The Ins and Outs of Postnuptial Agreements in the Philippines

What Exactly is a Postnuptial Agreement?

A postnuptial agreement, also known as a marital or family property settlement agreement, is a type of contract made between spouses after they are married. It is an agreement in which the husband and the wife divide their property and decide other issues such as spousal support. It is used in the Philippines in the same manner as a prenuptial agreement. In that sense, a postnuptial agreement is generally executed when the spouses have not entered into a prenuptial agreement prior to their marriage or previously if the parties wish to modify an existing agreement.
In contrast to a prenuptial agreement, no court approval is necessary for a postnuptial agreement in order to make the contract enforceable. (Note that if the agreement is in connection with a legal separation or a divorce, approvals from the courts are necessary.) A postnuptial agreement would be enforceable just like any other contract . While contracts without consideration can be valid, courts often require consideration separate and apart from the marriage contract. Of course, the requirements of valid contracts such as mutual consent, lawful object, and a lawful cause and subject matter under the Civil Code of the Philippines still apply.
In the Philippines, since the Contracting Parties are still married, customarily there is no mention of divorce or dissolution. Moreover, no provision should contradict any mandatory provisions of law such as support, custody and those provided in the Civil Code of the Philippines Articles 63 and 63-7 for persons under parental authority. The agreement while it is in effect will be binding and enforceable by either of the spouses. Under certain circumstances such as court declared a legal separation, the agreement may be modified by the courts.

The Lay of the Land in the Philippines

The legal framework governing postnuptial agreements in the Philippines is governed by various laws and statutes. The principal law relating to property relations and family law in general is the Civil Code of the Philippines. Title III of Book I of the Code deals with the Family and defines the general rules about contracting marriage. Article 68 of the Code states that: "The spouses shall fix the family domicile upon marriage. Irrespective of the family domicile agreed upon, the husband shall be deemed to be the head of the family."
Article 74 of the Code provides that the intrinsic validity of the marriage and various factors relating to it shall be governed by the law since the primary considerations for passing an absolute decree of divorce required the proper observance of the law with respect to contract of marriage. It also provides that all actions for annulment of marriage or for legal separation shall be subject to the period of one year laid down by law.
Article 75 further provides for the conjugal administration of community property. Article 76 provides that "With respect to the property rights of the spouses subject to regime other than that of community, the provisions of the law on property relations between different persons shall govern." This Article shows that property relations of parties who are married but under a different regime to that of absolute community shall be governed by the general laws of property relations. These include the Civil Code’s configuration of the general provisions on Sales, Donations, and Assignments.
With respect to agreements governing the property relations of spouses, Article 77 provides: "Minor children and descendants are presumed to be irrevocably instituted heirs of their parents unless there is a valid transmittal of the right to inherit from them. Should they die before their parents, their children shall inherit in their place. Once the status of descendants is severed due to relationship, the law terminates milder Article 202 of the Civil Code. In addition, Article 64 of the Family Code provides that the property relationship between husband and wife is governed by the law under which the marriage was celebrated. Any alteration or modification of this begins from the term of the contract of marriage and is not subject to the requirements of the law. This provision shows that the law does not provide for any specific rules regarding postnuptial agreements or other agreements between married couples.
Earlier on, the Supreme Court in the case of Victorio v. Tayco stated that: "The Supreme Court clarified that while parties in a definite marital relation as husband and wife may enter into contracts with each other, the enforceability of the agreement or contract thereof is for the courts to determine."
It is important to think that agreements reached between married couples or those who maintain civil partnerships.

The Advantages of a Postnuptial Agreement

Postnuptial agreements can provide numerous benefits for married couples in the Philippines. A postnuptial agreement can establish how assets will be divided in the event of a divorce or separation. This can help to avoid lengthy and costly legal battles over property and can provide clarity and peace of mind for both parties.
A postnuptial agreement can also be useful in situations where one spouse has significantly more assets than the other. This can occur in second marriages or where one spouse is much older than the other. A postnuptial agreement can help to protect the assets of the wealthier spouse and ensure that they are not lost in the event of a divorce or separation.
In addition, a postnuptial agreement can provide clarity on financial matters such as alimony, child support and the payment of debts. This can help to avoid confusion and conflict during difficult times, and can provide both parties with a clear understanding of their financial responsibilities.
Having a postnuptial agreement can also provide a sense of security and stability for both parties. In the event of a divorce or separation, a postnuptial agreement can provide a clear roadmap for resolving financial issues and can help to avoid a lengthy and costly legal battle.

