What Are The Exclusive Properties Of Spouses In A Conjugal Partnership?

• Property purchased before the marriage and fully paid during the marriage remains to be a separate property of either spouse.

• In a Conjugal Partnership of Gains, all property acquired during the marriage is presumed to be conjugal unless the contrary is proved.

• Property bought on installments paid partly from exclusive funds of either or both spouses and partly from conjugal funds belongs to the buyer or buyers if full ownership was vested before the marriage.

In a Conjugal Partnership of Gains, the spouses place in a common fund the proceeds, products, and fruits and income of their separate properties and those acquired thereafter through their efforts or by chance.

Under the Family Code

The following shall remain exclusive property of the owner spouse:

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, by barter or by exchange with property belonging to only one of the spouses; and

4. That which is purchased with exclusive money of the wife or of the husband. (Art. 109, FC)

Property purchased before the marriage and fully paid during the marriage remains to be a separate property of either spouse. And, if a future spouse sold his property with right to repurchase before the marriage and reacquired it during the marriage, such property is still the exclusive property of said spouse. However, if the money he or she paid for the repurchase came from the conjugal assets, then, the said spouse must reimburse the conjugal partnership. Note, however, that the reimbursement shall be done at the liquidation of the conjugal partnership.

In case the property has been donated to or inherited by one of the spouses, the said property shall be an exclusive property of such spouse. Accordingly, if someone donates to a married couple a parcel of land, the said land will not be conjugal, but separate property of the spouse, each spouse owning one half of the property. And if a different proportion or designation of shares is made, such will be followed.

• Purchase of Property

In a Conjugal Partnership of Gains, when there is no showing as to when the property was acquired by a spouse, the fact that the title is in one of the spouse’s name, is an indication that the property belongs exclusively to the said spouse. Consequently, if a property is purchased partly with money of the wife and partly with conjugal money, the same is partly conjugal and partly exclusive.

• Presumption of Inclusion of Property In The Conjugal Partnership of Gains

In a Conjugal Partnership of Gains, all property acquired during the marriage, whether the acquisition appears to have been made, contracted or registered in the name of one or both spouses, is presumed to be conjugal unless the contrary is proved. The presumption of conjugality of properties acquired by onerous title during the marriage arises regardless of the source of the funds used to acquire the same.

• Property on Installment

Property bought on installments paid partly from exclusive funds of either or both spouses and partly from conjugal funds belongs to the buyer or buyers if full ownership was vested before the marriage. And the property belongs to the conjugal partnership if such ownership was vested during the marriage. 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. (Art. 118, FC)

No Restrictions on Conveyance of Land Covered by Free Patents

Can agricultural land that was granted a free patent be sold or transferred to another person?

Please note the limitations provided under Section 118 of Commonwealth Act (CA) 141, otherwise known as the “Public Land Act,” which reads:

“Section 111. Except in favor of the Government or any of its branches, units, or institutions, lands acquired under free patent or homestead provisions shall not be subject to encumbrance or alienation from the date of the approval of the application and for a term of five years from and after the date of issuance of the patent or grant, nor shall they become liable to the satisfaction of any debt contacted prior to the expiration of said period, but the improvements or crops on the land may be mortgaged or pledged to qualified persons, associations or corporations.

“No alienation, transfer, or conveyance of any homestead after five years and before twenty-five (25) years after issuance of title shall be valid without the approval of the Secretary of Agriculture and Commerce, which approval shall not be denied except on constitutional and legal grounds.”

The abovementioned restrictions, however, have already been removed by Republic Act 11231 or the “Agricultural Free Patent Reform Act.”

Under Section 3 of the said law, “[a]gricultural public lands alienated or disposed in favor of qualified public land applicants under Section 44 of Commonwealth Act 141, as amended, shall not be subject to restrictions imposed under Sections 118, 119 and 121 thereof regarding acquisitions, encumbrances, conveyances, transfers or dispositions.

Agricultural free patent shall now be considered as title in fee simple and shall not be subject to any restriction on encumbrance or alienation.”

Clearly, the restrictions on the alienation and conveyance of agricultural lands covered by free patents have been removed by the Agricultural Free Patent Reform Act and are, likewise, now considered as title in fee simple. So, yes one can sell such a property.

Understanding Real Property Taxation

Local government units (LGU) shall enjoy local autonomy—that is, according to the Supreme Court, to perform certain functions and exercise certain powers in order not for them to be overly dependent on the National Government, subject to the limitations that the 1987 Constitution or Congress may impose.

Thus, LGUs are empowered to create its own sources of revenues, and to levy taxes, fees, and charges, one of which is real property tax (RPT).

For RPT purposes, LGUs shall appraise all real properties, whether taxable or exempt, at their current and fair market value (FMV) prevailing in the localities where they are situated.

Moreover, real property shall be classified, valued, and assessed based on its actual use, regardless of where located, whoever owns it, and whoever uses it. The assessment shall likewise extend to equipment, instruments, and machineries found on the real property, whether they are attached, permanently or temporarily.

For purposes of assessment, real property shall be classified as residential, agricultural, commercial, industrial, mineral, timberland, or special.

In this regard, special classes of real property shall refer to lands, buildings, and other improvements thereon actually, directly, and exclusively used for hospitals, cultural, or scientific purposes, and those owned and used by local water districts, and government-owned or controlled corporations rendering essential public services in the supply and distribution of water and/or generation and transmission of electric power.

