SPOUSES JAIME RAMOS AND NILDA ILANO RAMOS, PETITIONERS, VS. INTERMEDIATE APPELLATE COURT, HON ANDRES R. MATIAS, ETC., AND SPOUSES RESTITUTO MELO AND NELLY J. MELO, RESPONDENTS.

Two (2) errors present themselves for correction in the
proceedings at bar.

The first consists in the strict and literal application by the
Appellate Court on September 21, 1985,^[1]
of the doctrine laid down in Habaluyas
Enterprise, lnc., et al. v. Hon Maximo
N Japzon, et al., promulgated on August 5, 1985,
in denying petitioners urgent motion dated December 27, 1984 for extension of
time to file a motion for reconsideration of that Court’s Resolution of
December 27, 1984 — which had deemed said petitioners’ appeal from the
judgment of the Regional Trial Court abandoned and consequently dismissed the
same; this, despite the fact that the appropriate petition for review had been
filed by the petitioners ten (10) days earlier.

The second consists in the Trial Court’s ignoring the law of the
case, pronounced by the Intermediate Appellate Court with the assent of this
Court, and in characterizing an action of ejectment,
recognized as such by the appellate court, as an action involving a subject
matter “incapable of pecuniary estimation” and declaring it consequently
as being beyond the original jurisdiction of the municipal trial court.

These errors were spawned in a controversy arising from what
would appear to be nothing but a simple, straightforward transaction
consummated fourteen (14) years ago, in January, 1975.

The Melo Spouses (herein respondents)
were the owners of a house and lot situated in Imus, Cavite, which they mortgaged to the Cavite
Rural Bank to secure a loan obtained by them in the sum of P150,000.00.  They later sold the mortgaged property to the
Spouses Ramos (herein petitioners) in virtue of a “Deed of Absolute Sale With
Assumption of Mortgage” executed on April
22, 1977.  The vendees paid
the stipulated price, and, with the express consent of the mortgagee bank
evidenced by the signature of its authorized officer on the deed, assumed the
vendors’ mortgage obligation.  The deed
was recorded in the Registry of Property, the Melos‘
title (TCT No. T-11082) was cancelled, and a new one (TCT No. T-94025) was
given to the Ramoses.

The Ramos Spouses were however unable to obtain possession of the
property.  Their requests therefor were invariably met with pleas for extension by
the Melos.  When it became apparent that the Melos intended to renege on their agreement,
the Ramoses referred the matter to their attorney who
sent several letters to the Melos,
demanding delivery of the property, all to no avail.  The last of the letters was sent on January 10, 1978.

An action for illegal detainer was
finally presented before the Municipal Court of Imus
on January 27, 1978,
docketed as Case No. 226.  The Melos moved to dismiss the action, asserting
that the transaction of April 22, 1977
was not a sale but an equitable mortgage, subject to reformation, and
consequently, the subject matter was not within the Municipal Court’s
jurisdiction.  The Court denied the
motion, and the Ramoses, as plaintiffs, presented
their evidence and then rested their case. 
At this point, the Melos
again moved to dismiss the suit, on the same ground of the Court’s lack of
jurisdiction of the nature thereof.  The
Court also denied this second motion.

Instead of presenting evidence in their defense so that the
merits of their and the Ramoses‘ conflicting claims
could be determined in a single proceeding, the Melo
Spouses commenced another suit, a course of action that in retrospect is
revealed to be merely part of a stratagem to delay their delivery of the
property which they had validly sold to the Ramoses.  This second suit was initiated in the Court
of First Instance of Cavite on February 1, 1980, more than two (2)
years after the institution of the ejectment suit
against them in January, 1978.  In this
suit, docketed as Civil Case No. BVC-80-7, the Melos
prayed for reformation of the deed of sale with assumption of mortgage, and the
inhibition of the Imus Municipal Court from taking
cognizance of the desahucio action,
Case No. 226, on the same ground earlier pleaded, that the Municipal Court had
no jurisdiction of the subject-matter thereof. 
The CFI refused to restrain the Municipal Court.  The refusal was set out in its Order of August 18, 1980, in which the Court
explicitly acknowledged the lower Court’s exclusive original jurisdiction over
the ejectment suit against the Melos.

