Rescissible Contracts

A rescissible contract is a contract where all of the essential requisites of a contract exist and the
contract is valid, but because of injury or damage to either of the contracting partier or to third persons, it
may be rescinded.1 A rescissible contract is valid until rescinded; there is a sort of extrinsic defect
consisting of an economic damage or lesion.2

Rescission is a remedy granted by law to the contracting parties, and even to third persons, to secure the
reparation of damage caused to them by a contract, even if the same should be valid, by means of the
restoration of things to their condition prior to the celebration of the contract. 3 It is a relief to protect one
of the parties or a third person from all injury and damages which the contract may cause, to protect some
preferential right.4

Even a voidable contract may be rescinded, for example, by prejudiced creditors.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. 5

Essential Features

As to: Essential Features

1. Defect There is damage or injury either to one of the
contracting parties or to third persons.

2. Effect They are considered valid and enforceable until

they are rescinded by a competent court.

3. Prescribility of action or defense The action for prescription may prescribe.

4. Susceptibility of ratification
5. Who may assail contracts
6. How contracts may be assailed
They are not susceptible of ratification.
They may be assailed not only by a contracting
party but even by a third person who is
prejudiced or damaged by the contract.
They may be assailed directly only, and not
collaterally.

Two Kinds of Rescission

The two kinds of rescission are (1) the rescission mentioned in Article 1380 which refers to rescission;
and (2) the rescission mentioned in Article 1191 which refers to resolution. 6

1 D. Jurado. Comments and Jurisprudence on Obligations and Contracts. 2010. Twelfth Ed. 502.

2 E. Paras. Civil Code of the Philippines. 1994. Thirteenth Ed. 715. **please update with newest edition

3 See note 1. Id. at 503.

4 Aquino v. Tanedo, 39 Phil. 517.

5 See note 2. Id. at 718.

6 Ibid.
Distinctions of a Rescissible Contract from a Resolution
1. As to party who may
institute action
2. As to causes
3. As to power of the courts
4. As to contracts which
may be rescinded or
resolved
Distinctions of a Rescissible Contract from a Mutual Dissent
**The following distinctions were taken from the case of Aquino v. Tanedo, 31 Phil. 517.
1. With respect to the causes of
rescission
2. With respect to the laws
applicable
3. With respect to the effects
Rescissible Contract
The action may be instituted not
only by a party to the contract
but even by a third person.
There are several causes such as
lesion, fraud, and others
expressly specified by law.
There is no power of the courts
to grant an extension of time for
performance of the obligation so
long as there is a ground for
rescission.
Whether the contract is unilateral
or bilateral, it may be rescinded.
Rescissible Contract
Refers and which takes place
only in the cases mentioned in
the Articles 1381 and 1382.
Refers to contracts that are
rescissible in accordance with
law in the cases expressly
fixed thereby.
It is a relief to protect one of
the parties or a third person
from all injury and damages
which the contract may cause,
to protect some preferential
right.
Resolution
The action may be instituted only
by a party to the contract.
The only ground is failure of one
of the parties to comply with
what is incumbent upon him.
The law expressly declares that
courts shall have a discretionary
power to grant an extension for
performance provided there is a
just cause.
Only reciprocal contracts may be
resolved.
Mutual Dissent
Refers to rescission not
originating from any of the
causes mentioned in Articles
1381 and 1382.
Refers to contracts which are
rescinded by mutual consent
and for the mutual convenience
of the contracting parties.
Thus, there is no law which
governs upon them.
It is simply another contract
for the dissolution of a
previous one, and its effects, in
relation to the contract so
dissolved, should be
determined by the agreement
made by the parties, or by the
application of other legal
provisions, but not Article
1385, which is not applicable.