Introduction

In the Philippines, marital property regimes are primarily governed by the Family Code of the Philippines (Executive Order No. 209, as amended). The two most common regimes are the Absolute Community of Property (ACP) and the Conjugal Partnership of Gains (CPG). Under these systems, properties acquired during marriage are generally considered shared between spouses, subject to specific rules on ownership, management, and disposition.

The death of one spouse dissolves the marriage and terminates the property regime. This triggers the need for settlement of the deceased spouse's estate, which includes determining and distributing their share in the conjugal or community property. However, before the estate is fully settled—meaning before inventory, liquidation, partition, and distribution—the surviving spouse's ability to dispose of conjugal property is heavily restricted. These restrictions aim to protect the interests of heirs, creditors, and the deceased's estate, ensuring equitable distribution.

This article explores the legal framework, key principles, procedural requirements, and consequences of disposing of conjugal property prior to estate settlement. It draws from provisions in the Family Code, the Civil Code, the Rules of Court, and relevant jurisprudence to provide a comprehensive overview.

Legal Framework Governing Conjugal Property and Estate Settlement

Property Regimes and Ownership Upon Death

Absolute Community of Property (ACP): Under Articles 88-101 of the Family Code, all properties owned by the spouses at the time of marriage or acquired thereafter form part of the community, excluding certain separate properties (e.g., those acquired by gratuitous title). Upon death, the community terminates (Art. 99), and the deceased's share is half of the net community property after deductions for debts and obligations.
Conjugal Partnership of Gains (CPG): Governed by Articles 102-125, this regime includes properties acquired through the spouses' efforts or income during marriage. Termination occurs upon death (Art. 126), with the deceased's share being half of the net gains.

In both regimes, the conjugal property does not automatically vest solely in the surviving spouse. Instead, it becomes co-owned by the surviving spouse (for their share) and the deceased's heirs (for the deceased's share), pending settlement. This co-ownership is akin to that under Articles 484-501 of the Civil Code, where each co-owner has rights but cannot act unilaterally to the prejudice of others.

Dissolution and Settlement Process

The Family Code mandates liquidation of the community or partnership property as part of the estate proceedings:

Article 103 (for ACP): "Upon dissolution of the absolute community regime [by death], the following procedure shall apply: (1) An inventory shall be prepared... (2) The debts and obligations... shall be paid... (3) Whatever remains... shall be divided equally between the husband and wife, or their respective heirs."
Article 130 (for CPG): Similar provisions apply, with liquidation integrated into the judicial or extrajudicial settlement of the deceased's estate.

Estate settlement can be:

Judicial: Through testate (with a will) or intestate (without a will) proceedings in court, under Rule 73-90 of the Rules of Court.
Extrajudicial: Via an Extrajudicial Settlement of Estate (ESE) under Section 1, Rule 74, if there are no debts, the heirs are of legal age, and they agree on division. This requires publication and a bond if there are minors or unknowns.

Until settlement is complete, the conjugal property remains undivided, and any disposition must comply with co-ownership rules and estate administration protocols.

Administration of Conjugal Property by the Surviving Spouse

Upon the death of a spouse, the surviving spouse typically assumes administration of the conjugal property, as provided in Article 103(3) for ACP and Article 130(3) for CPG: "The administration of the community or conjugal property shall belong to the surviving spouse..."

However, this administration is not absolute:

It is subject to the interests of the heirs and creditors.
If the deceased left a will naming an executor, or if the court appoints an administrator (e.g., due to conflicts), the surviving spouse may lose sole administration.
Under Rule 84 of the Rules of Court, the administrator or executor manages the estate, including the deceased's share in conjugal property, to pay debts, taxes, and distribute residues.

The surviving spouse's role is fiduciary—acting as a trustee for the co-owners. They can manage for preservation and ordinary acts but cannot dispose without safeguards.

Restrictions on Disposition of Conjugal Property

Disposition includes selling, donating, mortgaging, leasing (beyond ordinary terms), or otherwise alienating conjugal property. Before estate settlement, such acts are restricted to prevent prejudice to the deceased's estate.

General Rule: No Unilateral Disposition

Co-Ownership Principle: Per Article 493 of the Civil Code, "Each co-owner may use the thing owned in common, provided he does so in accordance with the purpose for which it is intended and in such a way as not to injure the interest of the co-ownership or prevent the other co-owners from using it according to their rights." Alienation of the entire property or a specific portion requires consent of all co-owners (surviving spouse and heirs).
Estate Protection: The deceased's share forms part of the estate, which is under administration. Unauthorized disposition can be challenged as it diminishes the estate available for heirs and creditors.

