Lex loci rei sitae (lex situs or Article 16 of the Civil Code)

Real property as well as personal property is subject to the law of the country where it is situated.

However, intestate and testamentary successions, both with respect to the order of succession and to the amount of successional rights and to the intrinsic validity of testamentary provisions, shall be regulated by the national law of the person whose succession is under consideration, whatever may be the nature of the property and regardless of the country wherein said property may be found. (Article 16, Civil Code of the Philippines)

The law in force in the location of property governs the real or personal property involved. It is a universal principle that real or immovable property is exclusively subject to the laws of the country or state where it is located. The reason is found in the very nature of immovable property — its immobility. Immovables are part of the country and so closely connected to it that all rights over them have their natural center of gravity there. (Orion Savings Bank v. Suzuki, G.R. No. 205487, November 12, 2014, citing Agpalo, Ruben E., Conflict of Laws, 2004 Ed., p. 182; Salonga, Jovito R., Private International Law, 1995 Ed., p. 132, citing Wolff 515)

Thus, all matters concerning the title and disposition of real property are determined by what is known as the lex loci rei sitae which can alone prescribe the mode by which a title can pass from one person to another, or by which an interest over property therein can be gained or lost. This general principle includes all rules governing the descent, alienation and transfer of immovable property and the validity, effect and construction of wills and other conveyances. This principle even governs the capacity of the person making a deed relating to immovable property, no matter what its nature may be. Thus, an instrument will be ineffective to transfer title to land if the person making it is incapacitated by the lex loci rei sitae, even though under the law of his domicile and by the law of the place where the instrument is actually made, his capacity is undoubted. (Orion Savings Bank v. Suzuki, G.R. No. 205487, November 12, 2014, citing Agpalo, Ruben E., Conflict of Laws, 2004 Ed., p. 182; Salonga, Jovito R., Private International Law, 1995 Ed., p. 132, citing Wolff 515)

On the other hand, property relations between spouses are governed principally by the national law of the spouses. However, the party invoking the application of a foreign law has the burden of proving the foreign law. The foreign law is a question of fact to be properly pleaded and proved as the judge cannot take judicial notice of a foreign law. S/he is presumed to know only domestic or the law of the forum. (ATCI Overseas Corporation v. Echin, G.R. No. 178551, October 11, 2010)

Article 80 of the Family Code of the Philippines says: "In the absence of a contrary stipulation in a marriage settlement, the property relations of the spouses shall be governed by Philippine laws, regardless of the place of the celebration of the marriage and their residence. This rule shall not apply: (1) Where both spouses are aliens; (2) With respect to the extrinsic validity of contracts affecting property not situated in the Philippines and executed in the country where the property is located; and (3) With respect to the extrinsic validity of contracts entered into in the Philippines but affecting property situated in a foreign country whose laws require different formalities for its extrinsic validity."

Regarding personalty, Article 10 of the Old Civil Code (re law governing personal property) was changed by Article 16. The old law mandated that personal property would be governed by the national law of the owner thereof; i.e., personal property followed the national or domiciliary law of the owner, following the doctrine of mobilia sequuntur personam.

Paras (2008) discusses that the old rule grew up in the Middle Ages when movable property could easily be carried from place to place. (Pullman’s Palace Car Co. v. Comm. of Pennsylvania, 141 U.S. 18-22) However, now that there has been a great increase in the amount and variety of personal property not immediately connected with the person of the owner (Wharton, Confl icts of Laws, Secs. 297-311), it was deemed advisable by the Congress of the Philippines to adopt the doctrine of lex rei sitae also to movables. (Report of Senator Lorenzo Tañada, Chairman, Special Committee on the new Civil Code)

Shares of stock of a foreigner, even if personal property, can be taxed in the Philippines so long as the property is lo- cated in this country. (Wells Fargo Bank v. Collector of Int. Rev- enue, 40 O.G. [85] No. 12, p. 159; 70 Phil. 325). Bank deposits in the Philippines even if belonging to a foreigner may be the subject of attachment proceedings. (Asiatic Petroleum Co. v. Co Quico, 40 O.G. 132). Taxes may be imposed on dividends from shares in a gas corporation situated in the Philippines even if the stockholders do not reside here. (Manila Gas Corporation v. Col., 62 Phil. 895).

The second paragraph of Article 16 relates to the national law of the decedent when it comes to the (1) order of succession, (2) the amount of successional rights and (3) the intrinsic validity of testamentary provisions. In addition to the three, Article 1039 of the Civil Code further provides that (4) "capacity to succeed is governed by the law of the nation of the decedent."

In other words, even if the property is located in the Philippines, if the decedent is a national of Texas, Texan law shall be applied regarding who should inherit first, how much should be inherited by the heir, whether or not provisions in the last will and testament are valid and whether or not an heir is capacitated to succeed.

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