CHOICE OF LAW IN PROPERTY

A. CONTROLLING LAW
Immovable property regulated by lex situs.
Reason: The characterization of immovable property as
an isolated object of rights so that the interests of
various persons is determined by the place where the
land is situated.
Movable property Not necessarily governed by lex
situs. May be controlled by:
a) Lex domicilii
b) Lex situs
c) Lex loci actus (place where transaction was
completed)
d) Proper law of transfer
B. CAPACITY TO TRANSFER OR ACQUIRE PROPERTY
Capacity to transfer or acquire property is governed by
Lex situs or law of the place where property is located.
Cases:
*Llantino v. Chong
The sale of a residential land to an alien which is
now in the hands of a naturalized Filipino citizen
is valid.
*Cheesman v. Intermediate Appellate Court
The fundamental law of the land prohibits the
sale to aliens of residential lands. If between
spouses, one an alien and the other a Filipino, the
property acquired by the wife were to be declared
conjugal, this would accord to the alien husband
a not insubstantial interest and right over the
land, as he would then have a decisive vote as to
its transfer or disposition. This is a right that the
Constitution does not permit him to have.
C. EXTRINSIC AND INTRINSIC VALIDITY OF CONVEYANCES
Important rules to remember:
1) Formalities of a contract to convey property are
governed by lex situs. Any transfer of property which
requires registration of title cannot be accepted by
the registry of property unless the formal
requirements of the lex situs are complied with.
2) The validity and effect of conveyance of property are
treated as a question of property rather than
contract. Lex situs governs the effects of
conveyances. It also applies to the essential validity

of transfer unless the lex intentionis is clearly

established.
D. EXCEPTIONS TO LEX SITUS RULE
1) Where the transaction DOES NOT AFFECT TRANSFER
OF TITLE OR OWNERSHIP of the land. The proper
law is the lex intentionis or lex voluntatis.
2) In contracts where real property is OFFERRED BY WAY
OF SECURITY for the performance of an obligation
such as loan. The principal contract is the loan while
the mortgage of the land is only an accessory.
Mortgage of land governed by lex situs
Loan contract governed by rules on ordinary
contracts
3) TESTATE AND INTESTATE SUCCESSION and capacity
to succeed are governed by the national law of the
decedent. (Art 16, par 2 CC)
4) Situs of the immovable at the time of the transfer
was INSIGNIFICANT OR ACCIDENTAL
Ex: place was chosen by parties for mere
convenience of the parties
5) The issue involves CONSIDERATION OTHER THAN
VALIDITY AND EFFECT of the title.
Solution: Forum law may now look into the state
which is interested in the application of its own
law. (Interest Analysis Theory)
E. ELEMENTS OF CONFLICT OF LAW SITUATION INVOLVING
PROPERTIES:
*Laurel v. Garcia
1) When there is dispute over the title or ownership of a
real land
2) A foreign law on land ownership and its conveyance
is asserted to conflict with other state law
F. SITUS OF CERTAIN PROPERTIES
Two Types of Movable Properties:
1) Tangible also referred to as choses in
possession.
2) Intangible- choses in action.
TANGIBLE PROPERTIES OR CHOSES IN POSSESSION
1) Voluntary transfers of interest in chattels
local law of the state which has the most significant
relationship to the parties.

2) Involuntary transfer
- Title is acquired by operation of law such as
execution or attachment. Lex situs or that law of the
place where the chattel is located is applied.
3) Goods in transit
- Governed TEMPORARY RESTING PLACE. The right of
an unpaid seller and the goods are transferred from
one place to another. Concerning the seizure or
arrest in case the seller exercises the right to stop
and seize the goods, law of the temporary resting
place or where the goods were seized will govern the
validity of transfer.
4) Means of transports involving vessels
Seagoing vessels law of the flag of the vessel. For
states consisting of several countries, ex UK, law of the
place of registry shall govern.
INTANGIBLE PROPERTIES OR CHOSES IN POSSESSION
1) Debts
For recovery of debts, the applicable rule is place where
debtor can be effectively served with summons.
2) Voluntary transfer or assignments of debts
Validity depends on which the parties may select among
these:
a) lex intentionis or lex voluntatis
b) law of domicile of the debtor if there is no contract
between the parties. If not applicahlle, may be
govern by
c) lex loci celebrationis, or
d) lex loci solutionis, or law of place of performance.
e) If there is no agreement, lex intentionis.
3) Involuntary transfer of debts
ex: garnishment governed by law of the state where
jurisdiction is exercised against garnishee.
4) Negotiable instrument law of the place indicated in the
instrument. Or if none indicated, place of delivery. Or even
the place of negotiation.
5) Corporate shares of stocks ex: sale of shares of stock,
dividends issued by the corporation law of the place of
incorporation.
6) Patents, trademarks, tradenames and copyright
generally if there is a treaty, treaty shall govern any issue
involved.
If there is no treaty and a foreign corporation wants to
sue Filipino national who is using its tradename, the corporation
may be allowed to sue in the Philippines to give justice to the

foreign corporation because if not, it is as if court is consenting

the illegal use of the name of a foreign corporation.

