CORPORATION

• DOMESTIC CORPORATION – are those organized and

existing under the laws of the Philippines.

• FOREIGN CORPORATION – are those “formed,

organized or existing under any laws other than those
of the Philippines and whose laws allow Filipino
Citizens and corporations to do business in its own
country (Sec. 123)
FOREIGN CORPORATION – License to do
Business
• FOREIGN CORPORATION, may operate in the
Philippines so long as they apply for a license with the
Securities and Exchange Commission.
• Upon the grant of a license, the foreign corporation
may then transact business in the Philippines.
• The ABSENCE of license, however, is no impediment for
filing a suit against the corporation for commission of
illegal acts or violation of Philippine Laws.
FOREIGN CORPORATION – License to do
Business
Acts or Activities which constitute ”Doing
business”: RA 7042, Sec. 3(d)
d) The phrase “doing business” shall include soliciting orders, service contracts, opening offices,
whether called “liaison” offices or branches;

appointing representatives or distributors domiciled in the Philippines or who in any calendar

year stay in the country for a period or periods totalling one hundred eighty (180) days or more;

participating in the management, supervision or control of any domestic business, firm, entity or
corporation in the Philippines; and any other act or acts that imply a continuity of commercial
dealings or arrangements, and contemplate to that extent the performance of acts or works, or
the exercise of some of the functions normally incident to, and in progressive prosecution of,
commercial gain or of the purpose and object of the business organization:

Provided, however, That the phrase “doing business” shall not be deemed to include mere
investment as a shareholder by a foreign entity in domestic corporations duly registered to do
business, and/or the exercise of rights as such investor; nor having a nominee director or officer
to represent its interests in such corporation; nor appointing a representative or distributor
domiciled in the Philippines which transacts business in its own name and for its own account;
RA 7042, IRR: The ff are not considered doing
business

The following acts shall not be deemed “doing business” in the Philippines:
(1) Mere investment as a shareholder by a foreign entity in domestic
corporations duly registered to do business, and/or the exercise of rights as
such investor;
(2) Having a nominee director or officer to represent its interests in such
corporation;
(3) Appointing a representative or distributor domiciled in the Philippines which
transacts business in the representative’s or distributor’s own name and
account;
(4) The publication of a general advertisement through any print or broadcast
media;
RA 7042, IRR: The ff are not considered doing
business

(5) Maintaining a stock of goods in the Philippines solely for the purpose of
having the same processed by another entity in the Philippines;
(6) Consignment by a foreign entity of equipment with a local company to be
used in the processing of products for export;
(7) Collecting information in the Philippines; and
(8) Performing services auxiliary to an existing isolated contract of sale which
are not on a continuing basis, such as installing in the Philippines machinery it
has manufactured or exported to the Philippines, servicing the same, training
domestic workers to operate it, and similar incidental services.
“doing business”
• The determination of whether a foreign corporation is
doing business in the Philippines must be based on facts
of each case.

• In the case of Cargill, Inc. vs. Intra Strata Assurance Corp.

March 15, 2010, a foreign company that merely imports
goods from a Philippine exporter, without opening an
office or appointing an agent in the Philippines, is not
doing business in the Philippines.
Different Modes of Doing Business
1. Domestic Subsidiary
2. Branch
3. Representative Office
4. Regional or Area Headquarters
5. Regional Operating HQ
6. Joint Venture
7. Purchase of Shares in an existing corp.
8. Merger or Consolidation
9. Technology Transfer Agreement
TEST OF CORPORATE NATIONALITY

• CONTROL TEST. When shares belonging to corporations or

partnerships at least 60% of the capital of which is owned by Filipino
Citizens, the corporation shall be considered of Philippine nationality.

