FIRST DIVISION

COCA-COLA BOTTLERS PHILS. INC. vs. SPOUSES EFREN AND LOLITA SORIANO
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.