The Supreme Court ruled that a donation and subsequent sale of conjugal property are valid only to the extent of the donating spouse’s share when one spouse’s consent to the donation was forged. This means that the purchasing party becomes a co-owner with the non-consenting spouse. The Court emphasized the importance of protecting the rights of both parties involved, ensuring fairness in property disputes arising from questionable transactions.

When Forged Signatures Meet Real Estate: How to Divide a Disputed Property?

This case revolves around a property dispute involving Spouses Julieta and Fernando Carlos (Spouses Carlos) and Juan Cruz Tolentino, following a questionable donation and subsequent sale of a property originally owned by Juan and his wife, Mercedes Tolentino. Without Juan’s consent, Mercedes and their grandson, Kristoff M. Tolentino, allegedly forged a Deed of Donation, transferring the property to Kristoff. Kristoff then sold the property to Spouses Carlos. Upon discovering the alleged forgery, Juan filed a complaint for annulment of title. The central legal question is: Who has the better right to claim ownership over the property, given the forged Deed of Donation and the subsequent sale to Spouses Carlos?

The Regional Trial Court (RTC) initially dismissed Juan’s complaint, finding that Spouses Carlos were buyers in good faith since Kristoff was the registered owner at the time of the sale, and there were no annotations of adverse claims on the title. However, the Court of Appeals (CA) reversed this decision, stating that Spouses Carlos were negligent in not verifying the property’s status before the purchase. The Supreme Court (SC) then took on the case to resolve the conflicting decisions.

The Supreme Court noted that the property was acquired during the marriage of Juan and Mercedes. Therefore, it forms part of their conjugal partnership of gains. The Civil Code presumes that all properties acquired during the marriage belong to the conjugal partnership unless proven otherwise. Article 119 of the Civil Code states:

Article 119. The future spouses may in the marriage settlements agree upon absolute or relative community of property, or upon complete separation of property, or upon any other regime. In the absence of marriage settlements, or when the same are void, the system of relative community or conjugal partnership of gains as established in this Code, shall govern the property relations between husband and wife.

Thus, both Juan and Mercedes had equal ownership rights over the property. The Court also acknowledged Mercedes’ death, which dissolved the conjugal partnership. This is legally significant because upon the death of a spouse, the conjugal partnership terminates, and the estate is divided.

The pivotal issue was the validity of the Deed of Donation, given that Juan’s signature was found to be forged. While the RTC determined the forgery, the CA did not overturn this finding. The Supreme Court, however, noted that Mercedes’ signature on the Deed of Donation was never contested.

Despite the forgery concerning Juan’s signature, Mercedes’ consent to the donation of her share was undisputed. Quoting Arrogante v. Deliarte, the Supreme Court referenced that even if a sale is initially void, it may evidence consent and acquiescence to the transaction if the relevant parties signed the agreement. Mercedes’ consent to the disposition of her one-half interest in the property remained valid.

The Court then considered Spouses Carlos’ position as purchasers. They had paid a valuable consideration for the property before Juan’s adverse claim was annotated on the title. The Court found merit in protecting their acquisition for value, highlighting the need to balance the rights of all parties involved.

The Supreme Court, balancing the rights and interests, declared the Deed of Donation valid only to the extent of Mercedes’ one-half share in the property. The donation was deemed void regarding Juan’s share due to the forged signature and lack of consent. This resulted in Juan and Spouses Carlos becoming co-owners of the property. As co-owners, either party could seek a partition of the property, limiting their rights to the portion allocated to them upon the termination of the co-ownership.

The ruling aligns with the principle of upholding the binding force of a contract as far as legally possible, encapsulated in the maxim quando res non valet ut ago, valeat quantum valere potest – when a thing is of no effect as I do it, it shall have effect as far as (or in whatever way) it can.

Finally, the Court addressed the issue of unjust enrichment. Given that Kristoff had sold the property and received the full purchase price, he was ordered to reimburse Spouses Carlos for one-half of the purchase price, reflecting the portion of the property that Juan rightfully owned. This reimbursement was set with legal interest from the finality of the decision.

FAQs

What was the key issue in this case?	The key issue was determining the rightful ownership of a property that was transferred through a forged Deed of Donation and subsequently sold to a third party. The court had to decide whether the forged donation invalidated the entire transaction and how to balance the rights of the original owner and the buyers.
What is a conjugal partnership of gains?	A conjugal partnership of gains is a property regime between spouses where the properties acquired during the marriage through their work or industry are owned in common. This partnership is governed by the Family Code, which dictates how these assets are managed and divided.
What happens when a spouse’s signature is forged on a Deed of Donation?	When a spouse’s signature is forged on a Deed of Donation, the donation is considered void as to that spouse’s share of the property. The forged signature indicates a lack of consent, making the transfer invalid for their portion of the conjugal property.
What is the effect of the death of a spouse on a conjugal partnership?	The death of a spouse automatically dissolves the conjugal partnership. This dissolution triggers the process of liquidating the conjugal assets and distributing the shares to the surviving spouse and the heirs of the deceased.
What does it mean to be a buyer in good faith?	A buyer in good faith is someone who purchases property without any knowledge or suspicion that the seller’s title is defective or that there are any irregularities in the transaction. They rely on the face of the title and pay a fair price for the property.
What rights do co-owners have?	Co-owners have the right to use the property, receive a share of the profits, and demand partition of the property. They can also alienate, assign, or mortgage their share, although the effect of such actions is limited to the portion allotted to them upon the termination of the co-ownership.
What is the principle of unjust enrichment?	The principle of unjust enrichment states that no person should unduly profit or enrich themselves at the expense of another without just cause. This principle is invoked to prevent unfair gains and restore equity between parties.
What is the meaning of quando res non valet ut ago, valeat quantum valere potest?	This Latin maxim means “when a thing is of no effect as I do it, it shall have effect as far as (or in whatever way) it can.” It means that a legal instrument should be upheld to the extent that it is legally possible, even if it is not entirely valid.

In conclusion, the Supreme Court’s decision underscores the complexities of property rights within conjugal partnerships, especially when fraud or lack of consent is involved. By recognizing the validity of the donation to the extent of Mercedes’ share and establishing co-ownership between Juan and Spouses Carlos, the Court struck a balance between protecting the rights of all parties involved and preventing unjust enrichment.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Spouses Julieta B. Carlos and Fernando P. Carlos v. Juan Cruz Tolentino, G.R. No. 234533, June 27, 2018