Oblicon 3rd 63 Coca-Cola Bottlers Phils. Inc. Vs.

Spouses Efren and Lolita Soriano,

861 SCRA 93, G.R. No. 211232 (April 11, 2018)

Ponente: Justice Noel Tijam

Nature of the Action:

This petition for review on certiorari under Rule 45 of the Rules of Court
seeks to reverse and set aside the Decision and Resolution of the CA, affirming the
Decision of the RTC, Tuguegarao, Cagayan, granting the action for Annulment of
Sheriff’s Sale filed by the spouses Soriano against Coca-Cola.

Facts:
Spouses Soriano are engaged in selling Coca-cola products in Tuguegarao
City, Cagayan. Sometime in 1999, Coke’s manager, Cipriano, told the spouses that
Coke, as supplier, needs security for the continuation of their business. Thus, the
spouses signed a document which appeared to be a real estate mortgage deed
and they surrendered two titles to Cipriano. The latter told them that it is just for
formality and the deed will not be notarized. After sometime, the spouses told
Cipriano that they will not be continuing their business anymore due to advanced
age. They demanded for the return of the titles, but to no avail. When the
spouses were contemplating to file for issuance of new titles, they learned that
the subject lands were already foreclosed by Coke.

The spouses filed for annulment of sheriff’s sale alleging that they did not
sign any mortgage deed and they were not notified of the sale. Claiming there
was fraud on the part of Cipriano in obtaining their signatures in the deed, they
pray that the deed be nullified. The RTC granted the complaint. It nullified the real
estate mortgage deed and the foreclosure proceedings. On appeal, the CA upheld
the invalidity of the deed for failure to satisfy the required form. Thus, Coke
elevated the present controversy to the high court.

Issues:
Did Cipriano employ fraud in the obtaining the signatures of the spouses in
the real estate mortgage deed?

Ruling:
WHEREFORE, premises considered, the petition is GRANTED. The Decisions
of the Regional Trial Court dated February 9, 2011 and the Court of Appeals dated
June 18, 2013 are REVERSED and SET ASIDE. The complaint filed by the
respondents Spouses Efren and Lolita Soriano is hereby DISMISSED for lack of
merit.

Under Art. 1344 of the New Civil Code, fraud, as a ground for annulment of
a contract, should be serious and should not have been employed by both parties.
Meanwhile, Art. 1338 provides that there is fraud when through insidious words
or machinations of one of the contracting parties, the other is induced to enter
into a contract, without them, he would not have agreed to.

Here, there was no allegation of forgery in the signatures. The spouses

readily admitted that they signed the deed, only that Cipriano made them to
believe that the same will not be notarized. Coupled by the fact of the surrender
of the two titles, the claim of fraud is not convincing. Other than bare allegations,
the spouses’ claim of fraud is not supported by preponderance of evidence.

Likewise, the failure to comply with the formalities of law does not render
the deed invalid. The formal requisites are necessary in its registrability. Without
such registration, it cannot bind third persons. Nevertheless, the deed is with
force and effect as between the parties.