• GRANDFATHER RULE. If the percentage of Filipino ownership in the

corporation or partnership is less than 60%, only the number of
shares corresponding to such percentage shall be counted as of
Philippine nationality.
Term Capital under Sec. 11, Article XII of the
Constitution
• Gambao vs. Teves. The Term Capital in Sec. 11, Art. XII refers only to
shares of stock that can vote in the election of directors.
• Roi vs. Gamboa. The compliance with the Constitutional requirement
of 60% Filipino ownership of a public utitlity corporation must be
applied not to each class of shares but to outstanding capital stock,
whether voting or not, and percentage of voting rights
Term Capital under Sec. 11, Article XII of the
Constitution
• Roi vs. Gamboa. The full beneficial ownership tests states that mere
legal title is insufficient to meet the 60% Filipino-owned capital
required in the constitution. It means ownership of 60% of the
outstanding capital stock coupled with 60% of the voting must belong
to Filipino.
Latest Legislation
• R.A. 11659, An act amending Commonwealth Act No.
146, otherwise known as the Public Service Act, as
amended.
• With the amendments, the PSA now limits the scope
of a public utility to persons who operate, manage
and control for public use any of the following: (i)
electricity distribution; (ii) electricity transmission; (iii)
petroleum and petroleum products pipelines
transmissions systems; (iv) water pipeline distribution
systems and wastewater pipeline systems, including
sewerage pipeline systems; (v) seaports; and (vi)
public utility vehicles.
Latest Legislation
• R.A. 11647, An act promoting foreign investments
amending thereby R.A. 7042, otherwise known as the
Foreign Investment Act of 1991.
The Hague Conference on Private
International Law (HCCH) Conventions
• Out of the 39 HCCH Conventions, the Philippines is a
state party to four conventions:
• Intercountry Adoption (1996)
• Civil Aspects of International Child Abduction (2016)
• Apostille (2019)
• Service (2020)
CONTRACTS
Contract is defined as the meeting of the minds between
two persons whereby one binds himself, with respect to the
other, to give something or render some service. Art. 1305
NCC

As a general rule, unless provided by law or in the

agreement, a contract is obligatory in whatever form it may
have been entered into provided that all the essential
requisites for its validity are present.
CONTRACTS, Foreign Element
For Contractual relation to induce a conflict of laws
scenario, it is imperative that the contract involve a
foreign element.

A conflicts situation usually involve international

contracts where the parties have their establishments
in different places.
CONTRACTS, foreign element
• Due to modern means of communications, the
growing number of agreements and stipulations
entered by persons or entities of different
nationalities has given rise to more complicated
problems in conflict of laws.
• States, in their municipal laws, have different rules on
the formalities of a contract, the capacity of parties,
the essential requisities for the intrinsic validity of
contracts, interpretation of contracts and the law
governing execution thereof.
PHILIPPINE LAW on Contracts

Article 1159. Obligations arising from contracts have

the force of law between the contracting parties
and must be complied with in good faith.

Article 1306. Parties to a contract to “establish such

stipulations, clauses, terms and conditions as they
may deem convenient, provided they are not
contrary to law, morals, good customs, public order
or public policy.
Principles on Choice of Law in International
Commercial Contracts
Preamble
Article 1 Scope of the Principles
Article 2 Freedom of choice
Article 3 Rules of law
Article 4 Express and tacit choice
Article 5 Formal validity of the choice of law
Article 6 Agreement on the choice of law and
battle of forms
Article 7 Severability
Article 8 Exclusion of renvoi
Article 9 Scope of the chosen law
Article 10 Assignment
Article 11 Overriding mandatory rules and
public policy (ordre public)
Article 12 Establishment
EXTRINSIC VALIDITY OF CONTRACTS

Rule: The Lex Loci Celebrationis governs the

formal or extrinsic validity of contracts.

A contract is valid as to form “if in accordance

with any form recognized as valid by the law of
the country where made, and that no contract is
valid which is not made in accordance with the
local form.
EXTRINSIC VALIDITY OF CONTRACTS entered into
by cablegram, telefax messages between persons
from two different countries?

Art. 1319, par. 2 of the CC states that:

“Acceptance made by letter or telegram does not
bind the offeror except from the time it came to
his knowledge”.

