CHAPTER 3SYSTEM OF ABSOLUTE COMMUNITY

REGIME OF ABSOLUTE COMMUNITY

A property regime is also known as an absolute community.

Absolute Community- spouses are considered co-owners of all property brought into and acquired during marriage.

With this regime the property relations of the spouses are governed through the following instances:

1. When it is agreed upon in the marriage settlement

2. When the spouses did not execute a marriage settlement, and;

3. When the regime agreed upon in the marriage settlement is VOID

RULES GOVERNING ABSOLUTE COMMUNITY

1. If the regime of absolute community is provided in the marriage settlement- provisions of marriage settlement shall govern the spouses’ property relations

(as long as it does not violate mandatory provisions and not contrary to morals and public policy)

2. If regime of absolute community applies to the spouses by default pursuant to the provisions of art. 75- provisions of Family Code on absolute community shall govern

Applicability of provisions (C. Code) on co-ownership on the regime of absolute community-

recognizes the regime as a special kind of co-ownership

Commencement of Absolute Community

Regime is agreed upon in the marriage settlement or applies by default- it shall commence at the precise moment of marriage celebration;

any agreement between spouses (express or implied) that the regime will commence at any other time is void

REASON: SPOUSES ARE NOT ALLOWED TO MODIFY THEIR PROPERTY REGIME DURING MARRIAGE TO CHANGE IT TO ABSOLUTE COMMUNITY, IF IT IS NOT THEIR REGIME AT THE START OF THE MARRIAGE.

ART. 88 EMPHASIZES THAT SPOUSES WHO ARE LEGALLY SEPARATED MAY NOT ADOPT ABSOLUTE COMMUNITY

Community Property- properties included in the regime of absolute community which are co-owned by the spouses;

-all properties owned by the spouses at the time of celebration of marriage or acquired during the marriage with the exception of those included in art. 92 and those excluded by the spouses in the marriage settlement

Future spouses executing marriage settlement before marriage and adopting an absolute community as property regime, may agree to exclude from the community property whatever properties they may have at the time of the marriage celebration and include those that they may acquire during the marriage

What about the “Fruits and Income” of these properties, will they also be excluded from the community property?

It will depend on the agreement of the spouses in the marriage settlement, if they agree to exclude their agreement shall prevail pursuant to art.74(1)

- In the absence of agreement to exclude, these fruits and incomes will be considered part of the community property, thus falling under the general rule that all property owned by the spouses at the time of celebration of the marriage or acquired thereafter shall be part of the Community Property

but if these fruits and incomes are generated during marriage, it is presumed that they belong to the Community Property

Presumption in Favor of Community Property

Acquired before or during the marriage, the presumption in favor of the community must relate to all properties of the spouses and not only the properties acquired during the marriage

Conjugal Partnership: party must first prove that the property was acquired during the marriage

Absolute Community: spouses’ properties are in included in the community property as a rule, whether the property is acquired before or after the marriage

Separate or Exclusive Properties of the Spouses

Separate or Exclusive Properties- properties which are not included in the absolute community, over which the spouse-owner retain ownership, possession, administration, administration and enjoyment

Properties classified as separate or exclusive

1. Property acquired before the marriage by either spouse which has been excluded from the absolute community in the marriage settlement

2. 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

3. Property for personal and exclusive use of either spouse; jewelry shall form part of the community property

4. 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

Property acquired during marriage by Gratuitous Title

All properties acquired by the spouses during marriage belong to the community property except:

1. Those acquired by gratuitous title by either spouse

2. Those personal and exclusive use of either spouse

REQUISITES FOR GRATUITIOUS TITLE TO BE CONSIDERED EXCLUSIVE OR SEPARATE

1. Must be acquired during marriage

2. Acquired by either spouse

3. Donor, testator, or grantor does not expressly provide that shall form part of the community property

If property was gratuitously acquired before the marriage or the donor, testator, or grantor expressly provide that it shall form part of the community property, the property shall belong to the community

Family Code is silent if the property is acquired through gratuitous title by both spouses jointly

Property acquired prior to Marriage

All properties acquired prior to marriage are included in the community property except:

1. Those excluded in the marriage settlement

2. Personal and exclusive use

3. Acquired by either spouse who has legitimate descendants by a former marriage

Family Code excludes from the community all his or her property acquired prior to the subsequent marriage (applies to number 3)

May the future spouses in the subsequent marriage agree to include these properties as part of absolute community in their marriage settlement?

