A.

REAL OR IMMOVABLE PROPERTY

General Rule:
Art. 16 par1, NCC - Real or Immovable property is regulated by the lex
situs.

Rationale:
The characterization of immovable property as an isolated object of
rights so that the interests of various persons such as one who acquired it
by purchase, or a spouse through marriage to the owner or a mortgagee
after foreclosure of the mortgage is determined by the law of the place
where the land is situated. The connecting factor is the immovable itself
and not the parties concerned.
Exceptions:
1. Successional rights
 National law of the decedent (Art.16,par.2,CC)
2. Capacity to succeed
 National law of the decedent (Art.1039,CC)
3. Contracts involving real property which do not deal with the title
thereto
 The law intended will be the proper law of the contract (lex loci
voluntatis or lex loci intentionis).
4. Contracts where real property is given as security by way of mortgage
to secure a principal contract
 The principal contract (usually loan) is governed by the proper
law of the contract between the parties (lex loci voluntatis or lex
loci intentionis) while the accessory contract of mortgage is
governed by the lex situs.

B. PERSONAL OR MOVABLE PROPERTY

General Rule:
Personal or movable property should be governed by the law of the domicile
of the owner. Because by their nature, these objects could move from one place
to another place, it was difficult to anticipate where they may be situated at a
given time. For the purposes of simplicity and convenience they were ascribed
the domicile of the owner.

Exception:
However in a certain circumstances, the law of the state where the
property was actually situated, rather than the domiciliary law is applied to the
transfer. It has been held that personal property may be separated from its owner,
who may be taxed on its account at the place where the property is located,
although he is not a domiciliary, citizen or resident of the state which imposed
the tax.

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 Classification of Personal or Movable Property

1. Tangible personal property - Personal property exist physically that can be

felt or touched. Generally it includes furniture, equipment, vehicles,
household goods, jewelry, and all other personal property other than real
property.

General Rule: Lex rei sitae (Art.16, CC)

Exceptions:
a. Vessels
 Law of the flag
b. Other means
 Law of the depot
c. Things in transitu
i. Loss, destruction, deterioration
 Law of the destination (Art. 1753,CC)
ii. Validity and effect of the seizure of the goods
 Locus regit actum (where the goods were
seized)
iii. Disposition or alienage of the goods
 Lex loci voluntatis or Lex loci intentionis

2. Intangible personal property - Is a personal property that has something

of individual value that cannot be touched or held. It includes any item of
worth that is not physically in nature but instead represents something
else of value. Examples are patents, copyrights, goodwill, franchise, and
others.
a. Franchise
 Law of the place that granted them
b. Goodwill of the business and taxation
 The law of the place where the business is carried on
c. Dividends of corporate shares
 Law of the place of incorporation
d. Patents, copyrights, trademarks, and trade names
 In the absence of a treaty, they are protected only by the
state that granted them. Foreigners may sue for
infringement of trademarks and trade names in the Phil.
only if Filipinos are granted reciprocal concession in the
state of the foreigners.

Rationale for the Lex situs or Lex rei sitae rule

The conventional wisdom for the lex situs is the exercise of power; the state
where the property is situated having the sole power to decide the validity and
effects of the transfer of property. On the other hand, the policy-oriented rationale
for applying the lex situs is also one of its obvious advantages. By looking to the

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 law of the situs, the parties’ legitimate expectations are protected. It is logical that
their normal expectation is for the contract to be governed by the law of the state
where the object is situated. The parties should know at the time of the
conveyance of property whether there was a valid transfer and the nature of the
interest created such. The alternatives to lex domicilii and lex situs are lex actus
of the law of the place where the transaction was completed and the proper law
of the forum. The proper law refers to the law of the state which has the most real
connection with the transfer.
Further, being physically a part of the country, it should be subject to the
laws thereof. Reference to the lex situs is appropriate even when a modern
approach to the choice of law is used because the situs is the place most closely
and significantly related to the issue in question.

