Property Relations

Property Relationship Absolute Community of Property (ACoP)

• Applicable only to married persons • Most common regime in Philippine marital property
• Used to distinguish conjugal or community property relations
from exclusive property • Applies if spouses do not have a valid marriage
• Article 74 of Family Code, property relationship settlement
between husband and wife shall be governed in the • Spouses become co-owners of all property they
following order: bring into the marriage and those acquired by each
1. By marriage settlements executed before or both of them during marriage
marriage
2. By provisions of law Chapter 3 of the Family Code
3. By local custom
• Provides the provisions applicable to Absolute
community of property
Types of Property Relations or Marriage Settlements
• ACoP shall commence at the precise moment that
1. Absolute community of property (ACoP) the marriage is celebrated
2. Conjugal partnership of gains (CPG) • Any stipulation, express or implied, for the
3. Complete separation of property commencement of the community regime at any
4. Any other regime other time shall be void

Marriage Settlements Community Property under ACoP (Article 91)

• Shall be in writing General rule: All property belongs to the community
• Signed by the parties and executed before the (acquired at the time or after marriage) Article 91
celebration of the marriage
• Shall not prejudice third persons unless registered in Exception: If proven to be exclusive property
local civil registry and proper registries of
properties Exclusive Property under ACoP (Article 92)
1. Art. 92 (1) of the Family Code
• Exclusive Property:
Date of Marriage Property relationship
○ Property acquired by either spouse
Before August 3, 1988 → CPG through gratuitous title remains their
On or after August 3, 1988 → ACoP exclusive property, unless the donor,
testator, or grantor explicitly states
that it should be part of the community
NOTE: property.
→ Stipulations in the settlements or contracts for ○ If fruits or income came from
future marriage - void if marriage does not take exclusive property = remain exclusive
place (following the classification of the
→ Conjugal Property - Owned by both spouses principal asset)
→ Exclusive property - Owned • Community Property:
Exclusive Property of the husband - Capital ○ Fruits from labor (such as salaries or
wages earned by either spouse) are
Exclusive Property of the wife - Paraphernal
always considered part of community or
conjugal property, regardless of the
source.
If may prenuptial agreement - yun yung masusunod 2. Art. 92 (2) of the Family Code
• Exclusive Property:
If may property acquired by gratuitous title before ○ For personal and exclusive use of either
marriage (either spouse) - common siya pag kinasal na sila spouse — such as clothing, shoes, and
similar personal belongings (regardless
Jewelry kasi minsan binibili for appreciation (para of how they were acquired).
pataasin yung value) and not for personal use kaya ○ Any property acquired during marriage
exemption siya sa personal property through purchase with exclusive
funds or exchange with exclusive
assets remains exclusive.
• Community Property:
○ Exception to personal and exclusive use:
Jewelry
○ Treated as community property, unless
proven otherwise.
3. Art. 92 (3) of the Family Code
• Property acquired before marriage by
either spouse who has legitimate
descendants by a former marriage, and the
fruits as well as the income of such
property
• Yung mamamana ng surviving spouse sa
unang asawa na namatay is exclusive sa
bago niyang asawa (fruits are also excluded)

