Division of Assets and Debts Upon Separation

1) Why this topic matters

In the Philippines, living together without marriage (“live-in,” “common-law,” “cohabitation”) does not create a marriage, but it can create property rights and obligations between partners—especially when they acquire property, build a home, or incur debts while living together. When the relationship ends, the key questions usually are:

What property is considered “shared”?
How is it divided?
Who pays what debts?
What if one partner was married to someone else?
What proof is needed to claim a share?

The answers depend heavily on which legal regime applies—primarily Article 147 or Article 148 of the Family Code of the Philippines—plus general rules on co-ownership under the Civil Code.

2) The controlling law: Article 147 vs Article 148 (Family Code)

A. Article 147: Cohabitation where partners could have validly married each other

Article 147 applies when:

The partners live together as husband and wife, and
They are not legally disqualified from marrying each other (e.g., both single, or their prior marriages are legally terminated), and
There is no existing valid marriage of either partner to another person at the time of cohabitation.

Practical effect: The law treats their property relations similarly to a special co-ownership arising from a “union without marriage,” recognizing that both typically contribute to the household and the acquisition of property.

B. Article 148: Cohabitation where there is an impediment (e.g., one/both married to someone else)

Article 148 applies when:

One or both partners are married to someone else, or
There is another legal impediment to marry each other (e.g., within prohibited degrees of relationship), or
The relationship is otherwise not covered by Article 147.

Practical effect: This is a stricter rule. There is no automatic presumption that properties acquired during cohabitation are jointly owned. Ownership depends on actual proof of contribution.

3) Property rules under Article 147 (capacitated to marry each other)

A. What property becomes “common” under Article 147?

In general, property acquired during the cohabitation through the partners’ work, industry, wages, salaries, or efforts is treated as co-owned.

Key features:

Salaries/wages and properties bought from them during cohabitation are generally treated as part of the “common” property.
Even if only one partner’s name appears on the title, the other may still claim a share if the property was acquired during cohabitation and falls under the Article 147 rules.

B. Presumption of equal shares (important)

Under Article 147, when property is considered part of the co-owned pool, shares are presumed equal in the absence of proof to the contrary.

This matters because many couples do not keep receipts or documentation. Article 147 is designed to avoid unjust outcomes when one partner’s contributions were less documented (e.g., unpaid domestic work, childcare, household management).

C. What counts as “contribution” under Article 147?

Contribution can be:

Direct financial (cash, down payment, amortizations, materials)
Industry/labor (working on a family business, improving property, managing operations)
Support of the family and household (often recognized as enabling the earning partner to acquire property)

While disputes are fact-sensitive, Article 147 is generally more receptive to recognizing the reality that both partners contribute to the partnership’s wealth.

D. What property remains exclusive (not shared)?

Typically excluded from the common pool:

Property owned before cohabitation
Property acquired by gratuitous title during cohabitation (e.g., inheritance, donations) to one partner alone
Property clearly proven to be acquired exclusively using one partner’s exclusive funds (this can be contested if commingling occurred)

E. Improvements on exclusive property

If one partner owned land before cohabitation and a house was built during cohabitation, the outcome can depend on:

Who funded construction (common funds vs exclusive funds)
Whether the improvement is considered separate or part of a shared investment
Evidence of intention and contribution

Often, disputes focus on reimbursement or equitable division of the value added.

4) Property rules under Article 148 (with legal impediment)

A. The strict rule: “actual joint contribution”

Under Article 148, only properties acquired by both partners through actual joint contribution of:

Money, or
Property, or
Industry (work/labor) are co-owned in proportion to each partner’s proven contribution.

B. No presumption of equal sharing

Unlike Article 147:

There is no presumption that shares are equal.
A partner who cannot prove contribution may receive nothing from the co-owned pool, even if the relationship lasted long.

