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Rachelle Mayuga |Dahlia Salamat (Second Semester, A.Y. 2009-2010) -governed by LAW OF THE PLACE WHERE THE PROPERTY IS LOCATED: LEX SITUS

XIII. CHOICE OF LAW IN PROPERTY A.THE CONTROLLING LAW -depends on WON the property is movable or not Immovable Movable 1. Lex domicili (mobilia sequuntur personam):they could be moved from place to place, difficult to anticipate where they may be situated at a given time 2. lex situs: o >Traditional reason: the state has the sole power to decide the validity and effects of the transfer of property o >Policy-oriented rationale: parties expect their transaction would be governed by the law of the place where the property is located 3. Lex loci actus (law of the place where the transaction was completed) 4. Proper law of transfer: law of the state which has the most real connections with the transfer

Lex situs: May be: rights, interests of various person are determined by the law of the place where the land is situated

LLANTINO V. CO LIONG CHONG (1990) Facts: Co Liong Chong entered a contract with Llantino Sps for a lease of land for a period of 60 years. Note that Co Liong Chong was naturalized as a Filipino citizen (changed name to Juan Molina).Llantino sps wanted to recover the property from Co Liong Chong. Issue: WON the lease contract is INvalid because at the time of its execution, he was a Chinese? Held: NO. it was VALID. Lease contracts with Aliens allowed since an alien's stay in RP is temporary, they may be granted temporary rights such as a lease contract which is not prohibited by the constitution -the lease contract is valid as long as there are no circumstances attendant to its execution which are used to circumvent the constitutional prohibition such as an option to buy the contract or a lease for more than 50 years.An exception to this exception is when the alien subsequently acquires Philippine Citizenship. EAP Notes -it's merely TEMPORARY possession of property - not ownership -Why prohibit ownership of lands of aliens? To preserve properties in favor of Filipinos CHEESMAN V. IAC (1991) Facts American married to a Filipina. Filipina wife sold land and house on it, initially w/o protest from American husband, but later contesting it, raising that the sale was made w/o his knowledge and consent (prerogative of the husband in respect to conjugal property). Issue WON the American husband can contest the validity of the sale? Held NO. In accordance with the Constitution, aliens cannot have private lands transferred or conveyed to them except in cases of hereditary succession. Thus, the alien husband here does not have personality to contest the validity of the sale as the husband of the seller, he not allowed to have interest over the land. -note: here, trial court found that the property was bought by the Filipina wife with her own funds and the buyer was held a buyer in GF because the alien spouse led her to believe that the property was indeed the Filipina wife's and not a conjugal property. EAP notes: PFR review: administration and management of property is jointly exercised by spouses

EAP notes: Difference if traditional reason or policycentered approach? Traditional approach: centers on the territory: since it is part of the territory of the state, it is the state's law which would govern Policy-oriented: most significant contacts, state whose interest is less impaired In RP: ART414: property is anything that may be an object of appropriation ART 16: irrelevant if real or personal property (as regards nationals) - lex situs applies Problem: what if the place where the property is located distinguishes between rules applicable to real and personal property and the applicable law is not their law? Why RP adopted Lex Situs? Being physically part of the country, it [the property] should be subject to the laws thereof. The situs is the place most closely and significally related to the issue in question Increase in the amount and variety of personal property not connected w/ the person of the owner, so adopt lex situs even with movables. B. CAPACITY TO TRANSFER OR ACQUIRE PROPERTY

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Rachelle Mayuga |Dahlia Salamat (Second Semester, A.Y. 2009-2010) so what happens now? -Aliens can't have conjugal properties, or else would contravene Consti provisions prohibiting ownership of aliens -possibly, alien spouse may still exercise share in conjugal properties if it is converted to movable properties, i.e. cash!!!! - but as long as it is immovable, can't own anything C.EXTRINSIC AND INTRINSIC VALIDITY OF CONVEYANCES Formalities (extrinsic) Essential validity (intrinsic)

