Question

Scenario:

John, a resident of the Philippines, owns a beachfront property in Bali, Indonesia. He wants to sell the property and has found a potential buyer, Alice, who is also a resident of the Philippines. John and Alice agree on the terms of the sale and drafting a contract for the transaction.

During the drafting process, they encounter a disagreement on which laws should govern the sale of the property. John insists that Philippine laws should apply since both parties are Filipino residents. On the other hand, Alice argues that Indonesian laws should govern as the property is located in Bali, Indonesia.

Question:

1. Discuss the principle of Lex Rei Sitae and its significance in determining the applicable law in a transaction involving property located in a foreign jurisdiction.