Absolute Community of Property in Philippine Family Law

WHAT IS ABSOLUTE COMMUNITY OF PROPERTY IN PHILIPPINE FAMILY LAW

The system of Absolute Community of property is a system of property relation that treats properties acquired by the spouses during their marriage as jointly-owned. It consists of all the properties owned by the spouses at the time of the celebration of the marriage or acquired thereafter unless the property involved is expressly excluded by an existing marriage settlement or by the provisions of the Philippine Family Law.

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The System of Absolute Community of property is considered as the default property regime of the spouses. In the absence of a marriage settlement or if one is considered void, the law itself prescribes such as the operative property system within the marriage. Under the Family Code, the system of Absolute Community of property commences at the precise moment the marriage is celebrated and any stipulation allowing for the commencement of such system at a later time shall be considered as void. The rules governing co-ownership shall apply in all matters not provided for in the Family Code.

In order to protect third persons such as creditors, the law prohibits a spouse from making a waiver of interest over his or her share in the community property except in the case of judicial separation of property. In the event that a judicial separation of property occurs or when the marriage is dissolved or annulled, any waiver must appear in a public instrument and shall be registered in the local civil registry where the marriage contract is recorded as well in the proper registries of property.

The Absolute Community of property encompasses all the properties each spouse owns at the time of the marriage and thereafter. Certain properties however are excluded as determined by Philippine Family Law. These properties are as follows:

  1. Property acquired during the marriage by gratuitous title by either spouse, and the fruits as well as the income thereof, if any, unless it is expressly provided by the donor, testator or grantor that they shall form part of the community property;
  2. Property for personal and exclusive use of either spouse. However, jewelry shall form part of the community property;
  3. Property acquired before the marriage by either spouse who has legitimate descendants by a former marriage, and the fruits as well as the income, if any, of such property.

Notice should be taken that the law presumes a property acquired during marriage as part of the community unless it can be proved that such property is one of those excluded.

As a rule, the absolute community of property shall answer for the following charges and debts:

  1. The support of the spouses, their common children, and legitimate children of either spouse; however, the support of illegitimate children shall be governed by the provisions of this Code on Support;
  2. All debts and obligations contracted during the marriage by the designated administrator-spouse for the benefit of the community, or by both spouses, or by one spouse with the consent of the other;
  3. Debts and obligations contracted by either spouse without the consent of the other to the extent that the family may have been benefited;
  4. All taxes, liens, charges and expenses, including major or minor repairs, upon the community property;
  5. All taxes and expenses for mere preservation made during marriage upon the separate property of either spouse used by the family;
  6. Expenses to enable either spouse to commence or complete a professional or vocational course, or other activity for self-improvement;
  7. Ante-nuptial debts of either spouse insofar as they have redounded to the benefit of the family;
  8. The value of what is donated or promised by both spouses in favor of their common legitimate children for the exclusive purpose of commencing or completing a professional or vocational course or other activity for self-improvement;
  9. Ante-nuptial debts of either spouse other than those falling under paragraph (7) of this Article, the support of illegitimate children of either spouse, and liabilities incurred by either spouse by reason of a crime or a quasi-delict, in case of absence or insufficiency of the exclusive property of the debtor-spouse, the payment of which shall be considered as advances to be deducted from the share of the debtor-spouse upon liquidation of the community; and
  10. Expenses of litigation between the spouses unless the suit is found to be groundless.

In the event that the community property is not sufficient to cover all such claims, the spouses shall be solidarily liable for the unpaid balance with their separate properties except for those debts falling under paragraph (9).

Both spouses shall possess joint administration and enjoyment of the community property.  In case of disagreement, the husband’s decision shall prevail subject to proper recourse by the wife to the courts for proper remedy. This action on the part of the latter must be commenced within 5 years from the date of the contract implementing such. One of the spouses may assume sole administration and exercise powers of administration if the other spouse is incapacitated or is unable to participate in the administration of the property. Such power does not confer to the administrator the authority to dispose or encumber the properties administered unless allowed to by the court or consented to by the other spouse. In the absence of such consent, the disposition or encumbrance shall be considered void but the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third party that may still be perfected upon the acceptance by the other spouse or upon authorization of the court. Neither spouse may donate any community property without the consent of the other except in the case of moderate donations for charity or on occasion of family rejoicing or family distress.

