G.R. No. 104751 October 7, 1994
ISABEL RUBIO ALCASID, assisted by her husband DOMINGO A. ALCASID, petitioners, vs. THE HONORABLE COURT OF APPEALS and RUFINA L. LIM, respondents.

FACTS

Petitioner Isabel Rubio Alcasid is a co-owner of two parcels of land in Calamba, Laguna. Private respondent Rufina L. Lim offered to purchase the property. Petitioner was willing to sell her share for P4,500,000.00 only if all her co-owners would sell their respective shares. Petitioner engaged Atty. Antonio A. Fernandez to negotiate the sale, unaware that he was also representing private respondent. In March 1990, Atty. Fernandez informed petitioner that all her co-owners agreed to sell their shares for P1,500,000.00. On March 4, 1990, petitioner signed a Deed of Sale drafted by Atty. Fernandez. Petitioner later learned the other co-owners did not agree to sell. On November 4, 1990, petitioner filed a complaint in the Regional Trial Court for annulment of the contract of sale and damages, alleging fraud, mistake, and undue influence. The trial court denied private respondent’s motion to dismiss and later granted petitioner’s motion to declare private respondent in default. The Court of Appeals reversed, holding the complaint stated no cause of action.

ISSUE

Whether the complaint for annulment of contract based on fraud, mistake, and undue influence states a cause of action.

RULING

The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. The complaint did not state a cause of action.
1. On Fraud: For fraud to vitiate consent under Article 1338 of the Civil Code, it must be employed by one contracting party upon the other, induce the other to enter the contract, be serious, and result in damage. The Court found the element of inducement by the other contracting party lacking. A letter dated March 4, 1990, from Atty. Fernandez to petitioner, clearly identified him as “Counsel for Miss Rufina Lim,” belied petitioner’s claim of unawareness of his dual representation. The alleged misrepresentation was not shown to be an act of private respondent.
2. On Mistake: Under Article 1331, a mistake invalidating consent must refer to the substance of the contract or principal motivating conditions, and must be real and not avoidable by ordinary diligence. Petitioner’s alleged mistake—relying on Atty. Fernandez’s word about her co-owners’ consent—could have been avoided by directly verifying with her co-owners.
3. On Undue Influence: Under Article 1337, undue influence involves improper advantage of power over another’s will, depriving reasonable freedom of choice. The Court of Appeals’ finding, supported by evidence, was that petitioner executed the contract of her own free will and choice, not from duress. A competent person who assents freely and fairly is bound.
Since private respondent committed no wrongful act violating a primary right of petitioner, no cause of action existed.