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.