Spouses Carlos vs. Tolentino

A deed of donation of conjugal property bearing a forged signature of one spouse is not wholly void but valid only to the extent of the consenting spouse's undivided one-half share, pursuant to the principle quando res non valet ut ago, valeat quantum vale re potest — a contract must be recognized as binding as far as it is legally possible to do so.

Juan Cruz Tolentino and Mercedes Tolentino were married before the effectivity of the Family Code on August 3, 1988, and having adopted no different property regime, their property relations were governed by the conjugal partnership of gains under the Civil Code. The subject property — a 1,000-square-meter parcel of land in Novaliches, Quezon City, covered by TCT No. RT-90746 (116229) — was acquired on March 17, 1967 during their marriage and thus formed part of their conjugal partnership. Mercedes had since died, as evidenced by Juan's Verification executed on February 9, 2018 stating he was already a widower, resulting in the dissolution of the conjugal partnership.

The subject property is a 1,000-square-meter parcel of land with all improvements thereon, located in Novaliches, Quezon City, covered by TCT No. RT-90746 (116229) issued on March 17, 1967 and registered in the name of Juan C. Tolentino, married to Mercedes Tolentino. It formed part of the conjugal partnership of Juan and Mercedes, who were married before the effectivity of the Family Code. Mercedes and their grandson, Kristoff M. Tolentino, were residing in the subject property.

Without Juan's knowledge and consent, Mercedes and Kristoff allegedly forged a Deed of Donation dated February 15, 2011, making it appear that Juan and Mercedes had donated the subject property to Kristoff. By virtue of this alleged forged deed, Kristoff caused the cancellation of the original TCT and obtained TCT No. 004-2011003320 in his name on March 9, 2011. In April 2011, Kristoff offered the sale of the subject property to Felix Bacal, Julieta Carlos's brother, who also administered Julieta's adjacent lot. When Felix informed Julieta of the property's availability, Spouses Carlos asked him to negotiate the purchase. After an ocular inspection and Kristoff's surrender of copies of the title and tax declaration, Kristoff and Julieta executed a Memorandum of Agreement dated April 12, 2011 for the sale of the property at P2,300,000.00, payable in two installments.

Julieta made the first payment of P2,000,000.00 on May 28, 2011 and the second payment of P300,000.00 on June 30, 2011. On the same day as the final payment, a Deed of Absolute Sale was executed between Kristoff and Julieta. At the time of full payment and execution of the Deed of Absolute Sale, nothing was annotated on Kristoff's title to indicate any adverse claim. It was only on July 15, 2011 that Juan executed an Affidavit of Adverse Claim, which was annotated on Kristoff's title, after Juan discovered on July 14, 2011 that the property had been donated to Kristoff. Juan declared that he had not signed any deed of donation and neither had he sold, transferred, nor waived his rights over the property. Juan also filed a criminal complaint for Falsification of Public Document against Kristoff, which resulted in a Resolution on January 10, 2012 for the filing of an Information, and an Information was filed on February 15, 2012.

Meanwhile, Kristoff and Julieta executed another Deed of Absolute Sale dated September 12, 2011 over the subject property. By virtue thereof, the Register of Deeds cancelled Kristoff's title and issued TCT No. 004-2011013502 in favor of Spouses Carlos on December 5, 2011. Juan's adverse claim was duly carried over to the new title. On February 23, 2012, Juan filed a complaint for annulment of title with damages before the RTC of Quezon City. The RTC found that Juan's signature in the Deed of Donation was forged but nonetheless dismissed the complaint, holding that Spouses Carlos were buyers in good faith who had fully paid the purchase price before any adverse claim was annotated. The CA reversed, finding Spouses Carlos negligent for not examining the title and merely relying on Felix. The Supreme Court took due notice that Mercedes had died, as stated in Juan's Verification executed on February 9, 2018, which inevitably resulted in the dissolution of the conjugal partnership.

• Good Faith of Purchasers: Petitioners maintained that they were buyers in good faith, devoid of notice or knowledge of any flaw or infirmity in Kristoff's title at the time of purchase, since no adverse claim was annotated on the title when they fully paid the purchase price and executed the Deed of Absolute Sale on June 30, 2011.
• Validity Based on MOA and Deed of Absolute Sale: Petitioners argued that they were purchasers in good faith on the basis of the Memorandum of Agreement dated April 12, 2011 and the Deed of Absolute Sale dated June 30, 2011, having relied on the face of Kristoff's title without knowledge of any irregularity.
• Conjugal Nature of Property: Petitioners contended that the subject property was essentially conjugal in nature, and that at least one-half of the property should belong to them.
• Against Total Award to Respondent: Petitioners argued that the litigated property should not be awarded and returned in its entirety to respondent Juan Cruz Tolentino.

