Chapter 13-B

Gross Estate: Married Decedents

Gross Estate of Married Decedents
It is composed of:
1. Decedents exclusive properties
2. The common properties of the spouses
The gross estate of a decedent is reported as follows in the estate tax return:
Exclusive
GROSS ESTATE
Less:
Deductions

xxxxxx

Conjugal/Com
munal
xxxxxx

Total
xxxxxx

Property Relations between Spouses

For married decedents, the boundary between separate properties and common
properties of the spouses is important in the determination of the gross estate of
the decedent spouse.
What is a separate property or a common property?
Under the Family Code, the property relation between the spouses must be agreed
upon by the spouses before their marriage. The same is set in their Pre-nuptial
Agreement.
Property Relations of the Spouses
It is determined based on their agreed property regime. Upon the death of a spouse,
the properties held by the spouses shall be classified as separate or common
properties depending on the agreed regime.
Common types of property regimes:
1. Absolute separation of property (ASP) all properties of the spouses are
separate properties, except those properties which they may acquire jointly.
2. Conjugal partnership of gains (CPG) all properties that accrues as fruit
of their individual or joint labor or fruits of their properties during the
marriage will be common properties of the spouses.
3. Absolute community of property (ACP) all present properties owned by
the spouses at the date of celebration of the marriage shall become common
properties of the spouses including future fruit of their separate or joint
industry of fruits of their common properties.

Applicable property regime in default of an agreement

In the absence of an agreement or the regime is void:
Marriages celebrated before August 3, 1988 conjugal partnership of gains
At August 3, 1988 absolute community of property

Basic Rules in the Determination of Property Interest

1. Presumption in the inventory taking of the estate
- Under the ASP, properties are separate of either spouse unless proven to
be joint properties of the spouses.
- Under CPG and ACP, properties of the spouses are common properties
unless proven to be exclusive properties of either of the spouses.
2. The sale or exchange of properties do not alter their classification
- Properties acquired using separate properties are still separate properties
and acquired using common properties are still common properties.
3. Accruals in value or gains on sale of properties
- Increase in value or gains on the sale properties are fruits subject to the
rules of the property regime agreed upon by the spouses.
Conjugal Partnership of Gains (CPG)
Conjugal partnership of gains views marriage as a union of gains that accrues
during the marriage.
This property regime is described as prospective.
Exception to prospectivity: Acquisitions by gratuitous title
Donations or inheritance during marriage are separate properties of the recipient
spouse, unless the donor or the decedent designated the transfer for both spouses.
Illustration 1: Fruits of labor of either or both spouses
Mr. and Mrs. Calapan were under the conjugal partnership of gains. Mrs. Calapan is
a CEO in a multinational company and is the breadwinner of the family. Mr. Calapan
is unemployed taking care of the children at home.
During the marriage, Mrs. Calapan acquired various properties totaling P 10,000,000
from her salaries. Also during the marriage, Mr. Calapan discovered a World War II
treasure in their backyard worth P100, 000,000. Mr. Calapan also won P200,
000,000 jackpot in the PCSO 6/49 Super Lotto.
All properties obtained by Mrs. Calapan and Mr. Calapan are conjugal properties of
the spouses.

Illustration 2: Fruits of properties

Before their marriage on Nov. 1, 1987, Mr. and Mrs. Negros had properties of P1,
000,000 car and P2, 000,000 residential lot, respectively. Mr. and Mrs. Negros
married without an agreed property regime.
During their marriage, Mr. and Mrs. Negros acquired properties totaling P500, 000
and P800, 000, respectively, from their separate labor. Mrs. Negros also sold her
residential lot for P5, 000,000 and invested the entire proceeds in stocks.
Separate Properties

Car(owned bef.
Marriage
Stocks(owned bef.
Marriage)
Fruits of
labor(during
marriage)
(500K+800K)
Total

Mr. Negros
P1,000,000

Conjugal
Properties

Mrs. Negros

P2,000,000

P3,000,000
1,300,000

P1,000,000

P2,000,000

P4,300,000

Illustration 3: Acquisition by gratuitous title

Spouses Rene and Bebe who were under the conjugal partnership of gains had the
ff. properties:
Before Marriage
1. Donations or inheritance received
2. Income of property from No. 1
During Marriage
3. Properties acquired from separate industry or labor
4. Property received by donation or inheritance
5. Income of property from No. 1 and 2
6. Income of property from No. 3
7. Income of property from No. 4
Separate properties of the spouses:
Separate Properties
Rene
Bebe

Rene

Bebe

P100,00
0
10,000

P150,00
0
20,000

400,000
800,000
15,000
40,000
80,000

300,000
500,000
25,000
30,000
50,000

Before marriage:
During
Marriage
Donations received
P100,00
1. Properties
acquired from separate
0
industry
2. Income
10,000
5.
Incomefrom
fromNo.
No.1 1&2
During
marriage:
6. Income from No. 3
4.7. Property
received
by
800,000
Income from
No. 4
donation
Total
P910,00
0
Total common properties

