PROPERTY

Conflict of Law arises in the area of property law when a foreign element is involved in the case. The foreign
element may be in the form of a foreigner owning property in another country or there is a foreign law on
land ownership that conflicts with domestic law.

Lex Rei Sitae Rule

− a Latin phrase which means “the law where the property is situated”. The law governing the
transfer of title to property is dependent upon and varies with, the lex rei sitae.

− governs almost everything that concerns real property: formalities for their alienation, the
capacity to encumber or otherwise dispose of them, and so forth.
− In the Philippines, this rule applies to both real and personal property.

ARTICLE 16.

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 wherein said property may be found

ARTICLE 415. Immovable Property

The following are immovable property:

(1) Land, buildings, roads and constructions of all kinds adhered to the soil;

(2) Trees, plants, and growing fruits, while they are attached to the land or form an integral part of an
immovable;

(3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be separated
therefrom without breaking the material or deterioration of the object;

(4) Statues, reliefs, paintings or other objects for use or ornamentation, placed in buildings or on lands by
the owner of the immovable in such a manner that it reveals the intention to attach them permanently to
the tenements;

(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an
industry or works which may be carried on in a building or on a piece of land, and which tend directly to
meet the needs of the said industry or works;

(6) Animal houses, pigeon-houses, beehives, fish ponds or breeding places of similar nature, in case their
owner has placed them or preserves them with the intention to have them permanently attached to the
land, and forming a permanent part of it; the animals in these places are included;

(7) Fertilizer actually used on a piece of land;

(8) Mines, quarries, and slag dumps, while the matter thereof forms part of the bed, and waters either
running or stagnant;
(9) Docks and structures which, though floating, are intended by their nature and object to remain at a
fixed place on a river, lake, or coast;

(10) Contracts for public works, and servitudes and other real rights over immovable property. (334a)

ARTICLE 416. Movable Property

The following things are deemed to be personal property:

(1) Those movables susceptible of appropriation which are not included in the preceding article;

(2) Real property which by any special provision of law is considered as personalty;

(3) Forces of nature which are brought under control by science; and

(4) In general, all things which can be transported from place to place without impairment of the real
property to which they are fixed. (335a)

ARTICLE 417.

The following are also considered as personal property:

(1) Obligations and actions which have for their object movables or demandable sums; and

(2) Shares of stock of agricultural, commercial and industrial entities, although they may have real estate.
(336a)

Exceptions to Lex Situs in the case of Real Property (Paras)

4 exceptions:

1) In the case of successional rights to a real property, what should control is the national law of the
deceased (Art 16, Paragraph 2, Civil Code).

2) Capacity to succeed is also governed by national law of deceased.

3) Contracts involving real property but which do not deal with the title to such real property shall not
necessarily be governed by lex rei sitae. The proper law of the contract, which is lex loci voluntantis or
intention should be regarded as controlling.

4) In contracts where real property is given by way of security, the principal contract (like a contract of
loan) is governed by the proper law of the contract; the accessory contract (like a contris governed by the
law of the country where the real property mortgaged is situated.

a) If the principal contract is valid, the validity of the accessory contract is to be determined
by the lex rei sitae. If the mortgage is void by lex rei sitae, the principal contract can still remain
valid.

b) If upon the other hand, tested by lex loci volutantis, the principal contract of loan is void,
the mortgage contract would also be void ( for the accessory loses standing if principal is
valid) even if considered independently by itself the mortgaged would have been
considered valid by the lex rei sitae.
(Salonga)

4 notable exceptions.

1) Lex situs rule does not apply when it is the rights and liabilities of the parties to a contract
where the subject matter of the contract is an immovable that is at issue, and not the effect
of the transaction upon the title to the land. Instead, it is the law that regulates the contract itself
that will govern, though the land itself is in another state.

In Lijedahl v. Glasgow

The plaintiff held a mortgage on a piece of land located in Colorado as a security for an obligation
payable in Iowa. The mortgagor made a deed out to the land, leaving the space for the grantee’s name
blank. The deed contained a clause stating that it was made subject to the mortgage, which the grantee
agreed to pay. This deed was delivered for consideration to A, who in turn transferred it, for
consideration, to B, who then filled his name as grantee in the blank space.

Since the debt was not paid, the holder of the mortgage sought to hold A for the claim. According to
Colorado law, the blank deed to the grantee passed no interest to the purchaser until his name was
written therein, which A never did. On the other hand, Iowa law held that interest was passed to A.

The question was whether the contract’s validity was governed by Colorado or Iowa law. The court
ruled that the assumption of the encumbrance and the obligation to pay it were personal covenants,
and as they were made and performable in Iowa, the contract must be governed by Iowa law.

