Ga, Vanessa May C.

Conflict of Law- Activity 2

1. Discuss the following concepts in the context of Contractual Conflicts of Law:

a.) Primacy of Contractual Stipulations
Article of 1306 of the Civil Code allows the parties to a contract to “establish such
stipulations, clauses, terms and conditions as they may deem convenient, provided they are nit
contrary to law, morals, good customs, public order, or public policy.” The parties are free to
stipulate the terms and conditions that will govern their contractual relation. These stipulations
comprise the agreement of the parties and will govern their contractual relations. These
stipulations, in the form of the terms and conditions, constitute the law between the parties, and
will be applied in case of dispute. The parties to the contract are expected to follow these terms
and no derogation shall be allowed except only when these are contrary to law, good order, or
public policy.

b.) Choice of Law Stipulations

The principal of autonomy of contracts allows the parties to stipulate the law that shall
govern their contractual relations. A choice of law stipulation will greatly aid in the achievement
of the objectives of the parties in entering into a contract.
Parties may provide a foreign law, or a local law, for this purpose, depending on what
suits their interest. In addition, the parties may also provide that two or more foreign laws govern
their relationship, or that a foreign law/s and local law/s be made applicable to their contract. The
parties may provide that the stipulated law may have general or limited applicability.
If the parties do not specify the extent of the applicability of their chosen law, the chosen
law will normally apply to the following concerns.
a. interpretation;
b. rights and obligations arising from the contract;
c. performance and the consequences of non-performance, including the assessment of
damages;
d. the various ways of extinguishing obligations, and prescription and limitation periods;
e. validity and the consequences of invalidity of the contract;
f. burden of proof and legal presumptions; and
g. pre-contractual obligations.

c.) Waiver of Renvoi

To prevent complications, parties may even waive the application of renvoi incase the
same is provided for by a foreign law. This simply means that rules of private international law
will find no application once a foreign law is chosen by the parties. Renvoi is a complicated
doctrine since it usually mandates the parties to look to the TOTALITY of foreign law in
determining their rights and obligations. Hence, the need to exclude rules of private international
law and just focus on a segment of the foreign law in question.

2. Explain the meanings and reasons of the principles enumerated below as they are applied in
determining the applicable law in Contractual Conflict of Laws:
 a.) Lex loci contractus
(or the law of the place where the contract is executed)
The reason behind this approach is that the parties’ mindsets are usually focused on the
law of the place of execution when they enter into contracts. Without specifying any choice of
law, it is understood that the parties wanted the local law to govern their contractual relation. The
law of the place of execution is the default law based on the presumption that the parties would
have specified a particular law if they did not want local law to govern their contractual
relationship.
b.) Lex loci celebrationis
(or the law of the place where the contract is performed or celebrated)
The reason behind this principle is that since a contract is to be performed in a particular
place or state, it is but proper that the law of that state govern the relationship of the parties. It is
but natural that the law of the place of performance governs contractual disputes since parties to
a contract are expected to follow and comply with the laws where they are operating or
performing their obligations. Otherwise, there is a great chance that they will be in violation of
the law of the place of performance, which can also become a ground for invalidation of their
contract or render performance of the contract impossible or very difficult.
c.) State of the most significant relationship rule
(or law of the place with the most connection to the dispute)
This is basically a matter of convenience and practicality as it seeks to apply the law of
the place that has the most connecting factors to the contract. The more factors connecting the
case to a particular state, the easier it will be to determine the rights and obligations of the parties
to the contract. A enunciated in Section 188, the connecting factors to be considered are the place
of contracting, the place of negotiation of the contract, the place of performance, the location of
the subject matter of the contract, and the domicile, residence, nationality, place of incorporation,
and place of business of the parties. This approach, therefore, takes into account the previous two
approaches of lex loci contractus and lex loci celebrationis. The drawback to this approach,
however, is its complexity and tendency to create confusion as one will have to list and examine
the connecting factors of a state to a pending contractual dispute. This approach is unlike the
previous two approaches where one just applies the law of the place of performance or
execution.

d.) Depecage
This refers to the process whereby different issues in a singe case arising out of a single
set of facts may be decided according to the laws of different states. This has always been the
process when procedural matters were held to be governed by forum law and substantive
questions by some other law, even when matters characterized as procedural had substantial
outcome-determinative effect. It has always been understood also that different substantive
issues could properly be decided under the laws of different states when the choice-0influencing
considerations differ as they apply to the different issues. The new development in this area is
the currently increased discussion and analysis of the old technique.
3. Why is it that Lex loci contractus is the approach used in the Philippines in resolving choice of
law problems in contracts? Explain.
In Triple Eight Integrated Services, Inc. v. NLRC, the Supreme Court, speaking thru
Justice Flerida Ruth Romero, declared that “lex loci contractus governs in this jurisdiction.” This
clear and unequivocal means that our courts are obliged to apply the law of the place of
execution of the contract in case a conflict of laws dispute concerning contracts is brought to the
courts. It cannot be otherwise, as applying lex loci celebrationis or state of the most significant
relationship will result in the application of the law of a different state. Hence, if a contract is
executed in the Philippines, and the contract specifies no choice of law, the governing law will
be Philippine law.
4. Explain by illustrating w/ an example the following principles being used as approaches to
solving Conflict of Laws in Torts:
1. Lex loci delicti
(or the vested rights doctrine)
This is the traditional rule that employs the law of the place of injury. This is fairly
straightforward since what only needs to be done is the application of the law of the place where
the injury or damage was sustained. This is based on the vested rights theory since the rights of
the parties vested in the place of injury and nowhere else. When someone is wronged in a
particular place, the rights of the parties arise from that jurisdiction whose law must then be
applied to determine the parties’ rights and liabilities. Furthermore, the state where the damage
or injury is sustained has as much interest in redressing the wrongs committed within its
jurisdiction. Example of this are the cases Dowis et al. v. Mud Slingers, Inc. et al. and Melton v.
Stephens.
2. Governmental interest analysis approach
A three-tiered approach that involves an examination of whether there is a difference in
the law of the jurisdictions involved, whether there is a true conflict of law, and if a true conflict
exists, the court will apply the law of the state whose interests is more impaired. A good example
of this approach is Kearney v. Salomon Smith Barney and Butler v. Adoption Media, LLC.
3. Choice-influencing considerations approach
This approach requires an examination of several factors to determine the applicable law.
These five factors are (1) predictability of result; (2) maintenance of the interstate and
international order; (3) simplification of the judicial task; (4) advancement of the forum’s
governmental interest; and (5) application of the better rule of law.
4. Lex fori
An approach where the rights and liabilities of the parties are governed by law of the
forum.
5. Most significant relationship approach
An examination is made as to what state has the most connection to a case. The law of
the state which has the most connection shall be applied in the resolution of the conflict. The
points of contact, as enumerated in the Restatement (Second) of Conflict of Laws, are:
a. the place where the injury occurred;
b. the place where the conduct causing the injury occurred;
c. the domicile, residence, nationality, place of incorporation and place of business of the
parties, and
d. the place where the relationship, if any, between the parties is centered.

It must be noted that one point of contact in most significant relationship is the “place
where the injury occurred.” Most states adhering to the most significant relationship
approach place or allocate so much importance to this point of contact since “the state
with the most significant relation to a claim is usually the state in which the tort (and
therefore the injury) occurred. This is the state that “has the greatest interest in striking a
reasonable balance among safety, cost, and other factors pertinent to the design and
administration of a system of tort law.