Getting the Process Going on a Postnuptial Agreement

If you are already married, and you and your spouse wish to create a written agreement that delineates the property relations between you in the event of dissolution or death, you will need to enter into a postnuptial agreement. A postnuptial agreement requires great care in its preparation to ensure that it addresses all relevant issues and that it is prepared in such a way that it will be enforceable in the event you and your spouse should eventually separate. Written marital agreements must be prepared carefully and accurately for them to be valid. It is best to serve these documents on your spouse and your spouse to retain legal counsel to review and advise as to their terms. Steps to create a postnuptial agreement: 1. Choose an experienced family law attorney to assist you. If you and your spouse are going to work together and share the same attorney for this contract, both must reside within the attorney’s practice territory. 2. Prepare a written draft of the agreement by using the initial consultation with the attorney to learn the general laws regarding the property owned by both spouses. 3. The attorney can prepare the postnuptial agreement by drafting it according to the information you provide them and the desires you relay to them. The agreement you receive will contain the information necessary according to law and also address all of the aspects of your assets, liabilities and property rights. 4. Both spouses must express full and voluntary consent to all of the terms in the agreement for it to be legally effective. If one spouse believes the terms are not fair, they may not fully agree to all of the conditions. 5. It is possible to negotiate the terms of the agreement before finalizing it. It is possible to seek to include certain provisions that are not commonly included in a postnuptial agreement. 6. Any revisions can be made and both spouses can sign the agreement once it is final. This will conclude the process and both parties will have a final copy of the agreement for their records.

Some Common Provisions in a Postnuptial Agreement

While every postnuptial agreement in the Philippines is unique, there are certain clauses that tend to be part of most agreements legally binding on both spouses. Because the subject matter of these agreements – marriage and the disposition of real property – are strictly regulated by Philippine law and subject to court approval, the clauses reflect a general structure that allows the terms to be enforced.
Asset Division
The key part of most postnuptial agreements is the legally enforceable distribution of assets. The agreement may include a specific formula for the division of assets that both parties can accept. The parties may have a wide discretion in dividing real property, cars, bank accounts, and other assets acquired during the marriage into two parts and selling them at market value or distributing them as they see fit .
Debt Responsibility
The most common debts that must be allocated through a postnuptial agreement are mortgages on real property and automobile loans. The basic agreement over these debts is that both parties are responsible for the payment or that the spouse with the income most likely to pay the bill is responsible. Another common debt discussed in post-marital agreements are loans from friends and family necessary to fund the purchase of a home or family car. Most agreements dictate that both parties are responsible for these loans.
Special Conditions
The parties may elect to add several clauses to the agreement that do not refer to the distribution of property and debts at the dissolution of the marriage. The agreement may specify how the spouses will communicate with each other while living in the marital home, allocate times for each party to leave the house, and specify financial support.