Exceptions and Permissible Dispositions

Limited dispositions are allowed under specific conditions:

Ordinary Administration Acts: The surviving spouse may perform acts of administration, such as collecting rents, paying routine expenses, or entering short-term leases, without court approval, as these preserve the property (Art. 493, Civil Code; Rule 84, Rules of Court).
Urgent Necessity: In cases of urgent need (e.g., to pay funeral expenses or prevent property loss), the surviving spouse may sell movable property without court approval, but must notify the court or heirs promptly (Rule 89, Sec. 2).
Court Authorization for Immovables or Large Movables: For real property or significant movables, disposition requires court approval in the estate proceedings:
- Rule 89, Rules of Court: The administrator (which may be the surviving spouse) must petition the court for authority to sell, mortgage, or encumber estate property. The court grants this only if necessary for debts, expenses, or legacies, after notice and hearing.
- Grounds include payment of debts, taxes, administration costs, or if distribution in kind is impractical.
Consent of Heirs: If all heirs (including the surviving spouse) unanimously agree, they may dispose via extrajudicial settlement or a deed of partition. However, this still requires compliance with publication and bond requirements under Rule 74 if applicable.
Separate Property: If the property is the surviving spouse's exclusive property (e.g., paraphernal under CPG or separate under ACP), they may dispose freely, but proving exclusivity is crucial.

Special Considerations for Real Property

Registration under the Torrens System (Presidential Decree No. 1529) requires that any sale or transfer of conjugal real property before settlement be annotated with the estate's interest. Buyers acquire only the surviving spouse's share, subject to the heirs' claims.
If the property is the family home (Art. 152-162, Family Code), additional protections apply: It cannot be sold without written consent of beneficiaries or court approval if for their benefit.

Consequences of Unauthorized Disposition

Violating these rules can lead to severe repercussions:

Nullity or Annulment: Under Article 1313 of the Civil Code, contracts affecting co-owned property without authority are voidable or unenforceable against non-consenting co-owners. Heirs can seek reconveyance or damages.
Liability of Surviving Spouse: As administrator, they may be held accountable for losses (Rule 85, Rules of Court). Courts can remove them for mismanagement and surcharge them for unauthorized acts.
Criminal Liability: If disposition involves fraud or bad faith, it may constitute estafa (Art. 315, Revised Penal Code) or qualified theft.
Buyer's Risk: A buyer in good faith may acquire valid title to the surviving spouse's share, but the deceased's share remains recoverable (doctrine of "buyer beware" or caveat emptor). If bad faith is proven, the sale is void ab initio.
Prescription and Laches: Actions to recover must be filed within prescriptive periods (e.g., 10 years for reconveyance under Art. 1144, Civil Code), but laches may bar delayed claims.

Jurisprudential Insights

Philippine courts have consistently upheld these principles:

In Nittscher v. Nittscher (G.R. No. 112199, March 25, 1999), the Supreme Court ruled that the surviving spouse cannot unilaterally sell conjugal real property without court approval or heirs' consent, as it prejudices the estate.
Heirs of Protacio Go, Sr. v. Servacio (G.R. No. 157537, September 7, 2011) emphasized that extrajudicial settlements must include all heirs; otherwise, dispositions are invalid.
De la Cruz v. De la Cruz (G.R. No. 185978, December 11, 2013) clarified that the family home cannot be alienated without safeguards, even by the administrator.
Cases like Alipio v. Court of Appeals (G.R. No. 134100, September 29, 2000) highlight that unauthorized sales bind only the seller's share, allowing partition actions.

These rulings underscore the need for transparency and judicial oversight to prevent abuse.

Practical Advice for Compliance

To avoid pitfalls:

Initiate estate settlement promptly (within reasonable time; delay can lead to complications).
Prepare an inventory of conjugal assets early.
Seek legal counsel for petitions under Rule 89 if disposition is needed.
In extrajudicial settlements, ensure all heirs execute the deed, publish it for three weeks, and register with the Register of Deeds.
For remarriage, note that under Art. 104 (ACP) and Art. 131 (CPG), liquidation must precede a new marriage to avoid commingling issues.

Conclusion

The rules on disposing of conjugal property before settling a deceased spouse's estate in the Philippines prioritize protection of inheritance rights and estate integrity. While the surviving spouse holds administrative powers, dispositions are curtailed to prevent unilateral actions that could harm heirs or creditors. Compliance with the Family Code, Civil Code, and Rules of Court is essential, often requiring court intervention or unanimous heir consent. Unauthorized acts risk invalidation, liability, and litigation, emphasizing the importance of proper estate planning and timely settlement. Understanding these rules ensures fair handling of marital assets in the face of loss.