THE WELLEX GROUP INC. VS. U-LAND AIRLINES CO.

[GR NO. 167519 – JANUARY 14, 2015]

FACTS:
Wellex and U-land agreed to develop a long-term business
relationship through the creation of a joint interest in airline
operations and property development projects in the Philippines.
It owns shares of stocks in several corporations including Air
Philippines Intl. Corp. (APIC), Philippines Estates Corp. (PEC),
and Express Savings Bank (ESB). U-LAND AIRLINES, CO, LTD. is a
corporation duly organized and existing under the laws of Taiwan
registered to do business in the Philippines. It is engaged in
the the business of air transportation in Taiwan and in other
Asian countries However, despite the absence of a share purchase
agreement, U-Land remitted to Wellex a total of US$7,499,945.00
Wellex acknowledged the receipt of these remittances in a
confirmation letter addressed to U-Land and allegedly delivered
stock certificates and TCTs of subject properties.
The provisions of the memorandum were agreed to be executed
within 40 days from its execution date. The 40-day period lapsed
but Wellex and U-Land were not able to enter into any share
purchase agreement although drafts were exchanged between the
two.
The Agreement Includes:
1. The acquisition of APIC and PEC shares;
2. The operation and management of APIC/PEC/APC
3. Entering into and funding a joint development agreement
4. The option to acquire from WELLEX shares of stock of EXPRESS
SAVINGS BANK up to 40% of the capital stock of ESB of U-LAND

ISSUE: Whether or not respondent U-Land correctly sought the

principal relief of rescission or resolution under Article 1191
HELD:
Yes. Respondent U-Land is praying for rescission or resolution
under Article 1191, and not rescission under Article 1381. The
failure of one of the parties to comply with its reciprocal
prestation allows the wronged party to seek the remedy of Article
1191. The wronged party is entitled to rescission or resolution
under Article 1191, and even the payment of damages. It is a
principal action precisely because it is a violation of the
original reciprocal prestation.