Short answer. Possibly yes. Under Article 1342 of the Civil Code, misrepresentation by a third person normally does not affect the contract, but there is an exception: if that misrepresentation created a substantial mistake that was mutual — meaning both parties were misled — the contract can be vitiated.
What the law says
Misrepresentation by a third person does not vitiate consent, unless such misrepresentation has created substantial mistake and the same is mutual.
Civil Code, Article 1342 — Misrepresentation by a Third Person. Read the full provision →
The general rule and the exception
Article 1342 starts with a general principle: misrepresentation by someone who is not a party to a contract ordinarily has no effect on it. The parties bound themselves to each other, and the statements of an outsider do not automatically unwind that agreement. The policy behind this is stability — contracts should not be easily challenged every time a third person involved in the negotiations said something inaccurate. But the law recognizes one significant exception: if the third person's misrepresentation created substantial mistake and the same is mutual, that consent is vitiated.
What 'substantial' and 'mutual' mean
Both elements must be present together. The mistake must be substantial — it must go to the heart of the transaction, not a peripheral detail. A buyer who would have transacted anyway, even knowing the truth, cannot claim the misrepresentation was substantial. The mistake must also be mutual — both the buyer and the seller were deceived. If only one party was misled while the other knew the truth, the exception under Article 1342 does not apply. The scenario of a broker who misled both parties about key property facts fits this structure, but the specific facts determine whether both thresholds are met.
What 'vitiated' consent means for your contract
When consent is vitiated by mistake, the contract is not automatically void — it is voidable. That means the affected party may choose to annul it or ratify it. Ratification occurs if the injured party, knowing the true facts, elects to proceed with the contract anyway. Annulment, on the other hand, requires a court action filed within the period the law provides. If the court finds vitiated consent, the parties are restored as far as possible to their original positions.
Evidence you will need
Building a claim around Article 1342's exception requires showing what the broker actually said, that both parties relied on it, and that neither would have entered the contract on the same terms had they known the truth. Written communications, advertisements, representations made during negotiations, and what the property actually turned out to be are all relevant. Because the broker is a third party, you may also wish to explore whether separate claims against that broker arise independently of the contract between you and the other party.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Phil. Bank of Communications vs. Court of Appeals, et al, G.R. No. 109803, April 20, 1998 — read the decision on LawPhil →