2. When transaction is merely an accessory to a principal contract (i.e. mortgage for a loan) Apply: lex situs applies to the mortgage contract (thus, this is still not an exception) but law on contracts govern the principal contract 3. Testate/Intestate Succession & capacity to succeed Apply: lex nationali or the national law of the decedent (A16.2, NCC) On Movables: Policy-centered approach: forum court not bound to look to the law of the situs when *the situs is INSIGNIFICANT OR INCIDENTAL e.g. place merely chosen for convenience of one of the parties, when they both know that the property would be used somewhere else *when the issues involves considerations other than the validity and effect of the transfer itself >>>APPLY: law of the place which has real interest in the property E.SITUS OF CERTAIN PROPERTIES 1. SITUS OF PERSONAL PROPERTY FOR TAX PURPOSES -CAN'T apply mobilia sequuntur personam (had its origins in considerations of general convenience and public policy) mobilia sequuntur personam: a common law doctrine holding that personal property held by a person is governed by the same law that governs that person, so that if a person who is legally domiciled in one jurisdiction dies with property in a second jurisdiction, that property is legally treated as though it were in the first jurisdiction. -STATE has right to tax property w/n its jurisdiction -can't be applied if it would result in inescapable and patent injustice ASIATIC PETROLEUM V. CO QUICO (1940) *warning: not a tax case so ligaw Facts: Co Quico was an agent of Asiatic Petroleum who defaulted in payment of the proceeds of his sale for the latter company. Company filed suit to recover amount, attached his bank deposits w/ Mercantile Bank of China. Issue WON the court validly exercised jurisdiction over the property of Co Quico even if the court did not acquire jurisdiction over his person? Held YES. All property w/n a state is subject to the jurisdiction of its courts, and they have the right to: Adjudicate title thereto Enforce liens thereupon Subject it to the payment of the debts of its owners whether residents or not -modern tendency is to make NO DISTINCTION BETWEEN MOBILITY AND IMMOBILITY OF PROPERTY

lex situs GR: lex situs -treated as a question of X: lex intentionis clearly contract and not of property established D.EXCEPTIONS TO LEX SITUS RULE 1. Transaction does not affect transfer of title to or ownership of the land 2. When transaction is merely an accessory to a principal contract 3. Testate/Intestate Succession & capacity to succeed 1. Transaction does not affect transfer of title to or ownership of the land Apply: lex intentionis or lex voluntatis LILJEDAHL V. GLASSGOW (1921) Facts Bailey owed money to Foskett so he executed a mortgage over a Colorado land in favor of Foskett. Bailey later sold the mortgaged Colorado land to Glassgow, with a deed containing a blank space for the insertion of the name of the grantee (who would then assume the liability in the mortgage). Glassgow made subsequent transfers. Foskett transferred his interest to Liljedal so when the debt was due and Bailey was not able to pay, Liljedal sued Glassgow, et al. As a defense, they alleged that in the lex situs, he is not liable as he did not place his name in the blank. Issue WON the lex situs would apply, and not the lex intentionis? Held Lex intentionis (where the transferee is liable for payment of obligation upon mere acceptance f deed) Instruments of conveyance primarily or directly relating to the tile follow lex rei sitae; personal covenants or agreements in instruments of conveyance follow law of the place where the same is executed and to be performed Contracts made and to be performed in a particular state are made with reference to the law of that state.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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Rachelle Mayuga |Dahlia Salamat (Second Semester, A.Y. 2009-2010) established by the time honored principles of lex rei sitae and mobilia personam sequuntur Review: Cf: Pennoyer vs. Neff: If personal actions, should give summons personally and not through publication or else no jurisdiction over person of defendant quasi in rem: De Midgeley v. Ferandos: A quasi in rem action is an action between parties where the direct object is to reach and dispose of property owned by them or some interest therein. Jurisdiction was acquired because it was a quasi in rem action, where jurisdiction over the person is not required and where the service of summons is required only for the purpose of complying with the requirement of due process. In rem: where the direct object is to reach and dispose of property owned by them. (i.e. testamentary proceeding which is an action in rem par excellance) 2. SITUS OF MONEY LEON V. MANUFACTURERS LIEF INSURANCE CO. (1921)
(warning: just mentioned in the body of maams discussion, not separate case discussion so ung ibang parts hula lang)

