Short answer. No. Article 1344 of the Civil Code provides that fraud must not have been employed by both contracting parties for it to make a contract voidable. When both parties used fraud, neither can annul. The fraud is treated as incidental, obliging each person who employed it to pay damages — but the contract itself stands.
What the law says
In order that fraud may make a contract voidable, it should be serious and should not have been employed by both contracting parties. Incidental fraud only obliges the person employing it to pay damages.
Civil Code, Article 1344 — Causal vs. Incidental Fraud. Read the full provision →
Two requirements for fraud to void a contract
Article 1344 sets two conditions that must both be satisfied before fraud can render a contract voidable. First, the fraud must be serious — not a minor misrepresentation or puffery but a deception that was material to the other party's consent. Second, the fraud "should not have been employed by both contracting parties." When both parties lied to each other, neither meets this second requirement. The mutual fraud bars both from using it as a ground for annulment. What remains is a valid contract — and liability to pay damages for whatever deception each party employed.
Incidental fraud and the damage remedy
Article 1344 distinguishes causal fraud — which affects the very decision to enter a contract — from incidental fraud, which affects the terms but not whether a party would have contracted at all. When both parties used fraud, the law treats each party's deception as incidental: "Incidental fraud only obliges the person employing it to pay damages." Each party owes the other damages for the deception they practiced, but the contract remains intact. You may have a damages claim against the other party, and they may have one against you, but annulment is off the table.
Why the law bars mutual fraudsters from annulment
Allowing a party to annul a contract based on the other's fraud, while concealing their own, would be inequitable. The party seeking annulment would benefit from cancelling the deal while escaping accountability for their own deception. Article 1344 prevents this: if both parties were willing to deceive, neither has clean hands, and neither deserves the remedy of annulment. The damages remedy — each paying the other for harm caused by their respective fraud — is the fairer outcome.
What you can actually do
If you are in a contract where both you and the other party engaged in deception during negotiations, your realistic options are: perform the contract as agreed and seek damages for the harm the other party's fraud caused you, or negotiate a mutual release if both parties prefer to walk away. Before pursuing any formal claim, it is worth assessing honestly how significant each party's deception was, what damages actually resulted from each fraud, and whether the sums at stake justify the cost of litigation. A lawyer can help you evaluate whether what you described as mutual fraud truly meets that standard, or whether one party's conduct was actually more serious than the other's.
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.
- Coca-Cola Bottlers Phils, Inc. vs. Spouses Efren and Lolita Soriano, G.R. No. 211232, April 11, 2018 — read the decision on LawPhil →
- Paradigm Development Corporation of the Philippines vs. Bank of the Philippine Islands, G.R. No. 191174, June 7, 2017 — read the decision on LawPhil →
- Nenita Carganillo vs. People of the Philippines, G.R. No. 182424, September 22, 2014 — read the decision on LawPhil →
- Spouses Carmen Tongson and Jose Tongson vs. Emergency Pawnshop Bula, Inc. et al, G.R. No. 167874, January 15, 2010 — read the decision on LawPhil →