G.R. No. 146730 ; July 4, 2008
AMADO Z. AYSON, JR., petitioner, vs. SPOUSES FELIX and MAXIMA PARAGAS, respondents.

FACTS

Petitioner Amado Ayson filed an ejectment case against respondent spouses Felix and Maxima Paragas before the Municipal Trial Court in Cities (MTCC) of Dagupan City. Ayson anchored his claim on a 1992 Affidavit executed by Felix Paragas, wherein Felix admitted occupying the land by Ayson’s tolerance and agreed to vacate within three months in exchange for P20,000.00, with P10,000.00 paid upfront. The MTCC ruled for Ayson, ordering the spouses to vacate and return the P10,000.00. This decision was affirmed by the Regional Trial Court (RTC) and subsequently by the Court of Appeals. The Supreme Court denied the spouses’ appeal, and the ejectment judgment became final and executory in January 1998.
While the ejectment appeal was pending, the spouses filed a separate complaint before the RTC for declaration of nullity of a Deed of Absolute Sale covering the same property. They alleged that Felix, then a security guard for the original owner Amado Ll. Ayson, was coerced into signing the deed in 1974 under threat of imprisonment for a supposed salary overpayment. The RTC declared the sale void ab initio due to vitiated consent, a decision affirmed by the Court of Appeals. Ayson then filed the instant petition, arguing the action to annul the sale had prescribed and that the final ejectment judgment barred the annulment case.

ISSUE

The primary issue is whether the action for annulment of the 1974 Deed of Absolute Sale had prescribed, and whether the final judgment in the ejectment case constitutes res judicata barring the annulment case.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals. The action for annulment had not prescribed. An action based on fraud or intimidation, which vitiates consent, prescribes in four years from the time the defect ceases. Here, the defect in Felix’s consent—induced by threats of imprisonment over a fabricated debt—never ceased. The Court found that the coercion persisted, as evidenced by the 1992 Affidavit which Felix, unlettered and under undue influence from Ayson’s representative, was compelled to sign. The annulment complaint filed in 1993 was thus well within the four-year prescriptive period.
Regarding res judicata, the Court ruled the final ejectment judgment did not bar the annulment case. The ejectment case solely determined the issue of physical possession (possession de facto) based on tolerance, not ownership. The annulment case, which directly assailed Ayson’s title by challenging the validity of the sale, involved a different cause of action concerning ownership (possession de jure). Since ownership is a necessary incident of possession, declaring the spouses as the rightful owners necessarily entitled them to possession, rendering the execution of the ejectment judgment unjust. The two cases involved distinct subject matters and causes of action.