*Roberts v. Locke, 2013 See page 252 of Benito

2) Although the lex situs rule determines what law governs the validity and effect of a
mortgage upon immovable property, the validity and effect obligation which that mortgage
secures are governed by principles applicable to contracts generally. Problems arise when there
is a deficiency after the foreclosure on the mortgage has been made, as the cases regarding this matter
have not been uniform. If the bond and the mortgage are governed by the same law, and suit has been
brought in another state for the deficiency, the existence and extent of the right to recover are governed
by the law of the situs and contract, and recovery would not be limited by provisions of the law of the
forum prohibiting deficiency judgments, or restricting recovery to the difference between the debt and the
true value of the land, rather than the amount realized on sale.

However, when the bond is executed in one state and the land mortgaged lies in another, and the provisions
of these states regarding deficiency judgments differ, it is not clear which law governs. The case of Stumpf
v. Hallahan sidesteps the problem by stating that the contract was governed by the law intended by the
parties, and they must have intended it to be governed by the law of the situs of the land. If the law
governing the contract limits the recovery to the amount realized out of the land, there would seem to be
no basis for the recovery of a deficiency anywhere, irrespective of the law of the situs, unless, as is quite
likely, the law of the place of contracting is interpreted as intended to protect only holders of land situated
within that state.

A more difficult problem arises where the law of the contract permits recovery of the deficiency, while the
law of the situs restricts or denies it. One view is that since in some states a mortgagee may recover the
entire amount of the bond, disregarding the requirement of the law of the situs that the security first must
be exhausted,513 it might seem that he should likewise be able to disregard a law of the situs which
completely confines his recovery to the security. But the better view would seem to be that if he chooses
to avail himself of the procedure of the situs to obtain a foreclosure decree, he should be held to have
submitted himself and the disposition of his entire claim to the jurisdiction of the courts of the situs, in
whose decree his entire right would thereby be merged.

3) The validity of a contract to transfer is determined by the proper law of the contract, in
contrast with the validity of a transfer of land which is determined by lex rei sitae.

In Polson v. Steward – There was an action to enforce a covenant made by the defendant to his wife in
North Carolina to surrender all his marital rights in a certain land situated in Massachusetts. The parties
were domiciled in North Carolina, and practically every significant act connected with the covenant was
done in North Carolina. The wife took steps which under North Carolina law gave her the right to contract
as a femme sole with her husband as well as with others, and afterwards release her dower in the
defendant’s hands. In consideration of this release, and to induce his wife to forbear suing for divorce, for
which she had just cause and for other adequate considerations, the defendant executed the covenant.
Defendant demurred and contended that North Carolina law could not authorize a contract between them
as to lands in Massachusetts.

Justice Holmes said in the decision that “It is true that the laws of other States cannot render valid
conveyances of property within our borders which our laws say are void, for the plain reason that we have
exclusive power over the res. But for the same reason inverted establishes that the lex rei sitae cannot
control personal covenants, not purporting to be conveyances, between persons outside the jurisdiction,
concerning a thing within it. Whatever the covenant is the laws of North Carolina could subject the
defendant’s property to seizure on execution, and his person to imprisonment, for a failure to perform it.

Therefore, on principle, the law of North Carolina determines the validity of the contract. If valid by the law
of North Carolina there is no reason why to contract should not be enforced in Massachusetts.

4) Finally, the last exception, which has its origin in civil law codes that adopted Mancini’s principle even
with respect to problems of succession, is based upon two codal provisions. Article 16, paragraph 2 of the
Civil Code of the Philippines, states that whether succession is testate or intestate, whether the
property is moveable or immovable, and wherever the property may be located, it is the national law of
the person whose succession is in question, not the lex situs, that determines the order of
succession, the amount of rights, and the intrinsic validity of testamentary provisions. Under Article 1039
of the Civil Code, the capacity to succeed is also governed by the national law of the deceased.

Art. 1753 of the Civil Code

ARTICLE 1753. The law of the country to which the goods are to be transported shall govern the liability
of the common carrier for their loss, destruction or deterioration.

Land in the Philippines

Specific Rules as to Ownership of Real Property

Section 7, Art. XII, 1987 Constitution

Section 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except
to individuals, corporations, or associations qualified to acquire or hold lands of the public domain.
This section prohibits the transfer of private lands to individuals, corporations, or associations, who or which
are not qualified to hold lands of the public domain.

However, it allows transfer to qualified individuals through hereditary succession which must refer only to
intestate succession. Otherwise if testator would be allowed to transfer property to a person by will, the
same would allow a direct contravention of the Constitution disallowing aliens to own a property in the
Philippines. Thus, the provision aims to prevent Filipinos from transferring their landholdings to foreigners.

Ramirez v. Ramirez, (1982)

Jose Ramirez died leaving a will where among other dispositions, he granted a usufruct over real
property in favor of an alien, Wanda. This was opposed on the ground that it violated the Constitution.

The issue is W/N the usufruct over the real property in favor of Wanda violates the Constitutional
prohibition against ownership of lands by alien.

