THIRD DIVISION
G.R. No. 148775             January 13, 2004SHOPPER’S PARADISE REALTY & DEVELOPMENT CORPORATION, petitioner,
vs.
EFREN P. ROQUE, respondent.
D E C I S I O N
VITUG, J.:
On 23 December 1993, petitioner Shopper’s Paradise 
Realty & Development Corporation, represented by its president, 
Veredigno Atienza, entered into a twenty-five year lease with Dr. Felipe
 C. Roque, now deceased, over a parcel of land, with an area of two 
thousand and thirty six (2,036) square meters, situated at Plaza 
Novaliches, Quezon City, covered by Transfer of Certificate of Title 
(TCT) No. 30591 of the Register of Deeds of Quezon City in the name of 
Dr. Roque. Petitioner issued to Dr. Roque a check for P250,000.00 by way
 of "reservation payment." Simultaneously, petitioner and Dr. Roque 
likewise entered into a memorandum of agreement for the construction, 
development and operation of a commercial building complex on the 
property. Conformably with the agreement, petitioner issued a check for 
another P250,000.00 "downpayment" to Dr. Roque.
The contract of lease and the memorandum of 
agreement, both notarized, were to be annotated on TCT No. 30591 within 
sixty (60) days from 23 December 1993 or until 23 February 1994. The 
annotations, however, were never made because of the untimely demise of 
Dr. Felipe C. Roque. The death of Dr. Roque on 10 February 1994 
constrained petitioner to deal with respondent Efren P. Roque, one of 
the surviving children of the late Dr. Roque, but the negotiations broke
 down due to some disagreements. In a letter, dated 3 November 1994, 
respondent advised petitioner "to desist from any attempt to enforce the
 aforementioned contract of lease and memorandum of agreement". On 15 
February 1995, respondent filed a case for annulment of the contract of 
lease and the memorandum of agreement, with a prayer for the issuance of
 a preliminary injunction, before Branch 222 of the Regional Trial Court
 of Quezon City. Efren P. Roque alleged that he had long been the 
absolute owner of the subject property by virtue of a deed of donation 
inter vivos executed in his favor by his parents, Dr. Felipe Roque and 
Elisa Roque, on 26 December 1978, and that the late Dr. Felipe Roque had
 no authority to enter into the assailed agreements with petitioner. The
 donation was made in a public instrument duly acknowledged by the 
donor-spouses before a notary public and duly accepted on the same day 
by respondent before the notary public in the same instrument of 
donation. The title to the property, however, remained in the name of 
Dr. Felipe C. Roque, and it was only transferred to and in the name of 
respondent sixteen years later, or on 11 May 1994, under TCT No. 109754 
of the Register of Deeds of Quezon City. Respondent, while he resided in
 the United States of America, delegated to his father the mere 
administration of the property. Respondent came to know of the assailed 
contracts with petitioner only after retiring to the Philippines upon 
the death of his father.
On 9 August 1996, the trial court dismissed the complaint of respondent; it explained:
"Ordinarily, a deed of donation need not be 
registered in order to be valid between the parties. Registration, 
however, is important in binding third persons. Thus, when Felipe Roque 
entered into a leased contract with defendant corporation, plaintiff 
Efren Roque (could) no longer assert the unregistered deed of donation 
and say that his father, Felipe, was no longer the owner of the subject 
property at the time the lease on the subject property was agreed upon.
"The registration of the Deed of Donation after the 
execution of the lease contract did not affect the latter unless he had 
knowledge thereof at the time of the registration which plaintiff had 
not been able to establish. Plaintiff knew very well of the existence of
 the lease. He, in fact, met with the officers of the defendant 
corporation at least once before he caused the registration of the deed 
of donation in his favor and although the lease itself was not 
registered, it remains valid considering that no third person is 
involved. Plaintiff cannot be the third person because he is the 
successor-in-interest of his father, Felipe Roque, the lessor, and it is
 a rule that contracts take effect not only between the parties 
themselves but also between their assigns and heirs (Article 1311, Civil
 Code) and therefore, the lease contract together with the memorandum of
 agreement would be conclusive on plaintiff Efren Roque. He is bound by 
the contract even if he did not participate therein. Moreover, the 
agreements have been perfected and partially executed by the receipt of 
his father of the downpayment and deposit totaling to P500,000.00."1
The Trial court ordered respondent to surrender TCT 
No. 109754 to the Register of Deeds of Quezon City for the annotation of
 the questioned Contract of Lease and Memorandum of Agreement.
