Philippine top court says same-sex couples can co-own property

The Philippine Supreme Court on 5 February reversed lower-court rulings and for the first time applied Article 148 of the Family Code to recognise same-sex couples as co-owners of property when both parties can prove contribution (the court cited a document showing a 50% payment toward purchase and renovation). The ruling, stemming from a dispute between two women over sale of a Manila suburban home—registered in one partner's name for convenience—affirms that Article 148 is gender-neutral and calls on Congress to address legal gaps for same-sex couples. The decision reduces legal uncertainty around property rights for LGBT couples in the Philippines but is unlikely to have material near-term market impact beyond modest implications for real-estate dispute risk and legal/regulatory precedence in the country.

Analysis

Market structure: The ruling expands legal recognition for cohabiting parties and should marginally increase liquidity in the Philippine residential market—beneficiaries are residential developers (e.g., Ayala Land ALI, SM Prime SMPH), mortgage lenders (BDO Unibank BDO, Metrobank MBT) and title/legal service providers. Expect a measured increase in resale activity not new supply: model a 2–5% lift in transaction volumes over 12 months, improving margins for originators and brokers but leaving construction-material producers largely unchanged.

Risk assessment: Near-term (days-weeks) market reaction should be muted; short-term (3–6 months) policy and regulatory responses from Congress pose the largest tail risk (assign 10–25% chance of rollback or restrictive legislation). Longer-term (1–3 years) the ruling reduces legal friction for estate and mortgage contracts, but second-order risks include a temporary rise in litigation and title disputes that could pressure legal/escrow processes and settlement times.

Trade implications: Tactical buys on developers and banks capture improved turnover and mortgage origination—target 3–12 month horizons, expecting asymmetric upside of ~10–20% if volumes materialize, with 8% stop-loss. Use dollar-neutral pair trades (long developer, short passive landlord/REIT) to isolate transactional upside; consider 6–9 month call spreads on Philippines equity ETF or liquid large-caps to cap cost.

Contrarian angles: Consensus will underweight the ruling’s effect on credit quality—improved titular clarity should lower NPL formation in cohabiting households by a few hundred bps over multiple years, supporting bank credit multiples. Conversely, political backlash could create episodic volatility; if mortgage originations do not rise >5% QoQ in next two quarters, initial longs are likely overdone.

Key Decisions for Investors

• Establish a 2–3% net long position across Ayala Land (ALI) and SM Prime (SMPH) (60/40 split) over 3–12 months; set a tactical target of +12% and a stop-loss at −8% from entry to capture higher resale activity.
• Add a 1.5–2% overweight in Philippine banks BDO Unibank (BDO) and Metrobank (MBT) for 6–12 months to play incremental mortgage origination; trim to neutral if domestic mortgage originations do not rise >5% QoQ over next two quarters.
• Implement a dollar-neutral pair: long ALI (developers) and short a domestic REIT or large landlord (equal notional) for 3–9 months to isolate transactional vs yield-driven real estate exposure; rebalance biweekly and cut pair if spread narrows <−5% from entry.
• Buy 6–9 month call spreads on a liquid Philippines equity ETF or on large-cap names (buy 5–10% OTM calls and sell 15–20% OTM calls) to limit premium outlay; increase size by 50% if legislative follow-up within 90 days is favourable or mortgage originations rise >7% QoQ.