Tektwin Marketing Corporation v. Bermon Marketing Communications Corporation

Summary

Tektwin Marketing Corporation was contracted to deliver a Teckwin 2500 printer with XAAR 126 printer head to Bermon Marketing Communications Corporation for P2,600,000.00. After Bermon paid the downpayment and freight charges, Tektwin delivered a printer with XAAR 128 printer head instead, causing continuous malfunctions and printing defects. Despite offers to remedy the defect, Tektwin failed to replace the printer head as promised. The Supreme Court affirmed the lower courts' finding of substantial breach under Article 1191 of the Civil Code, ordering rescission of the contract and mutual restitution. Tektwin was ordered to refund P1,516,000.00 downpayment, P46,430.00 freight charges, and P100,000.00 attorney's fees with 6% interest, while Bermon must return the defective printer. The case establishes that delivery of goods with substantially different specifications constitutes fundamental breach warranting contract rescission.