The contract in such case, is presumed to have

been entered into the place where the offer was
made.
R.A 8792, Electronic Commerce Act of 2000.”

Section 16. Formation of Validity of Electronic Contracts.

(1) Except as otherwise agreed by the parties, an offer, the

acceptance of an offer and such other elements required
under existing laws for the formation of contracts may be
expressed in, demonstrated and proved by means of
electronic data messages or electronic documents and no
contract shall be denied validity or enforceability on the
sole ground that it is in the form of an electronic data
message or electronic document, or that any or all of the
elements required under existing laws for the formation
of contracts is expressed, demonstrated and proved by
means of electronic data messages or electronic
documents.
R.A 8792, Electronic Commerce Act of 2000.”

Section 17. Recognition by Parties of Electronic Data

Message or Electronic Document. - As between the
originator and the addressee of an electronic data
message or electronic document, a declaration of will
or other statement shall not be denied legal effect,
validity or enforceability solely on the ground that it
is in the form of an electronic data message.
Intrinsic Validity of Contracts
Refers to the nature, content and effects of the
agreement.
1. Consent of the Contracting Parties
2. Object certain which is the subject matter of
the contract;
3. Cause of the obligation which is established
Intrinsic validity of Contracts
Intrinsic validity of a contract is governed by the
proper law of the contract; lex loci voluntatis or the
lex loci intentionis.

In the Philippines:

a) We have no specific provision of law applicable to the

conflict rules on the intrinsic validity of contracts.
However, the policy of our law is to give effect to the
intention of the parties.
b) Thus, we should apply either, lex loci voluntatis or the
lex loci intentionis.
LEX LOCI CONTRACTUS

RULE: The law of the place where a contract is

made, or entered into governs with respect to its
nature and validity, obligation and interpretation.

Exceptions:
1. Stipulation of the parties
2. Lex rei sitae
• NOTE:
• If a contract is negotiated, perfected and consummated in
different states:
• Lex Loci celebrationis governs the formalities and solemnities of
the contract
• Lex Loci solutionis (place of performance) governs the liability or
non performance of obligations under contract.
• The law of the country, where the last stage in the perfection of
the contract took place, is the place of execution.
LEX LOCI SOLUTIONIS

• The law of the place of performance calls for the

reference to a law other than the place where the
acts of offer and acceptance took place.
• The law governing performance is lex loci
solutionis.
LEX LOCI SOLUTIONIS

In the absence of a contrary intention (effective choice

of law), the rule is that the law of the place of
performance of the contract, governs, such as with
respect to whether the contract has been breached,
rescinded, or otherwise terminated, or repudiated; or
whether there is an excuse for performance. (lex loci
solutionis).

In other words, mechanical details of performance,

such as time and place of presentment of demand,
days of grace, notice of dishonor, and the like, are
governed by the law of the Place where the contract
is to be performed.
LEX LOCI SOLUTIONIS

Example:

John and Pablo enter into a contract in Manila,

whereby John promises to make payments to
Pablo in Hongkong of a certain amount on a fixed
date “during usual business hours”. The local law
of Hongkong will be applied to determine what
business hours are “usual”.
 Phil Export vs. V.P. Eusebio Construction,
G.R. No. 140047 , July 13, 2004
A corollary issue is what law should be applied in
determining whether the respondent contractor
has defaulted in the performance of its
obligations under the service contract. The
question of whether there is a breach of an
agreement, which includes default or mora,
pertains to the essential or intrinsic validity of
a contract.
 Phil Export vs. V.P. Eusebio Construction,
G.R. No. 140047 , July 13, 2004

