Short answer. Yes. Article 1381 of the Civil Code expressly makes rescissible those contracts entered into by guardians whenever the wards they represent suffer lesion by more than one-fourth of the value of the subject matter. The loss threshold is the key trigger — clear it, and rescission is available.
What the law says
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
Civil Code, Article 1381 — Which Contracts Are Rescissible. Read the full provision →
Article 1381 and the lesion requirement
Article 1381 of the Civil Code lists five categories of rescissible contracts. The first directly addresses guardians: "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." The term lesion refers to an economic injury — the ward received less than three-fourths of the fair value of what was exchanged. Both elements must be present: the contract was entered into by the guardian on the ward's behalf, and the resulting loss to the ward exceeded that one-fourth threshold.
How the one-fourth threshold works
The threshold is measured against the fair market value of the subject matter at the time the contract was entered into. If a guardian sells property on behalf of a ward for 600,000 pesos when the property is worth 1,000,000 pesos, the ward suffered a lesion of 400,000 pesos — exactly forty percent, well above the one-fourth mark. That contract is rescissible. If the guardian sold it for 800,000 pesos — a loss of twenty percent — it does not reach the one-fourth floor and rescission on this ground is not available. The calculation is straightforward once the fair value is established.
Rescissible is not the same as automatically cancelled
A rescissible contract is not void from the start. It is valid and binding until a court grants rescission. Someone must file the action within the prescriptive period — and for wards, that four-year period does not begin until the incapacity ends. Until a court orders rescission, the contract stands. The effect of a successful rescission is to restore the parties to the position they were in before the contract: the ward gets back what was lost, and the other party returns what they received. This is possible only so long as the things that changed hands can still be restored.
When rescission may not be available despite the loss
The law limits rescission to situations where there is no other adequate remedy and where restoration is still possible. If the property transferred by the guardian has already been sold to an innocent third party who paid a fair price, rescission may no longer reach the property itself — the remedy would shift to an action for damages against the guardian who caused the loss. This is one reason why challenging a guardian's contract early matters: the more time passes and the more hands the property changes, the harder it becomes to unwind the transaction through rescission rather than through a claim for compensation.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- The Wellex Group, Inc. vs. U-Land Airlines, Co., Ltd, G.R. No. 167519, January 14, 2015 — read the decision on LawPhil →
- Congregation of the Religious of the Virgin Mary, etc. vs. Emilio Orola, et al, G.R. No. 169790, April 30, 2008 — read the decision on LawPhil →
- Union Bank of the Phil. vs. Sps. Alfredo Ong etc, G.R. No. 152347, June 21, 2006 — read the decision on LawPhil →
- Dr. Restituto C. Buenviaje vs. Spouses Jovito R. and Lydia B. Salonga, et al, G.R. No. 216023, October 5, 2016 — read the decision on LawPhil →