GROSS ESTATE OF MARRIED DECEDENTS

The gross estate of a married decedent is composed of:

1. The decedent’s exclusive properties

2. The common properties of the spouses

The gross estate of a decedent is reported as follows in the estate tax return:

Exclusive Conjugal/Communal Total

Gross Estate Pxxx Pxxx Pxxx
Less: Deductions

Art. Family Code (EO 2009)

Marriage is a special contract of permanent union between a man and a woman in accordance with
law. It is not subject to stipulation, except that marriage settlements mat fix the property relations
during the marriage within the limits provided by law.

PROPERTY RELATIONS

The system of property relationship is applicable only to married persons. It is used to distinguished a
conjugal or community property from an exclusive property. For married decedents, the boundary
between separate properties and common properties of the spouses is important in the
determination of the gross estate of the decedent spouse.

COMMON TYPES OF PROPERTY REGIME

1. Absolute Separation of Property/ Complete Separation of Property

2. Conjugal Partnership of Gains (CPoG)
3. Absolute Community of Property (ACoP)

ABSOLUTE SEPARATION OF PROPERTY/ COMPLETE SEPARATION OF PROPERTY

The spouses shall be governed by complete separation of property if the future spouses agree
in the marriage settlements that their property relations during the marriage shall be governed by the
regime of separation of property. Technically, all properties of the spouses are separate properties,
except those properties which they may acquire jointly.

CONJUGAL PARTNERSHIP OF GAINS (CPOG)

All properties that accrue as fruit of their individual or joint labor or fruits of their properties during
the marriage will be common properties of the spouses.

The properties of the spouses including fruits before the marriage are their exclusive properties. All
fruits of labor and fruits of properties of the spouses during the marriage starting from the date of
celebration of the marriage are considered common properties.
Since common properties begin to accrue only from the date of marriage, this property regime is best
described as prospective.

Examples of fruits during the marriage

a) Salary, profits, or gains of labor or industry of either spouse

b) Income of properties acquired by the spouses during the marriage
c) Income of separate properties of either husband or wife.

Exception to prospectively: Acquisitions by gratuitous title

The properties received by the spouses by way of gratuitous acquisition such as donation or
inheritance during marriage are separate properties of the recipient spouse, unless the donor or the
decedent, as the case may be, designated the transfer to both spouses.

CPG Applies:

1. When the future spouses agree to it in the marriage settlement, or

2. To conjugal partnerships of gains already established between spouses before the effectivity
of the Family Code (August 3, 1988), without prejudice to vested rights.

EXCLUSIVE PROPERTY UNDER CPG

1. That which us brought to the marriage as his her own.

2. That which each acquires during the marriage by gratuitous title.
3. That which is acquired by right of redemption or by exchange with property belonging to only
one of the spouses.
4. That which is purchased with the exclusive money of the wife or of the husband.

Illustration 1:

Mr. Aguilar died. An inventory of the properties of Mr. and Mrs. Aguilar is prepared below:

Mr. Aguilar Mrs. Aguilar Total

Properties accruing before marriage
Properties inherited before marriage 200,000.00 100,000.00 300,000.00
Other properties brought into the marriage 400,000.00 500,000.00 900,000.00

Properties accruing after marriage

Properties inherited during marriage 250,000.00 150,000.00 400,000.00
Properties as fruit of own labor 140,000.00 160,000.00 300,000.00
Properties as fruit of common labor 250,000.00
Fruits of:
Properties inherited before marriage 100,000.00 50,000.00 150,000.00
Properties inherited during marriage 20,000.00 80,000.00 100,000.00
Properties as fruit of own labor 20,000.00 40,000.00 60,000.00
Properties as fruit of common labor 50,000.00
The following shows an analysis of the properties of the spouses under the CPoG:

Exclusive Properties
Properties accruing before marriage Mr. Aguilar Mrs. Aguilar Common Properties
Properties inherited before marriage 200,000.00 100,000.00
Other properties brought into the marriage 400,000.00 500,000.00
Properties accruing after marriage
Properties inherited during marriage 250,000.00 150,000.00
Properties as fruit of own labor 300,000.00
Properties as fruit of common labor 250,000.00
Fruits of:
Properties inherited before marriage 150,000.00
Properties inherited during marriage 100,000.00
Properties as fruit of own labor 60,000.00
Properties as fruit of common labor 50,000.00

Total 850,000.00 750,000.00 910,000.00

The Gross Estate of Mr. Aguilar shall be:

Exclusive property of Mr. Aguilar P850,000

Common property of Mr. and Mrs. Aguilar 910,000
Gross Estate P1,760,000

ABSOLUTE COMMUNITY OF PROPERTIES (ACoP)

All present properties owned by the spouses at the date of celebration of the marriage shall become
common properties of the spouses including future fruit of their separate or joint industry or fruits of
their common properties.