The court ruled that no. It upheld its validity on the ground that the Constitution covers not only
succession by operation of law but also testamentary succession. Any alien would be able to circumvent
the prohibition by paying money to a Philippine landowner in exchange for devise of a piece of land. In
the present case, the usufruct in favor of Wanda although a real right, does not vest title to the land in
the usufructuary. It is the vesting of title in favor of aliens which is proscribed by the Constitution.

Possible applicable scenarios

Coverage of Lex Rei Sitae:

- governs the following things connected with real property: extrinsic validity of alienations,
transfers, mortgages, capacity of parties, interpretation of documents, effects of ownership, co-
ownership, accession, usufruct, lease, easement, police power, eminent domain, taxation, quieting
of title, registration, and prescription.

Capacity to Transfer or Acquire Property

Section 8, Article XII, A987 Constitution

Notwithstanding the provisions of Sec 7 of this article, a natural born citizen of the Philippines who
has lost his citizenship may be a transferee of private lands subject to limitations provided by law.

This section allows former natural born citizens of the Philippines to be transferees of private
lands. Hence, these people may purchase or acquire private lands subject only to area
exceptions.

Section 5 of RA No. 8197 or the Foreign Investments Act, the area that a former natural born
citizen may acquire has been increased to a maximum area of five thousand square meters in
the case of urban land, or three hectares in the case of rural land to be use by him for business
or other purposes.
Land Ownership by Filipinos Overseas

Article XII Section 8 of the Philippine Constitution provides that a natural-born citizen of the
Philippines who has lost his/her Philippine citizenship may be a transferee of private lands subject
to limitations provided by law. The laws on land ownership by Filipinos overseas are contained in
Batas Pambansa Blg. 185 and Republic Act 8179, which amended the Foreign Investment Act of
1991. BP 185 stipulates guidelines on land ownership by former Filipinos for purposes of
establishing residence, while Section 10 of RA 8179 specifies entitlements and conditions for land
acquisition for investment purposes.

Transferee

The acquisition or transfer of private land refers to either voluntary or involuntary sale, devise or
donation. Involuntary sale includes sales on tax delinquency, foreclosures, and executions of
judgment.

Qualifications of Former Filipinos

Both laws define former Filipinos as citizens of the Philippines from birth without having to perform
any act to acquire or perfect their Philippine citizenship, who lost said Philippine citizenship, and
who have the legal capacity to enter into a contract under Philippine laws

In general, only Filipino citizens and corporations or partnerships with least 60% of the shares
are owned by Filipinos are entitled to own or acquire land in the Philippines. Foreigners or non-
Philippine nationals may, however, purchase condominiums, buildings, and enter into a long-
term land lease.

Ownership of land in the Philippines is highly-regulated and reserved for persons or entities
legally defined as Philippine nationals or Filipino citizens. For this purpose, a corporation with
60% Filipino ownership is treated as a Philippine national.

Foreigners or expats interested in acquiring land or real property through aggressive

ownership structures must consider the provisions of the Philippines’ Anti-Dummy Law to
determine how to proceed. A major restriction in the law is the restriction on the number of
foreign members on the Board of Directors of a landholding company (which is limited to 40%
foreign participation). Another concern is the possible forfeiture of the property if the
provisions of the law are breached.

Are there any exceptions to the restriction on foreign land acquisition?

Yes, there are. The list of exceptions to the restriction are as follows:

• Acquisition before the 1935 Constitution

• Acquisition through hereditary succession if the foreigner is a legal or natural heir
• Purchase of not more than 40% interest in a condominium project
• Purchase by a former natural-born Filipino citizen subject to the limitations prescribed
by law (natural-born Filipinos who acquired foreign citizenship is entitled to own up to
5,000 sq.m. of residential land, and 1 hectare of agricultural or farm land).
 • Filipinos who are married to aliens and able to retain their Filipino citizenship (unless by
their act or omission they have renounced their Filipino citizenship)
Can a Corporation Own Land in the Philippines?
Foreign nationals, expats or corporations may completely own a condominium or townhouse in
the Philippines. To take ownership of a private land, residential house and lot, and commercial
building and lot, they may set up a domestic corporation in the Philippines. This means that the
corporation owning the land has less than or up to 40% foreign equity and is formed by 5-15
natural persons of legal age as incorporators, the majority of which must be Philippine residents.
Can a Foreigner Lease Real Estate Property in the Philippines?
Leasing land in the Philippines on a long-term basis is an option for foreigners, expats or foreign
corporations with more than 40% foreign equity. Under the Investors’ Lease Act of the
Philippines, they may enter into a lease agreement with Filipino landowners for an initial period
of up to 50 years renewable once for an additional 25 years.

Can a Foreigner Own Residential Houses or Buildings in the Philippines?