The Melos then
filed on January 7, 1981 an
action of certiorari, mandamus and prohibition in the Intermediate
Appellate Court, docketed as CA-G.R. No. SP-11845-SCA, assailing the denial by
the Court of First Instance of their motion to enjoin the Imus
Municipal Court from proceeding with the ejectment
suit, stubbornly insisting that the latter had no jurisdiction over the nature
of the action.

Like the Court of First Instance, the Appellate Tribunal quickly
– perceived the lack of merit in the Melos‘
cause.  It soon dismissed the Melos‘ petition, by Resolution dated April 23, 1981, holding that (1) the
Municipal Court indeed had jurisdiction over the ejectment
suit, and (2) it did not err in disbelieving the Melos‘
claim of an equitable mortgage.  The
Court1
said:

* * The Municipal Court and the respondent Court could not have
missed the fact that Mr. and Mrs. Melo appeal to be
educated and intelligent persons **.  A
mere averment could not be the sole basis of a motion to dismiss.  The Municipal Court acted within its
jurisdiction and with exercise of sound discretion in proceeding to hear the
case… instead of summarily dismissing it as moved by the herein
petitioners.  If in every case of
forcible entry and detainer, a mere averment to
reform the contract or title of the plaintiff is sufficient to oust the Municipal
Court of jurisdiction, the summary procedure in Rule 70 might as well be
stricken from the Rules of Court.

* * (T)here was likewise no grave abuse of discretion in
listening to the arguments of the private respondents (the Ramoses)
and not giving credence to those at the petitioners (the Melos).  The private
respondents point out that the defense that the absolute deed of sale was
really an equitable mortgage guaranteeing the payment of loans had all the
indicia of a mere sham defense to delay and obstruct the petitioners’ impending
ejectment from the property.

With adamantine persistence, motivated by an intent to delay the
proceedings, an intent becoming more evident with the unfolding of the relevant
events, the Melos came up to this Court to ask that the
Appellate Court’s aforesaid Resolution be set aside, and their shopworn theory
of equitable mortgage upheld.  Their
appeal petition2
was thrown out for lack of merit shortly after its filing, by Resolution of
this Court dated November 9, 1981.  That resolution, of course, had the effect of
affirming the challenged resolution of the Intermediate Appellate Court.3

By standing doctrine, the Resolution of the Appellate
Court of Appeals, as upheld by this Court, thus came to be the law of the
case.

**(W)hen an appellate court has once declared the law in a case,
such declaration continues to be the law of that case even on a subsequent
appeal.  The rule made by an appellate
court, while it maybe reversed in other cases, cannot be departed from in
subsequent proceedings in the same case. 
The Law of the Case, as applied to a former decision of an appellate
court merely expresses the practice of the courts in refusing to reopen what
has been decided.  Such a rule is
‘necessary to enable an appellate court to perform its duties satisfactorily
and efficiently, which would be impossible if a question, once considered and
decided by it, were to be litigated anew in the same case upon any and every
subsequent appeal.’ Again the rule is necessary as a matter of policy in order
to end litigation. **4

The ejectment action, Civil Case No.
226, thereafter proceeded and was duly decided on the merits on December 8, 1983.  The judgment vindicated the Ramos’ rights
over the property and commanded the Melos
and all persons deriving rights under them to vacate it and surrender it to the
Spouses Ramos.1
The Melos appealed, not
unexpectedly.

Amazingly, and no doubt to the utter consternation of the Ramos
Spouses, the Court of First Instance reversed the judgment of the Court about a
month or so after its rendition (or on January 20, 1984).  Essentially, the dismissal was grounded on
the patently spacious theory that the ejectment
action involved a subject-matter “incapable of pecuniary estimation,”
the title of the Ramoses, as disputed by the Melos, being the “epicenter of the
controversy,” and hence, beyond the competence of the Municipal
Court.  The holding is completely
inconsistent with the obvious nature of the action instituted by the Ramoses against the Melos as one
of desahucio or illegal detainer, it being in the language of the law, plainly an
action brought by vendees “against whom the possession of ** (a house and
lot) is unlawfully withheld after the expiration or termination of the right to
hold possession by virtue of ** (a) contract **.”2 The holding flies in the teeth of
established principle, that an inferior court is not deprived of jurisdiction
over an ejectment action simply because the defendant
sets up a claim of ownership over the premises of which possession is sought.3 The
holding disregards, too, the law of the case declared by the Intermediate
Appellate Court in CA-G.R. No. SP-11845-SCA on April 23, 1981, by virtue of which the Ramoses‘
action in the Municipal Court of Imus was
categorically characterized as one of illegal detainer
within that Court’s exclusive, original jurisdiction, and the Municipal Court’s
conclusion of the lack of merit of the Melos‘
defense was sustained.4 This is serious error, and must be
corrected.

