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Republic of the PhilippinesSupreme Court

Manila

SECOND DIVISION

PHILIPPINE TOURISM G.R. No. 176628

AUTHORITY,

Petitioner,

Present:

CARPIO,J., Chairperson,

BRION,

- versus - PEREZ,

SERENO, n!RE"ES,JJ.

Promul#te!:

PHILIPPINE GOLF DEVELOPMENT

E!UIPMENT" INC., $rch %&, '(%'

Respon!ent)*------------------------------------------------------------------------------------*

R E S O L U T I O N

#RION"J.$

Before this Court is petition for certiorari,un!er Rule + of the %&& Rules of Civil Proce!ure, to nnul the

!ecision.%/

!te! 0ecember %1, '((+ of the Court of Appels(CA) in CA 2)R) SP No) &(3(') 4his CA !ecision !ismisse! the petitionfor nnulment of 5u!#ment 6hich sou#ht to set si!e the !ecision .'/of the Re#ionl 4ril Court (RTC)of $untinlup Cit7, Brnch '(1

in Civil Cse No) (1-'%') 4he R4C hel! the Philippine 4ourism Authorit7 (PTA)lible for its unpi! obli#tion to Philippine 2olf0evelopment 8 E9uipment, Inc) (PHILGOLF).

FACTUAL #AC%GROUND

On April 1, %&&+, P4A,n #enc7 of the 0eprtment of 4ourism, 6hose min function is to bolster n! promote tourism, entere! into

contrct 6ith Atlntic Erectors, Inc) (AEI)for the construction of the Intrmuros 2olf Course E*pnsion Pro5ects PAR +(-++; for

contrct price of

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=ERE

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conscious in!ifference to conse9uences insofr s other persons m7 be ffecte!) 4his cnnot be invo?e! in cses 6here the counsel is

merel7 ne#li#ent in submittin# his re9uire! ple!in#s 6ithin the perio! tht the rules mn!te)

It is not !ispute! tht the summons to#ether 6ith cop7 of the complint 6s personll7 serve! upon, n! receive! b7 P4A

throu#h its Corporte @e#l Services 0eprtment, on October %(, '((1)./4hus, in filin# to submit responsive ple!in# 6ithin the

re9uire! time !espite sufficient notice, the R4C 6s correct in !eclrin# P4A in !efult)

There was no extrinsic fraud

E*trinsic fru! refers to n7 fru!ulent ct of the previlin# prt7 in the liti#tion 6hich is committe! outsi!e of the tril of the cse,6hereb7 the unsuccessful prt7 hs been prevente! from e*hibitin# full7 his cse, b7 fru! or !eception prctice! on him b7 his

opponent).&/Gn!er the !octrine of this cite! cse, 6e !o not see the cts of P4As counsel to be constitutive of e*trinsic fru!)

4he recor!s revel tht the 5u!#ment of !efult .%(/6s sent vi re#istere! mil to P4As counsel) =o6ever, P4A never vile! of the

reme!7 of motion to lift the or!er of !efult) .%%/Since the filure of P4A to present its evi!ence 6s not pro!uct of n7 fru!ulentcts committe! outsi!e tril, the R4C !i! not err in !eclrin# P4A in !efult)

Annulment of judgment is not

the proper remedy

P4As pproprite reme!7 6s onl7 to ppel the R4C !ecision) Annulment of u!#ment un!er Rule 3 of the Rules of Court is

recourse e9uitble in chrcter n! llo6e! onl7 in e*ceptionl cses 6here the or!inr7 reme!ies of ne6 tril, ppel, petition for

relief or other pproprite reme!ies re no lon#er vilble throu#h no fult of petitioner).%'/

In this cse, ppel 6s n vilble reme!7) 4here 6s lso no e*tror!inr7 reson for petition for nnulment of

5u!#ment, nor 6s there n7 !e9ute e*plntion on 6h7 the reme!7 for ne6 tril or petition for relief coul! not be use!) 4he Courtis ctull7 t loss 6h7 P4A h! 6ith!r6n properl7 file! ppel n! substitute! it 6ith nother petition, 6hen P4A coul! hve

merel7 rise! the sme issues throu#h n or!inr7 ppel)