Under ACoP, marriage is viewed as a union of the present property of the spouses including fruits of
labor and industries of the spouses during marriage.

In general, property will be presumed to belong to the community, unless it can be proven to be
exclusive property.

Special Features of ACoP

1. Retrospective Feature – Properties into the marriage will become common properties. All
properties of the spouses present at the date of celebration of the marriage which they acquired
before marriage will become common properties.

2. Prospective feature – All properties which the spouses may acquire during the marriage from their
separate or joint labor or industry shall be common.

Exclusive Properties
1) Properties received by way of gratuitous title during the marriage
2) Fruits of separate properties of the spouses
3) Properties for the exclusive personal use of either of the spouse, except jewelry
4) Properties brought into marriage by either spouse with a descendant by a prior marriage.
Note on Exclusive personal use or personal effects:
Properties for exclusive personal use of either spouse, other than jewelry, are separate property
even if:
- They are acquired from fruits of labor or industry of either spouse or from fruits of
common properties
- They are acquired before or during the marriage.

Exceptions to prospective feature:

1) Properties received by gratuitous title
2) Fruits of separate properties during marriage

Note: Properties inherited during the marriage are still separate properties, even if they are jewelry.

Fruits
Fruits of labor and industry
Fruits arising from the labor or industry of either or both spouses are common properties of the
spouses.

Fruits of properties
The fruit of separate property is a separate property. It follows therefore that the fruit of common
property is a common property. In short, “FRUITS FOLLOW PRINCIPAL.”

EXCEPTION TO RETROSPECTIVITY
 Properties acquired before marriage by a spouse with descendants in a prior marriage.
The ACoP does not retroact if there are affected descendants from a prior marriage. Properties
accumulated before the marriage by a spouse with descendants from a prior marriage are reserved
by law as separate properties. This is apparently intended to protect the interest of descendants which
could be prejudiced by the new marriage.

Illustration 2
Mr. Aguilar died. An inventory of the properties of Mr. and Mrs. Aguilar who were under the
Absolute Community of Property

Mr. Aguilar Mrs. Aguilar Total

Properties accruing before marriage
Properties inherited before marriage 200,000.00 100,000.00 300,000.00
Properties for exclusive personal use 50,000.00 60,000.00 110,000.00
Other properties brought into the marriage 350,000.00 440,000.00 790,000.00

Properties accruing after marriage

Properties inherited during marriage 250,000.00 150,000.00 400,000.00
Properties as fruit of own labor 140,000.00 160,000.00 300,000.00
Properties acquired for exclusive use 30,000.00 40,000.00 70,000.00
Properties as fruit of common labor 250,000.00
Fruits of:
Properties inherited before marriage 100,000.00 50,000.00 150,000.00
Properties inherited during marriage 20,000.00 80,000.00 100,000.00
Properties as fruit of own labor 20,000.00 40,000.00 60,000.00
Properties as fruit of common labor 50,000.00
The following shows the classification of the properties of the spouses under ACoP
Exclusive Properties
Properties accruing before marriage Mr. Aguilar Mrs. Aguilar Common Properties
Properties inherited before marriage 300,000.00
Properties for exclusive personal use 50,000.00 60,000.00
Other properties brought into the marriage 790,000.00
Properties accruing after marriage
Properties inherited during marriage 250,000.00 150,000.00
Properties as fruit of own labor 300,000.00
Properties acquired for exclusive use 30,000.00 40,000.00
Properties as fruit of common labor 250,000.00
Fruits of:
Properties inherited before marriage 150,000.00
Properties inherited during marriage 20000 80000
Properties as fruit of own labor 60,000.00
Properties as fruit of common labor 50,000.00

Total 350,000.00 330,000.00 1,900,000.00

PROPERTY REGIME OF UNIONS WITHOUT MARRIAGE

(Title IV, Chapter 7 of the Family Code)

The Family Code, however, provides that acquisitions made by common law spouses are governed
by the rules of co-ownership.

Capacitated to Marry
When a man and a woman who are capacitated to marry each other, live exclusively with each other
as husband and wife without the benefit of marriage or under a void marriage, the following rules
shall apply:

a. Wages and salaries shall be owned by them in equal shares.

b. Property acquired by both of them through their work or industry shall be governed by the
rules on co-ownership.
c. Neither party can encumber or dispose by act inter-vivos his or share in the property
acquired during cohabitation and owned in common, without the consent of the other, until
after the termination of their cohabitation.

INCAPACITATED TO MARRY

1. Only the property by both of them through their actual joint contribution of money,
property or industry shall be owned in common in proportion to their respective
contributions. (if silent assume equal shares)
2. The share of any party who is married to another shall accrue to the absolute community or
conjugal partnership, ash the case may be, if existing `under the valid marriage.