Short answer. Both sides must give everything back. The seller returns the price plus interest; the buyer returns the thing plus its fruits or income. Rescission is mutual, so you cannot ask a court to rescind unless you are able to restore what you received.
What the law says
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
Civil Code, Article 1385 — Mutual Restitution; Limits. Read the full provision →
Restitution runs both ways
Rescission is not a way to keep what you got and take back what you gave. The Civil Code treats it as an unwinding: the contract is undone and each party is put back, as nearly as money and property allow, in the position they held before signing. So a buyer who returns land must also account for the harvests, rents or other fruits that land produced while it was in his hands. A seller who takes the land back must return the price and the interest on it. If you only demand one half of that exchange, you have not asked for rescission at all — you have asked for a windfall, and courts do not grant it.
You must be able to restore before you can demand
Article 1385 attaches a condition that surprises many claimants. Rescission "can be carried out only when he who demands rescission can return whatever he may be obliged to restore." A party who has already consumed, resold, destroyed or heavily encumbered what he received usually cannot meet that condition, and the remedy closes to him. This matters practically: if you are thinking of rescinding, take stock first of what is still in your hands and in what condition. Selling the object while your case is pending can quietly defeat the very claim you filed.
Innocent third persons stop rescission
The Code also protects strangers to the contract. Rescission will not take place when the things are legally in the possession of third persons who did not act in bad faith. If the property has passed to a buyer who paid honestly and had no notice of your claim, the courts will not strip that person to satisfy you. What survives is a money claim: indemnity for damages may be demanded from the person causing the loss — that is, the party whose act put the property beyond reach. You recover value, not the thing itself.
What this rule does not decide
Article 1385 tells you the consequences of rescission; it does not tell you whether you are entitled to rescind in the first place. The grounds — lesion suffered by a ward or absentee, contracts in fraud of creditors, things under litigation, and cases the law separately allows — sit in other provisions, and a rescission suit is subject to prescriptive periods that can expire quietly. Nor does the article resolve who bears deterioration, or how interest is computed. Those are argued case by case. If real property, a mortgage or a third-party buyer is involved, get the documents reviewed by a lawyer before you file; the wrong remedy filed in the wrong year is rarely fixable later.
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 →