PROPERTY DIVISION AFTER A DECLARATION OF NULLITY UNDER ARTICLE 36 OF THE FAMILY CODE

(Psychological Incapacity, Philippine Law)

1. The Nature and Effect of a Decree of Nullity

Point	Key Concepts
Void ab initio	A marriage declared void under Article 36 is deemed never to have existed; the parties were never spouses in the eyes of the law.
Retroactive reach	Property relations that presuppose a valid marriage (absolute community or conjugal partnership) never took effect.
Court’s mandatory duties	When the decision becomes final, the court must (Art. 50–52, F.C.): 1. Order the liquidation, partition, and distribution of whatever property regime actually obtained; 2. Direct delivery of the children’s presumptive legitimes; and 3. Require registration of the decree and the liquidation instrument with the Civil Registry and the Registry of Deeds. Failure to register makes the partition void and un‐registrable.

2. Which Property Regime Applies?

Because the marriage is void, the default regimes in Chapters III (Absolute Community) or IV (Conjugal Partnership) never arise. Instead, property rights fall under Articles 147 and 148, supplemented by the Civil Code on co-ownership (Arts. 486–506) and by Art. 147’s own equity rules.

Scenario	Governing Article	Salient Rules
*Both parties were capacitated to marry each other and both acted in good faith*	Article 147	- Co-ownership arises the moment they start living together. - Wages, salaries and income of either become conjugal-in-fact and are split 50-50 unless proven otherwise. - Properties acquired by their joint efforts/industry belong to them in equal shares, absent proof of unequal contributions. - Exclusive property owned before union (or acquired gratuitously during it) remains exclusive; fruits thereof belong to the owner.
*At least one party was in bad faith* (e.g., knowledge of an existing valid marriage), or the parties were incapacitated to marry**	Article 148	- Only properties acquired through actual joint contributions of money, property or industry are co-owned—and in proportion to each party’s proven contribution. - Wages/salaries belong to the party who earned them. - The share of the party in bad faith is forfeited in favor of common children; if none, to the children of the innocent party, then to the State.
Bigamy, incest, underage marriage without parental consent, and other expressly void unions	Still Article 148	Note that bigamy can co-exist with an Article 36 petition (psychological incapacity) if both grounds are alleged; property consequences are settled under Art. 148.

Good faith under Art. 147 means a reasonable belief that no legal impediment existed; Supreme Court cases (e.g., Abalos v. Macatangay, Jr., 2006; Calimlim-Canulas v. Fortun, 1986) emphasize that both parties must be capacitated and at least one must be in good faith for Art. 147 to apply.

3. Liquidation Mechanics (Arts. 50-52; Rule 73, Sec. 2, ROC)

Inventories & Appraisals
Within 30 days from finality of the nullity decree, either party (or the court-appointed administrator) must submit a sworn inventory of:
- all properties that may form part of the co-ownership,
- their assessed values, and
- existing obligations.
Debts & Reimbursements
- Common debts contracted in furtherance of the co-ownership are paid from the common fund before distribution.
- Reimbursements are due to a party who used exclusive property for common needs, or to a party who paid more than his/her share of a common debt.
- The party who exclusively benefited from a debt shoulders it alone.
Delivery of the Children’s Presumptive Legitimes
- Although children of a void marriage are classified as “illegitimate” (Art. 165)—unless legitimated by subsequent valid marriage—they are entitled to support and legitimes.
- The court sets aside a portion of the net estate (usually ½ of what legitimate children would receive in intestacy) in cash or property, to be delivered upon finality of the decision.
Partition & Distribution
- If parties agree, they may execute an extrajudicial settlement (EJS); minors must be represented by a parent or guardian and the compromise needs court approval.
- Absent agreement, the court conducts a full accounting and issues a judgment of partition.
- Partition is followed by registration (Art. 52); title transfers are reflected by new TCTs/CCTs.