It must be noted that the service contract between SOB and VPECI
contains no express choice of the law that would govern it. In the United
States and Europe, the two rules that now seem to have emerged as "kings
of the hill" are (1) the parties may choose the governing law; and (2) in the
absence of such a choice, the applicable law is that of the State that "has
the most significant relationship to the transaction and the parties.” Another
authority proposed that all matters relating to the time, place, and manner of
performance and valid excuses for non-performance are determined by the
law of the place of performance or lex loci solutionis, which is useful
because it is undoubtedly always connected to the contract in a significant
way.
Intrinsic validity of Contracts
• No conflicts rule on essential validity of contracts is expressly
provided for in our laws. The rule followed by most legal
systems, however, is that the intrinsic validity of a contract
must be governed by the lex contractus or "proper law of
the contract." This is the law voluntarily agreed upon by the
parties (the lex loci voluntatis) or the law intended by them
either expressly or implicitly (the lex loci intentionis).
• The law selected may be implied from such factors as
substantial connection with the transaction, or the
nationality or domicile of the parties. Philippine courts
would do well to adopt the first and most basic rule in most
legal systems, namely, to allow the parties to select the law
applicable to their contract, subject to the limitation that it is
not against the law, morals, or public policy of the forum and
that the chosen law must bear a substantive relationship to
the transaction. (Phil. Export Foreign Gurantee vs. VP.
Eusebio Construction)
Exception:
• Rule: The law of the country where the contract is to
be performed generally governs the liability for
breach of contract by the obligor to perform his part
of the obligation.
• Exception:
• Triple Eight Integrated Services vs. NLRC
• Court of the forum will not enforce any foreign claim obnoxious to
the forumʼs public policy.
 Triple Eight Integrated Services vs. NLRC

Triple Eight attempts to sidestep the medical certificate requirement by

contending that since Osdana was working in Saudi Arabia, her
employment was subject to the laws of the host country. Apparently, it
hopes to make it appear that the labor laws of Saudi Arabia do not
require any certification by a competent public health authority in the
dismissal of employees due to illness.

Ruling: First, established is the rule that lex loci contactus (the law of
the place where the contract is made) governs in this jurisdiction. There
is no question that the contract of employment in this case was perfected
here in the Philippines.

Therefore, the Labor Code, its implementing rules and regulations, and
other laws affecting labor apply in this case. Furthermore, settled is the
rule that the courts of the forum will not enforce any foreign claim
obnoxious to the forum's public policy. 20 Here in the Philippines,
employment agreements are more than contractual in nature. The
Constitution itself, in Article XIII Section 3, guarantees the special
protection of workers.
LEX LOCI INTENTIONIS
• The parties to a contract may select the law by
which the contract is to be governed. (Lex Loci
Intentionis), unless there are cogent reasons for
not doing so.

• In the absence of such choice, the applicable law

is that of the State “has the most significant
relationship to the transactions and the parties.
Choice of Law

The foreign law is adopted as a “system” or a “set of

terms” to regulate the relations of the parties, including
questions of their capacity to enter into contract,
formalities to be observed, matters of performance and
the like.

Under Philippine Law, parties are allowed to select the

law applicable to their contract, subject to the
limitation that it is not against the law, morals or public
policy of the forum.

As per U.S. Second Restatement of Conflict of Laws,

the chosen law must bear a substantive relationship to
the transaction. The Choice of Law may be made
expressly or impliedly.
CAPACITY TO ENTER INTO CONTRACTS

• In the countries which follow the nationality law

principle, the capacity to enter into a contract is
governed by their national law (Art. 15 NCC).

• In countries that follow the domiciliary law theory,

the law of their domicile shall govern.
CONTRACTS: Rule
• Contracts are subject to the law stipulated by the parties to
be their choice of law.
• In the absence of a stipulation, the default law is the law of
the place where the contract is executed or the lex loci
contractus.
• Even if there is a choice of law stipulated in the contract, the
law of the place of performance will always find applicability
to ensure that the local laws thereof are not violated or
public policy infringed by the execution of contract .
• If the relationship is affected with public interest, (Labor
Laws) Philipppine Laws and Regulations (Local Law) cannot
be rendered illusory by the parties agreeing upon some
other law to govern their relationship.
Exceptions to the applicability of the law chosen
by the parties:

1.Where the foreign law chosen by the parties is

contrary to peremptory provisions dealing with
matters impressed with public interest.
2.Where the relationship of the contracting parties
affects public interest in the country of one of the
parties, or the substantial contracts arising
therefrom point to the law of another country as
the applicable law
• CASE: Pakistan vs. Ople 190 SCRA 90

• Any agreement on the choice of foreign law and venue

of action must yield to the public policy of the country
on the subject as enshrined in the Constitution and
laws.