was in Maryland, Epstein served a writ of attachment to the debt of Harris to Balk. Back in North Carolina, Balk wanted to collect from Harris. Issue WON the situs of debt and character of stay important in attachment of debt? Held No. The obligation of the debtor to pay his debt clings to and accompanies him wherever he goes -If the garnishee be found in the State, and process be personally served upon him therein, the court acquires jurisdiction over him, and can garnish the debt due from him to the debtor of the plaintiff and condemn it, provided that the garnishee could himself be sued by his creditor in that State -Power over the person of the garnishee confers jurisdiction on the courts of the State where the writ issues. If, while temporarily there, his creditor might sue him there and recover the debt, then he is liable to process of garnishment, no matter where the situs of the debt was originally -Possession cannot be taken of a debt or of the obligation to pay it as tangible property might be taken possession of CRITIQUE TO THE CASE: 2 premises which led to the conclusion in the case: 1. Debt though intangible, is subject to seizure like tangible property 2. The debt is LOCATED where the debtor is - can be sued wherever he is -BUT THIS MAKES THE CREDITOR HELPLESS TO FIX THE PERSONAL PRESENCE OF THE DEBTOR AT ONE PLACE OR ANOTHER Unjust to submit the creditor's claim to the accident of the debtor's presence in one state or another 4. SITUS OF CORPORATE SHARES OF STOCKS Corporation Code: SEC 63 shares of stock issued by the corp are PERSONAL PROPETY may be transferred by DELIVERY OF THE CERTIICATE OR CERTIFICATES INDORSED BY THE OWNER OR HIS ATTORNEY IN FACT or other persons legally authorized to make the transfer Valid Transfer -valid between parties ONLY: not yet recorded -when valid to everyone: recorded in the books of the corporation shows the names of the parties to the transaction date of transfer number of certificate or certificates number of shares transferred CIR V. ANGLO CALIFORNIA NATIONAL BANK (1960) Facts CIR wanted to collect "deficiency" income and capitl gainst tax from Calamba Sugar Estate Inc. for the sale of capital

Facts -Leon probably wanted to recover money from an instrument endorsed in an annuity in Canada so he sued the local branch or agency of Manufacturers Life Insurance in RP to recover Held Since the money to be recovered was from an instrument endorsed in an annuity in Canada under a contract executed in that country, CANADA WAS THE SITUS OF THE MONEY -the local branch impleaded delivered to the annuitant the checks made out and issued from the home office in CANADA, but no showing that the funds (the money) was indeed transferred from CANADA to the home branch *cha: Only Checks were in the local branch, not money. Probably, the pleading prayed that money, not checks were to be levied on or something. Boo this case is labo 3. SITUS OF DEBTS -still UNSETTLED in RP -suggested that the law w/c governs the contract from which the debt arises should govern the transfer of the debt 2 kinds of movable property: 1. Choses in possession: all kinds of TANGIBLE PHYSICAL OBJECTS 2. Choses in action: INTANGIBLE objects a. Mere rights of action: debt arising from a loan b. Rights represented by a document: capable of delivery, susceptible to negotiation as a separate legal entity HARRIS V. BALK (1905) Facts Harris owed Balk $180 (in North Carolina), who owed more than $300 to Epstein (in Maryland). When Harris

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Rachelle Mayuga |Dahlia Salamat (Second Semester, A.Y. 2009-2010) stock of Pampanga SUgar Mills (which was consumated in California). Issue WON CIR could impose income tax and capital gains tax on sales of shares of stock (located in RP) which was consumated in California? Held No. The NIRC imposes income tax on corporations only on income derived from sources w/n RP. The NIRC also defines the source of capital gains tax as the place of sale. Since the place of the sale is outside the Philippines, the income is thus derived from outside the Philippines, and so the corporation could not be taxed for the said transactions. -On argument of CIR that the situs of the shares of stock which is the subject of the sale is in RP, thus, the capital gains is derived in RP: no income tax imposed on the shares themselves! -the subject of the proceedings is the income derived by the sale of the shares of stock, NOT the income derived from the shares itself! F. PATENTS, TRADEMARKS, TRADE NAME, COPYRIGHT Paris Convention of 1893 (Union Convention for the Protection of Industrial Property) -RP became a party to it on September 1965 -protects TRADE NAME in all countries of the Union w/o obligation of registration, WON it forms part of the trade name WESTERN EQUIPMENT AND SUPPLY CO V. REYES (1925) A foreign corporation wanted to enjoin a domestic corporation who intends to use the foreign corp's name in RP, and would engage in the same business as the foreign corp, from using its name. Issue WON the foreign corporation has legal capacity to sue to protect its reputation even if its not registered nor is doing business in RP? Held Yes. The right to use the company's corporate and trade name is a property right which may be asserted against the whole world. -HANOVER STAR MILLING V. ALLEN AND WHEELER CORP: trademark acknowledges no territorial boundaries of municipalities or states or nations, but extends to every market where the trader's goods have become known and identified by the use of the mark RA 8293: INTELLECTUAL PROPERTY CODE OF 1998 -established the Intellectual Property Ofice -does not allow corps to register as their trade names those which are

