CXIII: Choice of Law in Property

1. THE CONTROLLING LAW
-depends on WON the property is movable or not

Immovable

Movable

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

May be: 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 lex situs: Traditional reason: the state has the sole power to decide the validity and effects of the transfer of property Policy-oriented rationale: parties expect their transaction would be governed by the law of the place where the property is located Lex loci actus (law of the place where the transaction was completed) Proper law of transfer: law of the state which has the most real connections with the transfer

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?
2. Being physically part of the country, it [the property] should be subject to the laws thereof.
3. The situs is the place most closely and significally related to the issue in question
4. Increase in the amount and variety of personal property not connected w/ the person of the owner, so adopt lex situs even with movables.
2. CAPACITY TO TRANSFER OR ACQUIRE PROPERTY
-governed by LAW OF THE PLACE WHERE THE PROPERTY IS LOCATED: LEX SITUS
~*©*~*©*~*©*~*©*~*©*~*©*~*©*~*©*~
LLANTINO V. CO LIONG CHONG
Short summary: Chinese national entered a contract with Filipinos for lease of a land in Catanduanes for 60 years. Court held that the lease is valid. Anyways, Chinese national later was naturalized to a Filipino.
Facts
-Llantino Sps entered a lease contract over a commercial residential (ano ba talaga?) in Catanduanes w/ Co Liong Chong (who later became Juan Molina).
-lease contract: for a period of 60 years
-Llantino wanted to get back the property from Molina, saying that it was to expire soon. Molina counters that the lease was for 60 years, that he already build a commercial building on it and that in any case, he is already a Filipino
-Llantino sps filed COMPLAINT TO QUIET TITLE W/ DAMAGES
-TC: ruled for MOLINA
WON the lease contract is invalid because at the time of execution, he was Chinese? YES (being Chinese actually irrelevant)
1. GR: LEASE CONTRACT W/ ALIENS ALLOWED
-there's no option for Molina to buy  the said property
-no scheme to circumvent the Consti prohibition
-Sps admitted that Molina merely wanted to lease the land (and not buy it from them)
-nothing to prevent Llantino sps from disposing their title to land to any qualified party, but subject to the right of Molina to the lease
Ratio why allowed: since 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
2. IF THERE'S AN OPTION TO BUY THE PROPERTY
GR: INVALID
X: if the alien subsequently acquires Philippine Citizenship
3. X (to valid lease contracts w/ aliens): If there are circumstances attendant to its execution which are used to circumvent the constitutional prohibition
-example: Option to buy + lease contract lasts for more than 50 years
…virtual transfer of ownership: the owner divests himself in stages not only of the right to enjoy the land (jus possidendi, jus utendi, jus fruendi, jus abutendi)
4. Even if the lease contract was virtually a transfer of ownership, it would be a moot point because Molina became a naturalized citizen of RP, thus, has capacity to own land
~*©*~*©*~*©*~*©*~*©*~*©*~*©*~*©*~
CHEESMAN V. IAC
Short summary: 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. Court held that since he is an alien who is prohibitted from owning land in RP, he cannot claim that he has a share in the conjugal property and thus, has no legal standing to void the sale.
Facts:
-Thomas Cheesman (American) and Criselda (Filipino) were married in 1970, got separated in 1981
-Before they got separated, Criselda was able to purchase a land. Although aware of the sale and the fact that the property was only in the name of his wife, Thomas never objected to the said transaction
-tax declarations where issued in the name of Criselda
-Criselda exercised exclusive management over the property
-In 1981 (oooh…kaya), Criselda sold the property. Thomas now complains
-Thomas filed for ANNULMENT OF THE SALE: Sale executed w/o his knowledge and consent
Defense:
1. Property was paraphernal
2. Thomas is American, disqualified to own or have any interest in real properties
3. The buyer was a buyer in GF
TC1: sale VOID (for Thomas)
-the buyer filed PETITION FOR RELIEF: there was fraud, mistake or excusable negligence, seriously impairing her right to present her case adequately
• Granted by TC
• Summary judgment:
1. Property was Criselda's paraphernal property
2. Presumption that all properties acquired during the marriage belongs exclusively to the conjugal partnership DOES NOT APPLY because Thomas, an American Citizen, is disqualified under Consti to acquire and own real properties
WON Thomas can contest the validity of the Contract? NO
1. 3 factual matters affirmed by both TC and CA:
(1) there was fraud, mistake or excusable negligence w/c seriously impaired the rights of the buyer
(2) the property was bought by Criselda using the funds she had saved previous to the marriage
(3) Criselda was the sole owner of the property
2. Art XIV, Section 14, 1973 Constitution
Save in cases of hereditary succession, no private land shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of public domain
-Thomas had no capacity or personality to question the subsequent sale of the property by his wife on the theory that by doing so he is merely exercising the prerogative of a husband in respect of conjugal property
3. Thomas and Criselda have no conjugal property
-or else Consti violated: not only would he have interest over the land, he would have a decisive vote as to its transfer or disposition as well
-SC didn't discuss WON Thomas could recover from his wife if ever the funds used in buying the land was not Criselda's but their shared money
4. Since the buyer is a buyer in GF (she was led by Thomas to believe that the property was indeed Criselda's and not their conjugal property), she would be protected
~*©*~*©*~*©*~*©*~*©*~*©*~*©*~*©*~
3. EXTRINSIC AND INTRINSIC VALIDITY OF CONVEYANCES