Rene

Bebe

Total

P150,00
P400,0
0
00
20,000
15,000
40,000
500,000
80,000

P300,0
00
25,000
30,000
50,000

P700,0
00
40,000
70,000
130,00
0

P670,00
0

P940,0
00

Common properties of the spouses:

Integrative Illustration: CPG

Mr. Crocs died. An inventory of the properties of Mr. and Mrs. Crocs is prepared
below:
Mr. Crocs

Mrs. Crocs

Total

Properties accruing before marriage:

Properties inherited before marriage
Other properties brought into the marriage
Properties accruing during marriage
Properties inherited during marriage
Properties as fruit of own labor
Properties as fruit of common labor
Fruits of:
Properties inherited before marriage
Properties inherited during marriage
Properties acquired from own labor
Properties earned from common labor

P200,000
400,000

P100,000
500,000

P300,000
900,000

250,000
140,000

150,000
160,000

400,000
300,000
250,000

100,000
20,000
20,000

50,000
80,000
40,000

150,000
100,000
60,000
50,000

Analysis of the properties of the spouses under CPG:

Exclusive
Properties
Mr.
Mrs.
Crocs
Crocs
Properties accruing before marriage:
Properties inherited before
marriage
Other properties brought into the
marriage
Properties accruing during marriage:
Properties inherited during
marriage
Properties as fruit of own labor
Properties as fruit of common labor
Fruits of:
Properties inherited before
marriage
Properties inherited during
marriage
Properties acquired from own labor
Properties earned from common
labor
Total

P200,00
0
400,00
0

P100,00
0
500,000

250,00
0

150,000

Common
Properties

P300,000
250,000
150,000
100,000
60,000
50,000

P850,00
0

P750,00
0

P910,000

The gross state of Mr. Crocs shall be:

Exclusive property of Mr. Crocs
Common property of Mr. and
Mrs. Crocs
Gross estate

P850,000
910,000
P1,760,000

Absolute Community of Properties (ACP)

Marriage is viewed as a union of the present property of the spouses including fruits
of labor and industries of the spouses during the marriage.
Special features of ACP
1. Retrospective feature

Properties brought into the marriage will become common properties. All
properties of the spouses present at the date of celebration of the marriage
which they acquired before marriage will become common properties.
2. Prospective feature
All properties which the spouses may acquire during the marriage from their
separate or joint labor or industry shall be common.
Exclusive properties
All properties of the spouses are effectively common with the exception of the
following which the law designated as exclusive properties of the spouses:
1. Properties received by way of gratuitous title during the marriage
2. Fruits of separate properties of the spouses
3. Properties for the exclusive personal use of either of the spouses, except
jewelry
4. Properties brought into the marriage by either spouse with a descendant by a
prior marriage
Exceptions to prospectivity feature:
2 exceptions:
a. Properties received by gratuitous title
b. Fruits of separate properties during marriage
Properties received by way of gratuitous title
Similar to CGP, properties received by way of gratuitous title such as donation or
inheritance during marriage is a separate property unless designated by the donor
or decedent to be for both spouses.
Fruits
Fruits labor and industry
Fruits arising from the labor or industry of either or both spouses are common
properties of the spouses.
Fruits of properties
The fruit of separate property is a separate property. It follows therefore that the
fruit of common property is a common property. In short, Fruits follow principal.
Illustration
Mr. Ato, a married decedent under the ACP, received the ff. properties by gratuitous
title:

Residential lot gift to Mr. Ato

Commercial lot gift to Mrs. Ato
Income of residential lot
Income of commercial lot
Income from own labor Mr. Ato
Income from own labor Mrs. Ato

Before marriage
P2,000,000
400,000
200,000
300,000

During marriage
P 5,000,000
800,000
1,400,000
800,000
800,000

The ff. shows a summary of the properties of the spouses:

Residential lot
Commercial lot
Income residential lot
Income commercial lot
Income own labor (Mr.)
Income own labor (Mrs.)
Total

Exclusive properties
Mr. Ato
Mrs. Ato
PP5,000,000

Common
properties
P2,000,000
1,200,000

P0

1,400,000
P6,400,000

1,000,000
1,100,000
P5,300,000

Exception to both prospectivity and retrospectivity features:

Property for exclusive personal use, except jewelry
Properties, acquired before or during the marriage, which are for the exclusive
personal use of either of the spouse are separate properties, except jewelry.
Illustration 1 The concept of exclusive personal use
Mr. and Mrs. Quezon had the ff. personal properties:
Acquired before marriage:
Tuxedo of Mr. Quezon
Wrist watch of Mr. Quezon
Car
Gown of Mrs. Quezon
Acquired during marriage:

