Metropolitan Fabrics v. Prosperity Credit Resources

Summary

Metropolitan Fabrics, Inc. and its officers sought to nullify a real estate mortgage involving seven properties, claiming they signed blank documents and were deceived about interest rates and loan terms by Prosperity Credit Resources, Inc. The Regional Trial Court initially ruled in their favor, finding fraud and predatory lending practices. However, the Court of Appeals reversed, holding that the action had prescribed and that plaintiffs were estopped from denying the mortgage's validity. The Supreme Court affirmed, ruling that petitioners failed to prove fraud with clear and convincing evidence sufficient to overcome the presumption of regularity of the notarized mortgage. The Court found that the lone testimony of a non-signatory witness was insufficient, especially when the actual signatories never testified against the document. Moreover, petitioners' subsequent conduct - including surrendering property titles, seeking postponement of foreclosure, and negotiating partial redemption - contradicted their fraud allegations. Since the contract was merely voidable (not void) due to alleged fraud, the four-year prescriptive period under Article 1391 of the Civil Code had expired, barring the action for annulment.