PTA was acting in a proprietary

character

P4A lso erre! in invo?in# stte immunit7 simpl7 becuse it is #overnment entit7) 4he ppliction of stte immunit7 is

proper onl7 6hen the procee!in#s rise out of soverei#n trnsctions n! not in cses of commercil ctivities or economic ffirs

4he Stte, in enterin# into business contrct, !escen!s to the level of n in!ivi!ul n! is !eeme! to hve tcitl7 #iven its consent tobe sue!).%1/

Since the Intrmuros 2olf Course E*pnsion Pro5ects prt?es of proprietr7 chrcter entere! into bet6een P4A n!

P=I@2O@

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of !iscretion mountin# to lc? or e*cess of 5uris!iction, the proper reme!7 vilble to the ##rieve! prt7 is

petition for certiorariun!er Rule + of the si! Rules) .emphses supplie!F cittions omitte!/

In sum, P4A h! the reme!7 of ppelin# the R4C !ecision to the CA n!, therefter, to us) Gn!er the circumstnces, 6e fin!

no !e9ute reson to 5ustif7 the elevtion of this cse to the CA n! then to us, un!er Rule + of the Rules of Court)

&HEREFORE"premises consi!ere!, 6e hereb7 DISMISSthe petition for certiorari.No costs)

SO ORDERED.

ARTURO D. #RION

Associte ustice

&E CONCUR$

ANTONIO T. CARPIO

Associte ustice

Chirperson

OSE PORTUGAL PERE

Associte ustice

MARIA LOURDES P. A. SERENO

Associte ustice

#IENVENIDO L. REYES

Associte usticeA T T E S T A T I O N

I ttest tht the conclusions in the bove Resolution h! been reche! in consulttion before the cse 6s ssi#ne! to the 6riter of the

opinion of the Courts 0ivision)

ANTONIO T. CARPIO

Associte ustice

Chirperson, Secon! 0ivision

C E R T I F I C A T I O N

Pursunt to Section %1, Article HIII of the Constitution, n! the 0ivision Chirpersons Attesttion, I certif7 tht the conclusions in the

bove Resolution h! been reche! in consulttion before the cse 6s ssi#ne! to the 6riter of the opinion of the Courts 0ivision)

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RENATO C. CORONA

Chief ustice

.%/

Penne! b7 Associte ustice Rosmri 0) Crn!n#, n! concurre! in b7 Associte ustices Reme!ios A) Slr-

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Almp7, Counsels for the !efen!nts t their !!ress in $?ti Cit7 on !efenses in 4l, et l)s ns6er

to be stric?en out)

4he tril court #rnte! Bnco

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'; 4A@A c9uire! the Btn#s propert7 in!epen!entl7 n! usin# its o6n fun!s throu#h rmslen#th trnsctionF

1; 4A@A is the full n! bsolute o6ner of the !ispute! propert7)

$en6hile, 4l, et l) file! to pro!uce the re9ueste! !ocuments) In Supplementl Or!er !te! April %, %&&, 4l, et l)

6ere !irecte! to pro!uce !!itionl !ocuments) 4he Supplementl Or!er re!s:.&/

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4=E COGR4 O< APPEA@S 0ECI0E0 A LGES4ION O< SGBS4ANCE NO4 IN ACCOR0 I4= @A AN0 GRISPRG0ENCE

=EN I4 RE

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presumption of completeness of service !oes not rise n! b7 impliction, respon!ent 5u!#e coul! not presume ctul receipt b7

!!ressee)

Petitioner lso lle#es tht the Or!er !te! November '(, %&&+ is nother in!icium of respon!ent 5u!#es mnifest prtilit7 6hen

he #rnte! the motion for pro!uction of !ocuments !espite filure b7 Bnco

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FIRST DIVISION

SOCIAL SECURITY COMMISSION"

Petitioner,

"%erss"

RIAL POULTRY an) LIVESTOC%

ASSOCIATION" INC." #SD AGRO INDUSTRIAL

DEVELOPMENT CORPORATION an)

#ENAMIN SAN DIEGO"

Respon!ents)

G.R. No. 167:>:

Present:

CORONA,C.J),

Chirperson

HE@ASCO, R),

@EONAR0O-0E CAS4RO,PERA@4A,M n!

