With younger people investing in real estate early in life and before they marry, it is important to understand the property relation that future husband and wife will have after their marriage.
In general, the property relations between spouses are governed by laws in the following order: by contract or marriage settlement executed before marriage; the provisions of the Philippine Code applicable at the time of the marriage, e.g., Civil Code or the Family Code; and by local custom.
According to Republic Act No. 386, as amended (Civil Code of the Philippines) and Executive Order No. 209, series of 1987 (Family Code of the Philippines), future spouses may agree to any of the following marriage settlements: relative community or conjugal partnership of gains, absolute community, separation of property, or any other regime.
In the absence of any marriage settlement or when the selected regime is void, the applicable system shall be based on conjugal partnership of gains, if the marriage was held before August 3, 1988 (effectivity date of the Family Code), or absolute community of property, if the marriage happened on or after August 3, 1988
• Separation of property. As provided in the Codes, the separation of property applies when it is properly executed before marriage. Its extent covers total or partial properties, and refer to those acquired before marriage, during marriage, or both. If only partial separation of properties was agreed upon, those outside the partial separation list shall be governed by absolute community of property, if the marriage was consummated on or after the effectivity of the Family Code of the Philippines.
Under this arrangement, the continued ownership shall solely belong to the spouse who owns the properties prior to marriage, and the possession, administration and disposition do not need the consent of the other spouse. All earnings by each spouse during the marriage shall be separate too.
• Relative community or conjugal partnership of gains. Under this regime, the spouses own in common all properties acquired by onerous title (purchase/sale) during their marriage using their common funds; obtained from income by their industry, work or salaries of either or both spouses; and the fruits, rents or interest received or due during their marriage whether coming from their common properties or exclusive properties of each spouse.
Meanwhile, the following are considered exclusive of each spouse and do not form part of the common properties: those brought into the marriage as his or her own; properties acquired during marriage by each spouse by lucrative/gratuitous title like donation, will or intestate (no will); those properties acquired by right of redemption or exchange with other property belonging to only one spouse; or purchased with exclusive money of either the husband or wife.
The conjugal partnership of gains last until the dissolution of their marriage like death or annulment, or of their partnership like legal separation or judicial separation of property. In these cases, their common properties, income and fruits from their exclusive properties are to be divided among them equally, unless found contrary to law.
• Absolute community of property. All properties that each spouse own before the marriage, or acquired during the marriage belong to both in common, unless it falls under any one of these exclusions like properties acquired during the marriage by gratuitous title by either spouse including the fruits and income thereof, unless the donor, testator or grantor expressly provided it to form part of the common property; personal property and for the exclusive use of either spouse, except jewelry; or properties acquired prior to the marriage by either spouse who has legitimate descendants by a previous marriage and the fruits and income from those properties.
The property relation is terminated when the spouses are legally separated or their properties are judicially separated; the marriage is annulled or voided; or any of the spouses dies.
After the death of a spouse, the estate should be settled and liquidated within a year, or the disposition of community property is considered void. If the surviving spouse remarries, a separation of property shall govern the subsequent marriage.
Common law spouses or “live-in” partners
If a man and woman live as husband and wife but are not married even if they have the capacity to be married, or their marriage is void from the beginning, properties acquired by either or both spouses while they live together are governed by co-ownership rules, and presumed to be in equal shares unless proven otherwise.
However, if a man and woman are incapable of being married but continuously live like husband and wife, or their marriage is void, only the properties acquired by them through their joint contributions are owned in common, in proportion to their respective contributions.
Understand your property relation, but tread with caution. You do not want to be perceived as loving your properties more than your spouse.
References used include the Executive Order No. 209, as amended (The Family Code of the Philippines) and Republic Act No. 386, as amended (The Civil Code of the Philippines).