As stated in the Philippine Family Law, the absolute community is terminated upon the happening of the following:

  1. Upon the death of either spouse;
  2. When there is a decree of legal separation;
  3. When the marriage is annulled or declared void; or
  4. In case of judicial separation of property during the marriage

In case the community property is dissolved, the following procedure shall take place. First, an inventory shall be made listing separately the properties that are included and excluded from the community property. Second, the debts and obligations of the absolute community shall be paid out of its assets. Third, whatever remains of the exclusive properties of the spouses shall thereafter be delivered to each of them. Fourth, the net assets shall be divided equally between husband and wife unless a different proportion or division was agreed upon in the marriage settlements or if there has been a voluntary waiver of such share as provided under the law. Fifth, the presumptive legitimes of the common children shall be delivered. Sixth, the conjugal dwelling and the lot on which it is situated shall be adjudicated to the spouse with whom the majority of the common children choose to remain unless otherwise agreed upon by the parties. Children below the age of seven years are deemed to have chosen the mother, unless the court has otherwise decided.

If no judicial settlement proceeding is instituted, the surviving spouse shall liquidate the community property either judicially or extra-judicially within six months from the death of the deceased spouse. If no liquidation is made upon the lapse of the six months period, any disposition or encumbrance involving the community property of the previous marriage shall be void. Should the surviving spouse contract a subsequent marriage without compliance with the previous requirements, a mandatory regime of complete separation of property shall be imposed upon the property relations of the subsequent marriage.

Source: Manila Legal Website

Formal Requisites of a Valid Prenuptial Agreement

WHAT ARE THE REQUISITES OF A VALID PRENUPTIAL AGREEMENT

Formal Requisites of a Valid Prenuptial Agreement provided by the Philippine Civil Code

The Philippine Civil Code provides the following formal requisites that must be complied with in order to make a prenuptial agreement valid:

Art. 77. The marriage settlements and any modification thereof shall be in writing, signed by the parties and executed before the celebration of the marriage.

The first requirement is that the agreement must be in writing. In other words, all the terms and modifications pertaining to the property regime must be in black and white. Oral agreements are therefore not allowed.

In addition, the executory nature of a prenuptial agreement may be considered as falling under an “agreement made in consideration of marriage, other than a mutual promise to marry;” hence, it is covered by the Statute of Frauds. The latter requires that a note or memorandum in writing subscribed by the party charged or his agent be made concerning the terms of the agreement in order for it to be enforceable.

With this in mind, is there a need to notarize the document?

Although there is no specific provision in the Code requiring notarization of a prenuptial agreement, an interpretation of several provisions shows that there is a need for it especially in registering the agreement as well as the properties involved. In fact, Article 77 further provides that, “They shall not prejudice third persons unless they are registered in the local civil registry where the marriage contract is recorded as well as in the proper registries of properties. (122a)” Registration requires a public document. The most common way of turning a private document into a public document is to have it notarized.

Note must be taken though that notarization is not a requirement for validity of the prenuptial agreement itself, but merely for its enforceability against third persons or parties other than the couple.

The second requirement is that the agreement must be signed by the parties. The signatures of each of the couple are the obvious manifestations of their consent to all the terms embodied in the agreement.

The third requirement is that the agreement must be entered into by the parties prior to the marriage. As the term “prenuptial” connotes, said agreement must indeed be drafted and signed before the marriage occurs. Otherwise, it fails to serve its purpose of settling beforehand the issue of property ownership and management between the couple.

There are certain instances though when modifications of prenuptial agreements are allowed even during the marriage: a) in cases of reconciliation between spouses who are subjects of legal separation proceedings; b) in cases of an agreement on the revival of their former property regime, executed by the reconciled couples above; c) in a regime of conjugal partnership of gains where a spouse abandons the other; d) in judicial separation of property; and e) in cases where the couple files a joint petition for voluntary dissolution of their existing property regimes.

Essential Requisites of a Valid Prenuptial Agreement

WHAT ARE THE ESSENTIAL REQUISITES OF A VALID PRENUPTIAL AGREEMENT

A prenuptial agreement is a contract therefore it must comply with the essential requisites characteristic of contracts.

