Inheritance of Conjugal Partnership of Gains Under Philippine Law

Disclaimer: This write-up is provided for general informational purposes only and does not constitute legal advice. For specific issues or cases, it is best to consult a qualified lawyer.

1. Overview of the Conjugal Partnership of Gains

1.1 Definition

Under Philippine law (particularly the Civil Code of the Philippines and, subsequently, the Family Code), the Conjugal Partnership of Gains (CPG) is one of the property regimes governing the property relations between spouses. In a CPG, each spouse retains ownership of the property he or she brought into the marriage (i.e., exclusive or separate property), but the couple commonly owns the “fruits” (income, profits, or gains) generated by both spouses’ properties during the marriage, as well as property acquired through their efforts or by chance (for example, winnings, beneficial transactions) during the marriage.

1.2 Historical Context

Before the Family Code (prior to August 3, 1988): The default marital property regime under the Civil Code of the Philippines (Republic Act No. 386) was the Conjugal Partnership of Gains if the spouses did not execute a marriage settlement (i.e., no prenuptial agreement).
Under the Family Code (Executive Order No. 209, effective August 3, 1988): The default regime, in the absence of a marriage settlement, became the Absolute Community of Property (ACP). However, spouses may still agree in a valid marriage settlement to adopt the Conjugal Partnership of Gains.

Thus, marriages solemnized before August 3, 1988, are generally governed by the CPG (unless a different regime was stipulated). Marriages after August 3, 1988, typically follow the ACP unless a prenuptial agreement establishing the CPG is in place.

2. Composition of the Conjugal Partnership of Gains

2.1 Conjugal (Common) Properties

Under the Conjugal Partnership of Gains, the following are ordinarily considered part of the conjugal assets:

Fruits (Income) of Exclusive Properties of each spouse during the marriage. This includes rentals, dividends, interest, or other incomes generated by the exclusive property of each spouse.
Fruits of Conjugal Properties themselves, i.e., crops harvested from farmland owned in common, or profits from a conjugal business.
Properties Acquired by Onerous Title (i.e., with valuable consideration) during the marriage. For example, if one spouse purchases real property with funds earned during the marriage, such property is presumed conjugal (unless proven otherwise).

2.2 Exclusive (Separate) Properties

Certain properties remain exclusive to each spouse, even under a Conjugal Partnership of Gains. Generally, these include:

Property owned before the marriage (brought into the marriage by a spouse).
Property acquired by gratuitous title (e.g., inheritance, donation) by a spouse during the marriage—unless otherwise provided by the donor/testator that it forms part of the conjugal property.
Personal or real property for personal and exclusive use (e.g., clothes, personal effects).
Property acquired with exclusive (separate) funds of one spouse, evidenced with proof that no conjugal funds were used.

3. Dissolution of the Conjugal Partnership of Gains

The Conjugal Partnership of Gains is terminated or dissolved upon:

Death of one spouse;
Nullity or annulment of the marriage;
Judicial separation of property during the marriage; or
In certain cases, legal separation (if the court orders dissolution of the property regime).

When the conjugal partnership is dissolved, a liquidation of the conjugal assets and liabilities must follow. Only after this liquidation can the net remainder be delivered accordingly to the surviving spouse (if applicable) and/or to the heirs of the deceased or to the spouses themselves in case of separation.

4. Inheritance Rules: Conjugal Partnership of Gains

4.1 Death of a Spouse

When one spouse dies under a Conjugal Partnership of Gains, the following steps typically occur:

Inventory of Conjugal Properties: All conjugal assets (including any uncollected income, bank deposits, real property, and personal property) are identified and inventoried.
Settlement of Conjugal Debts and Obligations: The conjugal partnership’s liabilities, obligations, and expenses are settled. This includes obligations incurred by the conjugal partnership during the marriage, funeral expenses, and other claims.
Division of the Net Conjugal Assets:
- The net remainder of the conjugal assets after debts is divided equally between the surviving spouse and the estate of the deceased spouse.
- Effectively, 50% of the net conjugal properties go to the surviving spouse as his or her share in the partnership. The other 50% forms part of the deceased spouse’s estate, subject to inheritance laws (i.e., it is inherited by the deceased spouse’s heirs, including the surviving spouse, children, and other relatives, depending on the applicable rules of succession).

4.2 Inheritance of the Deceased Spouse’s Share

The deceased spouse’s share (50% of the net conjugal partnership) will then be distributed according to the rules on succession under the Civil Code (as modified by the Family Code where applicable). The general rules on succession in the Philippines are:

Legitime of Compulsory Heirs:
- Surviving spouse is considered a compulsory heir.
- Children (legitimate, illegitimate, or adopted) are compulsory heirs and have their respective legitimes.
- Parents (or ascendants) may also be compulsory heirs if the deceased had no children.
Free Portion:
- Any portion of the estate not covered by the legitimes can be freely disposed of by will (testamentary disposition). If there is no will, intestate succession rules apply, and the distribution will follow the order of intestacy.

