died in 2022:

• Other personal property owned before marriage 16,000,000

Determine the following:

The following were considered as deductions from the gross estate

DETERMINE THE FOLLOWING:

*Family home is not allowed as a deduction for single decedent

#9: Shall be before marriage

(No. 19 & 20)

Value to take 15,000,000

Vanishing Deduction – Real property inherited:

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