Your rights after death of your common law partner

Question: My common law wife was previously married, but never had her marriage annulled or nullified. Do I have a claim on the properties we acquired?

In the Philippines, your legal rights to properties acquired during your relationship with your common-law wife depend significantly on her marital status under the law. Here's a breakdown of the legal implications:

1. Her Marriage is Still Valid

If your common-law wife was legally married and never obtained an annulment or nullity of marriage, then:

• Her marriage is still considered valid and subsisting under Philippine law.

• Any relationship with another person (including you) is not legally recognized and is considered an adulterous or bigamous relationship, depending on the circumstances.

  
  

2. Properties Acquired During Your Cohabitation

If you acquired properties together during your 20-year relationship:

Presumption of Co-ownership (but limited)

Under Article 147 of the Family Code, co-ownership rights may apply only if both parties are legally free to marry (i.e., not legally married to someone else). But since she was not free to marry, Article 148 applies:

Article 148 (Family Code) — For relationships where one or both parties are married to someone else:

• Only the properties acquired through the actual joint contribution of money, property, or industry of both parties shall be owned in common in proportion to their contributions.

• You must prove your actual contribution (financial or work/labor).

• If you can show that you contributed to the acquisition, you may have a proportionate claim.

Important Caveats:

• You do not get automatic 50-50 co-ownership as you would in a legal marriage or a common-law union where both parties are free to marry.

• Properties solely in her name, and where you cannot prove contribution, may not be claimable.

What You Should Do:

1. Gather evidence:

   • Receipts, bank records, construction materials, or any proof of monetary or labor contribution.

   • Witness statements if you did substantial work or helped financially.

2. Consult a lawyer:

   • A lawyer can help assess whether you can file a civil case for partition or recovery of your share in properties under Article 148.

3. Avoid prescriptive period issues:

   • There are time limits for asserting claims in court (prescriptive periods), so acting quickly is important.

Summary:

• You may have a claim, but only for properties you helped acquire, and only in proportion to your proven contribution.

• Her existing marriage means your relationship is not protected under typical cohabitation laws.

• Legal help is highly recommended for documenting your contributions and asserting your rights.

Sale of Mortgaged Property to Creditor Per Se Is Not Prohibited

When dealing with mortgaged properties, many people assume that selling such assets to the creditor is legally prohibited. However, this is not necessarily the case. Under the right legal framework, the sale of a mortgaged property to the creditor is allowed, provided that it does not violate laws on foreclosure, dation in payment, or the prohibition against pactum commissorium.

How Mortgages Can Be Paid

A mortgage is a security interest granted over a property to secure the performance of an obligation, typically the repayment of a loan. The debtor can satisfy the mortgage in several ways:

1. Full Payment of the Loan – The most straightforward way to release the mortgage is by repaying the debt in full. Once the debt is fully paid, the creditor must execute a release of mortgage, which should then be registered with the relevant land registry.

2. Foreclosure Sale – If the debtor fails to pay, the creditor may initiate a foreclosure process to sell the property, either through a judicial or extrajudicial foreclosure proceeding. The proceeds from the sale are then used to settle the outstanding debt.

3. Dation in Payment (Dacion en Pago) – Instead of paying in cash, the debtor may transfer ownership of the mortgaged property to the creditor in satisfaction of the debt. This is a voluntary arrangement between both parties and is valid as long as it does not constitute a disguised pactum commissorium.

4. 
   

Relationship Between Dation in Payment and Pactum Commissorium

Dation in Payment (Dacion en Pago)

Dation in payment occurs when the debtor transfers ownership of the mortgaged property to the creditor in exchange for the extinguishment of the debt. This is a negotiated and consensual agreement between both parties. The key difference between dation in payment and a foreclosure sale is that in dation, the debtor willingly conveys ownership as an alternative means of settling the obligation.

For the dation to be valid, it must be agreed upon by both parties and must not be forced upon the debtor. It is a lawful and commonly used method of settling obligations when cash payment is not feasible.

Pactum Commissorium: The Prohibited Clause

Pactum commissorium, on the other hand, is an illegal provision in a mortgage or pledge that allows the creditor to automatically appropriate the mortgaged property in case of non-payment. This is prohibited because it is considered oppressive and inequitable to the debtor, as it bypasses the due process of foreclosure or voluntary dation.

For a transaction to be considered a prohibited pactum commissorium, two elements must be present:

1. A security arrangement (such as a mortgage or pledge).

2. An automatic transfer clause in favor of the creditor upon default.

Unlike dation in payment, which is voluntarily agreed upon after default, pactum commissorium is a pre-arranged forfeiture mechanism that is deemed invalid under the law.

Conclusion

The sale of a mortgaged property to the creditor is not inherently prohibited. It can be done through legitimate means, such as dation in payment or foreclosure. However, what is illegal is the automatic appropriation of the property by the creditor without due process, as seen in pactum commissorium. Understanding these legal concepts helps ensure that mortgage transactions remain fair and within the bounds of the law.

Source: Ziggurat Real Estate

The need for property tax reform

As we work to achieve sustainable economic growth, maybe we can rethink the tax structure. Rather than heavily relying on income taxes, perhaps it is timely to consider a strategic shift toward property taxes, and in part, to business, and consumption taxes — especially on goods with negative externalities.

