Shoppers Paradise Realty & Development Corporation vs.

Efren Roque
G.R. No. 148775 January 13, 2004
FACTS
In 1993, petitioner Shoppers Paradise Realty & Development Corporation,
represented by its president, Veredigno Atienza entered into a 25-year lease with Dr.
Felipe Roque, now deceased, over a parcel of land situated in Novaliches, Quezon City.
Petitioner issued a check for reservation payment. Simultaneously, petitioner and Dr.
Roque likewise entered into a memorandum of agreement for the construction,
development and operation of a commercial building on the property.
The cntract f lease and memorandum of agreement were both notarized but were not
annotated due to the death of Dr. Roque. Respondent Efren Roque, one of the heirs of Dr.
Roque dealed with the petitioners but never came to an agreement. In 1995, petitioner
filed a case for annulment of the contract of lease and memorandum of agreement. Efren
alleged that he was the owner of the subject property by vitue of a deed of donation inter
vivos executed by his parents in 1978 and that Dr. Roque was only delegated with the
administration of the property when the respondent left for the United States but the title
of the property was not transferred in the name of the respondent until 1994.
ISSUE
W/N the contract of lease and memorandum of agreement are binding upon the
respondent.
RULING
No. The Court found petitioner Corporation have knowledge of the donation at the
time it entered into the two agreements with Dr. Roque. During their negotiation,
petitioner, through its representatives, was apprised of the fact that the subject property
actually belonged to respondent. It was also not shown that Dr. Roque had been an
authorized agent by respondent.
A deed of donation need not be registered in order to be valid between parties, but is
important to be in binding against third perons.
As a mode of acquiring ownership, donation results in an effective transfer of title
over the property from the donor to the donee. In donations of immovable property, the
law requires for its validity that it should be contained in a public document, specifying
therein the property donated and the value of the charges which the donee must satisfy.
However, the Civil Code provides that titles of ownership, or other rights over
immovable property, which are not duly inscribed or annotated in the Registry of
Property shall not prejudice third persons. It is enough, between the parties to a donation
of an immovable property, that the donation be made in a public document but, in order
to bind third persons, the donation must be registered in the registry of Property.
A person dealing with registered land may rely on the correctness of the certificate of
title, and he is not required to go beyond the certificate to determine the condition of the
property but, where such party has knowledge of a prior existing interest which is
unregistered at the time he acquired a right thereto, his knowledge of that prior
unregistered interest would have the effect of registration as regards to him.