Chapter 6

Rescissible Contracts
 ART. 1380. Contracts validly
agreed upon may be rescinded
in the cases established by law.
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.
1. Rescission under article 1383 is not a principal
remedy.
2. If the damage is repaired, as in the case of
lesion suffered by the ward or absentee,
rescission cannot take place.

3. A rescissible contract may be assailed directly

only by a proper action in court, and not
indirectly or collaterally by way of defense.
Rescissible contracts are those validly
agreed upon because all the
essential elements exist and, therefore,
legally effective, but in the cases
established by law, the remedy of
rescission is granted in the interest of
equity.
Binding force of rescissible contracts.

They are valid and enforceable

although subject to rescission by
the court when there is damage or
prejudice to one of the parties or to
a third person.
Requisites of rescission.

The following are the requisites in order that the remedy of rescission
may be availed of:

1. The contract must be validly agreed upon;

2. There must be lesion or pecuniary prejudice or damage to one

of the parties or to a third person;

3. The rescission must be based upon a case especially provided by law;

4. There must be no other legal remedy to obtain reparation for

the damage;
5. The party asking for rescission must be able to return what
he is obliged to restore by reason of the contract;

6. The object of the contract must not legally be in the

possession of third persons who did not act in bad faith; and

7. The period for filing the action for rescission must not
have prescribed.
In order that fraud of creditors may be a valid ground for rescission, the
following requisites must also be present:

1. There must be an existing credit prior to the contract to be rescinded,

although it is not yet due or demandable later;

2. The subsequent contract made by the debtor conveys a patrimonial

benefit to a third person;

3. There must be fraud on the part of the debtor which may be presumed
or proved; and

4. The creditor has no other legal remedy to satisfy his claim that is, he
cannot recover his credit in any other manner, it not being required that
the debtor be insolvent.
ART. 1381. The following contracts are rescissible:

1. Those which are entered into by guardians whenever

the wards whom they represent suffer lesion by more than one
fourth of the value of the things which are the object thereof;

2. Those agreed upon in representation of absentees, if the latter

suffer the lesion stated in the preceding number;

Illustration:
G is the guardian of W (ward). G sells the property of W worth
P20,000.00 for only P15,000.00. The contract of sale cannot be
rescinded because the lesion is not more than one-fourth. However,
if the property is sold for less than P15,000.00, W can rescind the
sale by proper action in court upon reaching the age of majority.
3. Those undertaken in fraud of creditors when the latter cannot in
any other manner collect the claims due them;

Illustration:
D owes C. To defraud C, D sells his only lot to T who knows of
the fraudulent intention of D. The sale is rescissible. However, the
sale is not rescissible if T was in good faith such as when he was not
aware of D’s fraudulent intention when he bought the property.
4. Those which refer to things under litigation if they have been
entered into by the defendant without the knowledge and approval
of the litigants or of competent judicial authority; and

Illustration:
S sues B for the recovery of a parcel of land. In this case, the
land is a “thing under litigation.” If, during the pendency of the case,
B sells the land to C without the approval of S or of the court, the
sale is rescissible at the instance of S in case he wins in his suit for
the recovery of said land unless C is in legal possession of the land in
good faith. S, however, may protect his right by fi ling a notice of *lis
pendens.

*Doctrine that refers to the jurisdiction, power or control which a court acquires over a
property involved in a suit, pending the continuance of the action, until final judgment
5. All other contracts specially declared by law to be subject to
rescission.

Illustration:
“Art. 1098. A partition, judicial or extrajudicial, may also be
rescinded on account of lesion, when any one of the co-heirs
received things whose value is less, by at least one-fourth, than the
share to which he is entitled, considering the value of the things at
the time they were adjudicated.”
 ART. 1384. Rescission shall be
only to the extent necessary to
cover the damages caused.
Illustration:

G, the guardian of M, a minor was authorized by the

court to sell two parcels of land valued at P200,000.00 each. G
sold the two properties to B for only P200,000.00. In this case,
the entire contract need not be rescinded. Rescission may
properly be applied only to one parcel to cover the damage
caused by G. But if G or B is willing to pay the difference of
P200,000.00, rescission is precluded.
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.
Effects of Rescission

1. Obligation of mutual restitution.

2. Abrogation of contract
3. Obligation of third person to restore.
Effects of Rescission

1. Obligation of mutual restitution.

2. Abrogation of contract
3. Obligation of third person to restore.
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.
Rescissible payment, requisites

1. The debtor is insolvent

2. The obligation is not yet due
3. The debtor makes the payment