Foreign ownership of a residential house or building in the Philippines is legal as long as the
foreigner or expat does not own the land on which the house was built.Can a Foreigner Own
Condominiums or Townhouses in the Philippines?
The Condominium Act of the Philippines (RA 4726) expressly allows foreigners to acquire
condominium units and shares in condominium corporations up to 40% of the total and
outstanding capital stock of a Filipino-owned or controlled condominium corporation.
However, there are a very few single-detached homes or townhouses in the Philippines with
condominium titles. Most condominiums are high-rise buildings.
Can a Foreigner Married to a Filipino Citizen Hold a Land Title in the Philippines?
If holding a title as an individual, a typical situation would be that a foreigner married to a Filipino
citizen would hold title in the Filipino spouse’s name. The foreign spouse’s name cannot be on
the Title but can be on the contract to buy the property. In the event of the death of the Filipino
spouse, the foreign spouse is allowed a reasonable amount of time to dispose of the property
and collect the proceeds or the property will pass to any Filipino heirs and/or relatives.

Llantino v. Co Liong Chong, 1990 See page 261 of Benito

De Castro v. Tan, 1984

Cheesman v. IAC, 1991 See page 260 of Benito

Interpretation and Effect of Conveyance: Lex situs

Intrinsic and Extrinsic Validity of Conveyances

General Rule: Lex Situs

General Rule: Lex Situs

Exceptions:

1) Art. 16, par. 2 of the Civil Code;

2) Subject matter of contract.is land, but issue pertains to contractual rights and liabilities of the parties;

3) Security is immovable property but issue is the validity and effect of the obligation which the property
secures;
4) Under a policy-centered approach, when. the’ situs of the movable at the time of the transfer was
insignificant or accidental;

5) When the issue involves consideration other than the validity and effect of the transfer — the court may
look into the law of another state which has a real interest in applying its law;

6) The validity of the contract to transfer an immovable;

7) Negotiable Instruments

a. Negotiability — law governing the rights in the instrument

b. Validity of the transfer, delivery, or negotiation — law of the situs of the instrument at the time
of transfer, delivery, or negotiation;
8) Corporate shares;

a. As against the corporation and third persons -— law of the place of incorporation.

b. As between the assignor and assignees -— law most closely connected to the transaction

c. Taxation on dividends received by corporate shares is governed by the law of the place
of incorporation
d. Sale of corporate shares between parties — proper law of the contract, /e., the lex foci
voluntatis or lex foci intentionis, which in many cases, is the place where the certificate is
delivered to the buyer

9) Franchises — subject to the law of the state that granted them; and

10) Intellectual Properties -

General Rule: — Patents, copyrights, trademarks, trade names, and service marks are
protected only by the state that granted/recognized them.

Exception: When a treaty otherwise.

Extrinsic Validity and Formalities of contract

Ramirez v. Vda de Ramirez, 1982

Mathews v. Taylor, 2009 See page 258 of Benito

Phil. Banking Corp. v. Lui She, 1967

Rules on Property

FACTUAL SITUATION POINT OF CONTACT

Real property Lex rei sitae (Article 16, CC)

National law of decedent (Article 16 par.

Successional rights 2, CC)

Exceptions Capacity to succeed National law of decedent (Article. 1039)


Contracts involving real property which
do not deal with the title thereto
Contracts where the real property is given
as security
Tangible personal property (choses in possession)
1
In General
Exceptions: same as those for real
property
Means of Transportation
Vessels
2 Law of the depot (storage place for
Other means
Things in 9ransit (these things have a
changing status because they move)
Loss, destruction, deterioration
Validity & effect of the seizure of the
goods
3 Lex loci volutantis or lex loci intentionis –
Disposition or alienage of the goods
FACTUAL SITUATION
The law intended will be the proper law
of the contract (lex loci voluntantis or lex
loci intentionis)
The principal contract (usually loan) is
governed by the proper law oft the
contract – (lex loci voluntatis or lex loci
intentionis)
NOTE: the mortgage itself is governed
by lex rei sitae. There is a possibility that
the principal contract is valid but the
mortgage is void; or it may be the other
way around. If the principal contract is
void, the mortgage will also be void (for
lack of proper cause or consideration),
although by itself, the mortgage could
have been valid.
Lex rei sitae (Article. 16, CC)
EXCEPTION: same as those for real
property EXCEPT that in the example
concerning mortgage, the same must be
changed to pledge of personal property)
Law of the flag (or in some cases, place
of registry)
supplies or resting place)
Law of the destination (Article. 1753, CC)
Locus regit actum (where seized) –
because said place is their
temporary situs
because here there is a contract
POINT OF CONTACT
INTangIBLE PERSONAL PROPERTY (CHOSES IN
ACTION)

1 Recovery of debts or involuntary Where debtor may be effectively served

assignment of debts (garnishment) with summons (usually the domicile)

2 Lex loci voluntatis or lex loci

Voluntary assignment of debts intentionis (proper law of the contract)