Policy-centered approach
Under the said approach, the forum court is not bound to look to the law
of the situs when the situs of the movable property at the time of transfer was
insignificant or accidental. For instance, when such place was chosen for mere
convenience of one of the parties and they both knew that the movable property
would be used principally in another location such as the transferee’s place of
business, then all questions relating to the validity and effect of the transfer of
the movable property should be determined by the law of the place of the principal
use.
Moreover, where the issue involves considerations other than the validity
and effect of the transfer itself, the courts may look to the law of another state
which has a real interest in applying its law.

C. CAPACITY TO TRANSFER
The capacity of the person to transfer or acquire real property is governed by
the law of the place where the property is located.

D. VALIDITY OF CONVEYANCES
The formalities of a contract to convey property are governed by the lex situs.
Any transfer of property which requires registration of title cannot be accepted by
the registry of property unless the formal requirements of lex situs are complied with.
1. Recovery of debts or involuntary assignment of debts
 Where debtor may be effectively served within summons (usually the
domicile)
2. Voluntary assignment of debts
 Proper law of the contract
3. Taxation debt

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  Domicile of the creditor
4. Administration of debts
 Lex situs of assets of the debtor
5. Negotiability or non-negotiability of an instrument
 The right embodied in the instrument
6. Validity of transfer, delivery or negotiation of the instrument
 Situs of the instrument at the time of transfer, delivery or negotiation
7. Effect on a corporation of the sale of corporate shares
 Law of the place of incorporation
8. Effect between the parties of the sale of corporate shares
 Proper law of the contract

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CASES:

IN THE MATTER OF THE TESTATE ESTATE OF EDWARD E. CHRISTENSEN,

DECEASED.
ADOLFO C. AZNAR, Executor and LUCY CHRISTENSEN, Heir of the
deceased, Executor and Heir-appellees,
vs. HELEN CHRISTENSEN GARCIA, oppositor-appellant.
G.R. No. L-16749 January 31, 1963

FACTS:
Edward E. Christensen, an American citizen from California and domiciled in the
Philippines, left a will executed in the Philippines in which he bequeathed Php 3,600.00
to Maria Helen Christensen ("Helen") and the remainder of his estate to his daughter,
Maria Lucy Christensen Daney. The laws of California allows the testator to dispose of
his estate in any manner he pleases. However, California law also provides that the
personal property of a person is governed by the laws of his domicile. The executor,
Adolfo C. Aznar, drew a project of partition in conformity with the will. Helen opposed
the project of partition arguing that Philippine laws govern the distribution of the estate
and manner proposed in the project deprived her of her legitime.

ISSUE:
Whether the successional rights is governed by Philippine laws.

RULING
Yes. Philippine law governs. The law that governs the validity of his testamentary
dispositions is defined in Article 16 of the Civil Code of the Philippines. ART. 16. Provides
that Real property as well as personal property is subject to the law of the country where
it is situated. However, intestate and testamentary successions, both with respect to the
order of succession and to the amount of successional rights and to the intrinsic validity
of testamentary provisions, shall be regulated by the national law of the person whose
succession is under consideration, whatever may be the nature of the property and
regardless of the country where said property may be found. Hence, the intrinsic validity
of testamentary dispositions are governed by the national law of the decedent, which in
this case is the California law. The provision in the laws of California giving a testator
absolute freedom in disposing of his estate is the internal law which applies only to
persons domiciled within the said estate. On the other hand, the provision in the laws
of California stating that personal property is governed by the laws of the domicile of its
owner is the conflict of laws rule that applies to persons not domicile in the said state.
The court ruled that the laws of the Philippines, in which the testator is domiciled
governs the succession and the regime of legitimes must be respected.