4. Case-Law Guideposts

Case	G.R.	Ratio relevant to property
Te v. Te (1999)	126745	Registration under Art. 52 is jurisdictional; without it, the partition has no effect against third persons.
Abalos v. Macatangay, Jr. (2006)	158989	Clarified equal sharing under Art. 147 when contributions cannot be quantified; “care and management of the household” counts as in-kind contribution equal to income.
Montemayor v. Bundalian (2018)	213975	Reiterated that only properties acquired during cohabitation are governed by Art. 147; those bought after separation in fact are exclusive.
Tan-Andal v. Andal (2021)	196359	Refined the test for psychological incapacity (now a legal not medical concept); confirmed that property settlement still follows Art. 147/148, not the absolute-community rules.
Dato v. Dato (2011)	171483	Court may award financial support to an innocent party temporarily, but this is separate from the division of assets.

5. Tax & Registration Nuances

Capital Gains & Documentary Stamp Taxes – The BIR treats a liquidation/partition incident to a decree of nullity as a transfer by operation of law, not a sale; it is exempt from CGT and DST. Transfer fees with the Registry of Deeds, however, still apply.
Donor’s Tax – Not imposed because each party merely receives what already belonged to him/her under Art. 147/148.
Real-property taxes – Accrued RPT is a charge on the property itself; parties should allocate it in the liquidation schedule.

6. Practical Tips for Litigants & Counsel

Document contributions early. Keep bank statements, payslips, titles, and receipts to establish who paid what—critical where Art. 148 applies.
Request for a special order of partition in the main petition. Saves time vs. filing a separate liquidation case post-decree.
Seek provisional reliefs (support pendente lite, injunction against asset dissipation) under A.M. No. 02-11-10-SC.
Coordinate with BIR/RDO before submitting the Deed of Extra-Judicial Settlement to avoid surcharges for wrong tax treatment.
Annotate bank accounts with a freeze order if there’s risk of withdrawals; liquidation includes intangibles.
Estate planners: A void marriage does not create legitime rights between “spouses,” so either may freely dispose of exclusive property by will, subject only to the children’s legitimes.

7. Frequently‐Encountered Misconceptions

Myth	Legal Reality
“Because the marriage is void, everything automatically goes 50-50.”	Only under Art. 147 and only for properties acquired during cohabitation—and even then, evidence of unequal contributions can alter the split.
“No need to go back to court once nullity is granted; we can divide assets privately.”	A court-approved liquidation or EJS and its registration are indispensable; unregistered partitions are void against third persons and may expose parties to future suits.
“Once nullified, my spouse can no longer claim any share in my retirement pay earned afterward.”	Correct, provided the retirement benefit accrues after separation in fact or after finality of the nullity judgment.
“Children from a void marriage have no inheritance rights.”	They are illegitimate, not “without rights.” They are compulsory heirs (Art. 887, Civil Code) and receive legitimes equal to ½ of those of legitimate children.

8. Timelines at a Glance

Step	Deadline / Period
Petition filed	Any time during or even after cohabitation
Decision becomes final	15 days after notice (if no appeal)
Sworn inventory	30 days from finality (Rule 73)
Appointment of administrator	Immediately upon failure to file inventory
Delivery of children’s presumptive legitime	Simultaneous with liquidation order
Registry annotation (Civil Registry & ROD)	Within 30 days from issuance of liquidation instrument

9. Summary

A declaration of nullity under Article 36 erases the marital bond but does not erase economic realities created while the couple lived together. Philippine law addresses those realities through Articles 147 and 148, treating the couple essentially as co-owners rather than spouses.

The general theme is equity:

reward actual contributions,
protect children’s successional rights,
prevent unjust enrichment, and
secure the integrity of the property registry system through mandatory annotation.

Sound legal strategy therefore demands early documentation, timely liquidation, and scrupulous compliance with registration and tax rules—otherwise, the supposed “clean break” of a nullity decree can become a breeding ground for future litigation.