PEREZ,JJ)

Promul#te!:

une %, '(%%

* ----------------------------------------------------------------------------------------*

D E C I S I O N

PERE"J):

4his petition for certiorari chllen#es the 0ecision.%/!te! '( September '((3 n! Resolution.'/!te! &

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A subse9uent motion for reconsi!ertion file! b7 respon!ents 6s li?e6ise !enie! on %% une '((') 4he SSC reiterte! tht

the principle of res 2dicata!oes not ppl7 in this cse becuse of the bsence of the in!ispensble element of i!entit7 of cuse of

ction).&/

Gnfe!, respon!ents sou#ht recourse before the Court of Appels b7 67 of petition for certiorari) 4he Court of Appel

reverse! the rulin#s of the SSC n! hel! tht there is common issue bet6een the cses before the SSC n! in the N@RCF n! it is

6hether there e*iste! n emplo7er-emplo7ee reltionship bet6een An#eles n! respon!ents)4hus, the cse flls s9urel7 un!er theprinciple of res 2dicata, prticulrl7 un!er the rule on conclusiveness of 5u!#ment, s enuncite! in /ith e$$ and Co. %. Cort of

Appea$s).%(/

4he Court of Appels !ispose!, thus:

&HEREFORE, the petition is GRANTED) 4he Or!er !te!

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4his is the concept of res 2dicata?no6n s conclusiveness of 5u!#ment) Stte! !ifferentl7,n7 ri#ht, fct or mtter in issue !irectl7

!5u!icte! or necessril7 involve! in the !etermintion of n ction before competent court in 6hich 5u!#ment is ren!ere! on the

merits is conclusivel7 settle! b7 the 5u!#ment therein n! cnnot #in be liti#te! bet6een the prties n! their privies, 6hether ornot the clim, !emn!, purpose, or sub5ect mtter of the t6o ctions is the sme) .%+/

4hus, if prticulr point or 9uestion is in issue in the secon! ction, n! the 5u!#ment 6ill !epen! on the !etermintion of

tht prticulr point or 9uestion, former 5u!#ment bet6een the sme prties or their privies 6ill be finl n! conclusive in the secon!if tht sme point or 9uestion 6s in issue n! !5u!icte! in the first suit) I!entit7 of cuse of ction is not re9uire! but merel7

i!entit7 of issue).%/

4he elements of res 2dicata re: %; the 5u!#ment sou#ht to br the ne6 ction must be finlF '; the !ecision must hve beenren!ere! b7 court hvin# 5uris!iction over the sub5ect mtter n! the prtiesF 1; the !isposition of the cse must be 5u!#ment on

the meritsF n! 3; there must be s bet6een the first n! secon! ction, i!entit7 of prties, sub5ect mtter, n! cuses of ction) Shoul!

i!entit7 of prties, sub5ect mtter, n! cuses of ction be sho6n in the t6o cses, then res 2dicatain its spect s br b7 prior

5u!#ment 6oul! ppl7) If s bet6een the t6o cses, onl7 i!entit7 of prties cn be sho6n, but not i!enticl cuses of ction, then res2dicata s conclusiveness of 5u!#ment pplies).%/

Heril7, the principle of res 2dicatain the mo!e of conclusiveness of 5u!#ment pplies in this cse) 4he first element is

present in this cse) 4he N@RC rulin# 6s ffirme! b7 the Court of Appels) It 6s 5u!icil ffirmtion throu#h !ecision !ul7promul#te! n! ren!ere! finl n! e*ecutor7 6hen no ppel 6s un!ert?en 6ithin the re#lementr7 perio!) 4he 5uris!iction of the

N@RC, 6hich is 9usi-5u!icil bo!7, 6s un!ispute!) Neither cn the 5uris!iction of the Court of Appels over the N@RC !ecision

be the sub5ect of !ispute) 4he N@RC cse 6s clerl7 !eci!e! on its meritsF li?e6ise on the merits 6s the ffirmnce of the N@RC

b7 the Court of Appels)

ith respect to the fourth element of i!entit7 of prties, 6e hol! tht there is substntil complince)