The Ramos Spouses sought to take an appeal from the grossly
unorthodox judgment of the Court of First Instance.  They however made a mistake in the choice of
the mode of appeal.  They appealed under
Rule 41 of the Rules of Court,5 instead of by petition for review
in accordance with Sec. 29 of the Judiciary Act of 1948 as amended by RA 5433.6
Fortunately, the Appellate Court opted to overlook the mistake and granted the
Ramos Spouses leave “to file the proper petition for review within fifteen
(15) days from ** (notice) after paying the required docketing fee.”7
Unfortunately, they were able to file the petition for review only after filing
four (4) motions for extension, or more precisely, on December 17, 1984.  Without acting on the motions for extension,
and apparently without awareness that the petition for review had already been
filed on December 17, 1984,
the Court of Appeals, by Resolution dated December 27, 1984, dismissed the Ramos Spouses’ appeal on
account of their failure to timely submit their petition for review.

On that very same day, December
27, 1984, the Ramoses presented a motion
for extension of time to file a motion for reconsideration of the Apellate Court’s resolution
dismissing their appeal, and submitted their “Very Urgent Motion for
Reconsideration” on January 15,
1985.

While the Ramoses‘ motion for
reconsideration was thus pending, this Court handed down its decision in the
case of Habaluyas Enterprises, Inc. v. Japzon, on August
5, 1985,1 in which among other things it was
held that courts should not allow extensions of the period for filing motion
for reconsideration or new trial.  This
dictum was invoked by the Appeals Court
as authority to deny the Ramoses‘ motion for
extension and the motion for reconsideration thereafter filed, which it did by
the Resolution of September 21, 1985,2
now challenged in this Court.

Subsequently, however, and as is now generally known, this Court
decided to soften the impact of an immediate and unexpected strict application
of rule which has since come to be known as the Habaluyas
doctrine.  By Resolution promulgated
on May 30, 1986, the Court,
speaking thru Mr. Justice Feria, deferred strict
enforcement of the rule as follows:3

**Beginning one month after the promulgation of this Resolution,
the rule shall be strictly enforced that no motion for extension of time to
file a motion for new trial or reconsideration may be filed with the
Metropolitan or Municipal Trial Courts, the Regional Trial Courts, and the
Intermediate Appellate Court.  Such a
motion maybe filed only in cases pending with the Supreme Court as the court of
last resort, which may in its sound discretion either grant or deny the
extension requested.

Further clarification of the rule was
made on September 15, 1986 in
Bayasa v. I.A.C.,4
viz:

In other words, there is a one-month grace period from the
promulgation on May 30, 1986 of the Court’s clarificatory
Resolution in the Habaluyas case, or up to June 30,
1986, within which the rule barring extensions of time to file motions for new
trial or reconsideration is, as yet, not strictly enforceable.

Relief to the Ramoses
is thus plainly indicated.

While the Appellate Court’s denial of the motion for
reconsideration of the dismissal of the petitioners’ appeal was undoubtedly
correct at the time, having in mind the implications of the Habaluyas doctrine as originally announced,
the subsequent relaxation of that doctrine justifies a review of such denial,
given the fact that the petitioners’ motions for extension of time (which were
not acted upon) were made during the grace period thereafter allowed and that
the petition for review was likewise filed within the extensions sought.  There is thus more than sufficient
justification to consider that their appeal from the judgment on the merits of
the Court of first Instance in Civil Case No. 226 had been timely perfected and
ought to have received due course. 
Normally, such ruling would call for a remand of the case to the Court
of Appeals for further appropriate proceedings. 
However, this will result only in further delay in according said
petitioners what otherwise clearly appears on the record to be so justly due
them.  The private respondents presented
no evidence whatsoever in support of their claim of an alleged equitable mortgage.  They well knew that that claim had already
been pronounced to be sham.  They chose
instead to rely again on the palpably unmeritorious defense of lack of
jurisdiction, although they were also fully aware that that defense had not
only been thrown out by the Municipal Court in Civil Case No. 226, the ejectment case, but had received equally short shrift in
the reformation case (Civil Case No. BVC-80-7) from the Court of First
Instance, and later, in review proceedings, the Intermediate Appellate Court
and this Court itself.  And while, on the
other hand, the petitioners have duly proved their right to the possession of
the property in dispute and to a judgment in their favor in the ejectment case, the private respondents by their dubious
maneuverings have managed to avoid compliance with that judgment for more than
twelve years.

