REAL and PERSONAL

PROPERTIES

Chapter XIX
 Conflicts Rules on Real Property
1 General Rule – Issues concerning real property
shall be governed by the law of the place where
the property is situated [lex rei sitae]
2 Exceptions:
1 ORDER OF SUCCESSIONAL RIGHTS –
NATIONAL LAW of the DECEDENT [Art. 16(2)
Civil Code]
2 CAPACITY to SUCCEED in inheritance cases
– NATIONAL LAW of the DECEDENT [Art.
1039 Civil Code]
2 Exceptions, cont…
3 Contracts involving REAL property but which do NOT
deal with the TITLE thereto - the proper law of the
contract which is either the:
1 Lex loci voluntatis – the law of the place voluntarily
agreed upon
2 Lex loci intentionis – the law of the place intended by
the parties
4 Contracts where the REAL property is given as
SECURITY [such as loan with mortgage]
1 The principal contract [loan] – the proper law of the
contract [lex loci voluntatis or lexl loci intentionis], and
2 The accessory contract [mortgage] – lex rei sitae
 Real Property Issues
What are Governed by Lex Rei Sitae

1. Extrinsic Validity of 5. Capacity of Parties

Alienations 6. Interpretation of
2. Intrinsic Validity of Documents
Alienations 7. Effects of Ownership
3. Transfers [including 8. Co – Ownership
sale, barter, 9. Possession
exchange] [including adverse]
4. Mortgage 10. Accession
 Real Property Issues
What are Governed by Lex Rei Sitae

11. Usufruct 16. Taxation

12. Lease 17. Quieting of Title
13. Easement 18. Registration
14. Police Power 19. Prescription
15. Eminent Domain
 Real Property Issues
Issues that may be determined by the lex
situs:
1. Who may own real property?
2. Under what conditions may the land be
held?
3. Under what uses may the land be put?
4.Who has the capacity to transfer interest
in or to convey property?
 Real Property Issues
Example:
Maria, a FILIPINO married woman,
executes a promissory note in Hongkong,
giving as security for it a mortgage on
land in the RP.
Under RP law Maria has no power to make
the conveyance without the consent of
her husband.
 Real Property Issues

Q: Can the mortgage

be enforced in the
RP?
 Real Property Issues

A: No, although she may

have the capacity to
execute the PN in HK.
Because this issue is
governed by the lex rei
sitae
 Real Property Issues

However: Although the

mortgage is unenforceable
in the RP, the PN may be a
valid personal obligation if
sanctioned by the proper
law of the contract [HK]
 Synopsis of Conflicts Rules
Factual Situation Point of Contact
General Rule - Anything Lex Rei Sitae
involving property
Exceptions:

1 Successional rights National Law of Decedent (Art. 16[1] Civil

Code)
2 Capacity to succeed National Law of Decedent (Art. 1039, Civil
Code)
3 Contracts involving real The Proper Law of the Contract [lex loci
property but do not deal voluntatis or lex loci intentionis]
with title thereto
4 Contracts where real Principal Lex loci voluntatis or lex
property is given as Contract loci intentionis]
security Accessory Lex rei sitae
Contract
 MOVABLE PROPERTY
Movable Property is of two [2] kinds:
1. Choses in possession – usually identified with
tangible objects [things that can be seen and
touched]
2. Choses in action – are rights, legal titles or
claims to something [such as debts, patents,
copyright, goodwill, trademarks and shares
of stock], subdivided into choses in action:
a. that are mere rights – such as the right to
collect from a debtor, or
b. choses in action represented by document
 Movable Property

Chose
A thing, an article or
property, a thing that
can be seen and
touched
 Movable Property
Rule with Respect to Choses in Possession
1. General Rule - the law of the State in which the
property is located at the time of the
transaction in question [lex rei sitae (Art. 16[1],
Civil Code)] determines the creation and
transfer of interests in choses in possession
[same as the rule in real property]
2. Exceptions – same as those for real property
except that in the example concerning the
mortgage the same must be changed to a
pledge of personal property
 Movable Property
Example
General Rule – X [a Filipino] buys a
watch while strolling along the
streets of Geneva.