• Buyer in Good Faith: Whether Spouses Carlos are buyers in good faith of the subject property despite the forged Deed of Donation.
• Conjugal Property and Partial Validity: Whether the Deed of Donation, though forged as to Juan's signature, remains valid to the extent of Mercedes' undivided one-half share in the conjugal property.
• Better Right: Whether the subject property should be awarded entirely to Juan or whether Spouses Carlos have a right to at least one-half thereof.

• Buyer in Good Faith: Partially sustained. Spouses Carlos' purchase was valid only to the extent of Mercedes' undivided one-half share, since Mercedes' consent to the donation and subsequent sale was never contested and she had signed the MOA and the second Deed of Absolute Sale.
• Conjugal Property and Partial Validity: Yes. The Deed of Donation was declared valid only to the extent of Mercedes' one-half share, Juan's signature having been forged and his consent lacking, pursuant to the principle quando res non valet ut ago, valeat quantum vale re potest.
• Better Right: Neither party prevailed entirely. Spouses Carlos and Juan were declared co-owners of the subject property on a 50-50 undivided basis, with Kristoff ordered to reimburse Spouses Carlos one-half of the purchase price.

• Buyer in Good Faith: The RTC found Juan's signature in the Deed of Donation to be forged, a finding the CA did not overturn. However, Mercedes' signature was never contested and was deemed admitted. Mercedes' knowledge of and acquiescence to the sale was evidenced by her signature appearing in the MOA dated April 12, 2011 and the Deed of Absolute Sale dated September 12, 2011. Spouses Carlos had already paid valuable consideration of P2,300,000.00 before Juan's adverse claim was annotated on Kristoff's title. The Court was disinclined to rule that the Deed of Donation was wholly void ab initio and that Spouses Carlos should be totally stripped of their right, given Mercedes' undisputed consent to the disposition of her one-half interest and the payment of valuable consideration.

• Conjugal Property and Partial Validity: Juan and Mercedes were married before the effectivity of the Family Code, and absent any marriage settlement, their property regime was the conjugal partnership of gains under Article 119 of the Civil Code. The subject property, acquired on March 17, 1967 during the marriage, was presumed conjugal under Article 160 of the Civil Code. Juan and Mercedes were absolute owners of their respective undivided one-half interests. While the congruence of the spouses' wills is essential for the valid disposition of conjugal property, Mercedes' consent to the disposition of her one-half interest remained undisputed. The conjugal partnership had been dissolved upon Mercedes' death, as provided in Article 126 of the Family Code. The Court applied the principle quando res non valet ut ago, valeat quantum vale re potest — the binding force of a contract must be recognized as far as it is legally possible — and upheld the Deed of Donation to the extent of Mercedes' one-half share. The donation was null and void only insofar as it covered Juan's undivided one-half portion, his consent having been lacking due to forgery. Relying on Arrogante vs. Deliarte, the Court recognized that even a void deed may evidence consent and acquiescence sufficient to uphold a disposition to the extent of the consenting party's share.

• Better Right: Kristoff's right as donee was limited to the one-half undivided portion that Mercedes owned. Spouses Carlos' right as vendees was likewise confined to that one-half undivided portion. The other undivided half belonged to Juan. Under Article 493 of the Civil Code, each co-owner has full ownership of his part and may alienate it, but the effect of the alienation with respect to co-owners is limited to the portion allotted upon termination of co-ownership. Accordingly, Spouses Carlos and Juan were declared co-owners. As a matter of fairness and under the principle against unjust enrichment (Article 22, Civil Code), Kristoff was ordered to reimburse Spouses Carlos the amount corresponding to one-half of the purchase price.

• Conjugal Partnership of Gains — Under Article 119 of the Civil Code, in the absence of marriage settlements, the system of conjugal partnership of gains governs the property relations between husband and wife married before the effectivity of the Family Code. All property of the marriage is presumed conjugal unless proved to pertain exclusively to one spouse (Article 160, Civil Code). The Court applied this doctrine to classify the subject property, acquired during marriage, as conjugal, with each spouse owning an undivided one-half interest.

• Quando res non valet ut ago, valeat quantum vale re potest — When a thing is of no effect as done, it shall have effect as far as (or in whatever way) it can. The Court applied this principle to uphold the Deed of Donation to the extent of Mercedes' one-half share, even though the deed was void as to Juan's share due to forgery. The contract was recognized as binding to the extent legally possible.

