REAL PROPERTY

Conflict of law arises in the area of property law when a foreign element is involved in the case.
Saudi Arabian Airlines vs. Court of Appeals1 explained the concept of Foreign Element, thus:

“A factual situation that cuts across territorial; lines as is affected by the

diverse laws of two or more states is said to contain a foreign element. The presence of
a foreign element is inevitable since social and economic affairs of individuals and
associations are rarely confined to the geographic limits of their birth or conception.”

The foreign element may be in the form of a foreigner owning property in another country or
there is a foreign law on land ownership that conflicts with domestic law. 2

SCOPE: Extrinsic validity of alienations, transfers, mortgages, capacity of the parties, interpretation of
documents, effects of ownership, co-ownership, accession, usufruct, lease, easement, police power,
eminent domain, taxation, quieting of title, registration and prescription.

RULE : Lex rei sitae (Art. 16, Par. 1, Civil Code)

“Art. 16. Real property as well as personal property is subject to the law of the
country where it is stipulated.”

Exceptions:

a. Successional Rights;

With respect to the successional rights to real property, the national law of the deceased
must govern. (Art. 16, par. 2, Civil Code)

“Article 16. …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.”

b. Capacity to succeed;

The applicable law is also national law of the decedent. (Art. 1039, Civil Code)

“Article 1039. Capacity to succeed is governed by the law of the nation of the decedent.”

c. Contracts involving real property but which do not deal with the title thereto;

I n Liljedahl vs. Glassow3, the Supreme Court held that the extrinsic validity of the agreement
is governed by the Philippine law because the contract was celebrated in our country. The intrinsic

1
G. R. No. 122191, October 8, 1998
2
Laurel vs. Garcia, 187 SCRA (1990)
validity shall also be determined by the Philippine law for this was likewise the lex loci voluntatis. The
fact that the contract involved land located in Switzerland is of no moment, for the agreement does not
concern itself with any transfer of title thereto, at least as between the parties. The fact that this case
deals with foreign land in a way is merely incidental.

d. Contracts where the real property is given as security.

The principal contract, which is generally is a contract of loan, is governed by the proper law
of the contract while the accessory contract of mortgage is governed by the law state where the real
property mortgage is situated.

 VALID Principal Contract (as tested by the lex loci voluntatis or the lex intentionis)
- The validity of the accessory contract of mortgage is still to be determined by the le rei
sitae.
 VOID Principal Contract (as tested by the lex loci voluntatis or the lex intentionis)
- The mortgage would be void for the accessory loses its standing should the principal be
invalid.

SPECIFIC RULES AS TO OWNERSHIP OF REAL PROPERTY

1. Section 7, Article XIII, 1987 Constitution

“Sec. 7. Save in cases of hereditary succession, no private lands shall be transferred of conveyed
excepts to individuals, corporations, or associations qualified to acquire and hold lands of the public
domain.”

Ramirez vs Vda. De Ramirez

FACTS:

Jose Ramirez a Filipino, died in Spain leaving only his widow Marcelle Ramirez, a
French. In the project partition, the property was divided into 2 parts: 1st part to the
widow, and 2nd part to the grandnephews the naked ownership. Furthermore, as to the
usufruct of the 2nd part, 1/3 was given to the widow and 2/3 to Wanda de Wrobleski, an
Austrian. The grandnephews opposed on the ground that usufruct to Wanda is void
because it violates the constitutional prohibition against the acquisition of lands by
aliens.

ISSUE:

WON the ground for the opposition is correct.

HELD:

No, it is not correct.

3
180 Iowa, 827
 The SC held that the Constitutional provision which enables aliens to acquire
private lands does not extend to testamentary succession for otherwise the prohibition
will be for naught and meaningless. The SC upheld the usufruct in favor of Wanda
because although it is a real right, it does not vest title to the land in the usufructuary
and it is the vesting of title to land in favor of aliens which is proscribed by the
Constitution.

What Section 7 allows is the transfer to qualified individuals through hereditary succession that is
intestate succession. If such rule is applied to testate succession, it constitute an indirect violation of the
law wherein a testator were allowed to transfer property to a person or entity not qualified to own
property by merely executing a will, which is a clear infringement of the purpose of the law of
disallowing aliens from owning property in the Philippines.

2. Section 8, Article XII, 1987 Constitution

“Sec. 8. Notwithstanding the provisions of Section 7 of this Article, a natural –born citizen of the
Philippines who has lost hi Philippine citizenship may be a transferee of private lands, subject to
limitations provided by law. ”

Section 5 of RA No. 8179, or the Foreign Investments Act, provides that the area the a former natural-
citizen may acquire has been increased to a “maximum area of five thousand (5,000) square meters in
the case of urban land or three (3) hectares in case of rural land to be used by him for business or other
purposes.”

3. Condominium Act of the Philippines (RA No. 4726)

“Sec. 5. Any transfer or conveyance of a unit or an apartment, office or store or other space
therein, shall include the transfer or conveyance of the undivided interests in the common areas or, in a
proper case, the membership or shareholdings in the condominium corporation: Provided, however, That
where the common areas in the condominium project are owned by the owners of separate units as co-
owners thereof, no condominium unit therein shall be conveyed or transferred to persons other than
Filipino citizens, or corporations at least sixty percent of the capital stock of which belong to Filipino
citizens, except in cases of hereditary succession. Where the common areas in a condominium project are
held by a corporation, no transfer or conveyance of a unit shall be valid if the concomitant transfer of the
appurtenant membership or stockholding in the corporation will cause the alien interest in such
corporation to exceed the limits imposed by existing laws.”

Said law allows foreigners to own units in the condominium building subject to the 60-40
percentage ownership ratio in favor of Filipino citizens or corporations. Any breach to said condition will
be a violation of the Constitution and the Condominium Act.