PROPERTY

The usual course of proceeding when

a court is confronted with the issue
of COL regarding property is to
determine whether it is an
immovable or a movable, and
thereafter they will be able to apply
what controlling legal system is
appropriate.

PHIL CONFLICT RULE ON REAL

PROPERTY
ART. 16, par. 1 Lex Rei Sitae.
Situs rule provides a uniform solution. The
immovable is characterized as an isolated
object of rights so that the interests of
various persons, such as the buyer, or a
spouse, or a mortgage is determined by the
law of the place where the land is situated.

PHIL CONFLICT RULE ON REAL

PROPERTY
ART. 16, par. 1 Lex Rei Sitae.
Exceptions for Real Property:
Art. 16, par. 2 (successional rights) and Art. 1039
(capacity to succeed) national law of decedent
Lex loci intentionis (contracts involving real property
which do not deal with title thereto), e.g., action to
annul a contract based on fraud where the fact that
realty is involved is incidental to the principal issue
which is the validity of the contract = law of the
place where the contract was perfected. But this is
problematic where even if the contract is adjudged
as valid by the law of the place where the contract
was perfected but held invalid by the law of the situs
of the property, which may refuse to give effect to
the contract.

PHIL CONFLICT RULE ON REAL

PROPERTY
ART. 16, par. 1 Lex Rei Sitae.
Exceptions for Real Property:
Lex loci intentionis where the principal contract
usually a loan is governed by the law of the
contract (contracts where the real property is given
as security). Otherwise, the law that shall govern
shall be inferred from relevant considerations: e.g.,
the legal framework within which the contract is
drafted, the currency in which payment is to be
made, etc. The mortgage contract itself, however,
is governed by the lex rei sitae. Obviously, the
validity of one contract is distinct from that of the
other, although the issues are related.

Marital Property as Conflict of

Laws Issue
This deals with the property rights of
the H and W upon marriage. From the
time of celebration of marriage, the law
recognizes property regimes that begin
to govern their property relations.
- It is a fact that there are different
property regimes for different states
that prescribe different rights and
interests on the spouses who acquire
assets before or after the marriage.

Marital Property as Conflict of

Laws Issue
Usually, marital property regime shall be
governed by express contract between
the parties (e.g., pre-nuptial agreement).
In the absence of a contract, the law
imposes or assumes a particular type of
property regime (i.e., Absolute Community
Property) as the default system.
The type of system that governs the
marriage depends on the law of the state
of dominant interest.
In most cases, the so-called state of
dominant interest is the domicile of the
parties.

CONFLICT RULE ON PERSONAL

PROPERTY
The SITUS of movables is the place where the
chattel is kept and used. It is the place where the
movable is. It follows therefore that it is not
necessarily the domicile of its owner.
The old law on movables was mobilia sequuntur
personam which meant that the rights over
movables were governed by the law of the
owners domicile.
But movables, by their nature are capable of being
transferred easily from place to place and as a
result it was difficult to anticipate where they
could be situated at a given time. Thus, for
convenience, they deemed it better that the law
to govern movables would be the domicile of the
owner.

CONFLICT RULE ON PERSONAL

PROPERTY
The law of the SITUS OF THE
MOVABLE governs and controls
transfers, and W-O-N title to
personalty actually passes depends
on the law of the state where the
property was at the time of the
transaction, regardless of the owners
domicile or nationality.

Rule 57, Sec. 7, ROC

Situs of different classes of personal property:
In case of personalty capable of manual delivery,
the SITUS is where the chattel can be found, since
the sheriff attaches such title by taking and
safely keeping it in his custody
For shares of stocks, the sheriff attaches these by
leaving with the president or managing agent of
the corporation a copy of the writ of attachment.
So for purposes of the attachment of the writ, the
SITUS is with the president or managing agent of
the corporation.
Situs of debt is with the debtor or one who has in
his possession such credits or similar property.

Tangible Personal Property

(Choses in Possession)
IN GENERAL, Lex rei sitae Art. 16, par. 1, CC
Exceptions: (same as in real property)

MEANS OF TRANSPORTATION
SHIP: Law of the flag. The situs of a ship is determined by
the flag it flies, thus, its situs is the flag state.
OTHER VEHICLES OR CRAFT (cars or airplanes): The situs
is wherever they come to rest, even if temporarily.
THINGS IN TRANSITU:
Loss, destruction and deterioration: Law of the destination
(Art. 1753, CC {The law of the country to which goods are to
be transported shall govern the liability of the common carrier
for their loss, destruction or deterioration})
Validity and effect of the seizure of goods: locus regit actum
(where seized) the temporary situs
Disposition or alienation of goods Lex loci intentionis
(contract)

 Note: The solution of Philippine law is

simplified subjecting both realty and chattel
to the law of the situs of the property.
So, if a problem of characterization arises, such
as if a Filipinos property should be situated in the
Seychelles and the law of that state prescribe one
set of laws for realty and another for chattel, the
Philippine court will decide which property is real
and which is personal. Our courts should decide
whether to classify property as realty or chattel
using the law of the situs.

Intangible Personal Property

(Choses in Action)
Choses in action are really rights, legal titles or
claims to something (e.g., debts, patents, copyright,
goodwill, trademarks and shares of stock)
Two kinds: (a) those that are mere rights (e.g., right to
collect from a debtor; (b) those represented by a
document.