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 Conjugal partnership of Gains
Conjugal Partnership of Gains Conjugal Deductions
• Applicable to marriages prior to August 3, 1988 (Art. Note: Whether under absolute community of property or
75 of Family Code) or when spouses agree in the conjugal partnership of gains
marriage settlements (Pre-nuptial agreement)
1. Support of Spouses and Children
• Exclusive property ○ Expenses for the support of both spouses,
○ That which is brought to the marriage as his or their common children, and legitimate
her own children of either spouse are considered
○ That which each acquires during the marriage valid deductions.
by gratuitous title 2. Debts Contracted During Marriage for the Benefit of
○ That which is acquired by right of redemption, the Conjugal Partnership
by barter or by exchange with property ○ By either spouse with the other’s consent,
belonging to only one of the spouses ○ By both spouses together,
▪ The right of redemption is the legal ○ Or by one spouse acting as administrator of the
right to reclaim or repurchase property conjugal property
○ That which is purchased with exclusive money of (e.g., buying a family car, home renovations)
the wife or of the husband 3. Debts by One Spouse Without Consent of the other
that Benefited the Family
• Conjugal Properties ○ Even without the other spouse’s consent, debts
○ Those acquired by onerous title during the are deductible if they benefited the family.
marriage at the expense of the common fund, 4. Taxes, Liens, Repairs on Conjugal Property
whether the acquisition be for the partnership, ○ Any government dues, repair costs, or
or for only one of the spouses charges related to conjugal property are
○ Those obtained from the labor, industry, work or deductible.
profession of either or both of the spouses ○ This maintains the value and usability of shared
○ Fruits, natural, industrial, or civil, due or assets.
received during the marriage from the common 5. Preservation Expenses on Separate Property
property, as well as the net fruits from the ○ If either spouse’s exclusive property incurs
exclusive property of each spouse expenses for preservation (not improvement)
▪ Even fruits of the exclusive property will = those are deductible from the conjugal
become common property
○ Share in hidden treasure discovered during ○ Since preserving one spouse’s property can still
marriage which the law awards to the spouses benefit the family.
or to either of them as finder or proprietor 6. Self-Improvement of Either Spouse
○ Property acquired by occupation such as ○ Expenses for a spouse’s education,
hunting or fishing by spouses or by either of professional training, or skill development
them ○ These are presumed to increase the family’s
○ Livestock existing upon the dissolution of the economic capacity.
partnership in excess of the number of each 7. Debts Before Marriage That Benefited the Family
kind brought to the marriage by either spouse ○ If a pre-marital debt of either spouse
○ Those which are acquired by chance, such as benefited the family after marriage (Ex.
winnings from gambling or betting. However business loan used for a family venture)
losses therefrom shall be borne exclusively by 8. Donations to Children for Education/Self-Improvement
the loser-spouse
○ If both spouses donate or promise funds to
• Once the inventory of the properties has been their common legitimate children for
determined as conjugal / exclusive, the 1/2 of the education or self-development
conjugal / community properties included in the gross
9. Litigation Expenses Between Spouses
estate shall be deductible for estate tax purposes
○ Legal expenses incurred between spouses
during marriage are deductible only if the
Additional Key Concepts: case is not groundless.
• Presumption of Benefit: Debts made during
marriage are presumed to have benefited the family
and are thus conjugal deductions, unless proven
otherwise.
• Obligations Before Marriage: These are
exclusive, unless it can be shown that the family
benefited.
• Estate Deductions: Upon death, deductions are
made from the net conjugal estate and exclusive • Wagering (Gambling) Outcomes:
estate to arrive at the net taxable estate. These ○ Losses: Borne by the losing spouse alone
include: (exclusive obligation).
○ ½ of the net conjugal property (goes to ○ Winnings: Form part of conjugal property.
surviving spouse) • Fines and Damages: Any penalties, indemnities, or
○ Family home deduction fines imposed by law on a spouse are charged
○ Medical expenses against that spouse’s exclusive property, not the
○ Standard deduction conjugal property.

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 Estate Tax Due
Administrative requirements
Rate of Estate Tax Estate Tax Return (BIR Form No. 1801)
• January 1, 2018 or after - 6% on net taxable estate • An estate tax return is required to be filed when:
○ The estate is subject to tax;
Tax Credits for Estate Taxes paid to a Foreign Country ○ If exempt from tax, but the gross estate exceeds
• Taxes paid to a foreign country can be claimed as tax P200,000
credits ○ Regardless of amount of the gross estate, where
• Deduction from the estate tax due to arrive at estate said estate consist of registered or registrable
tax still payable (after multiplying 6%) property, motor vehicle, shares of stock, or other
• Tax credits apply only to estate tax of resident citizen, similar property for which a Certificate
non-resident citizen and resident alien Authorizing Registration from the BIR is required
• Limitation: the allowable tax credits shall be subject to as a condition precedent for the transfer of
the limitation ownership.
• Important Period
What to submit Period Reference
Estate Tax Return 1 year from the Sec. 90 (B),
One foreign Country File and Payment decedent’s death NIRC
A certified copy of 30 days after Sec. 90 (B),
the schedule of promulgation of such NIRC
partition and the order
order of the court
approving the same
Extension of time to Not exceeding 30 days Sec. 90 (C),
file under for filing of the return NIRC
meritorious case

Two or More Countries Extension of Time of Not to exceed 5 years

Payment for judicial settlement

2 years for
extrajudicial
settlement

• Registration and Place of Payment

○ Resident Decedent – Register the estate and get
a new TIN from the RDO where the decedent lived
at death.
○ Non-Resident with Local Executor/Administrator -
File the estate tax return and get the estate’s
TIN from the executor’s/administrator’s RDO.
○ Non-Resident without Local
Executor/Administrator - File and get the estate’s
TIN through RDO 39 – South Quezon City via
the BIR Commissioner’s Office.
• Certification from a Certified Public Accountant
○ Required whenever the gross estate exceeds
P5,000,000
○ Must include:
▪ Itemized list of assets and their values
▪ Itemized deductions
▪ Tax due (whether paid or unpaid)
• Withdrawal from Bank Deposits of the Deceased
○ Section 10 of RR No. 12-18
Note: Lower value because the government wants to get ▪ If a bank is aware of a depositor’s death, it
higher tax may allow withdrawals (solo or joint
accounts) within one year from death,
subject to a 6% final withholding tax.
○ The executor, administrator, or any legal heirs,
withdrawing from the deposit shall provide the
bank with:
▪ Estate's TIN
▪ BIR Form 1904, stamped as received by
the BIR

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