Q: What law will govern the sale of the

watch to X?
 Movable Property
A:The sale of the watch will be
subject to the laws of
Switzerland
Effect:
X [a Filipino] will have the rights
conferred by Swiss law to the
owner of movable property
pursuant to sale thereof to him
 Movable Property
Reason: Commerce depends on
the protection of the purchaser
who must buy without
investigation of the applicable
law, at least not beyond where
the goods are located, which is
usually the place of transaction,
as well.
 Movable Property
Q: Are there
instances where
the lex situs will
not be applied?
 Movable Property
A: Yes, where the transaction looks
toward future delivery and the
location of the chattel bears no
significant relationship to the
transaction until delivery - this may
call for the application of “the
proper law of the transaction”
which is “the law most significantly
related to the issue presented”
 Movable Property
Example [Shanahan v. Landers]
P, in New Hampshire agreed to buy a power trench hoe
from S. The contract of conditional sale was executed
in Massachusetts. The hoe was delivered to P in
Vermont where it was used on a single job.
Later, P brought the hoe to New Hampshire where it was
used further.
Meanwhile, S assigned P’s contract and promissory notes
to F, a financing company.
When P failed to make his payments, F repossessed the
hoe in New Hampshire.
F took the hoe to Massachusetts where it was resold to B.
 Movable Property
The case was filed in Massachusetts
Situs of the sale: Massachusetts
Under Massachusetts law: The resale
is lawful
Under New Hampshire law: The
resale is unlawful because a 10-day
notice of resale must have been given
to P by F, failing to do so is
tantamount to conversion
 Movable Property
Issue: What law will
govern the validity of
the resale of the hoe
from F to B?
 Movable Property
Held: The law of New
Hampshire will
govern the validity of
the resale of the hoe
from F to B.
 Movable Property
Reason: It was selected due to its
substantial connection with the
transaction, as it was:
1. The place where the buyer signed the
contract of resale
2. The place of business of the buyer
3. The place where the hoe was kept
4. The place where the alleged conversion
took place in a manner contrary to that
State’s law
 Movable Property
Another instance where the lex situs
may be disregarded: When the
goods are in transit
Synopsis of Conflicts Rules on Tangible Property

Tangible Personal Property [Choses in Possession]

Factual Situation Point of Contact
1 Means of transportation
1 Sea-going Vessels
1 Transaction [such as sale The law of the FLAG (or in
or mortgage of the vessel] some cases, the law of the
while in the high seas PLACE of REGISTRY)
2 If the vessel is docked in The law of said port as it is
a foreign port usually regarded as a
temporary lex situs
2 Other means of transport The law of the state of
[such as railway trains, DEPOT (storage place for
motor cars, aircraft] supplies) or RESTING PLACE
2 Goods in Transitu (these things have a changing status
because they move)
Factual Situation Point of Contact
1 Loss, destruction, The law of the state of
deterioration of goods in DESTINATION (Art. 1753 Civil
transitu Code)
1 If the destination is The law of the state of NEW
changed destination
2 If the goods were never The law of the place of the actual
shipped situs
2 Validity and effect of The locus regit actum (law of
seizure of goods the place where goods were
seized)
3 Disposition or alienation The lex loci voluntatis or lex loci
of the goods intentionis
 Choses in Possession
Rules in International Air Transportation
1. Damage to or Delay in the arrival of
goods – Warsaw convention
2. Questions on jurisdiction – Warsaw
Convention [but procedural matters are
governed by the lex fori]
3. Prescriptive period for filing a case –
Warsaw convention [but method of
calculating period of limitation is
governed by the lex fori]
 Choses in Possession
Note:
Some authors say the questions arising
from transactions involving movables in
transit may be resolved by referring to
the law of any place having a substantial
connection with the transaction which
would uphold its validity [the owner of
the goods is permitted to choose
between several legal systems
 Intangible Personal Property (Choses in Action)
Factual Situation Point of Contact
1 Debts or simple rights of
action arising from
contracts
1 Recovery of debts or The law of state where DEBTOR or
involuntary GARNISHEE may be effectively
assignment of debts SERVED with SUMMONS (usually
(garnishment) the domicile)
2 Voluntary assignment Lex loci voluntatis or lex loci
of debts intentionis (proper law of the
contract)
3 Taxation of debts The law of the state of domicile of
creditor
4 Administration of Lex situs of assets of the debtor
debts (for these assets can be held liable
for the payment of the debts
 Factual Situation Point of Contact
2 Negotiable
Instruments
1 Negotiability or The law of the state that
non-negotiability gave rise to the right
of an instrument embodied in the instrument
(bill of exchange, (for example, in the case of a
for example) Swiss bill of exchange,
Swiss law determines its
negotiability)
2 Validity of transfer, In general, lex situs of the
delivery or INSTRUMENT at the time of
negotiation of the transfer, delivery or
instrument negotiation
 Factual Situation Point of Contact
3 Shares of Stock