4he prties in SSC n! N@RC cses re not strictl7 i!enticl) Ril Poultr7 6s imple!e! s !!itionl respon!ent in theSSC cse) urispru!ence ho6ever !oes not !ictte bsolute i!entit7 but onl7 substntil i!entit7) .%&/4here is substntil i!entit7 of

prties 6hen there is communit7 of interest bet6een prt7 in the first cse n! prt7 in the secon! cse, even if the ltter 6s not

imple!e! in the first cse).'(/

BS0 A#ro, Ril Poultr7 n! Sn 0ie#o 6ere liti#tin# un!er one n! the sme entit7 both before the N@RC n! the

SSC) Althou#h Ril Poultr7 is not prt7 in the N@RC cse, there re numerous in!ictions tht ll the 6hile, Ril Poultr7 6s lso

n emplo7er of An#eles to#ether 6ith BS0 A#ro n! Sn 0ie#o) An#eles !mitte! before the N@RC tht he 6s emplo7e! b7 BS0

A#ro n! Sn 0ie#o from %& until %&&).'%/=e m!e similr clim in his Petition before the SSC inclu!in# s emplo7er RilPoultr7 s respon!ent).''/ An#eles presente! s evi!ence before the SSC his I!entifiction Cr! n! ob Or!er to prove his

emplo7ment in Ril Poultr7) =e clrifie! in his Opposition to the $otion to 0ismiss.'1/

file! before SSC tht he file! to !!uce theses evi!ence before the N@RC even if it 6oul! hve proven his emplo7ment 6ith BS0 A#ro) $ost si#nificntl7, the three respon!ents

BS0 A#ro, Ril Poultr7 n! Sn 0ie#o, liti#te! s one entit7 before the SSC) 4he7 6ere represente! b7 one counsel n! the7submitte! their ple!in#s s such one entit7) Certinl7, n! t the ver7 lest, communit7 of interest e*ists mon# them) e therefore

rule tht there is substntil if not ctul i!entit7 of prties both in the N@RC n! SSC cses)

As previousl7 stte!, n i!entit7 in the cuse of ction nee! not obtin in or!er to ppl7 res 2dicatab7 conclusiveness o

5u!#ment) An i!entit7 of issues 6oul! suffice)

4he remittnce of SSS contributions is mn!te! b7 Section ''; of the Socil Securit7 Act of %&&, %i0:

SEC) '')Reittance of Contritions. "; 4he contributions impose! in the prece!in# Section shll be

remitte! to the SSS 6ithin the first ten %(; !7s of ech clen!r month follo6in# the month for 6hich the7 re

pplicble or 6ithin such time s the Commission m7 prescribe) Ever7 emplo7er re9uire! to !e!uct n! to remitsuch contributions shll be lible for their p7ment n! if n7 contribution is not pi! to the SSS s herein

prescribe!, he shll p7 besi!es the contribution penlt7 thereon of three percent 1D; per month from the !te the

contribution flls !ue until pi!) * * *)

4he mn!tor7 cover#e un!er the Socil Securit7 Act is premise! on the e*istence of n emplo7er-emplo7ee reltionship

.'3/4his is evi!ent from Section &; 6hich provi!es:

SEC) &) Co%era-e. "; Cover#e in the SSS shll be compulsor7 upon ll emplo7ees not over si*t7 +(;7ers of #e n! their emplo7ers:Pro%ided, 4ht in the cse of !omestic helpers, their monthl7 income shll not be

less thn One thousn! pesos P%,((()((; month * * *)

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Section !; of the sme l6 !efines n emplo7ee s n7 person 6ho performs services for n emplo7er in 6hich either or

both mentl or ph7sicl efforts re use! n! 6ho receives compenstion for such services, 6here there is n emplo7er-emplo7ee

reltionship) 4he ille#l !ismissl cse before the N@RC involve! n in9uir7 into the e*istence or non-e*istence of n emplo7er-emplo7ee reltionship) 4he ver7 sme in9uir7 is nee!e! in the SSC cse) An! there 6s no in!iction therein tht there is n essenti

conceptul !ifference bet6een the !efinition of emplo7ee un!er the @bor Co!e n! the Socil Securit7 Act)

