Premarital contracting: an overview of property regimes in Philippine law.

Philippines, April 26, 2021. Almost everyone dreams of a magical wedding followed by a happy and stable family life. But when dreams don't come true or turn into a horrible nightmare, the couple, or at least one of them, ends up regretting not having prepared one thing in advance: a prenup.

A prenuptial agreement, or "prenup" as it is commonly called, refers to a "marriage contract" or "prenuptial agreement" under Decree 209 or the "Family Code." Prenup has long been considered taboo for various reasons and an affront to conservative circles. However, a better understanding of one of the implications of marriage - the property relationship between husband and wife - may make you think twice about having one and discuss it with your future spouse.

According to the Family Code, the general rule is that unless the spouses have signed a prenup before the wedding, all property owned by the spouses at the time of the marriage or acquired after the marriage will be distributed as what is known as "absolute community property." Hence the saying, "Yours is mine, mine is yours. "

There are only three categories of property that are excluded or exempted from the absolute community of property: gifts received during the marriage (ie. if one spouse receives a large check from a distant relative during the marriage, the amount will belong to him or her exclusively); property intended for the personal and exclusive use of either spouse, other than jewelry (that expensive briefcase or designer handbag will belong to the bride or groom); and property acquired before the marriage by either spouse who has legitimate descendants (i.e., a children or grandchildren) from a previous marriage, and the fruits and proceeds of such property.

While under absolute community of property each spouse may manage and utilize the common property, neither spouse has the right to sell or dispose of any of the common property without the consent of the other spouse. Therefore, a buyer of property should always check the marital status of the seller and require the spouse of that seller to sign the purchase agreement to show his or her express consent. Otherwise, the sale may be weakened or completely voided if there is a dispute later on as to whether the spouse has given his or her consent.

If you do not think the above provision is suitable for you, then you may want to consider a prenup. Through a prenup, spouses can agree to other forms of property structure other than absolute community of property. A prenup is signed by the spouses before the wedding to show their agreement, and there is an opportunity to have it finalized and registered with the appropriate local registries.

Two common types of property structures commonly agreed between spouses in a prenup are (1) joint venture of capital and (2) complete division of property.

It is interesting to note that the Supreme Court has previously held that if property is registered in the name of both spouses, it remains the property of the spouse who used his or her own funds to acquire it, if the property was acquired before the marriage, regardless of the prenup prior to the marriage. It is important to consider the marital status of the purchaser on the date of acquisition of the property.

The Supreme Court has also previously held that because spouses retain ownership over their own exclusive holdings in a joint venture of capital, a wife's exclusive property cannot be used to satisfy her husband's liabilities or obligations. The wife was then considered a stranger to the legal case against her husband.

On the other hand, in another fairly common structure known as complete property division, each spouse has sole ownership over his or her own property. Consequently, each spouse has the right to use, manage, sell and enjoy his or her own property without the consent of the other spouse. When signing a prenup for full property division, spouses are free to agree on the degree of division of their property. If they only agree to a partial division of property, for example, where they decide that the family home will not be divided, property not agreed as separate will be considered part of the absolute community of property.

Many people still regard a prenup proposal as an expectation that the marriage will break up. On the other hand, it is also argued that your property was hard-won by you or your family, so you should ultimately have the right to how it is treated. While entering into a prenuptial agreement remains a sensitive topic for many couples, it is a topic that should be considered and discussed with your future spouse before marriage to avoid complications in the future.