G.R. No. 205487 November 12, 2014
ORION SAVINGS BANK, Petitioner, vs. SHIGEKANE SUZUKI, Respondent.

FACTS

Respondent Shigekane Suzuki, a Japanese national, purchased a condominium unit and a parking slot from Yung Sam Kang, a Korean national and Special Resident Retiree’s Visa (SRRV) holder, for ₱2,800,000.00 in August 2003. Suzuki issued checks for a reservation fee and the balance, and a Deed of Absolute Sale was executed on August 26, 2003. Suzuki took possession and began renovations. Kang failed to deliver the titles, which were in the possession of Alexander Perez, the loans officer of petitioner Orion Savings Bank. Suzuki verified with the Registry of Deeds and found that the Condominium Certificate of Title (CCT) for the unit (CCT No. 18186) had a cancelled mortgage annotation in favor of Orion and an annotation requiring Philippine Retirement Authority (PRA) approval for any conveyance due to Kang’s SRRV status. The CCT for the parking slot (CCT No. 9118) had no encumbrances. Suzuki registered adverse claims on both titles. Orion later informed Suzuki that Kang had executed a Dacion en Pago over the unit in Orion’s favor on February 2, 2003, for a ₱1,800,000.00 loan, but this was only registered on October 15, 2003. Suzuki filed a complaint for specific performance and damages. The Regional Trial Court ruled in favor of Suzuki, ordering Orion to deliver the titles. The Court of Appeals affirmed Suzuki’s right over the properties but deleted the damages award. Orion appealed, arguing the sale was void under Korean law for lack of spousal consent, Suzuki was not a buyer in good faith, the PRA restriction defeated good faith, and it exercised due diligence.

ISSUE

The primary issue is whether Suzuki, as a purchaser of the real properties, has a superior right over Orion, which claims ownership through a prior but unregistered Dacion en Pago.

RULING

The Supreme Court denied Orion’s petition and upheld Suzuki’s superior right. The Court ruled that Philippine law (lex loci rei sitae) governs the transfer of the real property located in the Philippines. Orion’s belated invocation of Korean law regarding spousal consent was improper, as foreign law must be pleaded and proved as a fact, which Orion failed to do. The Court found Suzuki to be a purchaser in good faith and for value. He exercised due diligence by verifying the titles with the Registry of Deeds, which showed no existing encumbrance on the parking slot and a cancelled mortgage on the unit. The PRA annotation was merely a warning to the SRRV holder and did not invalidate the sale to a third party. Orion’s claim based on the Dacion en Pago was unavailing because it was not registered until after Suzuki had purchased the properties and registered his adverse claim. Under the principle of registration, the unregistered Dacion en Pago cannot prevail over Suzuki’s registered rights as a purchaser in good faith. The Court also noted factual incongruences justifying its review, but ultimately found no merit in Orion’s arguments.