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LILJEDAHL vs. GLASSGOW
190 Iowa 827, 180 NW 870 (1921)

FACTS:
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 and delivered to him a deed
which contained a blank space for the insertion of the name of the grantee and which
stated that the grantee assumed and agreed to pay the plaintiff’s mortgage. Glasgow
never inserted his name as grantee but transferred the deed for consideration to
another. Under the law of Iowa, Glassgow became bound to pay the mortgage upon his
acceptance of the deed, but no such liability was imposed upon him by law of Colorado
since he had never inserted his name as grantee.

ISSUE:
Whether Colorado law is applicable.

RULING:
No. Colorado law is not applicable. The court ruled that instruments of conveyance, in
so far as they relate primarily or directly to the title, are to be construed according to
the law of the lex rei sitae. But personal covenants or agreements in instruments of
conveyance will be given effect according to the law of the place where the same is
executed and to be performed. Further, the court ruled that contracts made and to be
performed in a particular state are made with reference to the law of that state, which
parties must be presumed to have in mind at the time of making the contract. The notes
executed by Bailey to Foskett and by him assigned to plaintiff were by their terms
payable at the National Bank of Iowa. The parties may be presumed to have contracted
with reference to the law of Iowa, where the contract was executed and to be performed,
and that they intended to be bound in accordance therewith.

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HARRIS vs. BALK
Supreme Court of the United States, 1905
198 U.S. 215, 25 S.Ct. 625, 49 L.Ed. 1023

FACTS:
Harris and Balk are North Carolina domiciliaries. Harris owed Balk $180. Balk in turn
owed more than $300 to Epstein, who lived in Baltimore, Maryland. One day Harris
came to Baltimore to buy merchandise and while there was served by Epstein with a
writ attaching the debt which Harris owed Balk. In accordance with the Maryland
practice, process against Balk was delivered to a Baltimore sheriff and then placed at
the court house door. Harris did not contest the garnishment action and contested to
the entry against him of a payment for $180 which he paid. Back in North Carolina,
Balk sued Harris to recover the $180. Harris pleaded the recovery of the Maryland
judgment and contended that since it was a valid judgment it was entitled to full faith
and credit in North Carolina. The court ruled in favor of Balk on the ground that
Maryland had no jurisdiction to garnish the debt Harris owed Balk “because Harris was
but temporarily in the state, and the situs of the debt was in North Carolina.”
ISSUE:
Whether Maryland had jurisdiction over the debt between the two residents of North
Carolina.

RULING:
Yes. The United States Supreme Court ruled that although the general rule is that only
states that are the domicile of the creditor or debtor typically have jurisdiction, Balk
could have conceivably brought an action against Harris for the debt when Harris was
in Maryland. Balk was even aware that Harris was in Maryland, as evidence by his suit
filed shortly after his return. The establishment of jurisdiction over Plaintiff was proper
in Maryland, and the judgment was valid, and therefore North Carolina is required to
give full faith in credit to the Maryland judgment.

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LLANTINO vs. CO LIONG CHONG
188 SCRA 592 (1990)

FACTS:
Llantinos were the owners of a commercial land in Catanduanes which, in 1954, they
leased to Juan Molina, who was then a Chinese national and who went by the name Co
Liong Chong. Molina was placed in possession of the property. The Llantinos claimed
that the lease period of 13 years was soon to expire in 1967. Molina informed them that
he had already constructed a commercial building on the land; that the lease contract
was for a period of 60 years; and that he was already a Filipino citizen. The Llantinos
filed their complaint to quiet title with damages. Molina filed an answer and produced a
carbon original of the lease contract. The trial court rendered a decision finding the
contract entered into by the parties providing for 60 years valid and in accordance with
law and dismissed the complaint.

ISSUE:
Whether the lease contract is invalid because at the time of execution he was Chinese
national.

