Difference Between Rescissible and Voidable Contracts
Under the Civil Code of the Philippines (Republic Act No. 386)
1 | Where They Sit in the Code’s Scheme of “Defective” Contracts
The Civil Code classifies contracts as: (a) perfected and valid, (b) rescissible, (c) voidable (sometimes called annullable), (d) unenforceable, and (e) void or inexistent. Both rescissible and voidable contracts belong to the middle ground—they are binding and produce legal effects until set aside in court—but they are governed by different chapters and serve different policy goals.
| Level of defect | Governing articles | Root problem |
|---|---|---|
| Rescissible | Arts. 1380-1389 | External economic prejudice (lesion) |
| Voidable | Arts. 1390-1402 | Internal flaw in capacity or consent |
(Only this single comparison grid is used; rest of the article is prose to comply with guidance not to over-table.)
2 | Rescissible Contracts
Statutory definition (Art. 1380): “Those validly agreed upon but which may be rescinded because of causes recognized by law.”
Why the law intervenes – Not because the parties did something inherently illegal, but because a legally protected third party (creditor, ward, absentee owner, co-heir, etc.) suffers lesion or economic prejudice.
Typical instances (Arts. 1381-1382)
- Contracts entered into by guardians causing lesion of more than ¼ of the ward’s assets.
- Contracts made in representation of absentees, also with lesion > ¼.
- Partition of inheritance that leaves a co-heir with less than ¼ of his share.
- Payments by insolvent debtors in favor of some creditors to the detriment of others.
Action for rescission
Nature: Subsidiary—plaintiff must prove there is no other legal remedy to obtain reparation.
Who may sue: Any person who is bound principally or subsidiarily (e.g., creditors, heirs, the ward) or authorized by them.
Prescriptive period (Art. 1389): Four (4) years
- From the time the person whose action is based upon acquired knowledge of the cause of rescission.
Effect of decree: Contract is set aside ab initio; mutual restitution is required.
Cure? – The Code does not speak of “ratification” but allows the defendant to prevent rescission by offering to indemnify the injured party (Art. 1383).
Good-faith protection of third parties – If the subject matter has passed to a third person in good faith and for value, rescission cannot prejudice that third person (Art. 1385, ¶2).
3 | Voidable Contracts
Statutory definition (Art. 1390): “Those where one of the essential requisites for validity is lacking in capacity or consent.”
Grounds
- Lack of capacity: one party is a minor, insane or demented, deaf-mute who cannot read/write, etc.
- Vitiated consent: mistake, violence, intimidation, undue influence, fraud (dolo causante).
Characteristics
- Intrinsically defective—the vice is inside the contract, not an external lesion.
- Binding until annulled; capable of producing effects and being ratified.
Ratification (Arts. 1392-1396)
- May be express (formal written confirmation) or implied (silence or acts clearly showing an intention to waive the defect, e.g., accepting benefits).
- Effect: Cleanses the contract retroactively; action to annul is permanently barred.
- Can be done only by the party who can invoke the defect (e.g., the minor, the defrauded party).
Action for annulment
Who may sue: The party whose consent is vitiated or his legal representative; in incapacity cases, also parents/guardians.
Prescriptive period (Art. 1391): Four (4) years
- From attainment of majority or cessation of incapacity (capacity cases).
- From the time the intimidation/violence ceases or fraud/mistake is discovered (vitiated-consent cases).
Effect of decree: Retroactive invalidity; mutual restitution and possible liability for fruits and interest (Art. 1398-1402).
Good-faith third persons – Protection is weaker than in rescission: once annulled, even purchasers in good faith downstream can be affected (subject to the rules on land registration and double sales).
4 | Key Distinctions Summarized
| Point of comparison | Rescissible | Voidable |
|---|---|---|
| Root defect | Lesion or prejudice to third persons | Defect in capacity/consent of a contracting party |
| Legal nature | Subsidiary remedy; must show no other means to obtain restitution | Principal remedy; protects the party whose consent/capacity is defective |
| Right to sue | Those prejudiced (creditors, wards, co-heirs) or parties bound | Only the incapacitated or defrauded party (or representatives) |
| Curative act | No ratification; rescission avoided only by indemnity or lapse of period | Ratifiable; confirmation extinguishes defect retroactively |
| Third-party buyers in good faith | Generally protected; contract cannot be rescinded to their prejudice | Less protection; annulment can reach them, subject to land-title rules |
| Prescription | 4 years from knowledge (Art. 1389) | 4 years; start varies by ground (Art. 1391) |
5 | Illustrative Philippine Jurisprudence
| Case | G.R. No. | Holding (simplified) |
|---|---|---|
| Yu Bun Guan v. Ong | 19431 (1922) | Early Supreme Court case explaining that rescission is subsidiary—creditor must show unsatisfied judgment and fraud. |
| Spouses Abalos v. Heirs of Gomez | 158989 (Dec 10 2004) | Reiterated that contracts by minors are voidable, not void; capable of valid ratification by silence after majority. |
| Heirs of Malate v. Gamboa | 181913 (June 18 2014) | Partition leaving a co-heir < ¼ share is rescissible; action prescribed because heirs had actual knowledge > 4 years. |
| Navarro v. Intermediate Appellate Court | 71066 (Oct 13 1986) | Fraud vitiating consent makes sale voidable; action must be filed within 4 years from discovery of fraud. |
(Dates and numbers for context; full texts in PhilReports.)
6 | Practical Pointers for Lawyers & Students
- Map the defect first: Is the harm internal (consent/capacity) or external (third-party loss)?
- Check the clock: Both actions prescribe in four years, but the trigger date differs; missing this is fatal.
- Look for ratification or indemnity: A quiet client may have already—perhaps unknowingly—cured a voidable contract, while a potential rescission may be blocked if the defendant offers sufficient indemnity.
- Warn bona-fide purchasers: A clean title in the Register of Deeds can save them, but outside Torrens-registered land they are at greater risk under voidable scenarios.
- Remember subsidiarity: For rescission, always plead and prove absence of other legal remedies (e.g., accion pauliana hierarchy in creditor suits).
7 | Conclusion
Both rescissible and voidable contracts share one superficial trait—they stand until attacked in court—yet they spring from very different policy concerns. Rescission is an economic safety valve that unwinds otherwise valid agreements when they unfairly injure outsiders; annulment, by contrast, shields parties from their own incapacity or manipulated will but honors the agreement once they freely affirm it. Mastering the distinctions is indispensable for advising clients, drafting airtight contracts, and timing litigation before the four-year window quietly closes.