C. The “name on title” problem (and why proof matters)

If property is titled in one partner’s name:

Under Article 148, the other partner must generally show proof of contribution (receipts, remittance records, bank transfers, witness testimony, proof of labor/industry) to claim co-ownership or reimbursement.

D. When one partner is married to another person

A frequent scenario:

Partner A is legally married to Spouse S, but cohabits with Partner B.

Under Article 148 principles, B may claim only what B can prove was contributed to properties acquired by the cohabiting pair. Additionally, because of the existing marriage, complex issues can arise involving:

The legitimate spouse’s rights in the married partner’s property regime (Absolute Community / Conjugal Partnership, depending on marriage date and circumstances)
Whether the married partner’s share can be claimed by or credited to the legitimate marital property regime

Bottom line: Article 148 cases are more document-heavy and more legally complicated.

5) Forfeiture rules (bad faith) and their consequences

Family law policy discourages illicit relationships and protects children. The Family Code contains forfeiture provisions connected to bad faith in unions not in compliance with marriage requirements.

While the precise application depends on facts and court findings, the general framework is:

If one party is in bad faith, that party’s share in the property subject to the special co-ownership may be forfeited in favor of:
1. The common children, or
2. The children of the innocent party, and/or
3. In certain situations, the State if there are no such children.

Bad faith can include knowingly entering into cohabitation when legally disqualified, deception, or other circumstances showing culpability. Courts determine bad faith based on evidence.

6) Debts and obligations: who pays what upon separation?

A. Start with a basic classification

When partners separate, debts generally fall into these categories:

Debts for the household/family during cohabitation Examples: rent, utilities, groceries, children’s school expenses, medical costs, essential repairs.
Acquisition or loan debts tied to property Examples: housing loan, car loan, appliance installment plans, business loans used to buy assets.
Personal debts Examples: one partner’s credit card spending unrelated to the household, gambling debts, loans for personal hobbies, obligations to third parties not benefiting the household.

B. Article 147 approach to debts (capacitated partners)

Because Article 147 treats many acquisitions as part of a shared property pool:

Debts incurred to acquire or preserve property that belongs to the co-owned pool are commonly treated as chargeable against that pool (or shared equitably between partners).
Household obligations can be recognized as joint responsibilities when they benefited the family unit.

Still, creditors’ rights depend on whose name is on the loan and what the contract says. As between partners, reimbursement/adjustment can be ordered to reflect fairness and the property regime.

C. Article 148 approach to debts (impediment cases)

Article 148 is contribution-driven, so debt allocation often follows:

Who borrowed and for what purpose
Whether the other partner co-signed or is otherwise legally bound
Whether the debt directly produced an asset and whether the other partner can prove contribution to payments

A partner may be responsible to the lender even if the asset is later ruled partly co-owned—and vice versa. Courts may order reimbursement between partners to align burdens with proven contributions.

D. Practical reality: creditor liability vs internal sharing

Even if a court declares that a debt should be “shared” between partners, a bank or lender generally enforces the loan against:

The borrower and any co-makers, based on the contract

Then the paying partner may pursue the other partner for reimbursement under the property/co-ownership rules.

7) How courts divide assets upon separation: common outcomes

A. Partition of co-owned property

If a property is found co-owned, the usual remedy is judicial partition, which can result in:

Physical division (rare for houses/condos), or
Sale of the property and division of net proceeds, or
One partner buying out the other (often through settlement)

B. Accounting and reimbursement

Courts often require an accounting for:

Down payments, amortizations, renovation costs
Who paid which bills
Use of shared funds for personal expenses
Income from shared property (rentals, business profits)

If one partner paid more than their share, that partner may be entitled to reimbursement—especially under Article 148 or where unequal contribution is proven under Article 147.

C. Recognition of contributions beyond cash

Especially under Article 147, courts may recognize:

Childcare and household management as enabling contributions
Work in a family business
Labor improving property

Under Article 148, courts may still recognize “industry,” but it tends to require clearer proof of the labor’s connection to acquisition or value creation.