Under the Philippine Civil Code, there are three (3) requisites essential to a valid contract: a) consent; b) object; and c) cause.

Consent is defined by said Code as follows:

Art. 1319. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter-offer.

Simply stated, consent is shown when each of the parties fully agree with what the other is proposing and accepts all the terms of the prenuptial agreement, without any condition. In the case of a prenuptial agreement, each of the engaged couple must agree on the same property regime. If the proposed property regime is a modification of those already existing under the Code, then both of them should agree on every modification made.

In relation to consent, the parties must also have the capacity to act, which is defined by the Civil Code as the power to do acts with legal effects. Said Code further provides circumstances where capacity to act will be affected, to wit:

Art. 39. The following circumstances, among others, modify or limit capacity to act: age, insanity, imbecility, the state of being a deaf-mute, penalty, prodigality, family relations, alienage, absence, insolvency and trusteeship. The consequences of these circumstances are governed in this Code, other codes, the Rules of Court, and in special laws. Capacity to act is not limited on account of religious belief or political opinion.

A married woman, twenty-one years of age or over, is qualified for all acts of civil life, except in cases specified by Philippine law. (n)

Therefore, each of the couple should not have an impediment in any of the circumstances enumerated above. Foremost of which is the requirement that they should be of legal age, that is, at least eighteen (18) years old.

There are nonetheless certain modifications to the capacity to act of minors and persons sentenced with civil interdiction. Minors can give consent as long as the persons required to give consent to the marriage are made parties to the agreement. On the other hand, for persons sentenced with civil interdiction, his/her court-appointed guardian must be made a party to the agreement.

As regards the object, the Code provides the following definition:

Art. 1347. All things which are not outside the commerce of men, including future things, may be the object of a contract. All rights which are not intransmissible may also be the object of contracts.

No Philippine prenuptial agreement may be entered into upon future inheritance except in cases expressly authorized by law.

All services which are not contrary to law, morals, good customs, public order or public policy may likewise be the object of a contract. (1271a)

In prenuptial agreements, the object of the contract is the set of properties owned by each couple prior to the marriage as well as future ones. Future properties can not be considered as parts of the inheritance hence do not fall under the prohibition.

Finally, with respect to the cause of the contract, Article 1350 of the Code provides:

Art. 1350. In onerous contracts the cause is understood to be, for each contracting party, the prestation or promise of a thing or service by the other; in remuneratory ones, the service or benefit which is remunerated; and in contracts of pure beneficence, the mere liberality of the benefactor. (1274)

A prenuptial agreement can be considered as an onerous contract since each of the couple has correlative rights and obligations to fulfill in executing its terms. For instance, in case the couple adoptsthe conjugal partnership of gains as their property regime, each of them is obliged to contribute any income derived from either their profession or business to the conjugal fund. They in turn have the exclusive right to all the properties they have acquired prior to the marriage.

Indeed, prenuptial agreements must comply with the essential requisites of consent, object, and cause in order for it to be valid. Failure to do so renders the contract null and void and makes the absolute community of property regime operative. In this case, all properties acquired before and after the marriage by each of the couple, belong to the community property. Upon division, said properties, will be divided equally between them; hence renders ineffectual the exclusivity characteristic of other property regimes.

Seven Elements That Every Prenuptial Agreement Should Have

WHAT ARE THE SEVEN ELEMENTS OF A PRENUPTIAL AGREEMENT

Philippine prenuptial agreements are not wills or testaments. For obvious reasons, the two serve different purposes and functions. The problem is prenuptial agreements are crafted like wills, thus, making vague conditions.

Prenups do not set conditions in the betrothal of properties and deaths. Its main goal is to ensure that couples follow legal guidelines in managing their assets right after marriage.

Drafting prenups is a complicated and tedious process. Every single detail should be included in the agreement. Definitely, a lawyer is needed to ensure that all the terms included will benefit the affected parties. Legal help from a prenup lawyer is also instrumental in identifying the settlement’s biases.

Important Elements of a Prenuptial Agreement

Prenuptial agreements contain important elements. In general, these are the things or important issues that should be included in the agreement.