P3,000
2,000
800,000
40,000

Earrings and necklace of Mrs. Quezon

Cellphones
Louis Vuitton bag of Mrs. Quezon
Dress, shoes and underwear of Mr. Quezon
Dress, shoes and underwear of Mrs.
Quezon

P150,000
50,000
150,000
60,000
80,000

The following are the exclusive and communal properties of the spouses:
Exclusive Properties

Acquired before
marriage:
Tuxedo
Wrist watch
Car
Gown
Acquired during
marriage:
Earrings and necklace
Cellphones
Louis Vuitton bag
Dress, shoes and
underwear
Total

Common
Properties

Mr. Quezon

Mrs. Quezon

P3,000
-

P40,000

P2,000
800,000
-

150,000
50,000

60,000

150,000
80,000

P63,000

P270,000

P1,002,000

Illustration 2 Jewelry
During her marriage, Mrs. Aguilar received a gold bracelet worth P400,000 as
inheritance from her grandparents. Using her salaries, Mrs. Aguilar bought P100,000
worth of shoes and dress and a P200,000 diamond ring for her own use.
On the other hand, Mr. Aguilar bought a Rolex watch worth P30,000 from the income
of a property which was donated to him during the marriage. Using his business
income, Mr. Aguilar also bought shoes and dress worth P70,000 and a platinum
necklace worth P250,000 for his exclusive personal use.

The ff. shows an analysis of the properties:

Exclusive Properties

Inherited gold bracelet

Shoes and dress
Rolex watch
Diamond ring
Platinum necklace
Total

Mr. Aguilar
P70,000
30,000
P100,000

Mrs. Aguilar
P400,000
100,000
P500,000

Common
Properties
200,000
250,000
P450,000

Exception to retrospectivity:
Properties acquired before marriage by a spouse with descendants in a
prior marriage
The ACP does not retroact if there are affected descendants in a prior marriage.
Properties accumulated before the marriage by a spouse with descendants in a prior
marriage are reserved by the law as separate properties. This is apparently
intended to protect the interest of descendants which could be prejudiced by the
new marriage.
Illustration
Ms. Beauty Fool, 27 yrs. Old, married Don Mario Montero Montemayor Milagroso, a
wealthy 65-yr. old businessman known for his alias Mr. 4M. Mr. 4M had a child in a
prior marriage with his deceased wife.
Ms. Beauty brought into the marriage properties totaling P50,000. Mr. 4M also
brought into the marriage properties totaling P70,000,000. During the marriage, Ms.
Beauty accumulated P300,000 from her salaries.
Mr. 4M can no longer work at his age so he is totally dependent from the fruits of his
properties. His properties earned P11,000,000 during his marriage with Ms. Beauty.

The ff. shows an analysis of the properties of either spouse:

Exclusive Properties
Mr. 4M
Properties brought into the
marriage:
Mr. 4M
Ms. Beauty
Properties acquired during
marriage:
Fruits of properties
Cash- salaries of Beauty
Total

Additional Illustrations

Common
Properties

Ms.
Beauty

P70,000,00
0
-

P-

50,000

11,000,000

P81,000,00
0

P-

300,000
P350,000

Illustration 1
Mr. and Mrs. Negros married on Jan. 10, 1990 without agreeing on a property
regime. Mr. and Mrs. Negros brought into their properties: a P1,000,000 car and
P2,000,000 residential lot, respectively.
During their marriage, Mr. and Mrs. Negros acquired properties totaling P500,000
and P800,000, respectively, from their separate labor. Mrs. Negros also sold her
residential lot for P5,000,000 and invested the entire proceeds in stocks.
Solution:
Separate Properties

Car
Stocks
Fruits of labor (500K +
800K)
Total

Common
Properties

Mr. Negros
P-

Mrs. Negros
P-

P0

P0

P1,000,000
5,000,000
1,300,000
P7,300,000

Illustration 2
Spouses Rene and Bebe who were under the ACP had the ff. properties:
Before marriage:
1. Donations or inheritance received
2. Income of property from No. 1
During marriage:
3. Properties acquired from separate industry
4. Property received by donation or
inheritance
5. Income of properties from No. 1 and 2
6. Income of property from No.3
7. Income of property from No. 4

Rene

Bebe

Total

P100,00
0
10,000

P150,00
0
20,000

P250,00
0
30,000

400,000
800,000

300,000
500,000

15,000
40,000
80,000

25,000
30,000
50,000

700,000
1,300,00
0
40,000
70,000
130,000

Separate properties of the spouses:

Separate
Properties
Rene
Bebe
Before marriage:
1. Donations or inheritance received