Other Theories:
1. National law of the debtor or creditor
2. Domicile of the debtor or creditor
3. Lex loci celebrationis
4. Lex loci solutionis

3
Taxation of debts Domicile of creditor

4 Lex situs of assets of the debtor (for these

Administration of debts assets can be held liable for the debts)

The right embodied in the instrument (for

example, in the case of a Swedish bill of
5 Negotiability or non-negotiability of an exchange, Swedish law determines its
instrument negotiability)

6 Validity of transfer, delivery or negotiation In general, situs of the instrument at the

of the instrument time of transfer, delivery or negotiation

7 Effect on a corporation of the sale of

corporate shares Law of the place incorporation

Lex loci voluntatis or lex loci intentionis

(proper law of the contract) – for this is
8 Effect between the parties of the sale of really a contract; usually this is the place
corporate shares where the certificate is delivered)

9 Taxation on the dividends of corporate

shares Law of the place of incorporation

10 Taxation on the income from the sale of Law of the place where the sale was
corporate shares consummated
 11
Franchises Law of the place that granted them

12 Law of the place where the business is

Goodwill of the business & taxation thereto carried on

In the absence of a treaty, they are

protected only by the state that granted
themNOTE: foreigners may sue for
infringement of trademarks and trade
names in the RP ONLY IF Filipinos are
13 Patents, copyrights, trademarks, trade granted reciprocal concessions in the state
names of the foreigners

***********

Section 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except
to individuals, corporations, or associations qualified to acquire or hold lands of the public domain. (Sec 7,
Art XII, 1987 Constitution)

Section 8. Notwithstanding the provisions of Section 7 of this Article, a natural-born citizen of the
Philippines who has lost his Philippine citizenship may be a transferee of private lands, subject to limitations
provided by law. (Sec 8, Article XII, 1987 Constitution)

Sec. 5. The Foreign Investments Act is further amended by inserting a new section designated as
Section 10 to read as follows:

"Sec. 10. Other Rights of Natural Born Citizen Pursuant to the Provisions of Article XII, Sec. 8 of the
Constitution. – Any natural born citizen who has the legal capacity to enter into a contract under Philippine
laws may be a transferee of a private land up to a maximum area of five thousand (5,000) square meters
in the case of urban land or three (3) hectares in the case of rural land to be used by him for business or
other purposes. In the case of married couples, one of them may avail of the privilege herein granted:
provided, that if both shall avail of the same, the total area acquired shall not exceed the maximum herein
fixed.

"In case the transferee already owns urban or rural land for business or other purposes, he shall still be
entitled to be a transferee of additional urban or rural land for business or other purposes which when
added to those already owned by him shall not exceed the maximum areas herein authorized.

"A transferee under this Act may acquire not more than two (2) lots which should be situated in different
municipalities or cities anywhere in the Philippines: provided, that the total land area thereof shall not
exceed five thousand (5,000) hectares in the case of rural land for use by him for business or other
purposes. A transferee who has already acquired urban land shall be disqualified from acquiring rural land
area and vice versa." (Sec 5, RA 8179 or Foreign Investments Act)
RA 9225.

Sarsosa v. Cuenco, 1982

Vasquez vs Giap

FACTS: The plaintiff, Socorro Vasquez, sold to the defendant Li Seng Giap, Chinese citizen, for the sum of
P14,500, a parcel of land together with a house of strong materials existing thereon. Defendant Li Seng
Giap sold and transferred unto defendant Li Seng Giap & Sons, Inc., a corporation duly organized and
existing under and by virtue of the laws of the Philippines, with principal office in the City of Manila,
Philippines, whose shareholdings then were owned by Chinese citizens, for the same sum of P14,500.

Later, defendant Li Seng Giap was duly naturalized as a Filipino citizen together with the other Chinese
shareholders of the said corporation. Li Seng Giap & Sons, Inc., is now a Filipino corporation, 96.67 per
cent of its stock being owned by Filipinos, and duly authorized by its articles of incorporation to own,
acquire or dispose of real properties.
Plaintiff filed an action for the rescission of the said sale on the ground that at the time of the sale the
vendee was an alien and under the Constitution incapable to own and hold title to lands.

ISSUE: Whether or not the sale to the alien is valid.

RULING: Yes. Only the State that is entitled by proceedings in the nature of office found to have a forfeiture
or escheat declared against the vendee who is incapable of holding title to the real estate sold and conveyed
to him. However, if the State does not commence such proceedings and in the meantime the alien becomes
naturalized citizen the State is deemed to have waived its right to escheat the real property and the title of
the alien thereto becomes lawful and valid as of the date of its conveyance or transfer to him.

The Rule in the United States that in a sale of real estate to an alien disqualified to hold title thereto, the
vendor divests himself of the title to such real estate and is not permitted to sue for the annulment of his
contract, is also the rule under the Civil Code.