1. Well known internationally and in the RP, WON registered in RP (already used as a mark by some other person) 2. Used for identical or similar goods or services -allows a corporation w/c may not be engaged in business or is not registered in RP to still file suit (civil or administrative) to protect its trade name (note: only owners of registered marks in RP can recover damages for trademark infringement) PHILIPS EXPORT BV V. CA (1992) Facts Foreign Company (Philips Export BV) and corporations allowed to use its name (Philips Electrical Lamps and Philips Industrial Develoment Corp) wanted the cancellation of the Certificate of Registration of Standard PHILIPS Corp., a domestic corporation which allegedly wanted to ride on the popularity and name of the foreign corp to sell its products (which, although alleged to just be engaged in chain rollers, belts, bearings, cutting saw, may actually sell the same products as that of the complainant). Issue WON the foreign corporation could sue to protect its corporate/trade name Held -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 the 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 -A name is peculiarly important as necessary to the very existence of a corporation. Its name is one of its attributes, an element of its existence, and essential to its identity. The general rule as to corporations is that each corporation must have a name by which it is to sue and be sued and do all legal acts. The name of a corporation in this respect designates the corporation in the same manner as the name of an individual designates the person; and the right to use its corporate name is as much a part of the corporate franchise as any other privilege granted. -A corporation acquires its name by choice and need not select a name identical with or similar to one already appropriated by a senior corporation while an individual's name is thrust upon him. A corporation can no more use a corporate name in violation of the rights of others than an individual can use his name legally acquired so as to mislead the public and injure another. EMERALD GARMENT MANUFACTURING CORPORATION V. COURT OF APPEALS (1995) (note: this is not applicable anymore under the IP Code) Facts

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Rachelle Mayuga |Dahlia Salamat (Second Semester, A.Y. 2009-2010) In this case, RP Company used STYLISTIC MR. LEE. LEE international wanted the cancellation of the said trademark, alleging that it closely resembled its own trademark ("Stylistic Mr." was just a small marking at the side, then the "Lee" was similar to the "Lee" TM by the foreign corp). Issue WON the foreign corporation's trademark is entitled to protection Held NO. Court held that since the international corp failed to prove prior actual use of 2 months before they had their TM registered in RP + using the Holistic approach in testing the TM, Stylistic Mr. Lee could still be used by the domestic corp. The case summary in Ma'am's book focuses though on the Prior Actual Use requirement (which is misleading because under the IPC, it's not required anymore), saying that even if the Paris Convention provides for the protection of TMs by foreign corporation even if it's not registered in RP, it doesn't mean that the said foreign law is superior to our own laws. The incorporation principle in Consti merely makes the Paris Convention equal in standing to our own laws. XIV. CHOICE OF LAW IN CONTRACTS *The principal purposes of contract law: 1. to protect the reasonable expectations of the parties to the contract 2. to secure stability in commercial transactions A. CONTRACTS INVOLVING A FOREIGN ELEMENT What led to the problem of conflicts law? Modern means of communications Growing number of agreements and stipulations entered by persons or entities of different nationalities States have different municipal laws: Formalities of contracts Capacity of parties Essential requisites for the intrinsic validity of contracts Interpretation of contracts Law governing execution thereof *Parties intended applicable law: protect reasonable expectations *interpretation rules: applicable only when intended law can't be ascertained EAP Notes Family law: usually won't apply foreign law because family law would apply the law which reflects the values held highly by society of the forum Vs. Contract Law: not much attachment to the societies moral mores; reflect business practices

Extrinsic Validity Law of the place where the contract was entered (lex loci celebrationis)

Intrinsic Validity Would depend: Lex loci contractus Lex loci solutionis Lex loic intentionis

