Can Creditors Take the Family Home?
Quick answer
Generally, no. Under the Family Code, the family home is exempt from execution, forced sale or attachment, so most creditors with a court judgment cannot have it sold. There are four exceptions in Article 155: unpaid taxes, debts incurred before the home became a family home, debts secured by a mortgage on it, and debts to the workers and suppliers who built it. The exemption also has a value limit, and the owner must claim it and prove it.
What is a family home?
The family home, constituted jointly by the husband and the wife or by an unmarried head of a family, is the dwelling house where they and their family reside, and the land on which it is situated.
It becomes a family home when the family moves in:
The family home is deemed constituted on a house and lot from the time it is occupied as a family residence. From the time of its constitution and so long as any of its beneficiaries actually resides therein, the family home continues to be such and is exempt from execution, forced sale or attachment except as hereinafter provided and to the extent of the value allowed by law.
In *Ramos v. Pangilinan* (2010), the Supreme Court said that "All family homes constructed after the effectivity of the Family Code (August 3, 1988) are constituted as such by operation of law." No registration is needed for these. For a debt incurred before August 3, 1988, the Court said the home must be shown to have been constituted judicially or extrajudicially under the Civil Code.
The home must be built on property owned by the persons who constitute it. In *Cabang v. Basay* (2009), houses standing on land that belonged to the other party were not a family home. A person may have only one family home (Article 161).
When can the family home be taken?
Only in the cases listed in Article 155:
The family home shall be exempt from execution, forced sale or attachment except: (1) For nonpayment of taxes; (2) For debts incurred prior to the constitution of the family home; (3) For debts secured by mortgages on the premises before or after such constitution; and (4) For debts due to laborers, mechanics, architects, builders, materialmen and others who have rendered service or furnished material for the construction of the building.
So a bank holding a mortgage on the house may foreclose. A creditor whose unpaid personal loan came after the home was occupied generally may not have it sold, unless the value rules below apply.
Is there a value limit?
Yes. Article 157 says:
The actual value of the family home shall not exceed, at the time of its constitution, the amount of the three hundred thousand pesos in urban areas, and two hundred thousand pesos in rural areas, or such amounts as may hereafter be fixed by law.
The article also says that if the value of the currency changes, "the value most favorable for the constitution of a family home shall be the basis of evaluation." In *Eulogio v. Bell* (2015), the Supreme Court summarized that the exemption is limited to P300,000 in urban areas and P200,000 in rural areas "unless those maximum values are adjusted by law." This page does not convert these amounts to today's value: no official source read gives a current figure.
A creditor who is not covered by Article 155 can still ask the court for an execution sale under Article 160, if the family home is worth more than the limit. In *Eulogio v. Bell*, the Court said the creditor must prove three things: the actual value increased, the increase came from voluntary improvements made by the people who constituted the home, its owners or its beneficiaries, and the increased value is above the limit. At the sale, no bid below the value allowed for a family home is considered. The proceeds go first to the amount in Article 157, then to the judgment and costs, and any excess goes back to the debtor.
Who is protected?
The beneficiaries listed in Article 154: the spouses or the unmarried head of the family, and their parents, ascendants, descendants, brothers and sisters who live in the home and depend on the head of the family for legal support. In *Patricio v. Dario III* (2006), a grandson living in the house was not a beneficiary, because he depended for support on his father, not on his grandmother.
Can the family sell or mortgage the family home?
Yes, but with consent. Article 158 says the owner may sell, donate, assign or encumber it with the written consent of the person who constituted it, that person's spouse, and a majority of the beneficiaries of legal age. If they disagree, the court decides. If the home is common property of a married couple, see also Can a spouse sell conjugal property without consent?
What happens when the owner dies?
The family home continues. Article 159 says it lasts "for a period of ten years or for as long as there is a minor beneficiary", and the heirs cannot partition it during that time unless the court finds compelling reasons. In *Patricio v. Dario III*, the ten years had passed and there was no minor beneficiary, so nothing stopped the partition.
How does this work in real life?
These are made-up examples to show how the rules work. They are not advice for any real case.
Vic and Wena. They built their house on their own lot in 2005 and live there with their children. It became a family home when they moved in. A creditor with a judgment for a personal loan taken in 2015 generally cannot have it sold, unless the creditor proves the Article 160 conditions.
The same house, mortgaged. Vic and Wena mortgaged the house to a bank and stopped paying. The bank may foreclose, because Article 155(3) excepts debts secured by a mortgage on the premises.
Xian. Xian lives in a house he built on land owned by his cousin. Under the *Cabang* ruling, it is not a family home, because it is not on property owned by Xian.
For more on what creditors can and cannot do, see Debt and collection.
When do you need a lawyer?
Talk to a lawyer as soon as you receive a notice of levy, attachment or execution sale on your home. The exemption is not automatic in practice: in *Ramos v. Pangilinan* the Supreme Court said the claim for exemption "must be set up and proved." A lawyer can check whether your home qualifies, whether the debt is one of the exceptions, and how to raise the claim in time.
If you cannot afford a lawyer, see Free legal help in the Philippines for the Public Attorney's Office (PAO) and other options.
Which provisions does this answer rest on?
Frequently asked questions
Can a creditor take my family home for an unpaid loan?
Generally not, if it is a family home and the debt is not one of the exceptions. Article 155 of the Family Code exempts the family home from execution, forced sale or attachment, except for taxes, debts incurred before it became a family home, mortgages on it, and debts to those who built it.
Can the bank foreclose on a mortgaged family home?
Yes. Article 155(3) makes an exception for debts secured by mortgages on the premises, whether the mortgage was made before or after the home was constituted.
Do I need to register my house as a family home?
Not for homes built after the Family Code took effect. In Ramos v. Pangilinan (2010), the Supreme Court said family homes built after August 3, 1988 are constituted by operation of law. The owner must still claim the exemption and prove it.
Is there a value limit on the family home exemption?
Article 157 sets P300,000 in urban areas and P200,000 in rural areas, valued at the time the home was constituted, or other amounts fixed by law. A creditor may ask for an execution sale only by proving the conditions of Article 160.
Can a house built on someone else's land be a family home?
No. In Cabang v. Basay (2009), the Supreme Court said the family home must be constituted on property owned by the persons constituting it, so houses standing on land owned by others were not a family home.
What happens to the family home when the owner dies?
Article 159 says it continues for ten years, or for as long as there is a minor beneficiary, and the heirs cannot partition it during that time unless the court finds compelling reasons.
General information, not legal advice. For your case, ask a lawyer, the Public Attorney's Office (PAO) or the agency.
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