Negotiable Instruments
To determine whether an instrument is negotiable or not:
law of the state that gives rise to the rights embodied in
the instrument. For e.g., negotiability of Philippine draft is
governed by Philippine law.
To determine whether the instrument has been legally
negotiated, transferred or delivered: law of the place of
the instrument at the time of transfer, delivery or
negotiation.
Obligations of the maker of a note and acceptor of a
draft: law of the state designated in the instrument as the
place of payment. If no designated place, the SITUS is
where the instrument was delivered.

Example
S, a Filipino negotiates a PNB check
to another Filipino, T, on his way to
the USA while on stopover at Narita
Airport in Japan. What law governs
the validity of the negotiation of the
instrument?

SC Ruling on Checks
Lim vs. CA, 251 SCRA 408 (1995) The
place where bills were written, signed or
dated does not necessarily fix or
determine the place where they were
executed. Delivery of the instrument is the
crucial consideration, because delivery of
the instrument is the final act essential to
its consummation as an obligation. The
place of delivery is the LOCUS of the
consummation of the obligation.

Debts
If created by contract, the SITUS of the
debt is that stipulated by contract.
If judicial action is to be taken on the debt
(e.g., recovery of debts or involuntary
assignment of debts or garnishment), the
SITUS of the debt will be where the debtor
may be effectively served with summons
Taxation of debts, domicile of creditor
Administration of debts, lex SITUS of
assets of debtor (as these assets can be
held lialbe for the payment of the debts)

King Mau Wu vs. Sycip, GRN L5897 (April 23, 1954)

W-O-N Philippine courts had jurisdiction over
a claim for a sum of money arising out of an
agency contract executed in New York?
SC Ruled that Philippine courts had jurisdiction
since the action for a collection of a sum of
money is a personal action. A non-resident may
then sue a resident in the courts of the country
where such a defendant may be served with
summons and his property levied upon
execution. The courts of the country may
enforce obligations arising out of contract, even
if these contracts be perfected abroad, as long
as they are not contrary to the public policy of
the forum.

Shares of Stock
As to relation between the shareholder and the
corporation: law of the state of incorporation
Effect on a corporation of the sale of corporate
shares: law of the place of incorporation
Effect between the parties of the sale of corporate
shares: lex loci intentionis
Taxation on the dividends of corporate shares: law
of the place of incorporation
Taxation on the income from the sale of corporate
shares: law of the place where the sale was
consummated
As to rights of assignor and assignee: law with the
most significant relationship to the transaction

 Franchises: law of the place that granted

them
Goodwill of a business and taxation thereon:
law of the place where the business is carried
on
Patents, copyrights, trademarks, trade names:
In the absence of a treaty, they are protected
only by the state that granted them.
Note: Foreigners may sue for infringement of
trademarks and trade names in the Philippines
only if Filipinos are granted reciprocal concessions
in the state of foreigners.

Exercise1:
If A, a Chinese national donated in
Japan in favor of a Filipino a parcel of
land in Beijing. The law of which
country governs
The formalities of the donation?
The capacity of A to make the alienation
The intrinsic validity of the donation?

Exercise1:
If A, a Chinese national donated in Japan
in favor of a Filipino a parcel of land in
Beijing. The law of which country governs

The formalities of the donation? Lex rei sitae

(Chinese Law)
The capacity of A to make the alienation? Lex
rei sitae (Chinese Law). The doctrine of
national law under Article 15 yields precisely
because the subject matter is land.
The intrinsic validity of the donation? Lex rei
sitae. The lex loci intentionis yields to the lex
rei sitae since the subject matter is land.

Exercise 2:
A citizen of Greece died leaving
parcels of land in the Philippines.
What law governs
The successional rights of the heirs?
The capacity of the Chinese heir
(supposedly) to inherit Philippine real
property?

Exercise 2:
A citizen of Greece died leaving
parcels of land in the Philippines.
What law governs
The successional rights of the heirs:
national law of the decedent (Greek law),
(Art. 16, par. 2)
The capacity of the Chinese heir
(supposedly) to inherit Philippine real
property: law of the decedent (Art. 1039)

Exercise 3:
What law governs the extrinsic and
intrinsic validity of an agreement
between a German and Chinese
employee done in Manila where the
salary of the employee will be paid
from 10% of the annual produce of
the land located in Japan?
Extrinsic validity?
Intrinsic validity?

Exercise 3:
What law governs the extrinsic and
intrinsic validity of an agreement
between a German and Chinese
employee done in Manila where the
salary of the employee will be paid from
10% of the annual produce of the land
located in Japan?
Extrinsic: Phil law (law of the country where
the contract was celebrated)
Intrinsic: lex loci voluntatis.

Exercise 4:
A German, domiciled and found in
HongKong, owes a Filipino is Manila
an amount of money. Where should
the Filipino sue for the recovery of
the debt?

Exercise 4:
A German, domiciled and found in
HongKong, owes a Filipino is Manila an
amount of money. Where should the
Filipino sue for the recovery of the
debt?
Hong Kong because the debtor is domiciled
and found there. If garnishment
proceedings is present, it should be where
the debtor may be effectively served with
summons.