The ban on aliens from acquiring not only agricultural but also urban lands, as construed by this Court, is
to preserve the nation's lands for future generations of Filipinos, that aim or purpose would not be thwarted
but achieved by making lawful the acquisition of real estate by aliens who became Filipino citizens by
naturalization. The title to the parcel of land of the vendee, a naturalized Filipino citizen, being valid that
of the domestic corporation to which the parcel of land has been transferred, must also be valid, 96.67 per
cent of its capital stock being owned by Filipinos.

Holy See v. Rosario, Jr., 1994

FACTS: This petition arose from a controversy over a parcel of land consisting of 6,000 square meters
located in the Municipality of Paranaque. Said lot was contiguous with two other lots. These lots were
sold to Ramon Licup. In view of the refusal of the squatters to vacate the lots sold, a dispute arose as to
who of the parties has the responsibility of evicting and clearing the land of squatters. Complicating the
relations of the parties was the sale by petitioner of the lot of concern to Tropicana.

ISSUE: Whether the Holy See is immune from suit insofar as its business relations regarding selling a lot
to a private entity.
RULING: The Holy See is immune from suit for the act of selling the lot of concern is non-proprietary in
nature. The lot was acquired by petitioner as a donation from the Archdiocese of Manila. The donation
was made not for commercial purpose, but for the use of petitioner to construct thereon the official place
of residence of the Papal Nuncio. The decision to transfer the property and the subsequent disposal thereof
are likewise clothed with a governmental character. Petitioner did not sell the lot for profit or gain. It
merely wanted to dispose of the same because the squatters living thereon made it almost impossible for
petitioner to use it for the purpose of the donation.

6. Property situated in another country

Question: May Phil courts still be called to distinguish between real and personal property?

Laurel v. Garcia, 1990

Facts: Petitioners seek to stop the Philippine Government to sell the Roppongi Property, which is located in
Japan. It is one of the properties given by the Japanese Government as reparations for damage done by
the latter to the former during the war.

Petitioner argues that under Philippine Law, the subject property is property of public dominion. As such,
it is outside the commerce of men. Therefore, it cannot be alienated.

Respondents aver that Japanese Law, and not Philippine Law, shall apply to the case because the property
is located in Japan. They posit that the principle of lex situs applies.

Issues: WON Philippine Law applies to the case at bar.

Ruling: Yes.

We see no reason why a conflict of law rule should apply when no conflict of law situation exists. A conflict
of law situation arises only when: (1) There is a dispute over the title or ownership of an immovable, such
that the capacity to take and transfer immovables, the formalities of conveyance, the essential validity and
effect of the transfer, or the interpretation and effect of a conveyance, are to be determined; and (2) A
foreign law on land ownership and its conveyance is asserted to conflict with a domestic law on the same
matters. Hence, the need to determine which law should apply.

In the instant case, none of the above elements exists.

The issues are not concerned with validity of ownership or title. There is no question that the property
belongs to the Philippines. The issue is the authority of the respondent officials to validly dispose of property
belonging to the State. And the validity of the procedures adopted to effect its sale. This is governed by
Philippine Law. The rule of lex situs does not apply.

5. Situs of Certain Properties

2 Classes of Movables

i. Choses in possession - tangible physical objects

ii. Choses in action - also called as intangible property (e.g. debts, patents, copyright, goodwill, trade
marks and trade names, and shares of stock.)

Trademark – is the name or symbols of goods made or manufactured ex. Guess

Trade name – the name or symbol of the store or business place ex. Rustan’s
Service mark – the name or symbol of services rendered ex. Federal Express
Copyright – the right of literary property as recognized and sanctioned by positive law.
Kinds of choses in action
i. Debts or simple rights of action arising from loans or ordinary commercial contracts
ii. Negotiable instruments
iii. Corporate stocks or shares
Intangible Personal Property
(Choses in Action)
Debts
Negotiable instruments
Corporate stocks or shares
Voluntary transfer of
assignment of choses in
action
Involuntary transfer of choses
in action (e.g. garnishment)
Debt for taxation purposes
Administration of debts
Negotiability or non-
negotiability of an instrument
Validity of transfer, delivery or
negotiation of the instrument
Effect on a corporation of the
sale of corporate shares
Effect between the parties of
the sale of corporate shares
Taxation on the dividends of
corporate shares
Taxation on the income from
the sale of corporate shares
Franchises
Goodwill of the business &
taxation thereto
Patents, copyrights,
trademarks, trade names
i. Personal law of the
parties
ii. Law of the place of
execution of assignment
iii. Law of the place where
debt is recoverable
Law of the state where debtor
may be served summons
Domicile of the creditor where
the collectible credit may be
taxed
Where the assets of the
debtor are usually situated
Law governing the rights
embodied in the instrument
In general, situs of the
instrument at the time of
transfer, delivery o
Law of the place incorporation
Lex loci voluntatis or lex loci
intentionis (proper law of the
contract) – for this is really a
contract; usually this is the
place where the certificate is
delivered
Law of the place of
incorporation
Law of the place where the
sale was consummated
Law of the place that granted
them
Law of the place where the
business is carried on
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 RP
ONLY IF Filipinos are granted
reciprocal concessions in the
State of the foreigners

