G.R. No. 163495; May 8, 2009
SAMUEL MALABANAN, Petitioner, vs. RURAL BANK OF CABUYAO, INC., Respondent.

FACTS

Samuel Malabanan obtained a loan from Rural Bank of Cabuyao, secured by a real estate mortgage over a parcel of land. Upon default, he executed a dacion en pago, transferring the property to the bank, which was subsequently registered under a new title in the bank’s name. Malabanan refused to vacate the premises, prompting the bank to file an unlawful detainer case before the Municipal Trial Court in Cities (MTCC). Malabanan contested the action, denying the validity of the dacion en pago and asserting that the bank’s representative had no authority. Prior to the ejectment suit, Malabanan had already filed a separate action before the Regional Trial Court (RTC) for the annulment of the dacion en pago and the title issued to the bank, with a prayer for reconveyance.
The MTCC dismissed the ejectment complaint, finding the bank failed to prove possession by tolerance. On appeal, the RTC reversed, ordering Malabanan to vacate and pay rentals and attorney’s fees. The Court of Appeals affirmed the RTC decision. Malabanan elevated the case to the Supreme Court, arguing the ejectment case should be dismissed due to litis pendentia and forum shopping, given the pending annulment case, or at least suspended pending its resolution.

ISSUE

The primary issues are: (1) whether the complaint for unlawful detainer should be dismissed on the grounds of litis pendentia and forum shopping due to a pending annulment case; and (2) whether the allegations in the complaint sufficiently constitute a cause of action for unlawful detainer.

RULING

The Supreme Court denied the petition, affirming the lower courts’ decisions. On the first issue, the Court held that neither litis pendentia nor forum shopping exists. For litis pendentia to apply, a judgment in one case must constitute res judicata in the other. In ejectment cases, the sole issue is physical or material possession, and any resolution on ownership is merely provisional to determine possession, lacking finality. Therefore, a judgment in the ejectment case would not bar the annulment case, and vice-versa. The reliefs and causes of action are distinct: ejectment seeks possession, while annulment seeks to void the title and transaction.
On the second issue, the Court found the allegations in the complaint sufficient to establish unlawful detainer. The bank, as the registered owner by virtue of the dacion en pago and the new certificate of title, had a better right of possession. Malabanan’s refusal to vacate after demand constituted unlawful withholding. The pendency of the annulment suit does not divest the bank of its right to seek possession, as a Torrens title is conclusive evidence of ownership and carries the right to possess. However, the Court deleted the award of reasonable rentals, as the bank failed to substantiate its claim for such compensation. The ejectment order was upheld.