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Brief Survey of Choice of Law

Problems in Property
M. L. Perete
Adamson University

Lex situs for real and personal property


(Art. 16, CC)
Rule covers all transactions involving sale,
mortgage, barter, exchange, lease, assignment or
any form of alienation
Governs effects of co-ownership, quieting of title,
taxation, registration, and rules on prescription
The formalities of a contract involving property,
and validity and effect of conveyance of property
are treated as questions of property rather than
contract, except when lex intentionis is clearly
established.

Republic v. Sandiganbayan (1993)

PCGG impugns the compromise agreement it entered into with


Benedicto, a Marcos crony, regarding certain properties (i.e.,
IBC 13, etc.) located in the Philippines on the ground that the
compromise agreement approved by the Sandiganbayan was
defective for not having been authenticated before the consul
and lacks two (2) witnesses.
The SC brushed aside the argument upon the reasoning that
while lex loci celebrationis governs forms and solemnities of
contracts, lex rei sitae or lex situs applies with respect to the
formalities for the acquisition, encumbrance, and alienation of
real and personal property located in the Philippines.
Following lex situs, the Court pointed out that the rule in this
jurisdiction is contracts are obligatory in whatever form they
take for so long as essential requisites are complied with.
Furthermore, the requirement that contracts that extinguish or
transmit rights over immovable property must appear in a
public document merely designed for greater efficacy or
convenience.

Cheesman v. IAC (1991)

Capacity of Person to transfer or acquire real


property governed by lex situs
Cheesman, an American, was married to Criselda but later
separated. During their cohabitation, Criselda bought a
parcel of land on her own name which she later sold.
Cheesman sought to invalidate the sale on the ground that
the same was conjugal property, having been bought
during their marriage.
The lower court invalidated the sale but later reversed
itself. On appeal to the SC, the Court held that a foreigner
may not foist the rights to conjugal property that will
amount to an indirect contravention of the Constitutional
prohibition against aliens owning land in the Philippines.

But if property is outside the country


The law of the country where property is located
governs. Generally:
For realty lex situs
For personalty may be lex domicili, lex
situs, lex loci actus, or the proper law of
transfer

Llantino v. Co Liong
Chong (1990)

Capacity of Person to transfer or acquire real


property governed by lex situs
The Llantinos leased a commercial residential land to
Co, then a Chinese national. After 13 years, the
Llantinos sought to recover on the ground of end of
lease. Co, already a natruralized Filipino, alleged that
the lease was for 60 years. The Llantinos argued such
lease circumvents the Constitutional prohibition of
alien ownership of land. The Court upheld the lease.
The SC upheld, holding that there is nothing repugnant
to the lease for 60 years, especially since there is no
option to buy. Assuming there was, Co naturalized as
Juan Molina would have no incapacity to enter into
such a contract over property.

Exceptions to the Lex Situs Rule


If the transaction does not affect transfer of title to
or ownership of the land lex intentionis or lex
voluntatis governs
In contracts where real property is offered by way
of security for the performance of an obligation
such as a loan, the mortgage of the land is
governed by les situs but the loan agreement is
governed by the rules on ordinary contracts
Testate and interstate succession and capacity to
succeed, governed by national law of decedent

Liljedahl v. Glassgow
(1921) Iowa

Exception to lex situs


Liljedahl held a mortgage on a land in Colorado which
was issued as security for a debt payable in Iowa. The
mortgagor sold the land to Glassgow but left blank the
name of the grantee which is assumed to pay the
mortgage to Liljedahl. Glassgow soon after sold the
property to another. L sued G for the mortgage. G
interposed the defense that while under the law of Iowa,
he is bound to pay on the mortgage, under Colorado law
which should apply being the situs of the property, he is
not bound.
The Court held that the assumption of mortgage by the
buyer is a separate obligation, a personal contract, and
therefore Iowa law should apply.

Situs of Certain Properties


Asiatic Petroleum v. Co
Quico (1940)

Personalty where found or located


Co was an agent of AP to sell petroleum products and to
render accounting. Upon his default and later
relocation to China, AP filed suit to recover unremitted
sum with preliminary attachment. The Court thereafter
attached bank accounts. Cos counsel moved to nullify
proceedings on the ground that action was strictly in
personam against a non-resident summoned by
publication who did not appear. Lower court granted
Cos motion.
On appeal, the SC reversed, holding valid the
attachment on account of lex rei sitae. It held the situs
of the res is RP and therefore within the jurisdiction of
the court.

Situs of Certain Properties


Money where found or located
Debts where debtor may be found
following mobilia personam
sequuntur (because it is where debtor
can be sued and collected)
Shares of stocks domicile of the
corporation

CIR v. Anglo California National


Bank (1960)

The Calamba Sugar Estate Inc. (CSEI), represented by


its trustee Anflo California National Bank, is a foreign
corporation licensed to do business in RP. CSEI sold in
San Francisco shares it held in Pampanga Sugar Mills to
Pasumil Planters, Inc.
The CIR assessed capital gains taxes on the sale on the
ground that the situs of the shares is in RP. ACNB
opposed. The CTA ruled against the assessment.
The SC upheld, holding that there is a difference
between the shares themselves whose situs is here, and
the situs of the income derived from the sale that
resulted in capital gains tax.

Situs of Certain Properties


Intellectual Property Rights place
where actually used