In the instnt cse, therefore, res 2dicatain the concept of conclusiveness of 5u!#ment pplies) 4he 5u!#ment in the N@RC cse

pertinin# to fin!in# of n bsence of emplo7er-emplo7ee reltionship bet6een An#eles n! respon!ents is conclusive on the SSCcse)

A cse in point is /ith e$$ and Co. %. Cort of Appea$s .'/6hich, contrr7 to SSC, is pt n! proper reference) Smith Bell vile! of

the services of privte respon!ents to trnsport cr#oes from the pier to the compn7s 6rehouse) Cses 6ere file! #inst Smith Bellone for ille#l !ismissl before the N@RC n! the other one 6ith the SSC, to !irect Smith Bell to report ll privte respon!ents to the

SSS for cover#e) hile the SSC cse 6s pen!in# before the Court of Appels, Smith Bell presente! the resolution of the Supreme

Court in 2)R) No) @-33+'(, 6hich ffirme! the N@RC, Secretr7 of @bor, n! Court of Appels fin!in# tht no emplo7er-emplo7ee

reltionship e*iste! bet6een the prties, to constitute s br to the SSC cse) e #rnte! the petition of Smith Bell n! or!ere! the!ismissl of the cse) e hel! tht the controvers7 is s9urel7 covere! b7 the principle of res 2dicata, prticulrl7 un!er the rule on

conclusiveness of 5u!#ment) 4herefore, the 5u!#ment in 2)R) No) @-33+'( brs the SSC cse, s the relief sou#ht in the ltter cse is

ine*tricbl7 relte! to the rulin# in 2)R) No) @-33+'( to the effect tht privte respon!ents re not emplo7ees of Smith Bell)

4he firl7 recent cse of Co %. Peop$e,.'+/li?e6ise pplies to the present cse) An informtion 6s file! #inst Co b7 privte

respon!ent spouses 6ho clim to be emplo7ees of the former for violtion of the Socil Securit7 Act, specificll7 for non-remittnce

of SSS contributions) Erlier, respon!ent spouses h! file! lbor cse for ille#l !ismissl)4he N@RC finll7 rule! tht there 6s no

emplo7er-emplo7ee reltionship bet6een her n! respon!ent spouses) Co then file! motion to 9ush the informtion, r#uin# tht

the fcts lle#e! in the Informtion !i! not constitute n offense becuse respon!ent spouses 6ere not her emplo7ees) In support of hermotion, she cite! the N@RC rulin#) 4his Court pplie! /ith e$$n! !eclre! tht the finl n! e*ecutor7 N@RC !ecision to the

effect tht respon!ent spouses 6ere not the emplo7ees of petitioner is rulin# bin!in# in the cse for violtion of the Socil Securit7

Act) 4he Court further stte! tht the !octrine of conclusiveness of 5u!#ment lso pplies in criminl cses).'/

Appl7in# the rule on res 2dicatab7 conclusiveness of 5u!#ment in con5unction 6ith the forecite! cses, the Court of

Appels ptl7 rule!, thus:

In SSC Cse No) &-%''-(%, privte respon!ent An#eles is see?in# to compel herein petitioners to remit to

the Socil Securit7 S7stem SSS; ll contributions !ue for n! in his behlf, 6heres in N@RC NCR CA (%(++-&&

N@RC RAB-IH--&('-& RI; privte respon!ent pr7e! for the !eclrtion of his !ismissl ille#l) In SSC No) &-

%''-(%, privte respon!ent, in see?in# to enforce his lle#e! ri#ht to compulsor7 SSS cover#e, lle#e! tht heh! been n emplo7ee of petitionersF 6heres to support his position in the lbor cse tht he 6s ille#ll7 !ismisse!

