Republic of the Philippines vs. "G" Holdings, Inc.

Annulment of judgment lies only for extrinsic fraud committed by the prevailing party outside trial that deprives the losing party of its day in court, or for absolute lack of jurisdiction over the person or subject matter — not for grave abuse of discretion in the exercise of admitted jurisdiction nor for loss of appeal through a party's own counsel's negligence.

The Republic owned Maricalum Mining Corporation and acted through the Asset Privatization Trust as trustee for privatization of government assets. "G" Holdings, Inc. was a private bidder that submitted the best bid for the negotiated sale of 90% of the mining company's shares. The governing framework for disposition was the privatization program implemented through the Committee on Privatization and the purchase and sale agreement mechanism.

On May 21, 1992, the Committee on Privatization approved the Asset Privatization Trust proposal for negotiated sale of 90% of the shares of stock of the government-owned Maricalum Mining Corporation. Learning of the intended sale, "G" Holdings, Inc. signified interest and submitted the best bid.

Negotiations between the Republic, through the Trust, and "G" Holdings culminated in a purchase and sale agreement executed on October 2, 1992. Under it, the Republic undertook to sell and deliver 90% of the entire issued and outstanding shares of the mining company, as well as its company notes, for ₱673,161,280, with a down payment of ₱98,704,000 and the balance divided into four tranches payable in installments over ten years. Thereafter a disagreement arose on when installment payments should commence, the Republic claiming the seventh month from signing while "G" Holdings insisted on seven months after fulfillment of closing conditions.

Because no settlement was reached, "G" Holdings filed a complaint for specific performance and damages with the Regional Trial Court of Manila, Branch 49, docketed as Civil Case No. 95-76132. During pre-trial, counsels manifested that the issue was one of law and submitted the case for decision. According to the pre-trial minutes of May 27, 1996, exhibits presented by both parties were marked, offered and admitted, and the purchase and sale agreement was adopted as common exhibit on interpretation of its provisions.

On June 11, 1996, the trial court decided for "G" Holdings and ordered execution and delivery of the transfer documents, shares and notes within thirty days from receipt upon simultaneous full payment of the balance at present value of ₱241,702,122.86 computed under the prepayment provisions. The Solicitor General filed a notice of appeal on June 28, 1996 but filed it with the Court of Appeals rather than the trial court. No further remedy was taken until July 2, 1999, when the Republic through the Trust filed annulment proceedings alleging the decision was promulgated before submission of its formal offer and comment and without ruling on admissibility.

• Grave Abuse Amounting to Lack of Jurisdiction: Petitioner argued that the trial court committed grave abuse of discretion amounting to lack of jurisdiction resulting in nullity of its decision.
• Premature Rendition Before Offer of Evidence: Petitioner maintained that the trial court rendered its decision even prior to submission of petitioner's formal offer of evidence and before petitioner could file its comment to respondent's formal offer of evidence.
• Failure to Rule on Admissibility: Petitioner argued that the trial court rendered its decision without ruling on the admission of the evidence offered by respondent.
• Extrinsic Fraud Through Defective Appeal: Petitioner argued that the failure of the Solicitor General to file the notice of appeal with the proper forum amounted to extrinsic fraud which prevented petitioner from appealing the case to the Court of Appeals.

• Authority of Counsel: Whether the petition filed in the name of the Republic without imprimatur or deputation from the Solicitor General is dismissible.
• Lack of Jurisdiction and Grave Abuse: Whether the trial court's rendition of judgment before formal offer of evidence and without ruling on admissibility constituted grave abuse of discretion amounting to lack of jurisdiction annullable under Rule 47.
• Extrinsic Fraud: Whether the Solicitor General's filing of the notice of appeal with the wrong forum, preventing appeal, constituted extrinsic fraud warranting annulment.

• Authority of Counsel: Yes, dismissible in principle. Only the Solicitor General may bring or defend actions for the Republic absent duly deputized and supervised legal officers, and no deputation was shown here.
• Lack of Jurisdiction and Grave Abuse: No. Lack of jurisdiction for annulment means absolute want of jurisdiction over the person or subject matter, not abuse in its exercise, and any error was merely an error of judgment correctable by appeal.
• Extrinsic Fraud: No. Extrinsic fraud requires fraudulent procurement by the prevailing party outside trial preventing a day in court, and the loss of appeal was caused by petitioner's own counsel without participation by "G" Holdings.