Tangible Personal Property

(Choses in Possession)

General rule: lex rei sitae

Exceptions: same as the rules on real property
Means of transportation Vessels Law of the flag
Other means Law of the depot
Things in transit Loss, destruction, Law of the destination (Civil
deterioration Code, Art 1753)
Validity & effect of the seizure Locus regit actum (where
of the goods seized) – because said place
is their temporary situs
Disposition of goods The owner is permitted to
choose among several legal
systems:
iv. Law of the temporary
resting place
v. Lex loci actus
vi. Law of the place of
destination
vii. Law of the last real situs
of goods

6. 2 kinds of movables, 2 kinds of choses in action

a. Movable property

ASIATIC PETROLEUM V. CO QUICO 69 Phil 433 (1940)

FACTS : Co Quico entered into a contract of agency with Asiatic by virtue of which the former became the
sales agent on commission of the latter. Respondent was in default in the sum of P2,213 and without
rendering account to Asiatic left for China. Asiatic filed a complaint and after summons by publication Co
Quico was decalred in default and thereafter Co’s deposit in the Bank was levied. Co’s counsel moved to
declare the proceedings as null and void on the ground that the court never acquired jurisdiction over the
person of the respondent because the action is one in personam against a non-resident who was summoned
by publication and did not appear.

ISSUE : Whether or not the court acquired jurisdiction over the person of the defendant.

HELD : Yes. Although respondent was outside the Philippines at the time the action was instituted, he
possessed property found and located here in the Philippines and such property was within the reach of
our courts. It is well emphasized in this connection that all property within the state is subject to the
jurisdiction of its courts and they have the right to adjudicate title thereto, to enforce liens therupon and
to subject it to the payment of the debts of its owners, whether resident or not.

b. Situs of money -

Leon v. Manulife, 1951:

c. Situs of Debts –

Harris vs Balk

Ratio: It ought to be and it is the object of courts to prevent the payment of any debt twice over.

FACTS: A citizen of North Carolina owed money to another citizen of that State. While temporarily in
Maryland, however, the debtor got garnished by a creditor of his creditor (garnishee). Judgment was duly
entered according to Maryland practice and paid. Thereafter the debtor was sued in North Carolina by the
creditor and as a defense, showed the judgment and payment made in Maryland. Nevertheless, North
Carolina courts held that as the situs of the debt was in North Carolina the Maryland judgment was not a
bar and awarded judgment against him. The United States Court of Appeals reversed. The Supreme Court
of North Carolina, on the other hand, reversed the decision, which refused to give full faith and credit to a
Maryland judgment. The case was elevated to the Supreme Court of the United States.

ISSUE: Should the Maryland judgment be recognized in North Carolina courts?

RULING: Yes. The Court held that the garnishee's debt owed to the creditor in Maryland followed the
garnishee everywhere. Since Maryland had a law that would allow the Maryland creditor to pursue the debt
owed by the garnishee to it, debtor could attach the debt owed by the garnishee to the creditor, even
though the garnishee was not a Maryland resident. The garnishee's failure to notify defendant of
attachment was not prejudicial because defendant had the opportunity to show that he did not owe a debt
to plaintiff. Moreover, the court also reminded that it is the object of courts to prevent the payment of any
debt twice over.

d. Intangible properties

Lim v. CA, 1995

Facts: Manuel Lim and Rosita Lim are the officers of the Rigi Bilt Industries, Inc. (RIGI). RIGI had been
transacting business with Linton Commercial Company, Inc. The Lims ordered 100 pieces of mild steel
plates from Linton and were delivered to the Lim’s place of business which was in Caloocan. To pay Linton,
the Lims issued a postdated check for P51,800.00. On a different date, the Lims also ordered another 65
pcs of mild steel plates and were delivered in the place of business. They again issued another postdated
check. On that same day, they also ordered purlins worth P241,800 which were delivered to them on
various dates. The Lims issued 7 checks for this.

When the 7 checks were presented to the drawee bank (Solidbank), it was dishonored because payment
for the checks had been stopped and/or insufficiency of funds. So the Lims were charged with 7 counts of
violation of Bouncing Checks Law.

The Malabon trial court held that the Lims were guilty of estafa and violation of BP 22. They went to CA on
appeal.
The CA acquitted the Lims of estafa, on the ground that the checks were not made in payment of an
obligation contracted at the time of their issuance. However, the CA affirmed the finding that they were
guilty of violation for BP 22. Motion for Reconsideration to SC.

Issue: Whether or not the issue was within the jurisdiction of the Malabon Trial Court

Held: Yes. The venue of jurisdiction lies either in the RTC Caloocan or Malabon Trial Court.