B. EXTRINSIC VALIDITY OF CONTRACTS -follows law of the place where the contract was made (lex loci celebrationis) 2nd Reinstatement, Art17: follow law of the country where instrument is executed for forms and solemnities Locus regit actum: place governs the acts If contracts entered through cablegram, telefax Art1319(2), NCC: Acceptance made by letter or telegram does not bind the offeror except from the time it came to his knowledge >ff law of the place where the offer was made ENGEL vs. VELASCO: where telegraphic communications are followed by letters expressly referring to the telegrams and confirming the same, such telegrams become adminssible as part of correspondence between parties C. INTRINSIC VALIDITY OF CONTRACTS Intrinsic validity: refers to the nature, content and effects of the agreement Elements of a Contract(A1318): a. Consent b. Object c. Consideration There are 3 applicable laws: 1. Lex Loci Contractus 2. Lex Loci Solutionis 3. Lex Loci Intentionis 1. Lex Loci Contractus (law of the place of making) TEST: look at the place where the last act is done w/c is necessary to bring the binding agreement into being so far as the acts of the parties are concerned ADVANTAGE: Relative ease in establishing the place of contracting The principal purposes of contract which are certainty and stability are achieved DISADVANTAGE: If place merely incidental, no significant relationship with the contract or its performance Lex loci Solutionis (law of the place of performance) Scope: Time Place Manner of performance

2.

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Rachelle Mayuga |Dahlia Salamat (Second Semester, A.Y. 2009-2010) Sufficiency of performance Valid excuses for nonperformance Advantage: Always connected to the contract in a significant way Disadvantage: Gives extraterritorial effect to the laws of the former state (where the contract was made) Not helpful when the contract should be performed in 2 or more states w/ conflicting laws on validity MACMILLAN AND BLOEDEL V. TH VALDERAMA AND SONS (1964) Facts Valderama entered into a contract w/ Macmillan in Canada through his agent, Splane. The contract required that Valderama acquire import license which was necessary for the opening of letter of credit (by Macmillan in Canada). Since Valderama did not acquire import license, Macmillan cancelled the contract, and incurred expenses in the process. Thus, sues Valderama. Valderama now alleges as a defense that Splane was not authorized to enter into the contract in behalf of Valderma, thus the contract was perfected in Manila, and the lex loci celebrationis is in Manila, thus, RP Law applicable Issue WON RP Law is applicable Held No. Regardless if lex loci contractus or lex loci solutionis is applied, Canadian law would still apply Lex loci contractus law of the place where a contract is made or entered into governs w/ respect to: *nature *validity *obligation *interpretation (even if the place of performance and place of contracting is different) As to construction and validity of contract: law of the place where it is made Why: the municipal law of a state is the law of the contract made w/n that state, forms part of it and must govern whenever its performance is sought to be enforced Lex loci solutionis When law of contracting different from law of performance: law of place of performance governs: Validity Nature Obligation Effect of the contract Questions as to elements + amount of damages procurable for a breach or violation of a duty growing out of a contract: pertain to RIGHT, not a remedy so governed by lex loci contractus

-for the convenience of the courts As would be seen from the first issue, the law of contracting is in Canada, because it is here where the agent of Valderama (Splane) perfected the contract with Macmillan Sale f.o.b. Vancouver: Macmillan was obligated to bring the goods subject of the sale to Vancouver and load the same on the ship which was to take them to RP, at Macmillan's expense - so place of performance in Vancouver Sale c.i.f. Campomanes Bay, Negros Occidental: >point of view of seller: still in Canada ... place of shipping is still considered the place of performance (because this is merely a modified f.o.b. >point of view of buyer: still in Canada Valderama was to open a L/C payable to Macmillan in Canada, confirmed by Canadian Bank in Vancouver, which may be negotiated by the Canadian Bank of Commerce, Vancouver, B.C. even if the L/C is to be opened in Manila, the place of the buyer's performance and of shipment is still in Canada so its law would be applied

Why: parties are presumed to contract with reference to the law of the place where the contract is to be performed, often restricted to situations where a contrary intent or agreement does not appear.

3. Lex loci intentionis -Dicey and Cheshire: intrinsic validity of contract should be governed by the law intended by the parties -LEX LOCI INTENTIONIS: usually expressed in the choice-of-law provision of the contract -why allowed: A1306, NCC: Contracting parties may stipulate whatever they want as long as not contrary to Law Morals Good customs Public order Public policy Check if A1307 or 1306: as to interpretation of intent of parties GR: if terms clear, literal meaning will control

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Rachelle Mayuga |Dahlia Salamat (Second Semester, A.Y. 2009-2010) X: if terms unclear (words vs. intent): intent would govern - based on contemporaneous and subsequent acts -how to determine INTENT: acts of the parties + surrounding circumstances assumes that their intentions are in harmony w/ such acts and circumstances *but always assume the assumption that would make the contract VALID