Short answer. Yes. Article 2038 subjects a compromise tainted by mistake, fraud, violence, intimidation, undue influence, or falsity of documents to Article 1330 — the rule that consent so vitiated makes a contract voidable. One limit: you cannot raise a mistake of fact against a party who, relying on the settlement, withdrew from a pending case.
What the law says
A compromise in which there is mistake, fraud, violence, intimidation, undue influence, or falsity of documents, is subject to the provisions of article 1330 of this Code.
Civil Code, Article 2038 — Vitiated Compromise. Read the full provision →
A compromise still needs free consent
A settlement is a contract, and like any contract it requires consent that is freely and intelligently given. Article 2038 makes the point directly: A compromise in which there is mistake, fraud, violence, intimidation, undue influence, or falsity of documents, is subject to the provisions of article 1330 of this Code. Those are the classic vices of consent. Where one of them is present, the compromise is voidable — valid on its face but liable to be annulled at the instance of the party whose consent was defective. It is not automatically void; it stands until a court sets it aside.
What the vices cover
Each ground describes a different way consent can be corrupted. Fraud is being deceived by serious misrepresentation into agreeing. Violence and intimidation are being coerced by force or by threat. Undue influence is having one's will improperly overborne by another who holds power over you. Mistake is a genuine error about something essential to the deal. Falsity of documents covers a settlement procured on the strength of forged or fabricated papers. Any one of these, if proven, opens the door to annulment — the reason people are pressed to settle under pressure does not make the resulting compromise untouchable.
The exception that protects reliance
Article 2038 attaches a qualification aimed at mistake in particular: one party cannot set up a mistake of fact against the other if that other, by virtue of the compromise, has already withdrawn from a litigation that was under way. The logic is fairness to the party who acted on the settlement — having given up a live case in reliance on it, he should not have it undone over the other side's error. The limit is narrow: it concerns mistake of fact only, and does not shield a settlement obtained through fraud, intimidation, or falsified documents.
Acting on a voidable settlement
Because the compromise is voidable rather than void, it binds you until annulled, so the burden is on you to move. Assemble the proof of the vice — the misrepresentation, the threat, the forged document, or the essential error — since these are questions of evidence. Mind the period the law allows for seeking annulment, which runs from a point that depends on the vice involved. And avoid conduct that looks like ratification: continuing to accept benefits under the settlement after the pressure has lifted can be treated as confirming it, and confirmation closes off the remedy.
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.
- Domingo Realty, Inc., et al. vs. Court of Appeals, et al, G.R. No. 126236, January 26, 2007 — read the decision on LawPhil →
- Equitable PCI Banking Corporation vs. RCBC Capital Corporation, G.R. No. 182248, December 18, 2008 — read the decision on LawPhil →
- Maria Sheila Almira T. Viesca vs. Hon. Rebecca r. Mariano Pres. Judge etc, et al, G.R. No. 171698, July 4, 2007 — read the decision on LawPhil →
- Wilfredo and Swarnie Aromin vs. Paulo Floresca, et al, G.R. No. 160994, July 27, 2006 — read the decision on LawPhil →