Resolution vs. rescission

As to the nature of action, RESOLUTION FOR BREACH OF STIPULATION is a principal action, retaliatory in nature. On the other hand, RESCISSION BY REASON OF LESION is a subsidiary action involving partial resolution.

As to basis, RESOLUTION FOR BREACH OF STIPULATION is based on breach of trust. On the other hand, RESCISSION BY REASON OF LESION is based on economic prejudice, rendering the contract legally rescissible. However, it must be noted that not all forms and shapes of economic prejudice are recognized by law as a ground to rescind.

As to effect, RESOLUTION FOR BREACH OF STIPULATION results in termination of the obligation and release of the parties from further obligations from each other. On the other hand, RESCISSION BY REASON OF LESION results in abrogation of the contract from the very beginning, restoring the parties to their status prior to the perfection of the contract, as if no contract has ever been entered into between them. In short, RESCISSION BY REASON OF LESION declares the contract void from inception.

As to parties-in-interest, only a party to the contract may seek the remedy of RESOLUTION FOR BREACH OF STIPULATION, whereas RESCISSION BY REASON OF LESION is a remedy that may be sought even by a thirty party prejudiced by the contract.

As to grounds, RESOLUTION FOR BREACH OF STIPULATION is grounded on non-compliance or non-performance. On the other hand, RESCISSION BY REASON OF LESION is grounded on equity, i.e., various reasons are provided by law as grounds.

As to action by courts, the remedy of RESOLUTION FOR BREACH OF STIPULATION may be denied if the court finds that there is sufficient reason to justify extension. On the other hand, extension of time does not affect the right to seek RESCISSION BY REASON OF LESION.

As to the nature of the contract, RESOLUTION FOR BREACH OF STIPULATION is available only to reciprocal obligations. It must be recalled that the power to rescind is inherent in reciprocal obligations. On the other hand, RESCISSION BY REASON OF LESION applies to either unilateral or reciprocal obligations, regardless of whether the contract has been fully or partially fulfilled.

Both require mutual restitution. Please read Articles 1191 and 1381 and textbook comments thereon.

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