CHOICE OF LAW IN CONTRACTS

A. EXTRINSIC VALIDITY OF CONTRACT
Article 17, CC explicitly provides that LEX LOCI
CELEBRATIONIS or law of the place where contract was entered
shall govern. The rationale is that parties chose the place
because they had in mind the law of the particular place where
they executed the contract.
Exceptions:
1) If the contract involves transfer of properties which is
governed by lex situs.
Ex. Two Filipinos executed a contract involving transfer of
property located in US. Since it involves transfer of title
extrinsic validity is governed by lex situs , but if it does
not involve title, lex loci celebrationis.
2) Principle of exterritoriality as based on Article 17, it states
that a party should comply with the formalities established
by their own laws.
If a conflict arises because the stages of executing
contract took place in different places, consider the
place or country where LAST STAGE took place.
B. INTRINSIC VALIDITY OF CONTRACTS
The Philippine law is silent as to what governs the intrinsic
validity of contracts, thus, the rule is that parties to a contract may
choose that particular law that governs that intrinsic validity of
their contract, as long as not contrary to public policy or morals of
their respective country. The policy of our laws is to give effect to
the intention of the parties. (LEX LOCI INTENTIONIS)
What laws can they choose: lex loci contractus,
celebrationis, or lex loci solutionis or law of place of performance,
or any law.
If there is no choice of law proviso, it is the law which has
the most significant, most substantial connection with the
transaction of the parties.
C. CAPACITY TO ENTER INTO CONTRACTS

General rule:
Capacity to enter into contracts is generally governed
by the PERSONAL LAWS OF THE CONTRACTING PARTIES,
domiciliary or nationality theory.
Exception:
Contracts involving alienation or encumbrance of
property, thus lex litus
*Insular government v. frank:
Capacity to enter into contract is determined by personal
law
D. CHOICE OF FORUM LAWS
The contract may set forum of venue or court where parties
may file suit. It should be very exclusive, should indicate the
not in any other place.
ADHESION CONTRACTS
The general rules is that adhesion contracts are VALID
provided no abuse of power between the dominant party
and the submissive party. Limitation of liability of the
dominant party is valid.
Exceptions: (courts may not recognize adhesions)
1) PAL v. CA
Warsaw convention provides for the limit of liability of an
airline company. The Supreme Court ruled that WARSAW
Convention is not actually controlling; there is a limit to the
extent of liability of the company if there is negligence. The
warsaw does not preclude the operation of the civil code. The
court can award damages.
2) Contract is written in a language foreign to the other party
3) Undue advantage made by dominant party
Ex: dominant party deprived opportunity to bargain on
equal account
Rules for special contracts:
1) Voluntrary transfer of goods lex situs shall apply
2) Simple loan granted by financial institutions governing law is
the law of permanent place of business of financial institution
3) Loan granted by private individual - law where loan was
obtained or granted
4) Transportation by sea- carriage of passenger or goods
a) Philippine ports to foreign ports law of the country of
destination.

b) Foreign ports to Philippine ports

- Civil Code is the primary law,
other applicable provisions may be found in the code of
commerce,
- COGSA extent of liability is amount not exceeding 500
dollars per package unless value of goods were declared by
the shipper and stated in the bill
5) Contracts for international air transportation it is WARSAW
Convention that applies, usually indicated in the airline ticket.
The WARSAW applies only to international carriage of persons,
packages or good, and does not apply to mails and other postal
packages. Just like the cogsa, warsaw also mentions the extent
of liability of an iinternational carrier, which is loss baggage is
1,000 dollars, death of passenger is 100, 000 dollars.

Venue of suits in international airlines: (WARSAW

Convention)
a) Court of the domicile of the carrier
b) Court of principal place of business of the carrier
c) Court where the carrier transacts his business
Place where ticket was bought
d) Court of the place of destination
Case: Santos III v. Northwest orient airlines
SC construed the place of destination under WARSAW as
determined by the terms of the contract of carriage and does
not apply to the stopover. Place of destination is what was
indicated in the airline ticket. Sc explained THE significance of
venues.
Jurisisdiction under WARSAW takes a dual concept.
1) international concept- jurisdiction refers to any of
these places. Plaintiff passenger is to choose among these
court.
2) local sense- if the plaintiff chooses one of these, he
must check whether this court has jurisdiction to hear the case.
Does the MTC has jurisdiction to hear the complaint. Check the
law on jurisdiction.
Remember, WARSAW does not limit liability, especially if
there are negligence or acts on the part of employees that led
to death of its passengers. The Supreme Court may grant
award for moral damages if there are ground for such.
Cases where Warsaw does not apply:
1) validity of the contract which is the contract of international
carriage
2) absence of choice of law proviso in the ticket applicable
law is place where the passenger resides