Possible Trouble and Things to Think About

Though many Philippine lawyers are now correctly advising clients of the ability to enter into a valid postnuptial contract, it is important to recognize that a postnup cannot be entered into lightly. One of the most significant issues is the level of trust between the parties. In situations where one party has a high level of income (i.e., a doctor or businessperson) and the other is unemployed, still going through school or not "pulling their weight," it is unsafe to presume that the financially stronger spouse has not or will not take advantage of the other party. It may be safer to put off a postup until after the parties are better established in the relationship. The greatest danger is the power dynamic that exists in a failed relationship – one spouse may frequently threaten the other party with divorce, alleging that one of the parties will take all of the money, the children, etc. Such threats may be difficult to diminish even when both spouses know that the agreement is what they both want. One party may not feel that they can "risk" signing a postnup without some guarantees that (s)he will not be worse off than the other if the marriage fails. This threat is particularly dangerous because it changes the dynamics of the negotiation if a spouse is at risk of being "thrown out with nothing" by signing the postnup. When the trust level decreases, or when a spouse has the upper hand and is used to getting whatever (s)he wants, it is important to recognize that extreme care must be taken to ensure that the weaker party is protected. Those power dynamics, when exacerbated by economic realities, threaten the legal validity of any agreement signed at that point. A second consideration is how a couple will get through the timeframe necessary to actually make a valid agreement. Will the agreement be reached on a few pieces of paper jotted down over the course of a few weeks, or is the couple extremely committed to providing enough time and money to have a complete understanding of the issues? As noted previously, a shoddy agreement will not be valid even if signed, which defeats the purpose. Lawyers for both parties may assist with this detail. While not truly a problem associated with the use of a postnuptial agreement, the issue of a prenup versus postnup should also be addressed early in the negotiations. Some couples will feel it is too late to do a prenuptial when a postnup is valid – the truth is quite the opposite. A prenup reduces the pressure on the family to "fix" a poor postnup if it does not work out. Generally, it is safer to have a prenup and not need it than vice versa.

Case Examples and What’s Happening in Real Life

There are not many real-life published cases available to discuss in a blog article, as, there have not been many cases decided by the Supreme Court or the lower courts which tackled postnuptial agreements. The family law cases that are available only mention postnuptial agreements, and all seem to be in favor of the validity of postnuptial agreements or upheld the validity of the provisions in the agreements. Many of the postnuptial agreements provided for separation and settlement of property relations. In one case, the parties had entered into a separation agreement allowing them to live separately, but not dissolved their marriage, as they had reconciled after some time. They established separate properties before they reconciled so the court said that they cannot be entitled to those properties as partition under the separation agreement was not made in the first place. In another case, the husband filed early in the marriage a declaration of absolute nullity of marriage with claims for support and dissolution of conjugal partnership. However, the wife did not want to dissolve their marriage especially their religious beliefs. They discussed and entered into a property separation agreement but there was no partition of assets. They agreed to live separately after signing the agreement but live together again thereafter. Then the husband filed a petition for declaration of nullity but the wife filed her own petition for declaration of nullity of marriage with a claim for partition of the property with her husband in the conjugal partnership property she helped build from scratch. The trial court held a hearing on the second case and considered the first case evidence against the husband. Likewise, the trial court deemed the agreement valid and used it as a basis for the decision. It said that under the agreement, there was a separation of property. However, despite the separation, the conjugal partnership still exists and neither spouse can buy property without the co-ownership of the other spouse. The husband appealed to the appellate court but the appellate court sustained the trial court and upheld the separation agreement and the decision to declare the marriage valid. The Supreme Court affirmed the decision of the appellate court. Now, these are just some examples of available cases. It can be gleaned, however, that the validity of a postnuptial agreement has been upheld in these cases, but the agreements are not necessarily binding for binding for purposes of property relations as the courts still consider the nature of the property before the post-nuptial arrangement, so if for example there was already prior separation of property, the post-nuptial agreement allowing for a partition is considered valid, but the partition itself is not enforceable.

Questions You Might Be Asking

How enforceable is a postnuptial agreement in the Philippines?
As long as the agreements are not contrary to law, morals, good customs, public order or public policy, the resulting postnuptial agreement is valid and can be enforced in the Philippines.
What expenses should I expect in drawing up a postnuptial agreement?
When planning for a postnuptial agreement, it is essential to consult an attorney proficient in family law. The first meeting usually contains the following recurring expenses: While a retainer fee is a common setup, it is important to discuss the costs with the family lawyer as well . It’s best to consult with your attorney about the realistic cost of a postnuptial agreement to eliminate any surprises.
How should adjustments on a postnuptial agreement be handled?
After a postnuptial agreement is signed, arrangements can be made for amendments or adjustments by visiting an attorney to refresh the agreements. The attorney will evaluate whether changes are reasonable and fair. If so, a new agreement will be drafted.