Yours, mine, ours

1901

“If the spouses did not agree on a specific property regime in a pre-nup before they were married, Philippine law has determined “defaults.”

Drawing the line of “yours, mine and ours” between spouses can be a bit tricky. Fortunately, the law has established set rules or regimes that govern property relations between spouses.

There are three property regimes established by Philippine Law. The first is a Conjugal Partnership of Gains (CPG); the next is an Absolute Community of Property (ACP) and lastly, a Complete Separation of Properties (CSP).

In CPG, the spouses retain individual ownership of the property they had before they got married. It is the income, fruits, proceeds or “gains” from the spouses’ separate properties that form their conjugal property or the common fund that is co-owned by the spouses. In ACP, the spouses become co-owners of properties they had separately owned at the time of the celebration of marriage and those acquired thereafter during the course of their marriage. This forms a common fund referred to as the absolute community, save some exceptions which remain excluded such as property acquired by gratuitous title by a single spouse alone. In CSP, as the name suggests, each spouse retains individual ownership of the property that they had brought into the marriage as well as the property they had individually acquired thereafter. The separation of property may refer to present or future property or both and it may be total or partial separation. In the latter case, the property that was not agreed upon to be separate shall pertain to the absolute community of the spouses.

If the spouses did not agree on a specific property regime in a pre-nup before they were married, the Philippine law has determined “defaults” as to which property regime governs their marriage in absence of said document. For domestic marriages wherein both spouses are Filipino citizens, the reckoning point is the date they were married. If the marriage was celebrated/solemnized on or before 3 August 1988 (the effectivity of the Family Code), CPG is what will govern their marriage. If the marriage was celebrated/solemnized after the abovementioned date, then it is ACP that will prevail.

It gets a lot more complicated with international marriages wherein the spouses have different nationalities. International matrimonial law aims to harmonize domestic matrimonial laws and judicial rulings across international borders. For this purpose, The Hague Conference on Private International Law concluded the Convention on the Law Applicable to Matrimonial Property Regimes. Under said convention, spouses may select which law shall apply to their property between the state wherein one of the spouses is a national, the habitual residence of one of the spouses at the time of selection, or a new habitual residence after the marriage. Unfortunately, the Philippines is not yet a party to the said convention although it is a member of The Hague Conference on Private International Law.

That being said, for international marriages where one spouse’s state is a member of the European Union (EU), there is more progress in harmonizing matrimonial laws. Eighteen EU states (Sweden, Belgium, Greece, Croatia, Slovenia, Spain, France, Portugal, Italy, Malta, Luxembourg, Germany, the Czech Republic, the Netherlands, Austria, Bulgaria, Finland and Cyprus) have manifested efforts to establish enhanced cooperation between themselves in the area of the property regimes of international couples.

This enhanced cooperation was implemented in 2016 through Regulations EU 2016/1103 for married couples and will fully apply starting 29 January 2019. The regulations prioritize the informed choice of law of the parties between the law of the State where the spouses or future spouses, or one of them, is habitually resident at the time the agreement is concluded; or the law of a State of nationality of either spouse or future spouse at the time the agreement is concluded.

It bears stressing that even in states that are not a party to any of the above agreements, some courts have found ways to stretch their jurisdiction specifically if the assets are marital and under the control of only one spouse. In the US case of Riechers v. Riechers, one spouse had used marital assets to fund a Cook Islands trust so the court ordered the other spouse’s share of that money to be paid from other assets even though the New York court had no jurisdiction over the trust money.

To spare yourself the headache (and the heartache) of navigating the various rules on marital property, it seems best to execute a pre-nup or marriage settlement. Keep in mind that there are some things that money can’t buy, but for everything else — call your lawyer.

Email: nilo.divina@divinalaw.com

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