Rescissible Contracts (Arts.

1380 to 1389) carried out only when he who demands rescission can return whatever he may be obliged to
Guzman, Bocaling & Co. v. Bonnevie
The rights of First Refusal. Art. 1388. Whoever acquires in bad faith the things alienated in
fraud of creditors, shall indemnify the latter for damages suffered by them on account of the
alienation, whenever, due to any cause, it should be impossible for him to return them.
Siguan v. Lim
Action Paulina requisites not meet. (1) There must be a credit existing prior to the celebration
of the contract, (2) there must be a fraud, or at least the intent to commit fraud, to the prejudice
of the creditor seeking the rescission. Art. 1381 (3) those undertaken in fraud of creditors when
the latter cannot in any other manner collect the claims due them. Art. 1383, the action for
rescission is subsidiary; it cannot be instituted except when the party suffering damage has
no other legal means to obtain reparation for the same.
restore.
Voidable Contracts (Arts. 1390 to 1402)
House International v. IAC
Article 1397. The action for the annulment of contracts may be instituted by all who are
thereby obliged principally or subsidiarily. However, persons who are capable cannot allege
the incapacity of those with whom they contracted; nor can those who exerted intimidation,
violence, or undue influence, or employed fraud, or caused mistake base their action upon these
flaws of the contract. (1302a) Petitioner is not a party nor privy to the contract, cant assail the
validity of the said contracts.
Malabanan v. Gaw Ching

Pryce Corp. v. PAGCOR
Rescission in Art 1191 and Art. 1380. In rescission under Art 1191, is based on the breach of
faith by the defendant, that violates the reciprocity between parties, it is not a subsidiary
action. The action for rescission is a principal action retaliatory in character, it being unjust
that a party be held bound to fulfill his promises when the other violates his. In rescission
under Art. 1380, it is on account of breach of stipulations predicated on injury to economic
interests of the party, the cause of action is subordinated to the existence of that prejudice,
because it is the raison deter as well as the measure of the right to ascend.
Article 1397. The action for the annulment of contracts may be instituted by all who are
thereby obliged principally or subsidiarily. However, persons who are capable cannot allege
the incapacity of those with whom they contracted; nor can those who exerted intimidation,
violence, or undue influence, or employed fraud, or caused mistake base their action upon these
flaws of the contract. (1302a) Petitioner is not a party nor privy to the contract, cant assail the
validity of the said contracts.

Cabaliw v. Sadorra
Badges of Fraud. The fact that the transfer is made between father and son when there are
present any of the above circumstances. That the conveyances or deeds of sale were executed
to avoid payment of the monthly support adjudged in her favor and to deprive her of the means Alcasid v. CA
to execute said judgement, or as a judgment creditor of Benigno Sadorra. That sales merely a
scheme to place beyond reach of the wife the only properties belonging to the conjugal
partnership and deprive her of what rightly belongs to her and her only daughter Soledad.

China Banking Corp v. CA

Art. 1385. Neither shall rescission take place when the things which are the object of the
contract are legally in the possession of third persons who did not act in bad faith. In this case,
indemnity for damages may be demanded from the person causing the loss. (1295)
Cayabyab v. IAC
Coastal Pacific Trading v. Southern Rolling
Art. 1385. Rescission creates the obligation to return the things which were the object of the
contract, together with their fruits, and the price with its interest; consequently, it can be
carried out only when he who demands rescission can return whatever he may be obliged to
restore. Neither shall rescission take place when the things which are the object of the contract
are legally in the possession of third persons who did not act in bad faith. In this case,
indemnity for damages may be demanded from the person causing the loss. (1295)

Caltex Philippines v. PNOC Shipping

Art. 1381, the following contracts are rescissible: (3) those undertaken in fraud of creditors Theis v. CA
when the latter cannot in any other manner collect the claims due them.

Uy Tong v. Silva
Art. 1382. Payments made in a state of insolvency for obligations to whose fulfillment the
debtor could not be compelled at the time they were effected, are also rescissible. (1292)

Floro Enterprises v. CA
Art. 1385. Rescission creates the obligation to return the things which were the object of the
contract, together with their fruits, and the price with its interest; consequently, it can be