Conjugal Properties: How do They work?
After tying the knot and marking a new chapter together, newlywed couples usually invest in their own homes and acquire things like a car, and other valuable items that serve as investments for their future.
A question may arise between the couple as to who should be the owner of the properties acquired after marriage and those properties that were obtained by the other even before the marriage. Do these properties automatically belong to both of them? Before we go deeper into similar questions, let us define first what is a conjugal property.
What is a Conjugal Property?
Conjugal property refers to any property and asset that a married couple owns, in other words, it is the property that belongs to both spouses, and generally, it encompasses those properties regardless of whether it was acquired by one or both of the spouses.
To answer the question above, under the Philippine law, more specifically under the Family Code, all properties, whether acquired before or during the marriage, are considered as the conjugal property of the spouses. This means that any property owned by your spouse when they were still single is also owned by you and vice versa upon the celebration of your marriage.
Once you marry your significant other, part or all of your property becomes the conjugal property and vice versa, or all of your spouse’s property also becomes the conjugal property. Whether you’re just planning of getting married to your significant other soon or you’ve started making investment plans with your spouse, it’s important to understand the laws concerning conjugal properties in the Philippines.
What Are Prenuptial Agreements?
Before we discuss the different types of property regimes and particularly conjugal properties, it is important to learn first what is a marriage settlement or a prenuptial agreement. As formally defined, it is a contract agreed by a man and a woman who are planning to get married to define their property relations during marriage.
Couples are free to enter into an agreement that will provide for their property relations during marriage. This agreement is called marriage settlement, or more known as a prenuptial agreement in the Philippines. It is called a prenuptial agreement as it must be agreed upon before the consummation of marriage before you become husband and wife.
Through this agreement, they may specify which of their properties or assets is included as conjugal property or which can be owned by both the husband and wife (paraphernal property). This process of combining or separating assets is not only beneficial should a couple separate but it’s also more advantageous in property transactions.
By creating a prenup, you maintain separate ownership and control over some of your own properties during the marriage, you remain the sole administrator of such designated properties. You can still be able to sell it or enter into lease contracts without the consent of your spouse. Once executed, the prenuptial agreement or marriage settlement will govern the property relations between husband and wife during the marriage.
Normally, the execution of a prenuptial agreement would only be important between separating spouses, if both or either of them has several properties prior to the marriage.
Because if a prenuptial agreement was made, then the spouses could choose their property regimes and can even choose what property they can retain ownership which they have acquired prior to their marriage.
And if there is no agreement made, then the default property regime will govern your properties based on the year of marriage. It can be either a Conjugal Partnership of Gains or an Absolute Community of Property, which we will discuss more later.
The requisites needed for a marriage settlement or prenup agreement to be valid are:
It must be made by future spouses, meaning they are not yet married;
It must be in writing;
It must be executed before the celebration of the marriage, meaning made prior to the marriage;
It must be recorded in the local civil registry of the same municipality where the marriage contract was recorded (requirement is needed only to bind third persons).
Types of Property Regimes in the Philippines
There are several types of property regimes available in the country that will govern the property relations between a husband and wife. The one that you will choose or applies to you, depends on your situation and the facts. Our law on Family and Civil Code provides different property regimes that future spouses may agree on in the marriage settlements. It can be Absolute Community of Property, Conjugal Partnership of Gains, and Complete Separation of Property.
To easily understand which property regime will govern your properties:
If you married BEFORE August 3, 1988, without a prenuptial agreement, then the default property regime which will govern your properties is called the Conjugal Partnership of Gains.
If you married AFTER August 3, 1988, without a prenuptial agreement, then the default property regime which will govern your properties is called the Absolute Community of Property.
If you are married with a prenuptial agreement, then you are free to stipulate what kind of property regime will govern your properties.
It should be mentioned that August 3, 1988, is the effectivity of the Family Code of the Philippines, which brought significant changes to the rules on what property regime will govern the properties of spouses. Hence, the year of your marriage and prenuptial agreement are the two most important matters to determine what property regime is applicable to your marriage.
Conjugal Partnership of Gains
As stated above, in the absence of a prenuptial agreement, marriage before August 3, 1988, your property regime will be governed by the Conjugal Partnership of Gains. In this default regime, all proceeds, products, fruits, and income from separate properties of the spouses shall belong to the partnership or shall be shared by both of them.
