Problems in Property M. L. Perete Adamson University
Lex situs for real and personal property
(Art. 16, CC) Rule covers all transactions involving sale, mortgage, barter, exchange, lease, assignment or any form of alienation Governs effects of co-ownership, quieting of title, taxation, registration, and rules on prescription The formalities of a contract involving property, and validity and effect of conveyance of property are treated as questions of property rather than contract, except when lex intentionis is clearly established.
Republic v. Sandiganbayan (1993)
PCGG impugns the compromise agreement it entered into with
Benedicto, a Marcos crony, regarding certain properties (i.e., IBC 13, etc.) located in the Philippines on the ground that the compromise agreement approved by the Sandiganbayan was defective for not having been authenticated before the consul and lacks two (2) witnesses. The SC brushed aside the argument upon the reasoning that while lex loci celebrationis governs forms and solemnities of contracts, lex rei sitae or lex situs applies with respect to the formalities for the acquisition, encumbrance, and alienation of real and personal property located in the Philippines. Following lex situs, the Court pointed out that the rule in this jurisdiction is contracts are obligatory in whatever form they take for so long as essential requisites are complied with. Furthermore, the requirement that contracts that extinguish or transmit rights over immovable property must appear in a public document merely designed for greater efficacy or convenience.
Cheesman v. IAC (1991)
Capacity of Person to transfer or acquire real
property governed by lex situs Cheesman, an American, was married to Criselda but later separated. During their cohabitation, Criselda bought a parcel of land on her own name which she later sold. Cheesman sought to invalidate the sale on the ground that the same was conjugal property, having been bought during their marriage. The lower court invalidated the sale but later reversed itself. On appeal to the SC, the Court held that a foreigner may not foist the rights to conjugal property that will amount to an indirect contravention of the Constitutional prohibition against aliens owning land in the Philippines.
But if property is outside the country
The law of the country where property is located governs. Generally: For realty lex situs For personalty may be lex domicili, lex situs, lex loci actus, or the proper law of transfer
Llantino v. Co Liong Chong (1990)
Capacity of Person to transfer or acquire real
property governed by lex situs The Llantinos leased a commercial residential land to Co, then a Chinese national. After 13 years, the Llantinos sought to recover on the ground of end of lease. Co, already a natruralized Filipino, alleged that the lease was for 60 years. The Llantinos argued such lease circumvents the Constitutional prohibition of alien ownership of land. The Court upheld the lease. The SC upheld, holding that there is nothing repugnant to the lease for 60 years, especially since there is no option to buy. Assuming there was, Co naturalized as Juan Molina would have no incapacity to enter into such a contract over property.
Exceptions to the Lex Situs Rule
If the transaction does not affect transfer of title to or ownership of the land lex intentionis or lex voluntatis governs In contracts where real property is offered by way of security for the performance of an obligation such as a loan, the mortgage of the land is governed by les situs but the loan agreement is governed by the rules on ordinary contracts Testate and interstate succession and capacity to succeed, governed by national law of decedent
Liljedahl v. Glassgow (1921) Iowa
Exception to lex situs
Liljedahl held a mortgage on a land in Colorado which was issued as security for a debt payable in Iowa. The mortgagor sold the land to Glassgow but left blank the name of the grantee which is assumed to pay the mortgage to Liljedahl. Glassgow soon after sold the property to another. L sued G for the mortgage. G interposed the defense that while under the law of Iowa, he is bound to pay on the mortgage, under Colorado law which should apply being the situs of the property, he is not bound. The Court held that the assumption of mortgage by the buyer is a separate obligation, a personal contract, and therefore Iowa law should apply.
Situs of Certain Properties
Asiatic Petroleum v. Co Quico (1940)
Personalty where found or located
Co was an agent of AP to sell petroleum products and to render accounting. Upon his default and later relocation to China, AP filed suit to recover unremitted sum with preliminary attachment. The Court thereafter attached bank accounts. Cos counsel moved to nullify proceedings on the ground that action was strictly in personam against a non-resident summoned by publication who did not appear. Lower court granted Cos motion. On appeal, the SC reversed, holding valid the attachment on account of lex rei sitae. It held the situs of the res is RP and therefore within the jurisdiction of the court.
Situs of Certain Properties
Money where found or located Debts where debtor may be found following mobilia personam sequuntur (because it is where debtor can be sued and collected) Shares of stocks domicile of the corporation
CIR v. Anglo California National
Bank (1960)
The Calamba Sugar Estate Inc. (CSEI), represented by
its trustee Anflo California National Bank, is a foreign corporation licensed to do business in RP. CSEI sold in San Francisco shares it held in Pampanga Sugar Mills to Pasumil Planters, Inc. The CIR assessed capital gains taxes on the sale on the ground that the situs of the shares is in RP. ACNB opposed. The CTA ruled against the assessment. The SC upheld, holding that there is a difference between the shares themselves whose situs is here, and the situs of the income derived from the sale that resulted in capital gains tax.
Situs of Certain Properties
Intellectual Property Rights place where actually used