4.3 Example of Distribution

Suppose a deceased spouse leaves behind:

Net conjugal partnership assets worth PHP 2,000,000.
Exclusive properties (properties inherited from parents, etc.) that belong solely to the deceased or the surviving spouse.

Step-by-Step:

Divide Net Conjugal Assets: Half (PHP 1,000,000) goes to the surviving spouse as his or her share in the CPG. The remaining PHP 1,000,000 is the deceased spouse’s share.
Distribute the Deceased Spouse’s Share: The deceased spouse’s PHP 1,000,000 is now subject to succession. If the deceased had a will, it must be probated, and the legitimes of compulsory heirs must be respected. If there is no will, the laws on intestate succession dictate how that PHP 1,000,000 is divided among the surviving spouse, children, or other heirs.

5. Treatment of Exclusive Properties in Inheritance

Exclusive or separate properties of the deceased spouse (acquired before the marriage or through gratuitous title) are not part of the conjugal inventory. They pass in full to the heirs (including the surviving spouse and any children) according to the rules on succession. Similarly, the surviving spouse’s exclusive properties remain his or her sole property, unaffected by the estate proceedings.

6. Important Legal Provisions and References

While the comprehensive rules are set out in various articles, the key legal provisions on the Conjugal Partnership of Gains can be found in:

Family Code of the Philippines (Executive Order No. 209)
- Articles 105 to 133 cover both Absolute Community and Conjugal Partnership of Gains.
- Articles 146 to 162 specifically detail liquidation and dissolution in certain scenarios.
Civil Code of the Philippines (Republic Act No. 386), Title IV (Property Relations Between Husband and Wife)
- For marriages celebrated prior to August 3, 1988, the relevant articles on the Conjugal Partnership of Gains are Articles 1421 to 1463 (now mostly superseded or amended by the Family Code with respect to new marriages, but remain applicable for older marriages unless revised by law).
Rules on Succession (Book III of the Civil Code)
- Articles 774 to 1105 for basic succession law (both testate and intestate).
Supreme Court Decisions (Philippine Jurisprudence)
- The Supreme Court has consistently held that the conjugal partnership must first be liquidated to determine the net share of each spouse before distributing the deceased spouse’s share to the heirs (e.g., Heirs of Intestate Estate of Vda. de Palanca v. CA, among other rulings).

7. Practical Considerations

Estate Proceedings:
- Upon the death of a spouse, it is crucial to initiate either extrajudicial settlement (if allowed by law and agreed upon by all heirs) or judicial settlement of the estate to properly settle both the conjugal assets and any exclusive assets.
Documentation:
- It is important to keep clear records of which properties belong to each spouse (especially properties acquired before marriage or inherited). Proper documentation can help avoid disputes during estate liquidation.
Effect of Wills:
- If the deceased spouse left a will, its provisions cannot override the compulsory shares (legitimes) of the forced heirs. The testator (deceased) only has disposal over the free portion of the estate after the legitimes have been allocated.
Taxation (Estate Taxes):
- Philippine law imposes an estate tax on the net estate of the deceased. The surviving spouse’s share in the conjugal partnership (the spouse’s own 50%) is not subject to estate tax because it does not belong to the deceased’s estate. Only the deceased’s 50% share and his or her exclusive properties are included in the computation of estate tax.
Judicial vs. Extrajudicial Settlement:
- If the heirs are in agreement and there is no will, the estate can sometimes be settled extrajudicially. This involves a public instrument (affidavit of self-adjudication or extrajudicial settlement agreement) and publication in a newspaper of general circulation. If there are contested claims, minors involved, or if there is a will to be probated, judicial settlement in court is typically required.

8. Conclusion

The inheritance of conjugal property under the Conjugal Partnership of Gains in the Philippines involves a structured process:

Identify the conjugal and exclusive properties.
Settle liabilities of the conjugal partnership.
Divide the net conjugal assets—50% to the surviving spouse, 50% to the deceased spouse’s estate.
Distribute the deceased spouse’s half according to Philippine succession laws, respecting legitimes and any valid will.

Understanding these rules helps ensure that both spouses and their heirs know their rights and obligations. Where complexities arise—such as complicated assets, conflicting claims, or tax issues—legal counsel is advisable to properly protect everyone’s interests and facilitate compliance with Philippine laws.