- Petitioner
- Ong Yong
- Respondent
- David S. Tiu
- Citation
- G.R. No. 144476
- Court
- Supreme Court
- Division
- Second Division
- Ponente
- Buena, J.
- Decided
- February 1, 2002
Summary
This consolidated petition involved the rescission of a Pre-Subscription Agreement between the Ong and Tiu Groups regarding equal investment in First Landlink Asia Development Corporation (FLADC). The Tiu Group, facing P190M debt to PNB, invited the Ong Group to invest P100M for equal shareholding and corporate control. Both parties violated the reciprocal agreement: the Ongs prevented the Tius from exercising executive functions and refused to credit shares for property contributions, while the Tius diverted corporate rentals and failed to properly execute property transfers. The Supreme Court affirmed the Court of Appeals' confirmation of rescission under Article 1191 of the Civil Code, finding that both parties' substantial breaches made continued cooperation impossible. Rather than simple restitution, the Court ordered liquidation of FLADC according to actual contributions, with remaining assets transferred to the Tiu Group to restore status quo ante. The decision established important precedents on reciprocal obligations in corporate investment agreements and the remedies available when both parties breach their contractual duties.