All persons owning or administrating real property, including improvements, shall prepare and file with the provincial, city, or municipal assessor their tax declarations, which state:

(a) the true value of their property, whether previously declared or undeclared, taxable or exempt, which shall be the current and FMV thereof;

(b) description of the property sufficient in detail to enable the assessor or his deputy to identify the same for assessment purposes. Tax declarations shall be filed with the assessor concerned once every three years during the period from January 1 to June 30.

If the owner or administrator failed or refused to file the tax declaration, the proper assessor shall himself declare the property in the former’s name, if known, or against an unknown owner, as the case may be, and shall assess the property for taxation in accordance with the Local Government Code.

Meanwhile, all persons acquiring real property or making improvements therein shall prepare and file with said assessors their tax declarations within 60 days after the acquisition of such property or upon completion or occupancy of the improvement, whichever comes earlier.

A person who shall claim tax exemption for his property shall file with the proper assessor within 30 days from filing his tax declaration sufficient documentary evidence in support of such claim, including corporate charters, title of ownership, articles of incorporation, by-laws, contracts, affidavits, certifications, mortgage deeds, and similar documents.

If the required evidence was not submitted within the 30-day period, the property shall be listed as taxable in the assessment roll. But, if the property was proved to be tax-exempt, the same shall be dropped from the assessment roll.

In this regard, the following are exempt from the payment of RPT: (a) real property owned by the Republic of the Philippines or any of its political subdivisions, except when the beneficial use thereof has been granted to a taxable person, with or without consideration thereof; (b) charitable institutions, churches, parsonages, mosques, covenants, and all lands, buildings, and improvements actually, directly, and exclusively used for religious, charitable, or educational purposes; (c) machineries and equipment directly and exclusively used for supply and distribution of water and/or generation and transmission of electric power; (d) real property owned by duly registered cooperatives; and (e) machinery and equipment used for pollution control and environmental protection.

For real property taxation (RPT) purposes, the assessed value shall be computed by applying the proper assessment level to its fair market value (FMV). Said assessment levels shall be fixed by ordinances at rates not exceeding those prescribed under the Local Government Code (LGC).

The provincial, city or municipal assessor shall undertake a general revision of real property assessments every three years. Meanwhile, the assessment of real property shall not be increased oftener than once every three years, except in case of new improvements substantially increasing the value of said property, or of any change in its actual use.

All assessments or reassessments made after the first day of January of any year shall take effect on the first day of January of the succeeding year. But, reassessments shall take effect at the beginning of the next quarter if they were caused by: (a) the real property’s total or partial destruction; (b) a major change in its actual use; (c) any great and sudden inflation or deflation of real property values; or (d) gross illegality of the assessment when made; or (e) any other abnormal cause. In this regard, reassessments for said enumerated causes shall be made within 90 days from the date any such cause or causes occurred.

Real property declared for the first time shall be assessed for back taxes but for a period not more than 10 years before the date of initial assessment. Back taxes shall be computed based on the applicable schedule of values in force during the corresponding period.

If the back taxes were paid on or before the end of the quarter from the date of the owner or authorized person’s receipt of the assessment, interest for delinquency shall not be imposed. Otherwise, said taxes shall be subject to an interest rate of 2 percent per month or a fraction thereof from the date of receipt of the assessment, and until such taxes are fully paid.

Meanwhile, brand-new machinery found on the real property shall be assessed based on its acquisition cost as the FMV. If the machinery were imported, the acquisition cost shall include freight, insurance, bank and other charges, brokerage, arrastre and handling, duties and taxes, plus charges at the present site. The cost in foreign currency of imported machinery shall be converted to peso cost on the basis of foreign currency exchange rates fixed by the Central Bank of the Philippines.

In all other cases, the FMV shall be determined by dividing the remaining economic life of the machinery by its estimated economic life and multiplied by the replacement or reproduction cost.

A depreciation allowance shall be made for machinery at a rate not exceeding 5 percent of its original cost or its replacement or reproduction cost, as the case may be, for each year of use. But, the remaining value for all kinds of machinery shall not be fixed at less than 20 percent of such original, replacement, or reproduction cost for so long as the machinery is useful and in operation.

A province, city or municipality in Metro Manila shall fix a uniform rate of basic RPT applicable to their respective localities as follows: (a) in the case of a province, at a rate not exceeding 1 percent of the assessed value of real property; and (b) in the case of a city or municipality, at a rate not exceeding 2 percent of such assessed value. Moreover, said local government units (LGU) may levy and collect an annual tax of one percent on the assessed value of real property, which proceeds shall exclusively accrue to the Special Education Fund.

Meanwhile, a province, city or municipality may levy an annual tax on idle lands at the rate not exceeding 5 percent of the assessed value thereof, which shall be in addition to the RPT. Idle lands may refer to: (a) be agricultural or non-agricultural lands, which prescribed areas under the LGC remain uncultivated, unutilized or unimproved by the owner or person having legal interest therein; or (b) residential lots in duly approved subdivisions. Where the ownership of said residential lots was transferred to individual owners, they shall be liable for the additional tax. Otherwise, the subdivision owner or operator shall be liable for said additional tax.

For assessment purposes, idle taxes shall exclude those which, by reason of force majeure, civil disturbance, natural calamity or any cause or circumstance, the owner or person having legal interest therein is physically or legally prevented from improving, utilizing or cultivating.