P-

P-

2. Income of property from No. 1

During marriage:
4. Property received by donation or
inheritance
7. income of property from No. 4
Total separate properties

800,000

500,000

80,000
P880,00
0

50,000
P550,000

Community properties of the spouses:

Before marriage:
1. Donations or inheritance received
2. Income of property from No. 1
During marriage:
3. Properties acquired from separate industry
5. Income of property from 1&2
7. Income of property from No. 3
Total common properties

Rene

Bebe

Total

P100,00
0
10,000

P150,00
0
20,000

P250,000

P400,00
0
15,000
40,000

P300,00
0
25,000
30,000

P700,000

30,000

40,000
70,000
P1,090,00
0

INTEGRATIVE ILLUSTRATION: ACP

Mr. Crocs died. An inventory of the properties of Mr. and Mrs. Crocs who were under
the ACP were as follows:

Properties accruing before marriage:

Properties inherited from marriage
Properties for exclusive personal use
Other properties brought into the marriage

Properties accruing during

marriage:
Properties inherited during marriage
Properties as fruit of own labor
Properties acquired for exclusive use
Properties as fruits of common labor

Mr. Crocs

Mrs.
Crocs

Total

P200,000
50,000
350,000

P100,000
60,000
440,000

P300,000
110,000
790,000

Mr. Crocs

Mrs. Crocs

Total

P250,000
140,000
30,000

P150,000
160,000
40,000

P400,000
300,000
70,000
250,000

Fruits of:
Properties inherited before marriage
Properties inherited during marriage
Properties acquired from own labor
Properties earned from common labor

100,000
20,000
20,000

50,000
80,000
40,000

150,000
100,000
60,000
50,000

The ff. shows the classification of the properties of the spouses under ACP:
Exclusive properties
Mr. Crocs Mrs. Crocs
Properties accruing before marriage:
Properties inherited from marriage
Properties for exclusive personal use
Other properties brought into the marriage
Properties accruing during marriage:
Properties inherited during marriage
Properties as fruit of own labor
Properties acquired for exclusive use
Properties as fruits of common labor
Fruits of:
Properties inherited before marriage
Properties inherited during marriage
Properties acquired from own labor
Properties earned from common labor
Total

Common
Properties
P300,000

P50,000

P60,000
790,000

P250,000

P150,000

30,000

40,000

P300,000
250,000
150,000
20,000

P350,000

80,000

P330,000

60,000
50,000
P1,900,000

The gross estate of Mr. Crocs shall be:

Exclusive property of Mr. Crocs
Common property of Mr. and Mrs. Crocs
Gross Estate

P350,000
1,900,000
P2,250,000

ACQUISITION OF EXEMPT PROPERTIES

The acquisition of exempt properties will be included as exclusive or common
properties of the spouses but shall be excluded in the computation of the gross
estate.
Illustration:
Mr. and Mrs. Ravena are both government employees. Mrs. Ravena died during the
marriage. Before her death, she received a lump sum GSIS benefit amounting to
P1,000,000. P200,000 of these were expended before her death. The balance was
invented in a property which now has a value of P900,000. Aside from these, the

spouses have P4,000,000 other common properties. Mr. and Mrs. Ravena also have
separate properties of P1,800,000 and P2,200,000, respectively.
The common properties of the spouses shall be computed as:
Investment:
- Original principal GSIS benefits
- Income investment (900K-800K)
Investment value
Other common properties
Common properties
Less: Exempt properties (GSIS benefits principal)
Taxable common properties

P800,000
100,000
900,000
4,000,000
P4,900,000
800,000
P4,100,000

The gross estate of Mrs. Ravena shall be:

Exclusive property of Mrs. Ravena
Taxable common property
Gross estate

P2,200,000
4,100,000
P6,300,000

EXEMPT PROPERTIES OF NON-RESIDENT ALIEN DECEDENTS

The exempt foreign properties of married non-resident alien decedent must be
excluded in gross estate.
Illustration:
Mr. Speedy Gonzales, a non-resident Mexican, died in Korea. Mr. and Mrs. Gonzales
had the ff. properties:
Capital properties
Paraphernal properties
Common properties
tangible
Common properties
intangible
Total

Mexico
P100,00
0
250,000
550,000

Philippines
P200,000

Korea
P300,000

Total
P600,000

350,000
200,000

600,000
200,000

1,200,000
950,000

500,000

150,000

650,000

P900,00
0

P1,250,00
0

P1,250,00
0

P3,500,00
0

The gross estate of Mr. Gonzales shall be:

Husbands capital properties
Common properties tangible

P200,000
200,000

Common properties intangible

Gross estate

500,000
P900,000

Assuming that the reciprocity rule applies, the gross estate of Mr. Gonzales shall be:
Husbands capital properties
Common properties tangible
Gross estate

P200,000
200,000
P400,000