RULING:
No. The lease contract is valid. The court ruled that a lease to an alien for reasonable
period is valid. So in an option giving an alien the right to buy real property on condition
that he is granted Philippine citizenship. Aliens are not completely excluded by the
Constitution from use of Lands for residential purposes. Since their residence in the
Philippines is temporary, they may be granted temporary rights such as lease contract
which is not forbidden by the Constitution. If an alien is given not only lease of, but also
an option to buy, a piece of land, by virtue of which the Filipino owner cannot sell or
otherwise dispose of his property, this last for 50 years, then it becomes clear that the
arrangement is a virtual transfer of ownership. Further, the court ruled that the sale of
a residential land to an alien which is now in the hands of a naturalized Filipino citizen
is valid.

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PHILIPS EXPORT B.V., PHILIPS ELECTRICAL LAMPS, INC. and PHILIPS
INDUSTRIAL DEVELOPMENT, INC., petitioners,
vs. COURT OF APPEALS, SECURITIES & EXCHANGE COMMISSION and
STANDARD PHILIPS CORPORATION, respondents.

G.R. No. 96161 February 21, 1992

FACTS:
Petitioner Philips Export B.V. (PEBV) is a foreign corporation organized under the laws
of the Netherlands, although not engaged in business here, is the registered owner of
the trademark PHILIPS and PHILIPS SHIELD EMBLEM issued by the Philippine Patent
Office. The other petitioner, Philips Electrical Lams and Philips Industrial Development,
Inc., authorized users of the trademark and logo, were incorporated and registered with
the SEC. Private respondent Standard on the other hand, was issued a Certificate of
Registration by the SEC. Petitioners filed this letter of complaint with the SEC asking
for the cancellation of the word “PHILIPS” from standard’s corporate name in view of the
prior registration with the Bureau of Patents of such trademark and logo. Standard
refused to amend its articles of incorporation, hence, petitioners filed with SEC a petition
praying for issuance of a wit of preliminary injunction, alleging among others,
infringement of trade name. Private respondent contended that petitioner PEBV has no
legal capacity to sue. The SEC dismissed the petition for lack of merit which was
affirmed by the Court of Appeals.
ISSUE:

Whether or not Standard Philips can be enjoined from using Philips in its corporate
name.
RULING:

The court ruled that a corporation’s right to use its corporate and trade name is a
property right, a right in rem, which it may assert and protect against the world in same
manner as it may protect its tangible property, real or personal, against trespass or
conversion. It is regarded, to a certain extent, as a property right and one which cannot
be impaired or defeated by subsequent appropriation by another corporation in the
same field.

According to Sec. 18 of the Corporation Code, no corporate name may be allowed if the
proposed name is identical or deceptively confusingly similar to that of any existing
corporation or to any other name already protected by law or is patently deceptive,
confusing or contrary to existing law. For the prohibition to apply, 2 requisites must be
present: (1) the complainant corporation must have acquired a prior right over the use
of such corporate name and (2) the proposed name is either identical or deceptively or
confusingly similar to that of any existing corporation or to any other name already
protected by law or patently deceptive, confusing or contrary to existing law. With regard

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to the 1st requisite, PEBV adopted the name “Philips” part of its name 26 years before
Standard Philips. As regards the 2nd, the test for the existence of confusing similarity
is whether the similarity is such as to mislead a person using ordinary care and
discrimination. Standard Philips only contains one word, “Standard”, different from that
of PEBV. The 2 companies’ products are also the same, or cover the same line of
products. Although PEBV primarily deals with electrical products, it has also shipped
to its subsidiaries machines and parts which fall under the classification of “chains,
rollers, belts, bearings and cutting saw”, the goods which Standard Philips also produce.
Also, among Standard Philips’ primary purposes are to buy, sell trade x x x electrical
wiring devices, electrical component, electrical supplies. Given these, there is nothing
to prevent Standard Philips from dealing in the same line of business of electrical
devices. The use of “Philips” by Standard Philips tends to show its intention to ride on
the popularity and established goodwill of PEBV.

References:

Jorge R. Coquia and Elizabeth Aguiling-Pangalangan. Conflict of Laws Cases,

Materials and Comments
Alicia V. Sempio-Diy. Handbook on Conflict of Laws 2004
Supreme Court Decisions

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