• A stipulation in the employment contract of two

Filipina stewardesses w/c specifies the law of Pakistan
as the applicable law of the agreement and lays the
venue for the settlement cannot be validly invoked to
prevent the application of Philippine Labor Laws since
the relationship is “affected with public interest.

• In view of the “multiple and substantive contracts”

with Philippine Law, the Philippines is the proper forum
for the resolution of disputes between the contracting
parties and Philippine courts cannot be ousted of the
jurisdiction vested upon them by Philippine Law.
SECOND RULE

The General Rule is favor of the LEX LOCI

INTENTIONIS should be supplemented by a second
rule:

In the absence of an effective choice of law, express or

implied, the contract will be governed, with respect to the
particular issue involved, by the law which has the closest
and most substantial connection with the transactions and
the parties.
SECOND RULE (“Center of Gravity” or “Grouping of
Contacts”

Among the contacts that may be taken into account

are:
1) The place of negotiation of the contract
2) The place of contracting
3) The location of the subject matter of the contract
4) The place of performance
5) The domicile , residence, nationality, place of
incorporation and place of business of the parties.
SECOND RULE (“Center of Gravity” or “Grouping of
Contacts”
In one US Supreme Court Ruling:

“In determining w/c contract is the most significant

is a particular transactions, courts can seldom find a
complete solution in the mechanical formulae of the
conflicts of law. Determination requires the exercise
of an informed judgment in the balancing of all
interest of the State with the most significant
contacts in order best to accommodate the equities
among the parties to the policies of those states”.
WARSAW Convention

• A treaty commitment voluntarily assumed by the Philippine

Government and, as such, has the force and effect of law in this
country.
Warsaw: Jurisdiction

Art. 28(1). An action for damages must be brought

at the option of the plaintiff, in the territory of one
of the High Contracting Parties, either before the
court of the domicile of the carrier, or of his
principal place of business or where he has a place
business through which the contract has been
made, or before the court at the place of
destination.
• Santos III vs. Nortwest Orient Airlines.
• Article 28 (1) of the Warsaw Convention refers to jurisdiction rather
than to venue.

• In this case, Examination of the Santos ticket shows that his ultimate
destination is San Francisco.

• Although the date of the return flight was left open, the contract of
carriage between the parties indicates that NOA was bound to
transport the petitioner to San Francisco from Manila.

• Manila should therefore be considered merely an agreed stopping

place.

• the domicile of the carrier is only one of the places where the
complaint is allowed to be filed under Article 28(1). By specifying
the three other places, to wit, the principal place of business of
the carrier, its place of business where the contract was made,
and the place of destination, the article clearly meant that these
three other places were not comprehended in the term
"domicile
Wills and Succession
• Introduction:
In various legal system which respect private enterprise
and recognize the institution of private property, the
transfer of assets from one generation to another is
considered a great stabilizing force, to which value is
attached. But while they agree on the basic idea of
inheritance, they differ with respect to the law that
governs succession to a person’s estate, where his
assets are located in various jurisdictions.
Wills and Successions: Foreign Element

• Foreign Element can be in the form of a will

executed overseas, of foreigner dying within
Philippine Territory and leaving properties here
and abroad,
• of a Filipino dying overseas with properties in
the Philippines,
• of a testator specifying a foreign law to govern
the disposition of his estate.
Example:

Byron Chavez, a Filipino businessman, dies, domiciled in California, and

leaves real and personal properties in various places: a house and lot
in California, big parcels of land in Cebu City and suburbans;
substantial shares of stock in a number of multi national corporations;
and considerable bank deposits in Manila and New York

