Aniel, Mark Evan M

Student #: 5190007
UST Law 1 E-B

6Study Guide
(Answer Sheet)
Chapter 6- Rescissible Contracts

A.

1. FALSE. Article 1385 of the new Civil Code provides the requisites before an action to
rescind can be brought; para (2) of the same article governs this item as states that “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”. Therefore, under this article that third
party should not be in legal possession of the object such as registration in the registry of
property and must be in good faith.

2. FALSE. Rescissible contracts are valid until rescinded; there is a sort of extrinsic defect
consisting of an economic damage or lesion, therefore the purpose of rescission is to give a
relief to protect one of the parties or third person from all injury which the contract may cause to
protect some preferential right as decided in the case of Aquino V. Tañedo.

3. FALSE. Article 1385 must be interpreted as a whole and not with the first paragraph
only. It says that this will only be possible if the one who demands rescission can return whatever
he may be obliged to restore. This is in keeping with the 4 requisites provided under Article 1385
for an action to rescind be brought.

4. TRUE. As decided in the case of Barredo vs. Leaño, 431 SCRA 106, June 04, 2004.

5. TRUE. However, it can only abrogate the contract in all parts once the resolution for
rescission has been granted as decided in the case of Grace Park Engineering Co., Inc. vs.
Dimaporo.

6. FALSE. If the donor-debtor is able to reserve sufficient property to pay all debts
contracted BEFORE the donation then it is not considered fraudulent as provided by Article
1387.

7. TRUE. This is provided under Article 1387 of the new Civil Code. In Gaspar V Dorado
it was decided that judgement means all judgements even if not yet a final judgement.

8. TRUE. This is in keeping with Article 1389 of the new Civil Code.

9. TRUE. This is in keeping with Article 1389 of the new Civil Code. The ward will be
given 4 years after reaching the age of majority (the time the guardianship ceases); hence before
reaching 22 years of age, the former ward should already have sued for the rescission of the
contract.

10. TRUE. As provisionally provide in Article 1389 of the new Civil Code.

11. FALSE. Rescission does not only create an obligation to return the object of the
contract but its fruits, and the price with its interests but can only be carried out when he who
demands rescission can return whatever he may be obliged to restore as provided by Article
1385.
 12. FALSE. As decided in the case of UFC V.CA et. al, it states that the general rule is
that rescission of a contract will NOT BE PERMITTED for a slight or casual breach but ONLY
for such substantial and fundamental breach as would defeat the very object of the parties in
making the agreement.

13. TRUE. A rescissible contract is not void; its valid until rescinded. Thus, in the
meantime, it can convey title, this is the general rule in keeping with Article 1380 of the new Civil
Code.

14. TRUE. As defined in the Report of the Code Commission, it has defined rescissible
contract as a contract with all the essential requisites of a contract exist and the contract is valid
but by reason of injury or damage to third persons, such as creditors, the contract may be
rescinded.

15. TRUE. Action to rescind contracts made in fraud of creditors is called “accion
pauliana” as provided in Article 1381 (2). Generally, the party desiring to rescind must show that
the conveyance of alienation was fraudulent. He has the burden of proof except in the cases
when there is a presumption of fraud in keeping with Article 1387 of the new Civil Code.

B. Multiple Choice.

1. Answer: A.
As expressly stipulated in Article 1389 of the new Civil Code, the action to claim
rescission must be commenced within four years. In the case at bar, the year to start counting
the prescription from is January 28, 1993.

2. Answer: A.
As defined by Manresa and as provided by Art. 1380.

3. Answer: D
The sale is valid, binding and enforceable. As decided in Gomez V Rono,
repentance at having entered into transaction is not a ground for annulment. In addition the court
said that it is not the function of the law protect or relieve a man from the consequences of a bad
bargain.

4. Answer: A.
This is the definition of rescission as decided in the case of Aquino V Tañedo.

5. Answer: C
Generally, the donation MAY NOT be rescinded since the debts were incurred after
the donation as provided by Article 1387. However, rescission may still prosper if it can be shown
that the donation had been DELIBERATELY made beforehand to avoid the payment of debts
still to be contracted, this is in keeping with the Doctrine of Anticipatory Fraud.

6. Answer: D. Ward

7. Answer: C.
As stipulated in Article 1381 of the new Civil Code, a contract is rescissible which
are entered into by guardians whenever the wars whom they represent suffer lesion by
more than ¼ of the value of the things which are the object thereof. This usually occurs
when there is a great disparity between the price and the value.
 8. Answer: A.
This is defined in the case of The Wellex Group Inc. V U-Land Airlines Co,Ltd.

9. Answer: D.
Article 1385 supports this statement as it provides that “Rescission does not only
create an obligation to return the object of the contract but its fruits, and the price with its interests
but can only be carried out when he who demands rescission can return whatever he may be
obliged to restore.

10. Answer: D.
A contract of sale with a price unusually inadequate though resulting to a lesion is
not rescissible because it is assumed that the contract of sale is legal therefore making the object
in legal possession of the other party. Inadequacy in price might show a hint of bad faith but as
a general rule, the party desiring to rescind must show that the conveyance of alienation was
fraudulent. He has the burden of proof except in the cases when there is a presumption of fraud
in keeping with Article 1387 of the new Civil Code.