WHEREFORE, the Court makes the following dispositions. (1)
In the context of all that is shown to have transpired, the decision of the
Court of First Instance declaring the Municipal Court without jurisdiction to
hear and decide the ejectment case is so
transparently erroneous that it cannot be allowed to stand unreversed.  It is, accordingly, REVERSED. (2) The
Appellate Court’s verdict sustaining the inferior court’s assessment of the
private respondents’ defenses as sham, is AFFIRMED, and the disputed
transaction between the petitioners and the private respondents is hereby
DECLARED a true and proper sale that vested in the former not only title but
also the right to the possession of the property subject thereof. (3) That
right was appropriately litigated and properly vindicated in the judgment of
the Municipal Court in Civil Case No. 226, and said judgment is therefore
AFFIRMED.  This decision is immediately executory.  Costs
against the private respondents.

Cruz, Gancayco, Griño-Aquino,
and Medialdea,
JJ., concur.

^[1]
Months before strict enforcement of the rule was enjoined on May 30, 1986, by resolution of this
Court in G.R. No. 70895, 142 SCRA 208

1
Thru Mr. Justice Hugo E. Gutierrez, Jr. (now Associate Justice of the Supreme
Court), with whom concurred Messrs. Justices Cenzon
and Zosa (Rollo, p.
56); ITALICS supplied

2
Docketed as G.R. No. 57600

3
Sy v. Tuvera, 152
SCRA 103, citing Commercial Union Assurance Co., Ltd. v. Lepanto Consolidated Mining Co., 86 SCRA 80

4
National Mines & Allied Workers’ Union v. Luna, 83 SCRA 607,
612-613, citing Zarate v. Director of Lands,
39 Phil. 747 and other cases; SEE Sec. 3, Rule 51 of the Rules of Court which
provides that “(w)hen a new trial shall be granted (or a remand
to e lower court for further proceedings ordered), the ** (Court of Appeals)
shall pass on all the questions of law involved for the final determination of
the action.” SEE also Lichauco v. Limjuco, 19 Phil. 12; Esperanza, et al. v. Catindig, 27 Phil. 397; Hilario v.
Paulist Congregation, 27 Phil. 593; Zook v. Coker, 24 Phil. 434, cited in Moran,
Comments on the Rules, 1979 ed., Vol. 2, p. 518

1
Rollo, p. 77

2
Sec. 1, Rule 70, Rules of Court

3
See, e.g., Drilon v. Gaurana,
149 SCRA 342, 350, citing De la Cruz v. C.A., 133 SCRA 520; Alilaya v. Española, 107
SCRA 564; Debesa Macalalag,
81 SCRA 543; Bacani v. Macadaig,
105 Phil. 635; Ganadia v. Ramos, 99 SCRA 613

4
See footnote 1, page 3 hereof, supra

5 Note that Sec. 39 of B.P. Blg.
129, eff. Aug. 14, 1981, and par. 18 of this Court’s
implementing, interim rules, eliminated the requirement in Rule 41 of a record
on appeal and appeal bond, a notice of appeal being generally sufficient,
except in special proceedings and cases wherein multiple appeals are allowed,
in which event a record on appeal continues to be a requisite for appeal.

6 See Resolution, Sept. 26, 1972, in Mota v.
C.A., G.R. No.
L-35462, and the Resolution of the Court of Appeals en banc adopted on Aug. 12, 1971.

7 Resolution of the late Mr. Justice Gopengco, with whom concurred Messrs. Justices Patajo, Racela, Jr. and Purisima

1 138 SCRA 46, SEE footnote 1, page 1, supra

2 Per, Mr. Justice de Pano,
Jr., with whom concurred Messrs. Justices Borromeo
and Kapunan

3 142 SCRA, 208, 212

4 144 SCRA 161, 163