b7 petitioners BS0 A#ro n!>or Ben5min Sn 0ie#o, he sserte! tht there 6s n emplo7er-emplo7ee reltionshipe*istin# bet6een him n! petitioners t the time of his !ismissl in %&&) Simpl7 stte!, the issue common to both

cses is 6hether there e*iste! n emplo7er-emplo7ee reltionship bet6een privte respon!ent n! petitioners t thetime of the cts complint of 6ere committe! both in SSC Cse No) &-%''-(% n! N@RC NCR CA (%(++-&&

N@RC RAB-IH--&('-&-RI;)

4he issue of emplo7er-emplo7ee reltionship 6s li! to rest in CA 2R) SP) No) 11, throu#h this Courts

0ecision !te! October ', '((( 6hich hs lon# ttine! finlit7) Our ffirmtion of the N@RC !ecision of $7 %,

%&&& 6s n !5u!iction on the merits of the cse)

Consi!erin# the fore#oin# circumstnces, the instnt cse flls s9urel7 un!er the umbr#e of res

2dicata,prticulrl7, un!er the rule on conclusiveness of 5u!#ment)

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OSE PORTUGAL PERE

Associte ustice

E CONCGR:

RENATO C. CORONA

Chief ustice

Chirperson

PRES#ITERO . VELASCO" R. TERESITA . LEONARDODE CASTRO

Associte ustice Associte ustice

DIOSDADO M. PERALTA

Associte ustice

C E R T I F I C A T I O N

Pursunt to Section %1, Article HIII of the Constitution, it is hereb7 certifie! tht the conclusions in the bove 0ecision 6ere

reche! in consulttion before the cse 6s ssi#ne! to the 6riter of the opinion of the Court)

RENATO C. CORONA

Chief ustice

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4his is petition for certiorariun!er Rule + of the Rules of Civil Proce!ure, ssilin# the Resolution of the Court of Appels in

CA-2)R) CH No) 1&(', !te! une &, '(((, 6hich !enie! petitioners motion for clrifictor7 5u!#ment n! the Resolution of the

Court of Appels, !te! Au#ust 1, '(((, 6hich !enie! the motion for reconsi!ertion)

Gn!er n #reement !enominte! s pacto de retrosle, $ri $en!o H!) 0e Ocmpo c9uire! prcel of ln! from @uis

Briones) 4he ltter thereun!er reserve! the ri#ht to repurchse the prcel of ln! up to 0ecember 1%, %&().%/

$ri $en!o H!) 0e Ocmpo psse! 67 on $7 ', %&&) .'/On une %3, %&&(, =ipolit Ocmpo Pulite n! Eusebio

$en!o Ocmpo, the heirs of $ri $en!o H!) 0e Ocmpo, file! petition for consoli!tion of o6nership, lle#in# tht theseller 6s not ble to e*ercise her privile#e to re!eem the propert7 on or before 0ecember 1%, %&().1/

4he Re#ionl 4ril Court R4C; of Pili, Cmrines Sur, Brnch 1' ren!ere! 0ecision .3/on nur7 1(, %&&' s follo6s:

=ERE

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It pperin# tht the !ecision of the Court of Appels h! become finl n! e*ecutor7, n! n entr7 of finl 5u!#ment h! lre!7 been

issue! b7 the =onorble Court of Appels, let 6rit of e*ecution issue)

=EREAS, on ul7 %(, %&&, Sheriff E!!ie $) Rosero submitte! his return:

=ERE

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Gnble to effect the e*ecution of the Court of Appels !ecision, petitioner file! 6ith the R4C n omnibus motion, !te! $7 '

%&&&, pr7in#:

=ERE

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nothin# is more settle! in the l6 thn tht 6hen finl 5u!#ment becomes e*ecutor7, it thereb7 becomes immutble n! unlterble)

4he 5u!#ment m7 no lon#er be mo!ifie! in n7 respect, even if the mo!ifiction is ment to correct 6ht is perceive! to be n

erroneous conclusion of fct or l6, n! re#r!less of 6hether the mo!ifiction is ttempte! to be m!e b7 the Court ren!erin# it or b7

the hi#hest Court of the ln!) 4he onl7 reco#nie! e*ceptions re the correction of clericl errors or the m?in# of so-clle! nnc pro

tncentries 6hich cuse no pre5u!ice to n7 prt7, n!, of course, 6here the 5u!#ment is voi!) .''/