Personal income taxes, though progressive, burdens especially middle-income earners, potentially hindering their spending capacity. By shifting away from personal income taxes and toward property and business taxes, governments can generate more revenues from profitable sectors.

Corporate tax reforms can prove beneficial for revenue generation by minimizing avoidance and fighting evasion. Obviously, to encourage investments, business or corporate income should be taxed at fair and globally competitive rates. But, the government need not bend backwards too much in this regard.

As for shifting more of the tax burden to consumption, this should be skewed specifically towards excise taxes on goods associated with negative externalities, such as sugary beverages; cigarettes, tobacco, and vaping products; beer, liquor, and other alcoholic beverages; and in part, carbon-emitting fuels.

Options include higher excise taxes on jewelry; motor vehicles including motorcycles; and, maybe unhealthy or junk food. The objective is to minimize the consumption of goods that have high social and health costs. It is incidental that taxing them provides a source of revenue. The aim is to discourage harmful consumption behaviors.

By taxing goods that carry social costs, the government can create a two-fold benefit: theoretically it reduces the demand for harmful products, and, at the same time, generate revenue that can be channeled or earmarked for spending on healthcare, environmental protection, and public education.

Mexico introduced a soda tax in 2014 to combat rising diabetes rates, using excise taxes to generate revenue as well as reduce public health costs. Within the first year, sugary drink sales dropped by over 5%, and the tax now provides additional funding for healthcare and public health initiatives. The Philippines has followed suit with its own sugary drinks tax.

As for India, it implemented a carbon tax on coal production to curb emissions and fund renewable energy projects. This excise tax, levied at a specific rate per ton of coal, has raised significant funds for green energy development, highlighting how consumption taxes on polluting industries can drive sustainable development while meeting fiscal goals.

But more government revenues, if feasible, should come from property taxes. And it should be collected and managed at the local level. Property taxes capture wealth accumulated through real estate and ensure that property owners contribute fairly to local infrastructure and service costs.

Property taxes offer a largely untapped revenue stream in many developing countries, where they currently represent only a fraction of what they do in more developed economies. In wealthier countries, property taxes contribute more than 1% of GDP, with some countries reaching nearly 3%. In contrast, emerging regions like Asia and Africa generate only around 0.1% of GDP from property taxes, highlighting a missed opportunity.

By expanding property tax revenues, the Philippines can build a more stable and equitable revenue base, less susceptible to economic fluctuations than income taxes. Shifting the tax burden from personal income to property also allows the government to retain a progressive revenue source without stifling individual earning potential.

In cities like Lagos in Nigeria and Delhi in India, improved property tax collection has reportedly generated more funds for urban development, better waste management, and increased social services — enhancing the quality of life for residents while stabilizing local budgets.

In Lagos, by mapping properties via GIS technology and tightening tax compliance, the city reportedly increased its property tax collection fivefold, generating over $1 billion in a decade. This revenue supports critical urban services and infrastructure improvements, boosting public trust and improving local quality of life.

And in Bogota, Colombia, updated property valuations and tax reforms have reportedly helped municipalities fund local development projects. Linking property taxes directly to urban improvements, Bogota has seen rising public acceptance and compliance, particularly as residents observe the impact on infrastructure and local services.

In Belo Horizonte in Brazil, a clear correlation was reportedly established between property tax revenues and visible local improvements, including road maintenance and waste management. This transparency encouraged higher compliance and provided a stable revenue source for ongoing municipal projects.

To be fair and equitable, property taxes should impose minimal burdens on those without substantial assets. To protect low- and middle-income homeowners from a high tax burden, exemptions and deferred payments can be considered. This way, the government can promote affordable homeownership while ensuring that those who benefit most from urban growth also contribute proportionately.

In raising property taxes, a gradual, phased approach is recommended. Municipal governments should also establish clear policies on exemptions and implement mechanisms for regular public reporting of tax expenditures. By limiting exemptions to a narrow range of beneficiaries, local governments can prevent revenue erosion and ensure funds are available for public services.

For asset-rich but cash-poor households, such as retirees or elderly homeowners, the government can introduce deferral programs that allow taxes to be postponed until the property is sold. Exemptions or rebates can also be given to pensioners and low-income households. This approach ensures that property taxes remain fair and do not impose undue financial hardship on vulnerable groups.

Having localized, visible benefits from higher property taxes can help improve public buy-in, particularly from low- and middle-income groups, and hopefully minimize political resistance to taxation. People should be able to directly observe — see and feel — how their tax contributions translate into public benefits.

Of course, it goes without saying that business or corporate income taxes should continue to play a major role in revenue collection, as they allow governments to capture a share of corporate profits without unduly burdening individual earnings. Fair, but not necessarily low, taxation will allow corporations to contribute to the public good while maintaining the productivity that drives economic growth.

In Colombia, corporate taxes are said to fund local public services and infrastructure projects, showing a direct link between corporate taxation and social development. Such taxes can be earmarked specifically for education, healthcare, and economic development initiatives.

By connecting corporate tax revenue to visible projects, Colombia has built public trust, aligning corporate taxation with social benefits. As a result, corporate tax compliance has reportedly increased, showing how transparency in the use of taxes fosters acceptance and collaboration.

Overhauling property, corporate, and excise taxes on harmful consumption can support a robust and equitable tax base. By shifting away from personal income taxes, governments can create revenue systems that capture wealth more fairly, incentivize healthier behaviors, and fund public services effectively.

Source: Business World