In Oberes v. Oberes, the Supreme Court addressed the validity of a sale involving an illiterate party. The Court ruled that when one party to a contract is unable to read or understand the language in which the contract is written, the burden falls on the party enforcing the contract to prove that the terms were fully explained to the other party in a language they understand. Failure to do so raises a presumption of fraud, rendering the contract voidable. This case underscores the importance of ensuring that all parties to a contract, especially those with limited education, fully understand their obligations and rights.

Signed, Sealed, But Not Delivered? Questioning Consent in Property Sales

The case revolves around a complaint filed by Ciriaco, Cesario, and Gaudencio Oberes against their brother, Adriano Oberes, seeking to annul a Deed of Absolute Sale, recover possession of land, and obtain a judicial partition. The land in question, Lot No. 5306, was part of the inheritance from their deceased parents, Francisco Oberes and Catalina Larino. Gaudencio claimed he never sold the land to Adriano, while Adriano insisted he bought it in 1973. This dispute led to a legal battle that hinged on whether Gaudencio, who was illiterate, truly understood the sale.

The heart of the matter lies in the application of Article 1318 of the Civil Code, which mandates that for a contract to be valid, it must have consent, object, and consideration. Consent, specifically, must be intelligent, free, and spontaneous. The Civil Code further addresses situations where one party lacks education. Article 1332 states:

When one of the parties is unable to read, or if the contract is in a language not understood by him, and mistake or fraud is alleged, the person enforcing the contract must show that the terms thereof have been fully explained to the former.

Building on this principle, the Supreme Court emphasized that since Gaudencio was illiterate and the Deed of Sale was written in English, a language he did not understand, there was a presumption of mistake or fraud. This shifted the burden to Adriano to prove that he fully explained the contents of the deed to Gaudencio in a language he understood, presumably the Visayan dialect. The Court found that Adriano failed to present such evidence.

This failure is critical because consent is not just a formality; it must be informed and voluntary. As the Court noted, intelligence in consent is vitiated by error, freedom by violence, intimidation, or undue influence, and spontaneity by fraud. Here, the lack of evidence that Gaudencio understood the terms of the sale meant his consent was not intelligently given, thus vitiating the contract. This situation falls squarely within the ambit of Article 1339 of the Civil Code, which addresses the duty to disclose facts:

Failure to disclose facts, when there is a duty to reveal them, as when the parties are bound by confidential relations, constitutes fraud.

The Court, however, did not invalidate the sale based on the lack of consent from Ciriaco and Cesario. The Court observed that the siblings had previously undertaken an oral partition of the inherited properties, which included their subject land. Ciriaco and Cesario subsequently sold their respective shares in Lot No. 11450 to third parties, demonstrating their recognition of, and consent to the oral partition of their inherited lands. As the Supreme Court has long recognized the validity of oral partitions in Casilang, Sr. v. Casilang-Dizon, 704 Phil. 397, 418 (2013), the Court held that Ciriaco and Cesario effectively waived their rights over Lot No. 5306 by accepting their shares in the oral partition.

Consequently, the Supreme Court determined that the Deed of Sale was not void but voidable, as defined by Article 1390 of the Civil Code. A voidable contract is binding until annulled by a court. The action to annul a voidable contract, according to Article 1391, must be brought within four years from the discovery of the fraud. The Court agreed with the Court of Appeals that the prescriptive period commenced on May 17, 1994, when Ciriaco, Cesario, and Domingo executed an Affidavit of Waiver, acknowledging Adriano’s claim of ownership based on the contested sale.

Because the petitioners filed their complaint only on May 23, 2002, more than eight years after discovering the alleged fraud, their action had already prescribed. The Supreme Court, therefore, affirmed the Court of Appeals’ decision to dismiss the complaint.

FAQs

What was the central legal issue in this case?	The main issue was whether the Deed of Sale was valid, considering that Gaudencio, one of the parties, was illiterate and may not have fully understood the terms of the sale.
What does it mean for a contract to be voidable?	A voidable contract is valid and binding unless and until it is annulled by a court. It can be ratified, meaning the parties can agree to be bound by it despite the defect.
How long do you have to file a case to annul a voidable contract based on fraud?	Under Article 1391 of the Civil Code, the action for annulment based on fraud must be brought within four years from the discovery of the fraud.
What happens when one party to a contract is illiterate?	When one party is illiterate and alleges mistake or fraud, the burden shifts to the party enforcing the contract to prove that the terms were fully explained to the illiterate party in a language they understand.
Why was the complaint dismissed in this case?	The complaint was dismissed because the petitioners filed their action for annulment more than four years after discovering the alleged fraud, meaning the action had already prescribed.
What is the significance of Article 1332 of the Civil Code?	Article 1332 provides protection to individuals who are unable to read or understand the language of a contract, ensuring that the terms are fully explained to them.
Can siblings validly divide inherited properties orally?	Yes, the Supreme Court has consistently recognized the validity of oral partitions of inherited properties among siblings, as demonstrated by their actions and agreements.
What is the effect of prescription in legal actions?	Prescription means that the right to bring a legal action is lost due to the passage of time fixed by law, preventing the party from seeking legal redress.

This case serves as a crucial reminder of the legal safeguards in place to protect vulnerable individuals in contractual agreements. While the petitioners’ claim was ultimately barred by prescription, the ruling underscores the judiciary’s commitment to ensuring fairness and transparency in contractual dealings, especially where disparities in knowledge or education exist.

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: CIRIACO OBERES, G.R. No. 211422, October 16, 2019