Formalities (extrinsic)	Essential validity (intrinsic)
lex situs -treated as a question of contract and not of property	GR: lex situs X: lex intentionis clearly established

4. EXCEPTIONS TO LEX SITUS RULE (3)
1. Transaction does not affect transfer of title to or ownership of the land
Apply: lex intentionis or lex voluntatis
~*©*~*©*~*©*~*©*~*©*~*©*~*©*~*©*~
LILJEDAHL V. GLASSGOW
Short summary: Morgagee sues the transferee of the Mortgagor for the amount due. Transferee argues that in accordance with lex situs, he is not liable. The court held that he is, it being assumed that the parties contracted w/ the reference to lex contractus.
Facts:
-BAILEY (DEBTOR-MORTGAGOR) executed a mortgage in favor of Foskett (original CREDITOR)
-Foskett assigned the proceeds of the loan and the mortgage to Liljedahl.
-land mortgaged was in Colorado
-principal loan payable in Iowa
-Bailey sold the mortgaged land to GLASSGOW w/ a deed containing a blank space for the insertion of the name of the grantee (and w/ a statement as follows: "grantee assumed and agreed to pay the plaintiff's mortgage"
-Glassgow, though, did not put his name on the blank
-Glassgow later transferred the land to another
-Liljedahl now sues Glassgow as the grantee of the land

Iowa	Colorado
Where principal obligation was entered into	Where the land is located
Glassgow liable for payment of obligation upon acceptance of deed (irrelevant if he placed his name on the blank)	Glassgow NOT liable, he having not placed his name on the blank
Note: Glasslow and Hiatt (a later grantee) were residents of Iowa - and so Is Liljedahl

WON Glassgow is liable? YES. Apply Colorado Law
1. 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
2. Contracts made and to be performed in a particular state are made with reference to the law of that state
-Glassgow and Hiatt were residents of Iowa
-the mortgage was payable in Iowa (in Shenandoah)
-delivery by Bailey to Glassgow is presumed to be in Iowa also
-evidence was introduced before the jury that Glassgow and Hilger (also a subsequent transferee) understood the legal implications of accepting a deed containing the statement making them liable (Hilger, after finding out that there was a deed saying the said statement, he returned the deed and rescinded the contract)
*** 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
~*©*~*©*~*©*~*©*~*©*~*©*~*©*~*©*~
1. 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
2. Testate/Intestate Succession & capacity to succeed
Apply: 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
RUDOW V. FOGEL: issue was WON the conveyance would result in a constructive trust among family members all residing in another state (and not the title to the land)
>>>court applied the law of the domicile of the trustor and trustee instead of the lex situs of the property

*** end of coverage for this Tuesday