Abestilla, Valerie Kate R.

CHAPTER 6 RESCISSIBLE CONTRACTS

STUDY GUIDE

I. Definitions

1. 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. Based from
upcounsel.com, A Rescissible contract is one that was entered into legally by the
contracting parties but has resulted in economic damage to one of the parties or an
outside party. The court can therefore rescind, or set aside, the contract for
equitable reasons.
2. Rescission is a remedy granted by law to the contracting parties and sometimes
even to third persons in order to secure reparations of damages caused them by a
valid contract, by means of the restoration of things to their condition in which they
were prior to the celebration of said contract.
II. Discussion
1. the rule on the liability of the acquires in bad faith of property alienated in frau
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; if there are two or more alienations the first acquirer shall be first, and so on
successively. (Art. 1388)
2. On the following cases, rescission is not allowed even though the contract is
found to be rescissible under the law:
- if the thing to be restored is not demanded or if the party who demands
rescission cannot return what he is obliged to return due to causes like its lost,
broken or sold.
- if the object of the contract is on the legal possession of a third person who acted
in good faith. In this case, the remedy is indemnity for damages.

III. Problem
1. Yes, C has the right to ask for the rescission of the sale of the car for it is a way
of escaping his debt to D. Since the car is the only suitable collateral for his credit, it
Is the only way he can pay C. Selling that car implies that he doesn’t want to pay his
credit. If he sold that car to X, he may reason out that he doesn’t have the money to
pay for his debt and in this problem, he acted in bad faith which tells us that he is
aware that C might get his car as a payment for his debt. It is considered as fraud
because it tells us that even though he has the capacity to pay his debt with his car,
he tries to avoid it. Also, what if X is his friend and D negotiated with X before

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 “selling” the car to him. Since they are friends, he may just get it back without
really selling it to X. In this case, we may apply Art. 1383 that says if the injured
party proves that he has no other legal means aside from rescinding the contract to
obtain redress for the damage caused even if the contract is covered by Art. 1381.
But if D pays his debt, C has no right to ask for the rescission of the sale of the car
for the damages caused to his by D was already settled.
2. The defense may be even though the lesion is above ¼ of the market value of
the property, the rescission may not take place for it is approved by the courts.
Based from Art. 1386, if a contract entered in behalf of a ward or absentee has been
approved by the court, rescission may not take place even though there is lesion or
not. But, if the minor reached his appropriate age, he could rescind the sale by the
proper action when he reached his proper age in court.

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