Article 1383

The action for rescission is subsidiary; it cannot be instituted except when the party suffering damage has no other legal means to obtain reparation for the same. (1294)

Ang hakbang para sa pagpapawalang bisa ay subsidiary; ito ay hindi pwedeng maisakatuparan maliban kung ang partido na nag dusa ng danyos ay walang ibang legal na paraan para makamit ang reparation sa pagpapawalang bisa.

Discussion:

An action to rescind a rescissible is just subsidiary, whih means, it cannot be instituted except when the party suffering damages has no other legal means to obtain reparation for damages suffered. Therefore it is necessary for the plaintiff to have exhausted all other legal means to obtain reparation. Otherwise, action will not prosper.

A Four – year period to rescind a fraudulent contract must be counted from the time the action accrues and not from the date of registration of the conveyance for that would run  counter.

The Person allowed to file for rescission:

a.Parties who suffered economic lession

b.The affected creditor

c.Others authorized by law

In case of their debt or incapacity, their heirs may institute the action or may continue the same if already commenced.

However, the heirs of a debtor who alienated properties in fraud of creditors cannot represent the debtor to institute the action.

If a deceased person alienated his property during his lifetime for the purpose of depriving or diminishing the legitimates of his cumpolsory heirs, the latter may rescind the contracts made for that illegal purpose.

Case Illustration: Margarita Suria vs. Court of Appeals & Herminom/ Nativiadad Crispin

Article 1384

Rescission shall be only to the extent necessary to cover the damages caused.

Ang pagpapawalang bisa ay dapat lamang na kung kinakailangan na maisama ang pinsala na nagging sanhi.

1. Partial Rescission

This is a new provision of the New Civil Code, making possible partial rescission, since after all, the only purpose of rescission is to repair or cover the damages caused. Complete rescission will not therefore be allowed, if it is not justified by the circumstances of the case. Insofar as it is not rescinded, the alienation is valid.

2. Person Benefited

Only the creditor who has asked for rescission, not the other creditors, benefits from the rescission.

Article 1385

Rescission creates the obligation to return the things which were the object of the contract, together with their fruits, and the price with its interest; consequently, it can be carried out only when he who demands rescission can return whatever he may be obliged to restore.

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.

In this case, indemnity for damages may be demanded from the person causing the loss. (1295)

Ang pagwawalang bisa sa kontrata ay gumagawa ng obligasyon na ibalik ang mga bagay na tinutukoy sa kontrata, kasama ng kanyang bunga, at ng halaga pati interes; dahil dito, magagawa lamang ito kung ang humingi ng pagwawalang bisa ay maibibiga ang anumang obligahin niyang ibalik.

Hindi mapapawalang bisa ang kontrata kapag ang mga bagay na kailangang ibalik ay nasa legal na pagmamay-ari na ng ibang tao wala namang masamang intensyon.

Discussion:

This article provides for mutual restitution where there is delivery on both sides and both parties must return what they had received from each other.  It is not applicable in cases where the creditor rescinds the contract executed by his debtor in favor of other persons, because the creditor will not have anything to restore in the first place since he did not receive anything from the debtor.

However, rescission will not prosper when the thing had already been legally transferred to a third person, such as by way of sale, and he is in good faith that the transfer to him will be respected.  On the other hand, the thing can be recovered from the third person if he had acted in bad faith, along with the imposition of damages for the injury suffered by the complaining party.

What if the thing has been acquired gratuitously from the debtor? Although the transferee is in good faith, the is still obliged to return the thing under the principle that no person shall be enriched at the expense and predjudice of other persons like the creditor.  He will restore the property in the condition it may be found without any liability to pay for the fruits he had received, if any.  In addition, he is entitled to reimbursement for necessary and useful expenses which he incurred and is not liable for the deterioration of loss of the thing he possessed, unless he acted with negligence or fraudulent intent, after receiving judicial summons.

Case Illustration: Goldenrod, Inc. vs. CA (299 SCRA 141)