Proceeds of rent from the property can be considered as owned by the spouses. You don’t want to let your property to be just sitting there and be idle. You can enter to lease contracts to third persons in order to generate more income.
Also, those acquired by either or both of the spouses through their efforts or chance, such as winnings from gambling or betting, after their marriage will be shared by both of them. Simply put, they will retain absolute ownership over their own properties prior to their marriage but upon being married, any income or benefit from those separate properties by the spouses, will be joined together as one estate, and any future income or other benefits that will be generated by such property shall be considered shared.
So the things that are excluded under this regime are those which are brought to the marriage as his or her own, also those which each spouse acquires during the marriage by gratuitous title, such as by donation, and those which are purchased with his or her own money or the exclusive money of the wife or of the husband.
Absolute Community of Property
The default property regime for marriages celebrated on or any time after August 3, 1988, is now governed by the Absolute Community of Property. Under this regime, all properties owned by the spouses before or during the celebration of the marriage are automatically considered as conjugal property upon marriage.
To put it simply, all properties acquired by the spouses at the time of the celebration of the marriage will be jointly owned by both of them and thus, they will be considered as co-owners of all properties brought into and acquired during the marriage.
Conjugal property is not only limited to house or real estate property. But it also includes those acquired by either or both of the husband and wife from their work or profession or income from the exclusive property of a spouse.
It also includes those obtained through their efforts or chance, such as winnings from gambling (lottery) or betting. It also includes insurance, you can get insurance for your house and lot upon purchase to protect your home from any disaster by acquiring the coverage you need even before you even move in.
However, there are some properties that if acquired during the marriage are excluded from the Absolute Community of Property. Such as those properties acquired by gratuitous title, meaning through donation or inheritance; also those properties for the exclusive or personal use of each spouse, except for jewelry as its value increases and can become a source of income for the benefit of the community of property; and lastly those properties that are acquired before the marriage by either spouse who has legitimate descendants from a former marriage, simply put those who have children form his or her previous marriage. This is to protect the interest of the descendants from the former marriage of the other spouse.
Moreover, under this regime, the administration of the community property belongs to both spouses jointly. One spouse cannot sell the property without the consent and knowledge of the other.
So, the husband cannot sell their conjugal property without the permission of his wife.
However, the transaction is still considered a continuing offer and may be perfected or done upon acceptance of the other spouse that the other is selling their conjugal property.
If the other spouse has an Illegitimate child, that child is entitled to inherit from his or her parent as he is considered as a compulsory heir under the law. From his or her parent’s share, the illegitimate child usually inherits one-half of the share of a legitimate child.
It is also worth mentioning that the conjugal properties can be also held liable for expenses that will redound to the benefit of the family such as the support of spouses, and their common children, and even the debts and obligations contracted during their marriage can be made charge to the conjugal property.
However, if in case the other spouse wanted to terminate the Absolute Community of Property, it can be done but must be only due to some limited reasons. Such as upon the death of either spouse; or when there is a decree of legal separation of their marriage; or when their marriage is declared annulled or void; or when there is a judicial separation of property during the marriage.
So when a spouse passes away, the conjugal property of Absolute Community also ends and the property is shared among the remaining heirs. Once the Absolute Community of Property is dissolved or terminated, the rules on complete separation of property shall govern their properties, same with the conjugal partnership of gains.
Complete Separation of Properties
This kind of property regime, which can be selected by the soon-to-be husband and wife in their prenuptial agreement, provides that the ownership of properties acquired prior to and after marriage shall be owned by each spouse exclusively. In short, there is no Conjugal Property under this regime. This includes any income or benefit that their separate properties will gain through their efforts or work.
So in case, your relationship with your spouse turns sour and you want a way out, questions about property rights arise, such as ‘who gets the house,’ among others.
This is when you realize the importance of executing a prenuptial agreement prior to the celebration of your marriage. It expedites the process of your breaking up with your spouse by identifying immediately which properties will belong to whom.
But in case the other spouse just leaves the home or abandons the family without just cause and without even filing for an annulment or legal separation, the conjugal property will not be affected but the spouse who is at fault, or the one who left the conjugal home will not have the right to be supported as provided in the Family Code of the Philippines.
The spouse who was left at home may file a case for judicial separation of property in court or be authorized to be the sole administrator of the conjugal property.