Article 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;
(3) Those undertaken in fraud of creditors when the latter cannot in any other manner collect the claims due them;
(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;
(5) All other contracts specially declared by law to be subject
to rescission.
By: Kristia Capio
Artikulo 1381. Ang sumusunod na mga kontrata ay maaring ikansila:
(1) Yaong mga ipinasok ng mga tagapangalaga kapag ang kanilang inaalagaan na kanilang kinakatawan ay walang kakayahan mahigit sa ika apat ng halaga ng mga bagay na siyang kadahilanan;
(2) Yaong mga napagkasunduan na patungkol sa wala, kung ang huli ay mayroon kwalang kakayahan na nakasaad sa naunang bilang;
(3) Yaong mga pagsasaayos na maypanlinlang sa mga nagpapautang ang nahuli ay hindi na sa anu man paraan makaka singil pa;
(4) Yaong mga nauukol sa mga bagay na napapailalim ng hukuman kung iyon ay pinasok ng nasasakdal na walang kaalaman at pagsang-ayon ng mga nasasakdal o ng hukuman may karampatan kapangyarihan;
(5) Lahat nang ibang mga kontrata na lalong itinakda ng batas na maaring ipawalang bisa/ ikansila.
CASES OF RESCISSBLE CONTRACTS
(1) Contracts entered into in behalf of wards. — A ward is a person under guardianship by reason of some incapacity. As a rule, the powers of the guardian with respect to the property of the ward are limited to mere acts of administration.
EXAMPLE:
Gina is the guardian of Wendell (ward). Gina sells the property of Wendell worth 20M for only 14M. The contract of sale can be rescinded because the lesion is more than one-fourth. Wendell can rescind the sale by proper action in court upon reaching the age of majority.
(2) Contracts agreed upon in representation of absentees. — An absentee is a person who disappears from his domicile, his whereabouts being unknown, and without leaving an agent to administer his property. Likewise, the absentee must suffer lesion by more than one-fourth of the value of the property object of the contract to entitle him to the remedy of rescission.
It must be noted that paragraphs 1 and 2 refer only to transactions by guardians and absentees’ representatives. Rescission cannot take place if the contracts have been approved by the court. As a general rule, lesion does not invalidate a contract except only in special cases specified by law.
EXAMPLE:
(3) Contracts undertaken in fraud of creditors. — The action to rescind in fraud of creditors is known as accion pauliana. Here, as in No. (4), the remedy of rescission may be availed of by a third person. Such contracts are usually made without the knowledge of the creditors. In order that fraud of creditors may be a valid ground for rescission, the following requisites must also be present:
(a) There must be an existing credit prior to the contract to be rescinded, although it is not yet due or demandable later;
(b) The subsequent contract made by the debtor conveys a patrimonial benefit to a third person;
(c) There must be fraud on the part of the debtor which may be presumed or proved;
(d) 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.
EXAMPLE:
Gina made a donation of a parcel of land to Wendell. Before the date of the donation, Gina had contracted several debts. With the donation to Wendell, the remaining property of Gina is not sufficient to pay all her debts. The donation can be rescinded because the alienation is presumed in fraud of creditors.
(4) Contracts which refer to things under litigation. — In No. (3), the purpose of the remedy is to secure the payment of an existing credit of a third person against a party to a contract sought to be rescinded. Here, the purpose is to make effective the claim of a party litigant over a thing under litigation which was the object of a contract entered into by the other party with another person.
The right to file the action for rescission arises in favor of the plaintiff when the defendant enters into a contract over the thing in litigation without the knowledge or approval of the plaintiff or the court.
EXAMPLE:
Sandy sues Ben 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, Ben sells the land to Cathy without the approval of Sandy or of the court, the sale is rescissible at the instance of Sandy in case she wins in her suit for the recovery of said land unless Cathy is in legal possession of the land in good faith. Sandy, however, may protect his right by filing a notice of lis pendens.
OBLIGATIONS AND CONTRACTS 