Limitations to choice of law:

1) Parties may not select a law which has no connection at all with
their transaction, select only the law applicable
* if the law selected should change, the law as changed
should govern except if law is so revolutionary it could
never have been contemplated by the parties.
2) the law chosen should not be interpreted to oust the jurisdiction
which the court has already acquired
3) parties may not contract away provisions of law heavily
impressed with public interest
4) cognovit clause
Referred to as confession of judgment clause. Usually
added by the parties to their contract if it involves loan of
money. Under this, debtor agrees to be subject to the
jurisdiction of a specific court indicated in the contract in case
of breach of contract, or failure to fulfill obligation under the
contract. Automatically submits himself to the jurisdiction of
the court, and authorize the entry of judgment even if not
favorable upon him. Not invalid but generally frowned upon
because the debtor is the weaker party. In cognovits clauses,
there is waiver of his right to the jurisdiction of the court.
Valid provided:
1) both parties have equal bargaining power
2) debtor agreed voluntarily
Remember: lex loci celebrationis governs extrinsic validity of
contracts.
May also govern intrinsic validity provided it was law
chosen by the parties. In the absence of choice of law, the law
which has the closest or substantial relationship to the parties.
WILLS, SUCCESSIONS, AND ADMINISTRATION OF ESTATES
A. EXTRINSIC VALIDITY
Extrinsicc validity depends on nationality of testator and
law of the place where will was executed.
1) Filipino executes will abroad intrinsic validity
governed by Philippine laws either lex loci celebrationis
or lex nationale.
2) Testator alien executed last will in PH extrinsic
validity determined by lex loci celebrationis or personal
law of the foreigner.
3) Alien execute will in another country either personal
law, lex loci celebrationis or ph law.
wills.

Rules apply not only to notarial, but also holographic

B. JOINT WILLS

1) Joint wills by Filipino citizens in another country

where the execution of joint will is allowed
extrinsically and intrinsically NOT valid in the ph
because against public policy.
2) If joint will executed by an alien in a country where
allowed or by the personal law of the alien - may be
given recognition in the Philippines because the
prohibition applies only to Philippine nationals.
3) If alien executes in ph even if personal law of alien
allows, such cannot be recognized because it will
show injustice to Filipinos.
C. INTRINSIC VALIDITY OF WILLS
Governed by the national law of decedent regardless of
property located. Article 16, par 2 CC
D. INTERPRETATION OF WILLS
Governed by national law of decedent.

E. REVOCATION OF WILLS
Depends on the place of revocation or even the domicile
of testator.
1) If revocation takes place in Philippines, whether testator be
domiciled here or in another country, revocation is valid if it is
done according to Philippine laws.
2) If revocation takes place outside Philippines and testator is
domiciled in the Philippines, valid if done according to Philippine
laws.
3) Revocation takes place outside the Philippines and the testator
not domiciled in ph, valid if done according to law of place
where the will is executed or according to the law of place of
domicile of the testator.
4) If after revoking in another country, testator transferred to
another state and has new domicile when he died:
a) Common law countries law of domicile.
b) Civil law law of place of revocation.
F. PROBATE
Basically procedural in nature, so law of the forum should
govern procedural matters.
1) Foreign will not yet probated in the country where
executed the estate of the testator should go through
all the procedure that Philippine laws provide.
2) Foreign will already probated in the foreign country
needs to be reprobated in Philippines. Ask for the
enforcement of the foreign judgment before the
Philippines.
are:

Evidence necessary for reprobate or allowance of wills

a) DUE EXECUTION of the will in accordance with

foreign laws
b) Testator has his DOMICILE in the foreign country
c) Proof that will has been PROBATED in the foreign
country
d) The court that probated the will is a PROBATE
COURT
e) LAWS OF FOREIGN COUNTRY on the procedure and
allowance of wills should be shown before the
court.
G. ADMINISTRATION OF ESTATES
Ph apply the principle of territorialism. Under
this, the administrator or executor can exercise
administrative rights over the estates only within the
territory of the place or country where the properties of
decedent are located. Administration extends only to
the properties of the decedent found in the country
where located.
Case: Tayag v. benguet consolidated
Stocks of certificates held by new york domiciliary
administrator in new York. The ancilliary administrator in
new York does not have the power to hold stock
certificates were issued by a Philippine cortpration. It is
Philippine administrator who as the right.
H. TESTAMENTARY TRUSTS
Rule:
If trust contains choice of law provision, what is
applied is choice of law proviso to give or carry out the
will of the testator. In no choice of law proviso, apply the
law that will sustain the validity of the trust.