Answer: No, while the future spouses are free to fix their property relations in their marriage settlement, the law provides that they can only do so within the limits provided by the Family Code

Sale or Exchange of Separate Properties

If a separate property of either spouse is sold/exchanged for another property, will the proceeds of the sale or property acquired remain separate or be now part of the community property?

Answer: if property is excluded from the community property by reason of the marriage settlement, alienation of such property converts the proceeds of the property acquired in its place to community property following the rule in art. 91 and presumption in art. 93

If a property is excluded from the community by reason of mandatory provisions of law, it is submitted that the policy of the law to stamp these properties with separate character should not be easily defeated by the simple expedient of converting said properties into some new form

Support

- Community Property shall be liable for the support of the spouses, their common children and legitimate children of either spouse in the previous marriage

- An adopted child is considered legitimate son/daughter of the adopter thus entitled to all rights and obligations provided by law to legitimate children

Illegitimate children of either spouse shall come from the exclusive property of the illegitimate parent-spouse

Absence/insufficiency of the exclusive property of the illegitimate parent- spouse will mean payment which may be taken from the community property and the same shall be considered as advances to be deducted from the share of such parent

Debts and Obligations Contracted during Marriage

Absolute Community shall be liable for:

1. Those contracted by the designated administrator-spouse for the benefit of the community

2. Those contracted by both spouses

3. those contracted by one spouse with the consent of the other

4. Those contracted by either spouse without the consent of the other to the extent that the family may have been benefited

If the debt is contracted during marriage by both spouses or by either spouse with the consent of the other, the law presumes that such debt has redounded to the benefit of the family

If the debt is contracted by the designated administrator-spouse or by one spouse without the consent of the other, absolute community shall be liable only if it can be proven that the debt benefited the community or the family

Ante- Nuptial Debts

- Are debts contracted by either spouse prior to the marriage

- Absolute community shall be liable only if it can be proven that such debt has redounded to the benefit of the family

- If such debt did not redound to the benefit of the family, it is the exclusive property of the debtor-spouse which must pay such debt

Taxes and Expenses Incurred on the property

• Taxes• Liens• Charges and expenses (minor and major

repairs) upon the community property

All shall be the liability of the absolute community

Expenses for Education and Self-Improvement

- enable either spouse or their common legitimate children

to complete a professional or vocational course or expenses incurred

for other activities aimed at self-improvement are chargeable to

the absolute community

Expenses of Litigation Between Spouses

- chargeable to the absolute community unless the suit is found to be groundless

-spouses shall be solidarily liable for the unpaid balance with their separate properties if the community property is insufficient to cover the foregoing liabilities

Obligations Chargeable to Exclusive Property

(a) Support of illegitimate children of either spouse;

(b) Debts contracted by the designated administrator-spouse during the marriage which did not benefit the community;

(c) Debts contracted during the marriage by either spouse without the consent of the other which did not redound to the benefit of the family;

(d) Ante nuptial debt of either spouse which did not redound to

the benefit of the family;

(e) Taxes and expenses incurred during the marriage for the preservation of a separate property of either spouse which is not being used by the family;

(d) Ante nuptial debt of either spouse which did not redound to the benefit of the family;

(e) Taxes and expenses incurred during the marriage for the preservation of a separate property of either spouse which is not being used by the family;

(f) Civil liability of either spouse arising from crime or quasi-delict;

(g) Expenses of litigation between spouses, if the suit is found to be groundless;

(h) Losses during the marriage in any game of chance, betting, sweepstakes, or any other kind of gambling, whether permitted or prohibited by law, shall be borne by the loser and shall not be charged to the community but any winnings therefrom shall form part of the community property.