As #enerl rule, therefore, finl n! e*ecutor7 5u!#ments re immutble n! unlterble e*cept un!er the three e*ceptions

nme! bove: ; clericl errorsF b; nnc pro tncentries 6hich cuse no pre5u!ice to n7 prt7F n! c; voi! 5u!#ments)

In the present cse, petitioner clims the secon! e*ception, i.e), tht her motion for clrifictor7 5u!#ment is for the purpose of

obtinin# nnc pro tncmen!ment of the finl n! e*ecutor7 0ecision of the Court of Appels)

3nc pro tnc5u!#ments hve been !efine! n! chrcterie! b7 this Court in the follo6in# mnner:

4he office of 5u!#ment nnc pro tncis to recor! some ct of the court !one t former time 6hich 6s not then crrie! into the

recor!, n! the po6er of court to m?e such entries is restricte! to plcin# upon the recor! evi!ence of 5u!icil ction 6hich hs

been ctull7 t?en) I* a ' -0') *o a?' *+' /'

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4he Court of Appels pronounce! in its 0ecision tht the contrct bet6een the prties is n e9uitble mort##e) Since the

contrct is chrcterie! s mort##e, the provisions of the Civil Co!e #overnin# mort##es ppl7) Article '( of the Civil Co!e

sttes:

4he cre!itor cnnot pproprite the thin#s #iven b7 67 of ple!#e or mort##e, or !ispose of them) An7 stipultion to the contrr7 is

null n! voi!)

4his Court hs interprete! this provision in the follo6in# mnner:

4he essence ofpacto coissorio, 6hich is prohibite! b7 Article '( of the Civil Co!e, is tht o6nership of the securit7 6ill pss to

the cre!itor b7 the mere !efult of the !ebtor 2uerrero v) "i#o, et l), &+ Phil) 1, 3%-3'F Pui# v) Sellner, et l), 3 Phil) '+, '

; .'/

4he onl7 ri#ht of mort##ee in cse of non-p7ment of !ebt secure! b7 mort##e 6oul! be to foreclose the mort##e n! hve the

encumbere! propert7 sol! to stisf7 the outstn!in# in!ebte!ness) 4he mort##ors !efult !oes not operte to vest in the mort##ee

the o6nership of the encumbere! propert7, for n7 such effect is #inst public polic7, s enuncite! b7 the Civil Co!e .'+/

Appl7in# the principle ofpact coissorispecificll7 to e9uitble mort##es, in#onte%er-in %. CA,.'/the Cour

enuncite! tht the consoli!tion of o6nership in the person of the mort##ee in e9uit7, merel7 upon filure of the mort##or in e9uit7

to p7 the obli#tion, 6oul! mount to pact coissori.4he Court further rticulte! tht n ction for consoli!tion of

o6nership is n inpproprite reme!7 on the prt of the mort##ee in e9uit7) 4he onl7 proper reme!7 is to cuse the foreclosure of the

mort##e in e9uit7) An! if the mort##ee in e9uit7 !esires to obtin title to the mort##e! propert7, the mort##ee in e9uit7 m7 bu7 it

t the foreclosure sle)

4he privte respon!ents !o not pper to hve cuse! the foreclosure of the mort##e much less hve the7 purchse! the

propert7 t foreclosure sle) Petitioner, therefore, retins o6nership of the sub5ect propert7) 4he ri#ht of o6nership necessril7

inclu!es the ri#ht to possess, prticulrl7 6here, s in this cse, there ppers to hve been no vilment of the reme!7 of foreclosure

of the mort##e on the #roun! of !efult or non-p7ment of the obli#tion in 9uestion)

&HEREFORE, the petition for certiorari is 0IS$ISSE0) 4he prties re !irecte! to procee! upon the bsis of the finl

0ecision of the Court of Appels, !te! une '&, %&&, in CA-2)R) CH No) 1&(', tht the contrct in 9uestion 6s n e9uitble

mort##e n! not sle)

No costs)

SO ORDERED.

1a%ide, Jr., C.J., (Chairan), 4isin-, 5nares"/antia-o, n!Carpio, JJ., concur.

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