1 Effect on a Law of the state of

corporation of the sale INCORPORATION [to bind the
of corporate shares corporation, the transfer must be
recorded in its books]
2 Effects between the Lex loci voluntatis or lex loci
parties of the sale of intentionis (proper law of the
corporate share contract) – for this is really a
contract; usually, this is the place
where the certificate is delivered
3 Taxation on the Law of the state of
dividends of corporate INCORPORATION
shares
4 Taxation on the Law of the state where the sale
income from the sale was CONSUMMATED
of corporate shares
 Factual Situation Point of Contact
4 Franchises Law of the state that
GRANTED them
5 Goodwill of a Law of the state where the
business and taxation BUSINESS is carried on
thereon
6 Patents, copyrights, In the absence of a treaty, they
trademarks, trade are PROTECTED ONLY by the
names STATE that GRANTED them
NOTE: Foreigners may sue for
infringement of trade marks
and trade names in the
Philippines only if Filipinos are
granted reciprocal concession
in the state of the foreigners
[Art. 3 of the IPL]
 Rules of Situs
Factual Situation Situs Example
1 Negotiable
Instruments
1 Obligations of The state
the maker of designated in the
the note and instrument as the
acceptor of place of payment
the draft
2 In the absence The state where
of the the instrument
designated was delivered
place
 Factual Situation Situs Example
1 Negotiable
Instruments
3 Issue at to The state that Negotiability of a
whether or not gives rise to the Philippine draft is
the instrument is rights embodied determined by
negotiable in the instrument Philippine law
4 Issue as to The state of the When a Filipino
whether or not instrument at the negotiates a PNB
the instrument time of transfer, check to another
has been legally delivery or Filipino enroute to
transferred or negotiation Canada, while on a
delivered stopover at Tokyo –
subject to validity of
the negotiation of
the instrument to
Japanese law
 Factual Situation Situs Example
2 Checks
1 Issue as to The state of Negotiability of a
whether or not delivery [Lim v. Philippine draft
the obligation CA, 251 SCRA is determined by
has been 408] Philippine law
consummated
3 Debts
1 If the debt has The state
been created by stipulated in the
contract contract
2 If judicial action The state where
is to be taken the debtor may
on the debt be effectively
served with
summons
 Factual Situation Situs Example
4 Shares of Stock
1 The relation The state of
between the incorporation
shareholder and
the corporation
2 The rights of The state with the
assignor and most significant
assignee of relationship to the
share of stock transaction to control
3 For purposes of The state where the
attachment President or
managing agent of
the corporation is
[Rule 57 Sec. 7)