BP 22 is a continuing crime. A person charged with a transitory crime may be validly tried in any municipality
or territory where the offense was partly committed. In determining the proper venue, the ff. must be
considered. 1) 7 checks were issued to Linton in its place of business in Navotas. 2) The checks were
delivered Linton in the same place. 3) The checks were dishonored in Caloocan 4) The Lims had knowledge
of their insufficiency of funds.

Under sec 191 of the Negotiable Instruments Law:

ISSUE = 1ST delivery of the instrument complete in form to a person who takes it as a holder

HOLDER = payee or indorsee of a bill/note who is in possession of it or the bearer

The place where the bills were written, signed or dated does not necessarily fix or determine the place
where they were executed. It is the delivery that is important. It is the final act essential to its
consummation of an obligation. An undelivered bill is unoperative. The issuance and delivery of the check
must be to a person who takes it as a holder.

Although Linton sent a collector who received the checks fr. The Lims at their place of business, the checks
were actually issued and delivered to Linton in Navotas. The collector is not a holder or an agent, he was
just an employee.

e. Situs of Shares of Stock

CIR V. ANGLO CALIFORNIA NATIONAL BANK 106 Phil 903

FACTS : Respondent Calamba Sugar Estate Inc. (CSEI), represented by its trustee, the Anglo Cal. Nat’l
Bank is a foreign corporation organized under the laws of California, duly licensed to do business in the
Phils. Petitoner notified CSEI of an assessment for an alleged deficiency income taxes. Based on the
allegation that the sale of its shares of stocks was perfected and payment took place in USA and that the
sale was made in accordance with the laws of USA, the CTA absolved CSEI from liability on the ground that
the capital gains which constituted income were derived from abroad and not subject to income tax.
Petitioner appealed contending that the situs of shares of stock of corporation is considered to be at the
domicile of the latter.

ISSUE : WON the situs of the corporate shares of stock is within the Philippines

HELD : No. Shares of stock of corporation are considered as intangible personal properties. Sec. 24 of NIRC
levies income taxes on foreign corporations only on income derived from sources within the Philippines and
with respect to capital gains on the sale of personal properties. Sec 37 (e) of NIRC deems the place of the
sale as also that place or source of capital gain. Moreover, income derived from sale abroad is not taxable
here in the Phils. Only income within the Philippines are taxable.
TAYAG v. BENGUET CONSOLIDATED INC. 26 SCRA 242

FACTS : Perkins died leaving two stock certificates in the Benguet Consolidated Inc., a Phil. Corporation.
The certificates were in possession of Country Trust Co. of New York, which was the domiciliary
adminstrator of the estate of the deceased. Meanwhile, anciliary administration proceedings in the CFI of
Manial were instituted and the court appointed Lazaro Marquez as anciliary administrator, wo was
substituted by Renato Tayag. A dispute arose between the domiciliary and anciliary administratoes as to
which of them was entitled to the possession of the stock certificates. The CFI ordered the domiciliary
administrator to produce and deposit the certificates with Tayag or with the Cerk of Court, but the former
did not comply with the said order. Tayag petitioned the Court to issued an order declaring the stocks
certificates as lost, which the court granted. Hence, this appeal by the oppositor Benguet Consolidated Inc.

ISSUE : Whether or not ancillary administrator is entitled to the possession of the stock certificates

HELD : Yes. The ancillary administration is proper, whenever a person dies, leaving in a country other than
that of is last domicile, property to be administered in the nature of assets of the deceased liable for his
individual debts or to be distributed among his heirs. It would follow then that the authority of the probate
court to require that anciliary administrato’s right to the stock certificates…standing in her name in the
books of appellant-Benguet Consolidated Inc., be respected is equally beyond question. For appellant is a
Phil. Corporation owing full allegiance and subject to the unrestricted jurisdiction of the local courts. Its
shares of stock cannot therefore be considered in any wise as immune from lawful court orders.

WILLS AND SUCCESSION

II. CONTENT

1. Succession: General Terms

Arts. 774, 778, 779, 783 (Civil Code)

Articles 804-807

Art. 810

2. Extrinsic Validity:

Articles 17, 815 - 819

Dacanay v. Florendo, 1950

3. Successional Rights, Intrinsic Validity

Articles 16, 1039.

Bellis v. Bellis, 1967:

Bohanan v. Bohanan, 1960

Miciano v. Brimo, 1927 :

Cayetano v. Leonidas, 1984 -

4. Revocation:
Articles 829, 830.

5. Probate –

Rule 76, Section 9 and Rule 77, Sec. 1 of Special Proceedings

Article 817, Civil Code

Suntay v. Suntay, 1954

Vda. De Perez v. Tolete, 1994, Evidence needed for reprobate

Dalton v. Giberson, 1952

Tayag v. Benguet Consolidated, Inc.