On appeal, the Court of Appeals reversed the decision
 of the trial court and held to be invalid the Contract of Lease and 
Memorandum of Agreement. While it shared the view expressed by the trial
 court that a deed of donation would have to be registered in order to 
bind third persons, the appellate court, however, concluded that 
petitioner was not a lessee in good faith having had prior knowledge of 
the donation in favor of respondent, and that such actual knowledge had 
the effect of registration insofar as petitioner was concerned. The 
appellate court based its findings largely on the testimony of Veredigno
 Atienza during cross-examination, viz;
"Q. Aside from these two lots, the first in the name 
of Ruben Roque and the second, the subject of the construction involved 
in this case, you said there is another lot which was part of 
development project?
"A. Yes, this was the main concept of Dr. Roque so 
that the adjoining properties of his two sons, Ruben and Cesar, will 
comprise one whole. The other whole property belongs to Cesar.
"Q. You were informed by Dr. Roque that this property
 was given to his three (3) sons; one to Ruben Roque, the other to 
Efren, and the other to Cesar Roque?
"A. Yes."Q. You did the inquiry from him, how was this property given to them?
"A. By inheritance.
"Q. Inheritance in the form of donation?
"A. I mean inheritance.
"Q. What I am only asking you is, were you told by 
Dr. Felipe C. Roque at the time of your transaction with him that all 
these three properties were given to his children by way of donation?
"A. What Architect Biglang-awa told us in his exact word: "Yang
 mga yan pupunta sa mga anak. Yong kay Ruben pupunta kay Ruben. Yong kay
 Efren palibhasa nasa America sya, nasa pangalan pa ni Dr. Felipe C. 
Roque."
"x x x           x x x           x x x
"Q. When was the information supplied to you by 
Biglang-awa? Before the execution of the Contract of Lease and 
Memorandum of Agreement?
"A. Yes.
"Q. That being the case, at the time of the execution
 of the agreement or soon before, did you have such information 
confirmed by Dr. Felipe C. Roque himself?
"A. Biglang-awa did it for us."Q. But you yourself did not?
"A. No, because I was doing certain things. We were a team and so Biglang-awa did it for us.
"Q. So in effect, any information gathered by 
Biglang-awa was of the same effect as if received by you because you 
were members of the same team?
"A. Yes."2
In the instant petition for review, petitioner seeks a
 reversal of the decision of the Court of Appeals and the reinstatement 
of the ruling of the Regional Trial Court; it argues that the 
presumption of good faith it so enjoys as a party dealing in registered 
land has not been overturned by the aforequoted testimonial evidence, 
and that, in any event, respondent is barred by laches and estoppel from
 denying the contracts.
The existence, albeit unregistered, of the donation 
in favor of respondent is undisputed. The trial court and the appellate 
court have not erred in holding that the non-registration of a deed of 
donation does not affect its validity. As being itself a mode of 
acquiring ownership, donation results in an effective transfer of title 
over the property from the donor to the donee.3 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.4
 The Civil Code provides, however, that "titles of ownership, or other 
rights over immovable property, which are not duly inscribed or 
annotated in the Registry of Property (now Registry of Land Titles and 
Deeds) shall not prejudice third persons."5 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 
(Registry of Land Titles and Deeds).6 Consistently, Section 
50 of Act No. 496 (Land Registration Act), as so amended by Section 51 
of P.D. No. 1529 (Property Registration Decree), states:
"SECTION 51. Conveyance and other dealings by registered owner.-
 An owner of registered land may convey, mortgage, lease, charge or 
otherwise deal with the same in accordance with existing laws. He may 
use such forms of deeds, mortgages, leases or other voluntary 
instruments as are sufficient in law. But no deed, mortgage, lease, or 
other voluntary instrument, except a will purporting to convey or affect
 registered land shall take effect as a conveyance or bind the land, but
 shall operate only as a contract between the parties and as evidence of
 authority to the Register of Deeds to make registration.
