RESCISSIBLE CONTRACTS

(Art. 1380 – 1389)
What are rescissible contracts?
They are contracts validly agreed upon and legally effective, but in cases of
economic injury or damage (lesion), they may be rescinded.
What is action for rescission?
An action for rescission is a remedy granted by law to injured parties, whether one
of the contracting parties or a third party, to recover from the damages (lesion)
caused by the valid contract.
Who may file for rescission? What happens if he files for rescission?
Parties who suffered economic damage or lesion (like loss, instead of profit) may
file for rescission, whether they are:
1. one of the contracting parties or a defrauded creditor; or
2. their heirs and assigns; or
3. creditor of the mentioned entitled to subrogation.
When they do file for rescission, they must file before it prescribes and they would
only be entitled to the extent necessary to cover damage suffered.
What are the requisites of rescissible contracts?
The following are the requisites of rescissible contracts:
1. Contract validly agreed upon;
2. Lesion or injury in relation to money, to one of the parties or to a third
parties;
3. Rescission must be based upon a case especially provided by law;

4. Object of the contract with its fruits. b. Fraud on the part of the debtor be presumed or proved. if any of the contracting parties fail to comply with their obligations. 6. There be an existing credit prior the contract. and c. 4. There must be no other legal means to recover from the injury. Creditor cannot recover his credit in any other manner. like – a. Action for rescission done before it prescribes. and 7. 5. if the lesion is more than ¼ value of the thing. if the lack of area of real estate be at least 1/10 of that stated. Mutual restitution – party asking for rescission must be able to return what he is obliged to restore by reason of the contract. if lesion is more than ¼ value of the thing. 5. Object must not be in the legal possession of third persons who acted in good faith. if the lesion is more than ¼ value of the thing. In a partition. In a contract of sale. Contracts entered into by guardians on behalf of wards. a. In a lease. What are the types / cases of rescissible contracts? The following may be rescinded: 1. Contracts which refer to objects under litigation. Other instances. or . 2. provided that – a. and b. Contracts entered into by representatives on behalf of absentees. 3. or c. Contracts undertaken in fraud of creditors. or b. Price thereof with legal interest. although it is not yet due and demandable.

. The defect arises if the within the four years from W’s capacity (the moment he turns 18 years old). In contracts entered into on behalf of wards or absentees. if approved by the courts. What is an example of a rescissible contract? Let’s say that G is the guardian of W. or b. W questions the defectiveness of this contract. Payments made in a state of insolvency. G. if – a. lesion is less than or equal to ¼ value of the thing. the contract in question is validly agreed upon. or c. and the lesion is the loss from selling the car. and e. who was only 15 years old at the time. In contracts undertaken in fraud of creditors. and there is another legal means to recover or collect his claim. 2. In this instance. 4. on behalf of W. When mutual restitution is no longer possible. if the damage is repaired. or d. He may then file an action for rescission. 3. if the inferior value of the thing exceeds 1/10 of the price agreed upon. When the object of the contract is in the legal possession of a third person who acted in good faith. contract was not made by guardian or representative.d. In a contract of sale. sells W’s car worth Php2 million for only Php1 million – resulting in a Php1 million loss. When rescission may NOT be applied? Rescission may not be applied: 1.

Presence of essential elements: All essential elements are present 2. the action for rescission has prescribed and he may no longer file for action for rescission. 7. whether it be one of the contracting parties or a third person 8. until rescinded 3. Obligations and Contracts . Who may file rescission or attack or question: injured party. as to: 1. Whether it can be cured: Yes. Prescription period: action for rescission must be filed 4 years from –  General rule: time of perfection.  Contracts in representation of wards: time the ward attains capacity. Civil Code of the Philippines Annotated Volume Four De Leon.However. Nature: Valid and binding. but in the economic injury or damage it would cause to one of the contracting parties or to third persons 4. Cause of defect: External Defect – defect is not in the contract itself. if W lets the four years lapse without questioning. Whether it can be ratified: No need for ratification 5.  Contracts in representation of absentees: time the absentee appears. Calica Sources: Paras. Rescissible Contracts. prescription can cure the defect 6. Whether it may be directly attacked or collaterally attacked: Direct attack only Prepared by: Angelica Grace G.