Fernando Carrascoso, Jr. v. The Honorable Court of Appeals

Summary

This consolidated case involves the rescission of a real estate sale contract initiated through a derivative suit by minority stockholder Lauro Leviste against buyer Fernando Carrascoso Jr.'s failure to pay the balance of the purchase price for a 1,825-hectare property. El Dorado Plantation, Inc. sold the property to Carrascoso in 1972 for P1,800,000, with P1,300,000 balance due by March 1975. When Carrascoso defaulted, he had already sold 1,000 hectares to PLDT, which developed the land. The Supreme Court affirmed the Court of Appeals' decision granting rescission, rejecting claims of verbal payment extensions and finding PLDT's purchase subject to the notice of lis pendens. The Court ordered mutual restitution while distinguishing between improvements made by PLDT in good faith (before the lis pendens) versus bad faith periods, applying Civil Code provisions on building on another's land. The decision establishes important precedents on derivative suits, contract rescission, notice of lis pendens effects, and the distinction between contracts of sale versus contracts to sell in property transactions.