8) Evidence: what usually proves (or defeats) claims

A. Strong proof

Deeds of sale, titles, tax declarations
Loan documents, amortization schedules, official receipts
Bank statements, remittance slips, transfer records
Construction contracts, materials receipts
Business records (SEC/DTI registrations, ledgers, invoices)
Written agreements (even informal) acknowledging sharing or contributions

B. Useful supporting proof

Messages/emails acknowledging joint purchase or payment
Photos of construction progress tied to dates and purchases
Testimony of sellers, neighbors, contractors, relatives (with credibility)

C. Common pitfalls

Property titled to one partner only, with no receipts from the other
Payments made in cash without documentation
Claims based purely on length of cohabitation (length helps context, but proof still matters—especially under Article 148)

9) Procedure and legal remedies (typical cases filed)

A. Civil actions commonly used

Depending on the situation, a separating partner may file actions such as:

Partition (to divide co-owned property)
Reconveyance / Declaration of co-ownership (to recognize a share despite title being in one name)
Accounting (to compute contributions, income, and reimbursements)
Sum of money / Reimbursement (for specific proven payments)
Injunction (to prevent sale/transfer while the case is pending, in proper cases)

B. Where cases are filed

Property disputes are generally filed in the appropriate trial court depending on:

Nature of action (real action involving property)
Assessed value/location of property
Jurisdictional thresholds

C. Provisional protection

In appropriate circumstances, courts may issue orders to preserve property (e.g., preventing disposal), but standards are strict and evidence-based.

10) Special topics that often arise

A. Children and property division

Children’s rights are separate from property division between partners, but they influence:

Support obligations
In some situations, forfeiture outcomes (where bad faith rules apply)
Practical settlement dynamics (family home arrangements)

B. The family home concept

The “family home” protections in Philippine law are closely tied to marriage and family relations, but cohabiting arrangements can still raise issues about:

Occupancy
Possession pending partition
Rights of minor children living in the home

C. Gifts between partners

Gifts can be contested if:

Alleged to be disguised property transfers
Connected to an illicit relationship (especially if one partner is married), raising issues of policy and validity depending on facts

D. Violence, coercion, or economic abuse

Where separation involves abuse, additional remedies may exist under special laws (e.g., protective orders). These are distinct from property regimes but can affect possession and interim arrangements.

11) Practical framework for analyzing a live-in separation (Philippine context)

Step 1: Identify the regime

Were both partners single and legally able to marry each other during cohabitation? → Likely Article 147
Was one/both married to someone else or otherwise disqualified? → Likely Article 148

Step 2: List assets and tag them

For each asset, note:

Date acquired
Source of funds (salary, business income, inheritance, donation)
Whose name is on title/contract
Who paid (and proof)

Step 3: List debts and tag them

For each debt:

Borrower/co-maker
Purpose (household, asset acquisition, personal)
Payments made by each partner (and proof)

Step 4: Apply the correct sharing rule

Article 147: broad common pool + presumption of equal sharing (rebuttable)
Article 148: narrow pool + strict proof of actual contribution, proportional shares

Step 5: Choose remedy

Partition for co-owned assets
Accounting for contributions and income
Reimbursement for unequal payments
Protective measures when needed to prevent disposal

12) Key takeaways

Live-in partners do not have the same default property regime as spouses, but Philippine law still recognizes property rights based on the nature of the relationship and contributions.
Article 147 is generally more protective of the partnership concept and may presume equal shares in qualifying cases.
Article 148 is stricter and often requires documentary proof of contributions; shares are proportional and not presumed equal.
Debts are allocated based on purpose, benefit, contractual liability, and contribution, and creditors can enforce loans based on the contract regardless of later internal adjustments.
Outcomes are highly fact-driven: records, receipts, and consistent proof often determine success.

General informational note

This article is for general legal information in the Philippine context and is not a substitute for advice on a specific case.