• Dissolution of Conjugal Partnership Upon Death — Under Article 126 of the Family Code, the conjugal partnership terminates upon the death of either spouse. The Court took judicial notice of Mercedes' death from Juan's Verification, which stated he was already a widower, and held that the conjugal partnership had been dissolved, making it proper to uphold Mercedes' disposition of her eventual share.

• Co-ownership and Pro Indiviso Rights — Under Article 493 of the Civil Code, each co-owner has full ownership of his part and may alienate, assign, or mortgage it, but the effect of the alienation with respect to co-owners is limited to the portion allotted upon termination of co-ownership. The Court applied this to declare Spouses Carlos and Juan as co-owners, each entitled to a 50-50 undivided interest.

• Unjust Enrichment — Under Article 22 of the Civil Code, no person should unjustly enrich himself at the expense of another. The Court applied this principle to order Kristoff to reimburse Spouses Carlos one-half of the purchase price, since the sale was valid only as to Mercedes' share.

• "Given the foregoing, the Court is disinclined to rule that the Deed of Donation is wholly void ab initio and that the Spouses Carlos should be totally stripped of their right over the subject property. In consonance with justice and equity, We deem it proper to uphold the validity of the Deed of Donation dated February 15, 2011 but only to the extent of Mercedes' one half share in the subject property." — This passage articulates the core ratio decidendi: partial validity of a forged deed of conjugal property, limited to the consenting spouse's share.

• "This disposition is in line with the well established principle that the binding force of a contract must be recognized as far as it is legally possible to do so-quando res non valet ut ago, valeat quantum vale re potest." — This passage invokes the controlling maxim that justifies upholding the donation to the extent of Mercedes' consent, notwithstanding the forgery of Juan's signature.

• "Accordingly, the right of Kristoff, as donee, is limited only to the one-half undivided portion that Mercedes owned." — This passage defines the scope of the donee's rights under a partially valid donation of conjugal property, a formulation significant for subsequent property law jurisprudence.

• Arrogante vs. Deliarte, G.R. No. 152132, July 24, 2007 — Followed. The Court cited this case for the proposition that a deed of sale, albeit void as a conveyance of future inheritance, may nonetheless evidence the consent and acquiescence of the signatories, warranting the quieting of title in favor of the vendee. The Court applied the same reasoning to uphold Mercedes' disposition of her one-half share despite the forgery of Juan's signature.

• Abalos vs. Macatangay, Jr., G.R. No. 155043, September 30, 2004 — Cited for the established rule that the congruence of the wills of the spouses is essential for the valid disposition of conjugal property. The Court acknowledged this principle but distinguished it by noting that Mercedes' consent was undisputed, making the disposition valid as to her share.

• Metropolitan Bank and Trust Co. vs. Pascual, G.R. No. 163744, February 29, 2008 — Cited as the source of the Latin maxim quando res non valet ut ago, valeat quantum vale re potest, which the Court applied to uphold the Deed of Donation to the extent legally possible.

• Article 119, Civil Code — Governs the property relations of spouses married before the Family Code in the absence of marriage settlements, establishing the conjugal partnership of gains. Applied to classify Juan and Mercedes' property regime.
• Article 105, Family Code — Provides supplementary application of the Family Code's conjugal partnership provisions to partnerships established before its effectivity, without prejudice to vested rights. Cited to bridge the Civil Code and Family Code regimes.
• Article 126, Family Code — Provides that the conjugal partnership terminates upon the death of either spouse. Applied to establish that the conjugal partnership was dissolved upon Mercedes' death.
• Article 160, Civil Code — Presumes all property of the marriage belongs to the conjugal partnership unless proved to pertain exclusively to one spouse. Applied to classify the subject property as conjugal.
• Article 493, Civil Code — Governs co-ownership rights, providing that each co-owner has full ownership of his part but alienation is limited to the portion allotted upon termination of co-ownership. Applied to declare Spouses Carlos and Juan as co-owners with rights limited to their respective undivided shares.
• Article 22, Civil Code — Prohibits unjust enrichment at the expense of another. Applied to order Kristoff to reimburse Spouses Carlos one-half of the purchase price.

Lucas P. Bersamin (Chairperson), Marvic M.V.F. Leonen, Samuel R. Martires, and Alexander G. Gesmundo concurred. No separate concurring opinions were written.

None. All justices concurred in the decision.