1. What law or laws determine who will succeed, and to what extent, to
Chavez’s assets?

2. Does it matter whether proceedings for the administration of the Chavez

estate to take place in California, his domicile at the time of his death, or
in the Philippines, his country?
 Choice of Law: Theories or System

• Theories or System in determining the proper law for

the transmission of successional rights:

uUNITARY SYSTEM

uSPLIT OR SCISSION SYSTEM

 UNITARY SYSTEM

Unitary or Single system – only one law determines

transmission of real as well as personal properties.
e.i. Philippines (The national law of the deceased governs
the transmission of both real as well as personal
properties).
 SPLIT or DIVISION
• Split or Division system, succession to real property
is governed by the lex situs, while succession to
movable or personal property is governed by the
law of the domicile of the deceased at the time of
his death.
BAR Problem: Civil 2015
DEPECAGE
Depecage (from the French “depecer” meaning “to
dissect”) is a term for the phenomenon where”
different aspects of a case involving a foreign
element may be governed by different systems of
laws.
WILLS AND SUCCESSION
Will – is an act whereby a person is permitted, with
the formalities prescribed by law, to control to a
certain degree the disposition of his estate, to take
effect after his death. (Art. 783 CC).

Succession, is a mode of acquisition by virtue of

which the property, rights and obligations to the
extent of the value of inheritance, of a person are
transmitted through his death to another or others
either by his will or by operation of law (Art. 774 CC)
Validity of Wills:
• Extrinsic validity – deals with the forms and solemnities in
the making of wills, which include the age and
testamentary capacity of the testator and the form of the
will.

• Intrinsic validity- refers to the validity of the dispositions

made by the decedent. It concerns on the order of
succession, the amount of successional rights and such
other matters that fall under the term “substance” as
distinguished from “forms and solemnities” of wills.
Philippine Conflict Rules on Extrinsic Validity of Wills
Art. 17 CC,
The forms and solemnities of contracts, wills, and other public
instruments shall be governed by the laws of the country in which they
are executed.

When the acts referred to are executed before the diplomatic or

consular officials of the Republic of the Philippines in a foreign country,
the solemnities established by Philippine laws shall be observed in
their execution.
Xxx

Article 815 CC,

When a Filipino is in a foreign country, he is authorized to make a will
in any of the forms established by the law of the country in which he
may be. Such will may be probated in the Philippines.
Philippine Conflict Rules on Extrinsic
Validity of Wills: Alien
Art. 816 CC,

The will of an alien who is abroad produces the effect

in the Philippines if made with the formalities
prescribed by the law of the place in which he resides,
or according to the formalities observed in his country,
or in conformity with those which this Code
prescribes. When the acts referred to are executed
before the diplomatic or consular officials of the
Republic of the Philippines in a foreign country, the
solemnities established by Philippine laws shall be
observed in their execution.
 Philippine Conflict Rules on Extrinsic
Validity of Wills: Other provisions
Art. 817 CC,
A will made in the Philippines by a citizen or subject
of another country, which is executed in accordance
with the law of the country of which he is a citizen
or subject, and which might be proved and allowed
by the law of his own country, shall have the same
effect as if executed according to the laws of the
Philippines.
JOINT WILLS: PROHIBITED
ART. 818 CC,
Two or more persons cannot make a will jointly, or in the
same instrument, either for their reciprocal benefit or for the
benefit of a third person.

Art. 819 CC,

Wills, prohibited by the preceding article, executed by
Filipinos in a foreign country shall not be valid in the
Philippines, even though authorized by the laws of the
country where they may have been executed.
HOLOGRAPHIC WILL

Art. 810 CC,

Holographic will, which must be entirely written, dated, and signed by
the hand of the testator himself, it is subject to no other form and
may be made in or out of the Philippines, and need not be witnessed.
REVOCATION OF WILL

Art. 829 CC,

A revocation done outside the Philippines, by a
person who does not have his domicile in this
country, is valid when it is done according to
the law of the place where the will was made,
or according to the law of the place in which
the testator had his domicile at the time; and if
the revocation takes place in this country, when
it is in accordance with the provisions of the
Code.
Philippine Law on intrinsic validity of
wills
Art. 16 CC, 2nd par.
xxx 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 nature of the property and regardless of
the country wherein said property may be found.

