AYSON V. PARAGAS (REMEDIAL)

It must be remembered that in EJECTMENT suits, the issue to be resolved is merely the physical possession over the property, i.e., possession de facto and not possession de jure, independent of any claim of ownership set forth by the party-litigants. Should the defendant in an ejectment case raise the defense of ownership in his pleadings and the question of possession cannot be resolved without deciding the issue of ownership, the issue of ownership shall be resolved only to determine the issue of possession. The judgment rendered in such an action shall be conclusive only with respect to physical possession and shall in no wise bind the title to the realty or constitute a binding and conclusive adjudication of the merits on the issue of ownership. Therefore, such judgment shall not bar an action between the same parties respecting the title or ownership over the property, which action was precisely resorted to by respondent-spouses in this case.

The Deed of Absolute Sale is in reality, an equitable mortgage or a contract of loan secured by a mortgage. Article 1602 of the Civil Code enumerates the cases in which a contract, purporting to be a sale, is considered only as a contract of loan secured by a mortgage, to wit:

1. when the price of the sale with right to repurchase is unusually inadequate;
2. when the vendor remains in possession as lessee or otherwise;
3. when upon or after the expiration of the right to repurchase another instrument extending the period of redemption or grating a new period is executed;
4. when the purchaser retains for himself a part of the purchase price; when the vendor binds himself to pay the taxes on the thing sold;
5. in any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation.

In this case, the evidence before the RTC had established that the possession of the subject property remained with respondent-spouses despite the execution of the Deed of Absolute Sale. In fact, testimonies during the trial showed that petitioner and his predecessors never disturbed the possession of the respondent-spouses until the filing of the ejectment case.

An equitable mortgage is a voidable contract. As such, it may be annulled within 4 years from the time the cause of action accrues. This case, however, not only involves a contract resulting from fraud, but covers a transaction ridden with threat, intimidation, and continuing undue influence which started when petitioner's adoptive father, Felix's superior, practically bullied respondent-spouses into signing the Deed of Absolute Sale under threat of incarceration. Thus, the 4-year period should start from the time the defect in the consent ceases. The complaint was filed well within the 4-year prescriptive period.

Regarding the finality of the adjudication of physical possession in favor of petitioner, it may be reiterated that the right of possession is a necessary incident of ownership. This adjudication of ownership of the property to respondent-spouses must include the delivery of possession to them since the petitioner has not shown a superior right to retain possession of the land independently of his claim of ownership which is herein rejected. Verily, to grant execution of the judgment in the ejectment case would work an injustice on respondent-spouses who had been conclusively declared the owners and thus, right possessors of the disputed land.