In the Philippines, the classification of inherited property depends primarily on two factors: the date of the marriage and the property regime governing the spouses. Under the Family Code of the Philippines, property acquired through inheritance is generally treated as "exclusive property," but the nuances of how its income (fruits) is handled vary significantly between regimes.
The Governing Property Regimes
The default property regime for Filipino couples depends on when they were married. If no prenuptial agreement was signed, the law imposes a default system:
- Absolute Community of Property (ACP): The default for marriages celebrated on or after August 3, 1988 (the effectivity of the Family Code).
- Conjugal Partnership of Gains (CPG): The default for marriages celebrated before August 3, 1988 (under the Civil Code).
1. Absolute Community of Property (ACP)
Under the ACP, the husband and wife are considered co-owners of all property brought into the marriage or acquired during the marriage. However, the law provides specific exceptions for inheritance.
- Inheritance During Marriage: Property acquired during the marriage by gratuitous title (inheritance or donation) is exclusive property.
- The "Fruits" Rule: Unique to the ACP, both the inherited property and its fruits/income (such as rent or interest) remain the exclusive property of the inheriting spouse.
- The Exception: Inherited property only becomes community property if the person leaving the inheritance (the testator) expressly states in the Will that the property should form part of the community property.
Note on Prior Inheritance: If a spouse inherited property before the marriage, that property generally becomes part of the Absolute Community (common property) upon marriage, unless it falls under other specific exclusions (like property for personal use).
2. Conjugal Partnership of Gains (CPG)
Under the CPG, the husband and wife retain ownership of what they brought into the marriage, but the "proceeds, products, fruits, and income" from their separate properties, as well as everything acquired through effort during the marriage, are placed in a common fund.
- Inheritance During Marriage: The property itself remains the exclusive property of the inheriting spouse.
- The "Fruits" Rule: Unlike the ACP, the net fruits and income (e.g., rentals from an inherited building) earned during the marriage belong to the Conjugal Partnership. While you own the land, the "earnings" from that land are shared with your spouse.
- Inheritance Before Marriage: Property inherited before the marriage remains the exclusive property of the heir.
Comparison Table: Inherited Property
| Feature | Absolute Community (ACP) | Conjugal Partnership (CPG) |
|---|---|---|
| Principal Property | Exclusive | Exclusive |
| Fruits/Income (Rent, etc.) | Exclusive | Conjugal (Shared) |
| Inherited Before Marriage | Usually becomes Community | Remains Exclusive |
| Requirement for Sharing | Must be expressly stated by Testator | Automatic for fruits/income |
Key Legal Provisions
The Family Code of the Philippines
- Article 92 (ACP): "The following shall be excluded from the community property: (1) Property acquired during the marriage by gratuitous title by either spouse, and the fruits as well as the income thereof..."
- Article 109 (CPG): "The following shall be the exclusive property of each spouse: ... (2) That which each acquires during the marriage by gratuitous title..."
- Article 117 (CPG): "The following are conjugal partnership properties: ... (3) The fruits, natural, industrial, or civil, due or received during the marriage from the common property, as well as the net fruits from the exclusive property of each spouse..."
Practical Implications
1. Sale of Inherited Property
Since inherited property is exclusive, the inheriting spouse generally does not need the written consent of the other spouse to sell, mortgage, or encumber the property. However, many banks and the Register of Deeds may still require an "Affidavit of Paraphernal/Capital Property" to clarify that the funds used to acquire or maintain the property did not come from the conjugal fund.
2. Transfer of Title
When a spouse inherits land, the title (TCT) is usually issued in their name, often described as "Married to [Name of Spouse]." Legal jurisprudence clarifies that this phrase is merely a description of the civil status of the registered owner and does not grant the spouse ownership rights over the inherited land.
3. Dissolution of Marriage
In the event of legal separation or annulment:
- In ACP, the inherited property and its fruits remain with the inheriting spouse.
- In CPG, the inherited property remains with the heir, but the accumulated income/fruits derived during the marriage are divided as part of the conjugal assets.