• This was followed by the Supreme Court in Miciano vs.

Brimo, 50 Phil. 867; Bellis vs. Bellis, 20 SCRA 558; and
Cayetano vs. Leonidas, 129 SCRA 522.
Summary: Extrinsic and Intrinsic Validity

• The extrinsic validity of wills is governed by the law of

the place where they are executed;
• The intrinsic validity of a will is governed by the
national law of the decedent.
(The intrinsic validity of wills under the Civil Code is
governed by Arts. 798 to 803, which govern wills
executed by citizens of the Philippines wherever they
may have been executed, as his national law follows
him in his travels in accordance with the art. 15 in
relation to 2nd par. of Art. 16 the CC.)
PROBATE OF THE WILL
• The probate of a will refers to the authentication of
a will in a probate proceedings in court concerning
the capacity of the testator and the compliance
with those requisites or solemnities which the law
prescribes for its validity.

• Mandatory.
Effect of Probate:
Once probated, the principle of res judicata applies,
with respect to its extrinsic validity.
This means that the testator was of sound mind
and disposing mind at the time when he executed
the will and was not acting under duress, etc. and
that the will was signed by him in the presence of
the required number of witnesses, and that the will
is genuine and is not a forgery.
Allowance of Will Proved Outside of Philippines and
Administration of Estate

• A will may be probated outside the Philippines. Rule

77 of the Rules of Court provides the procedure on
the allowance of will proved outside the Philippines
and administration of estate.
• When a decedent has properties in the Philippines
and abroad, the administration of his estate will
require the appointment of a domiciliary or principal
adminstrator and an ancillary administrator with
respect to properties abroad.
 Evidence necessary for the reprobate or allowance of will
in the country, which has been probated outside the
Philippines:

1. The due execution of the will in accordance

with the foreign law;
2. The testator has his domicile in the foreign
country and not in the Philippines;
3. The will has been admitted to probate in such
country;
4. The fact that the foreign tribunal is a probate
court; and
5. The laws of a foreign country on probate and
allowance of wills.
 Ancillary Administrator vis-à-vis Principal
Administrator
• Territorial limits of administration-
The general rule universally recognized is that administration
extends only to the assets of the decedent found within the state
or country where it was granted, so that an administrator
appointed in one state or country where it was granted, has no
power over property in another state or country.

• Ancillary Administrator vis-à-vis Principal Administrator

When a person dies intestate owning property in the

country of his domicile as well as in a foreign country,
administration shall be in both countries. That which is granted in
the jurisdiction of the decedent’s domicile is termed the principal
administration. The ancillary administration is proper whenever a
person dies leaving in a country other than that of his domicile,
property to be administered in the nature of assets of the
decedent, liable for his individual debts or to be distributed among
his heirs.
Grounds for the disallowance of the Will
Rule 76 Sec. 9. Grounds for disallowing will. - The will
shall be disallowed in any of the following cases:

(a) If not executed and attested as required by law;

(b) If the testator was insane, or otherwise mentally
incapable to make a will, at the time of its execution;
(c) If it was executed under duress, or the influence of
fear, or threats;
(d) If it was procured by undue and improper pressure
and influence, on the part of the beneficiary, or of some
other person for his benefit;
(e) If the signature of the testator was procured by fraud
or trick, and he did not intend that the instrument should
be his will at the time of fixing his signature thereto.
PROPERTY
• Rule: The law of the place where it is situated governs everything
concerning real property.
• Pursuant to this rule, in all actions relating to recovery of land, the
rule is that the action is governed by the law of the place where the
land is located. (Laurel vs. Garcia, 189 SCRA 797)
PROPERTY
• Matters connected with real property are governed
by the lex situs:
• Extrinsic and Intrinsic validty of transactions over real
property, such as alienations, transfers, and mortgages.
• Effects of ownership, co-ownership, lease, and the like.
PROPERTY
• Example: Xander, a California citizen domiciled in
California sells to a Filipino domiciled in the
Philippines a piece of land located in Florida, U.S.A.
• The intrinsic validity of the transactions (the formalities) is
governed by the lex situs (Florida Law)
• The capacities of both vendor and vendee are governed by
Florida Law
• The intrinsic validity of the transactions is governed by
Florida Law.
Nature and Scope of the Lex Situs
• The capacity to take and transfer immovables.
- the lex situs determines such issues as who
own the land, the conditions under which.
• Formalities of Conveyances
- The formal validity of an instrument purporting the transfer or
interest in land is governed by the law of the situs.
nEssential Validity and effect of the transfer.
nInterpretation and effect of conveyance.