"The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned, and
 in all cases under this Decree, the registration shall be made in the 
office of the Register of Deeds for the province or city where the land 
lies." (emphasis supplied)
A person dealing with registered land may thus safely
 rely on the correctness of the certificate of title issued therefore, 
and he is not required to go beyond the certificate to determine the 
condition of the property7 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.8
The appellate court was not without substantial basis
 when it found petitioner to have had 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 not shown that Dr. Felipe C. Roque had been an authorized agent of respondent.
In a contract of agency, the agent acts in representation or in behalf of another with the consent of the latter.9
 Article 1878 of the Civil Code expresses that a special power of 
attorney is necessary to lease any real property to another person for 
more than one year. The lease of real property for more than one year is
 considered not merely an act of administration but an act of strict 
dominion or of ownership. A special power of attorney is thus necessary 
for its execution through an agent.1awphil.ne+
The Court cannot accept petitioner’s argument that 
respondent is guilty of laches. Laches, in its real sense, is the 
failure or neglect, for an unreasonable and unexplained length of time, 
to do that which, by exercising due diligence, could or should have been
 done earlier; it is negligence or omission to assert a right within a 
reasonable time, warranting a presumption that the party entitled to 
assert it either has abandoned or declined to assert it.10
Respondent learned of the contracts only in February 
1994 after the death of his father, and in the same year, during 
November, he assailed the validity of the agreements. Hardly, could 
respondent then be said to have neglected to assert his case for 
unreasonable length of time.
Neither is respondent estopped from repudiating the 
contracts. The essential elements of estoppel in pais, in relation to 
the party sought to be estopped, are:
 1) a clear conduct amounting to 
false representation or concealment of material facts or, at least, 
calculated to convey the impression that the facts are otherwise than, 
and inconsistent with, those which the party subsequently attempts to 
assert; 
2) an intent or, at least, an expectation, that this conduct 
shall influence, or be acted upon by, the other party; and 3) the 
knowledge, actual or constructive, by him of the real facts.11 
 With respect to the party claiming the estoppel, the conditions he must
 satisfy are:
 1) lack of knowledge or of the means of knowledge of the 
truth as to the facts in question; 
2) reliance, in good faith, upon the 
conduct or statements of the party to be estopped; and
 3) action or 
inaction based thereon of such character as to change his position or 
status calculated to cause him injury or prejudice.12 
It has 
not been shown that respondent intended to conceal the actual facts 
concerning the property; more importantly, petitioner has been shown not
 to be totally unaware of the real ownership of the subject property.
Altogether, there is no cogent reason to reverse the Court of Appeals in its assailed decision.
WHEREFORE, the petition is DENIED, and the decision 
of the Court of Appeals declaring the contract of lease and memorandum 
of agreement entered into between Dr. Felipe C. Roque and Shopper’s 
Paradise Realty & Development Corporation not to be binding on 
respondent is AFFIRMED. No costs.
SO ORDERED.Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concur.
Footnotes
1 Rollo, p. 37.
2 Rollo, pp. 40-41.
3 Article 712, New Civil Code.
4 Article 749, New Civil Code.
5 Article 709, New Civil Code.
6 See Gonzales v. Court of Appeals, G.R. No. 110335, 18 June 2001, 358 SCRA 598.
7 Santos v. Court of Appeals, G.R. No. 90380, 13 September 1990, 189 SCRA 550.
8 Lagandaon v. Court of Appeals, G.R. No. 
102526-31, 21 May 1998, 290 SCRA 330; Fernandez v. Court of Appeals, 
G.R. No. 83141, 21 September 1990, 189 SCRA 780.
9 Article 1868, New Civil Code.10 Tolentino, Civil Code of the Philippines, vol. IV, 1990-1991, p. 661.
11 Kalalo v. Luz, G.R. No. L-27782, 31 July 1970, 34 SCRA 337.
12 Id.
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