Administration of Community Property

- administration and enjoyment of the community property belong to both spouses

-in case of disagreement, the husband’s decision shall prevail, which must be availed of within five years from the date of the contract implementing such decision

In the following situations, one of the spouses may assume sole powers of administration:

1. one spouse is incapacitated or otherwise

unable to participate in the administration of the common properties

2. during the pendency of a legal separation case

3. if a spouse without just cause abandons the other or fails to comply with his or her obligations to the family

Disposition of Community Property

The rule of absolute regime applies even if the disposition is to be made by the administrator-

spouse because the powers of sole administration do not include disposition or encumbrance without authority of the court or the written consent of the other spouse

Disposition of Spouse’s Interest in the Community Property

- neither spouse can dispose of their respective interest in the community property by way of disposition inter vivos, hence any disposition of the spouse’s respective shares or interest shall be void since such right to one-half of the community assets does not vest until the liquidation of the absolute community

- Nemo dat qui non habet- No one can give what he has not

Causes of Termination of Absolute Community

1. upon the death of either spouse

2. When there is a decree of legal separation

3. when the marriage is annulled

4. when the marriage is judicially declared void under Article 40

5. in case of judicial separation of property during the marriage under Articles 134 to 138

Effects of Separation De Facto

Separation De Facto- situation where the spouses simply separate without the benefit of a decree of legal separation

Consequences:

1. the spouses retained their right of consortium because in the eyes of the law, they are not entitled to live separately from each other

2. 2. the separation de facto does not likewise affect the regimes of absolute community or conjugal partnership of gains

3. the spouses continue to be the legal heir of each other in intestate succession

4. there is neither a guilty spouse nor an innocent spouse

In case of separation de facto:

- judicial authorization may be obtained in a summary proceeding when the consent of one spouse to any transaction of the other is required by law

In Case of Abandonment

Abandonment- act of one spouse voluntarily separating from the other, with the intention of not returning to live together as husband and wife- a spouse is deemed to have abandoned the other

when he or she has left the conjugal dwelling without intention of returning

- spouse who has left the conjugal dwelling for a period of three months or has failed within the same period to give any information as to his or her whereabouts shall be prima facie presumed to have no intention of returning to the conjugal dwelling

if the separation de facto is attended by abandonment, the following effects are likewise

produced:

1. the spouse who leaves the conjugal home or refuses to live therein, without just cause, shall not have the right to be supported

2. the aggrieved spouse may petition the court for receivership

3. the aggrieved spouse may petition for legal separation if the abandonment lasts for more than one year

Procedure in the Liquidation of Absolute Community

1. An inventory shall be prepared, listing separately all the properties of the absolute community and the exclusive properties of each spouse

2. The debts and obligations of the absolute community shall be paid out of its assets. In case of insufficiency of said assets, the spouses shall be solidarily liable for the unpaid balance with their separate properties in accordance with the provisions of the second paragraph of Article 94

3. Whatever remains of the exclusive properties of the spouses shall thereafter be delivered to each of them.

4. The net remainder of the properties of the absolute community shall constitute its net assets, which shall be divided equally between husband and wife, unless a different proportion or division was agreed upon in the marriage settlements, or unless there has been a voluntary waiver of such share provided in this Code.

Net assets is what remains of the community property after payment of all the charges and obligations for which the absolute community is liable while net profits represents the increase in the market value of the community property at the time of the celebration of the marriage and the market value at the time of its dissolution but minus the charges and obligations for which the community is liable

5. The presumptive legitimes of the common children shall be delivered upon partition, in accordance with Article 51

Legitime is that part of the testator’s property which he cannot dispose of because the law has reserved it for certain heirs who are, therefore, called compulsory heirs

Common children are regarded as compulsory heirs of their parents, whether they are legitimate or illegitimate.

6. Unless otherwise agreed upon by the parties, in the partition of the properties, 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.

Mandatory Liquidation of the Absolute Community

Liquidation- positive act on the part of the spouses or of the surviving spouse in case the absolute community is terminated by reason of death- if the marriage is terminated by reason of the

death of either spouse, the liquidation of the absolute community is mandatory.

- If upon the lapse of one year from the death of either spouse, no liquidation is made, any disposition or encumbrance involving the community property of the terminated marriage is declared by law to be void

Effect Upon Disposition or Encumbrance of Community

Property

if no liquidation of the absolute community is made within one year from the death of the deceased spouse, any disposition or encumbrance involving the community property of the terminated marriage shall be void

Mandatory Regime of Complete Separation

If there is no liquidation of the absolute community within one year from the death of the deceased spouse and the surviving spouse contracts a subsequent marriage:

- a mandatory regime of complete separation of property shall govern the property relations of the subsequent marriage