Short answer. No, not against that third person. Rescission does not take place when the things that were the object of the contract are legally in the possession of third persons who did not act in bad faith — your remedy shifts to indemnity for damages against whoever caused the loss.
What the law says
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.
Civil Code, Article 1385 — Mutual Restitution; Limits. Read the full provision →
A good-faith third-party holder blocks rescission
The statute is direct on this point: rescission shall not take place where the object of the contract is now legally in the possession of a third person who did not act in bad faith. Because the third person here bought in good faith and holds the property legally, rescission — undoing your original contract and reclaiming the specific object — is no longer available to you against that third person's holding.
Why rescission requires mutual restitution in the first place
This rule follows from what rescission is designed to do: it creates an obligation for mutual restitution — the things that were the object of the contract, together with their fruits, must go back, and the price with interest must be returned in turn. Rescission can only be carried out when the person demanding it can also return what they are obliged to restore. A good-faith third person now legally holding the object makes that mutual restitution impossible without harming someone who did nothing wrong.
The remedy shifts to damages instead
Rather than leaving you without a remedy, the article redirects your recourse: indemnity for damages may be demanded from the person causing the loss — ordinarily the party you contracted with, whose act put the object beyond your reach by transferring it to the good-faith third person. So while you cannot get the specific object back from the innocent buyer, you retain a claim for damages against the party responsible for making rescission unavailable to you.
Why possession must be legal and in good faith
Both conditions matter: the third person's possession must be legal, and the third person must not have acted in bad faith. A third person who knew of the defect in the original transaction, or who acquired the object through an irregular or unlawful means, would not enjoy this protection, and rescission could potentially still reach the object in that situation. The exception exists specifically to shield an innocent buyer who had no reason to know the object was subject to a contract someone might later seek to rescind, not to protect every subsequent holder regardless of how they came to possess it.
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.
- Camp John Hay Development Corporation vs. Charter Chemical and Coating Corporation, G.R. No. 198849, August 7, 2019 — read the decision on LawPhil →
- Philippine Economic Zone Authority, vs. Pilhino Sales Corporation, G.R. No. 185765, September 28, 2016 — read the decision on LawPhil →
- Oliverio Laperal, et al. vs. Solid Homes, Inc, G.R. No. 130913, June 21, 2005 — read the decision on LawPhil →
- The Wellex Group, Inc. vs. U-Land Airlines, Co., Ltd, G.R. No. 167519, January 14, 2015 — read the decision on LawPhil →