Vermen Realty Development Corporation v. The Court of Appeals

Summary

This case involves the rescission of an 'Offsetting Agreement' between Vermen Realty Development Corporation and Seneca Hardware Co., Inc. Under the agreement, Seneca was to deliver P552,000 worth of construction materials in exchange for P276,000 cash and two condominium units worth P276,000, with an option to transfer to Phase II units upon completion. Seneca partially performed by paying P110,151.75 and delivering P219,727 worth of materials. However, Vermen stopped issuing purchase orders after April 1982 and construction of Phase II ceased in 1983 when loan funding was denied. The Supreme Court affirmed the Court of Appeals' decision granting rescission, finding that Vermen's failure to issue purchase orders and inability to complete Phase II construction constituted substantial breach of reciprocal obligations under Article 1191 of the Civil Code, justifying rescission as the option to transfer to Phase II was a key consideration for Seneca entering the agreement.