  • List of all assets and properties
  • Every spouse should include a list of all their properties together with their corresponding values in their prenuptial agreements. This will readily define the things that a spouse will bring into the marriage and its corresponding limitations. The enumeration should not be limited to assets and properties alone, but is also true for the liabilities.

  • Debt management
  • The prenuptial agreement must describe to whom the burden of payment rests and how debts will be managed. Some may find this option offensive and therefore not include it in their agreements. The truth is, there is nothing offensive in this. It is much better to discuss this aspect as soon as possible to avoid more pressing problems in the future.

  • Asset and property divisions
  • Note down how the properties will be divided during unexpected deaths. Determine which assets will go to the spouse or children. For those who have annulled marriages, they are sure to reap benefits from this particular option.

  • Pension and death benefits
  • It is best to include this in the agreement. Once again, in situations where there is an unexpected death, the prenup will determine the beneficiaries. Disputes and conflicts that could lead to court battles are readily avoided.

  • Insurances
  • Like in pension and death benefits, the prenuptial agreement should also tackle how insurances will be managed and other special provisions concerning the beneficiaries.

  • Child and spouse support
  • The prerogatives regarding child and spouse support should be clearly stated in the prenuptial agreement, just in case an annulment is pursued.

  • Asset gains and profits
  • Prior to exchanging marital vows, it would be best for couples to discuss how they will oversee or manage any income or profit gained from each of their properties.

Indeed, prenuptial agreements are not created to preempt the marriage’s failure. Instead, this is an instrument to clarify important issues that are commonly ignored. Also, marriage settlements tend to put an end to possible disagreements that could lead to legal battles. That is why it is advisable for couples to check their prenups once in a while to see if they need to make changes or modifications that will be more appropriate to their current circumstances.

Why Filipino Couples Are Averse To Prenuptial Agreements

REASONS WHY FILIPINO COUPLES ARE AVERSE TO PRENUPTIAL AGREEMENTS

Filipino Couples on Prenuptial Agreements

There is a highly conservative culture practiced by the Filipinos especially when it comes to Philippine marriage. Societal norms advocate the sanctity of marriage and the importance of preserving the union at all costs. That is why all matters that may possibly affect the harmony of the couple’s relationship are avoided.

The act of entering into prenuptial agreements is commonly perceived as an example of those matters that can do more harm than good to the couple’s relationship. These agreements tend to develop an atmosphere of mistrust between parties. Such mistrust often blows petty fights out of proportion and worse, leads to separation.

Why then is mistrust created? The primary reason behind this effect is the nature of prenuptial agreements. Such mainly deal with property management acquired before and after the marriage. Therefore, the agreement impliedly advocates the preservation of the self-interests of each of the couple. This preservation sought may be misunderstood as the spouse’s fear that the other is merely taking advantage of his/her wealth. Or it may be interpreted as the spouse’s selfishness to share whatever he/she owns.

Aside from the Filipino culture’s conservatism on marriage, the Filipinos innate, hopeless romanticism is another reason why many couples are averse to drafting prenuptial agreements. By nature, they love fantasizing about a happy ever after for the prince charming and his princess.  This marital bliss is often defined as a marriage where money or property can never be an issue. Whatever each of them owns must be shared to the other. In case debts are incurred, both of them must be together in settling it.Simply stated, this romanticism unconsciously imbeds the belief that couples should act as one at all times.

Indeed, the Filipino culture greatly influences the couple’s aversion to prenuptial agreements. Nothing is inherently wrong with this. What counts is the couple’s continuous struggle to nurture their relationship with love, respect, openness and trust. Once this is fulfilled, the presence or absence of a prenuptial agreement will be meaningless.

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Property Regimes in the Philippines

The System of Absolute Community is considered as the default property regime of the spouses. In the absence of a marriage settlement or if one is considered void, the law itself prescribes such as the operative property system within the marriage.

Spousal Support in the Philippines

The obligation to provide spousal support derives itself from article 68 of the Family Code elucidating the various rights and obligations of the spouses during the existence of their marriage. Under the said provision, both spouses are required to render mutual help and support to each other. As a rule, the spouses are jointly responsible for the support of the family.