This means that the lex rei sitae, governs all

questions of transfer, capacity to transfer and to
acquire, and of the validity, effect and construction of
conveyances.
• Exceptions to the rule of the Lex Situs or Lex Rei Sitae:
• Succession
• Contracts involving real property but do not deal with title
or real rights over the property, the issue being the
contractual rights and liabilities of the parties, are
governed by the proper law of the contract.
• Mortgages to secure a principal contract, the loan is governed by the proper
law of the contract between the parties, while the accessory contract of
mortgage is governed by lex situs.
• While the validity of a transfer of land must, as a rule be determined by the
lex situs, the validity of a contract to transfer is determined by the proper law
of the contract.
Capacity To Transfer or Acquire Property

The Capacity of the person to transfer or acquire real

property is governed by the law of the place where the
property is located.
Extrinsic and Intrinsic Validity of Conveyances

The formalities of a contract to convey property are

likewise governed by the lex situs. Any transfer of
property which requires registration of title can not be
accepted by the registry of property unless the formal
requirements of the lex situs are complied
Laurel vs. Garcia 187 SCRA 797
Issue: Whether Roppongi property is governed by Japanese Law
or Philippine Law?

Ruling: A conflict of law situation arises only when: (1) There is a

dispute over the title or ownership of an immovable, such that
capacity to take conveyance, the essential validity and effect of
the transfer, or the interpretation and effect of a converyance
are to be determined & (2) a foreign law on land ownership and
its conveyance is asserted to conflict with a domestic law on the
same matters.
Laurel vs. Garcia 187 SCRA 797
Ruling: The issues in this case are not on the validity of
ownership or title, but the authority of the respondent officials
to validly dispose of property belonging to the State. And validity
of the procedures adopted to effect its sale. This is governed by
Philippine law. The rule on lex situs does not apply.
SPEFICIC RULES AS TO OWNERSHIP OF REAL
PROPERTY
Section 7, Article XII, 1987 Constitution

Save in cases of hereditary succession, no private lands shall be

transferred or conveyed except to individuals, corporations, or
associations qualified to acquire or hold lands of the public
domain.

• It must be noted that hereditary succession only refers to

intestate succession.
MATTHEWS vs. TAYLOR, June 22, 2009

Benjamin, being an alien, is absolutely prohibited from

acquiring private and public lands in the Philippines. By
entering into such contract knowing that it was illegal, no
implied trust was created in his favor; no reimbursement
for his expenses can be allowed and no declaration can be
made that the subject property was part of the
conjugal/community property of the spouses.

Note: The Supreme Court in the case of “United Church Board

for World Ministries v. Sebastian” reiterated the consistent
ruling that if land is invalidly transferred to an alien who
subsequently becomes a Filipino citizen or transfers it to a
Filipino, the flaw in the original transaction is considered cured
and the title of the transferee is rendered valid.
What are the exceptions to the restriction on foreigners’ acquisition of
land in the Philippines?

[1] Purchase by a former natural-born Filipino citizen subject to the limitations

prescribed by Batas Pambansa 185 and R.A. 8179

[2] Acquisition before the 1935 Constitution;

[3] Purchase of not more than 40% interest in a condominium project;

[4] Acquisition through hereditary succession if the foreigner is a legal or natural

heir