11. Answer: B.
As provided in Article 1381 (2) of the new Civil Code.

12. Answer: C.
This is not rescissible because it is a voidable contract. Although a voidable
contract may be rescinded, for example, by prejudiced creditors. This is particularly true if the
injured party does not care to ask for annulment.

13. Answer: C.
Part of the 4 requisites before an action to rescind can be brought is that there
must be no other legal remedy available for the defraud creditors as stated by Article 1383 of
this code.

14. Answer: D
Under the Badges of Fraud as provided by Article 1387 of the new Civil Code, the
creditor having no other legal remedy to satisfy his claim is not a prerequisite for action to rescind
contracts in fraud of creditors as this is a requisite under Art. 1385 of the same code instead.

15. Answer: D.
The answer is none of the above since as decided in the case of Anchor Savings
Bank (Formerly Anchor Finance and Investment Corporation) vs. Furigay, an accion pauliana
presupposes 1) A judgment; 2) the issuance by the trial court of a writ of execution for the
satisfaction of the judgment, and 3) the failure of the sheriff to enforce and satisfy the judgment
of the court.

16. Answer: C
The contract is considered to be VOIDABLE therefore it can be annulled. If the
mistake vitiates consent then it makes the contract voidable as provided by Article 1390. The
error or mistake committed was regarding the true amount of the painting therefore this is an
error that principally induced the party to enter the contract, thus this is considered to be a
substantial mistake or error thereby vitiates S’ consent.
 17. Answer: A
For it to constitute as a badge of fraud the fact that the consideration of the
conveyance is FICTITIOUS OR INADEQUATE as laid down by the court in Regalado V
Luchisinger.

18. Answer: D
It should be a sale upon credit by an INSOLVENT debtor as decided in Regalado
V Luchisinger.

19. Answer: A, B and C.

As decided in Adorable V CA, the following successive measures must be taken
by a creditor before he may bring an action for rescission of an allegedly fraudulent sale : (1)
exhaust the properties of the debtor through levying by attachment and execution upon all the
property of the debtor, except such as are exempt by law from execution; (2) exercise all the
rights and actions of the debtor, save those personal to him (accion subrogatoria); and (3) seek
rescission of the contracts executed by the debtor in fraud of their rights (accion pauliana). This
is in keeping of Article 1380 (3) stating that those undertaken in fraud of creditors when the latter
cannot in any other manner collect the claims due them.

20. Answer: D
There are four kinds of defective contracts meaning contracts that may be
invalidated: rescissible, voidable, void and inexistent and UNFORCEABLE.

21. Answer: D
In the case at bar, the contract is rescissible and valid. First it is rescissible because
it contains all the requisites required before the action for rescission can be brought as provided
by Article 1385 and they are the following:
a. Plaintiff must be able to return what has been received. In this case the
land can still be returned.
b. Not in legal possession of 3rd party in Good faith. We can concur from the
scenario that the property is not yet legally possessed by B and when he bought it from A he
was in good faith.
c. There is no other legal remedy
b. must be brought within 4 years.

With all these requisites present X can move for the rescission of the contract.

As to the second question, it can still be registered under B’s name since he bought
the property from A in good faith. If X is to presume that B was in bad faith, the burden of proof
is in X’s hand as provided by Article 1387.

22. Answer: C
Example # 1 is valid but unenforceable and not rescissible. As provided by law if
the guardian will be engaging in act of ownership, which is in this case a contract of sale, then
there is a need for a court approval for without it the contract is unenforceable regardless of the
amount of lesion.
Example #2 is voidable because the consent of X was vitiated because of error or
mistake as provided by Article 1390. X’s mistake is substantial since the mistake refer to the
substance of the thing which is the object of the contract. In this case it is Php 10,000.00 in
exchange of the house. This is considered as substantial mistake for if X would have known the
true value of the house, then X might have not sold it, this is in consonance with Article 1331 of
the new Civil code.
 23. Answer: B
As decided in the case of Siguan vs. Lim. It is, therefore, essential that the party
asking for rescission prove that he has exhausted all other legal means to obtain satisfaction of
his claim.

24. Answer: B
In the case at bar, since the creditor another manner to collect what is due for them
then the sale is not rescissible to be in consonance with what is provided by Article 1381 (3).

25. Answer: D
As defined in Republic Act 10142 of the Financial Rehabilitation and Insolvency
Act of 2010.

26. Answer: B
This is governed by Art.1399, therefore making it a voidable contract and not a
rescissible one.

27. Answer: C
The contract is VOIDABLE because M as cannot give consent to a contract as an
unemancipated minor provided by Article 1327. Thus, making the contract voidable since M as
a party of the sale is incapable of giving consent to a contract as provided by Article 1390. For
this to qualify as a rescissible contract it should be G that have sold the property and therefore
caused a lesion of more than ¼ of the object thereof.

28. Answer: C
Those covered by Statute of Fraud are unenforceable contracts and not rescissible
as provided by Article 1403. What are rescissible are those under the badges of Fraud as
provided by Article 1387 of the new Civil code.