Solidstate Multi-Products Corporation v. Sps. Erlinda Catienza-Velasco

Summary

Solidstate Multi-Products Corporation purchased land from Julian Peñaranda in 1976, with respondent spouses mortgaging their property to secure Peñaranda's warranty against adverse claims by Estate of Virata. In 1989, while litigation was pending, respondents sold their mortgaged property to petitioner through a Deed of Absolute Sale. Seven years later, respondents sought annulment claiming vitiated consent through fraud. The Supreme Court affirmed lower courts' ruling that the sale was void for lack of consideration, finding that both the mortgage and sale were executed solely to address the possibility of losing to Estate of Virata. Since petitioner ultimately won the case, the contracts lost their cause. The stated P96,000.00 consideration was never actually paid, and amounts received by respondents were gratuitous payments, not sale consideration. The Court rejected prescription as a defense, ruling that actions for contract inexistence do not prescribe under Article 1410 of the Civil Code.