• Authority of Counsel: The general rule requires Solicitor General initiation or defense for the Republic, with the sole exception of deputized legal officers of government offices acting under supervision and control pursuant to Section 35(8), Chapter 12, Title III, Book IV of the Administrative Code of 1987. The petition was signed by Asset Privatization Trust and Privatization and Management Office lawyers without proof of deputation, making it dismissible, though the merits were still resolved in the interest of justice.
• Lack of Jurisdiction and Grave Abuse: Annulment is extraordinary and restricted to (1) extrinsic fraud and (2) lack of jurisdiction, to avoid making a farce of final judgments, and is unavailable where remedies were lost through fault or negligence. By invoking grave abuse, petitioner conceded jurisdiction and attacked only the manner of formulation, enlarging the concept beyond absolute lack over parties or subject matter, which was admittedly present. Jurisdiction being distinct from its exercise, errors therein are errors of judgment for appeal. No grave abuse occurred in any event because documents attached to pleadings form part thereof and may be considered without formal introduction where authenticity and due execution are undenied, the pre-trial minutes showed exhibits marked, offered and admitted, the sole issue was one of law on interpretation of the common exhibit agreement, and a decision with all facts available without further hearing is not without or in excess of jurisdiction.
• Extrinsic Fraud: Extrinsic fraud is a fraudulent act of the prevailing party outside trial, operating on procurement rather than the judgment itself, that prevents the unsuccessful party from having trial or presenting its entire case. No deceit or subterfuge by "G" Holdings was proven or even alleged, and no connivance between counsels was found. To void a judgment, fraud must be by the adverse party, not one's own counsel, and the Republic's predicament flowed from the Solicitor General's inaction, for which invocation of non-estoppel of the government does not provide blanket immunity. Finality having attached, the winning party must not be deprived of the verdict's fruits.

• Annulment of judgment; exclusive grounds and nature — Annulment is an extraordinary remedy restricted exclusively to extrinsic fraud and lack of jurisdiction, intended to prevent a losing party from making a farce of a final and executory decision. It may not be invoked where the party availed himself of new trial, appeal, petition for relief or other remedy and lost, or failed to avail himself thereof through fault or negligence, as applied to bar the Republic which lost appeal through its counsel's defective filing.
• Lack of jurisdiction vs. exercise of jurisdiction — Lack of jurisdiction for annulment means absolute want of jurisdiction over the person of the defending party or over the subject matter, not mere abuse of jurisdictional discretion. Where jurisdiction over person and subject matter exists, all other questions are but exercise of jurisdiction whose errors are errors of judgment proper for appeal, as applied to reject the claim that early rendition amounted to lack of jurisdiction.
• Extrinsic fraud — Extrinsic fraud is any fraudulent act of the prevailing party committed outside trial whereby the unsuccessful party is prevented from fully proving his case by fraud or deception, operating on procurement rather than the judgment itself, with the overriding consideration being deprivation of a day in court. It was not established because "G" Holdings had no participation in the Solicitor General's misfiling, and fraud by one's own counsel does not void the judgment.
• Authority of Solicitor General; deputation — Only the Solicitor General can bring or defend actions on behalf of the Republic, except through legal officers of government departments, bureaus, agencies and offices duly deputized to assist and appear under supervision and control. The petition by Asset Privatization Trust lawyers without shown deputation was thus dismissible.
• Evidence; pleadings annexes as evidence — Documents attached to pleadings form part thereof and may be considered as evidence even if not formally introduced, where authenticity and due execution have not been denied under oath. The trial court therefore could rely on annexes to the pleadings and the common purchase and sale agreement exhibit.
• Finality of judgments — Litigation must end sometime and somewhere; once final, the winning party should not be deprived of the verdict's fruits and courts must guard against schemes to undermine finality. The decade-old controversy was thus given finis after finality resulted from the Republic's counsel's fault.

• "Jurisdiction is not the same as the exercise of jurisdiction. As distinguished from the exercise of jurisdiction, jurisdiction is the authority to decide a cause, and not the decision rendered therein." — States the canonical distinction foreclosing annulment for mere errors in deciding, since errors with admitted jurisdiction are errors of judgment for appeal.
• "Extrinsic fraud refers to any fraudulent act of the prevailing party in the litigation which is committed outside of the trial of the case, whereby the unsuccessful party is prevented from fully proving his case, by fraud or deception practiced on him by his opponent." — Defines the controlling test for extrinsic fraud and why counsel's misfiling without prevailing-party participation fails it.
• "The remedy may not be invoked where the party has availed himself of the remedy of new trial, appeal, petition for relief or other appropriate remedy and lost, or where he has failed to avail himself of those remedies through his own fault or negligence." — Limits annulment as extraordinary relief and bars its use to excuse the lost appeal here.
• "Litigation should end and terminate sometime and somewhere." — Expresses the finality policy justifying refusal to disturb the long-final trial court judgment.

• Tolentino vs. Leviste, G.R. No. 156118, 19 November 2004 — Followed as authority that lack of jurisdiction means want over person or subject matter, and that jurisdiction is distinct from its exercise whose errors are errors of judgment for appeal.
• Cerezo vs. Tuazon, G.R. No. 141538, 23 March 2004 — Followed for the extraordinary character of annulment, its restriction to Rule 47 grounds, and its purpose of preventing farce of final decisions.
• Dizon vs. Bayona, 98 Phil 942 (1956) — Followed to hold that a decision rendered with jurisdiction and all necessary facts, even without trial or hearing for presentation of evidence, is not without or in excess of jurisdiction nor with grave abuse.
• Republic vs. Court of Appeals, G.R. No. 104678, 20 July 1992, 211 SCRA 657 — Applied to reject blanket reliance on non-estoppel of government to excuse the Solicitor General's shortcomings.
• Philippine Bank of Communications vs. Court of Appeals, G.R. No. 92067, 22 March 1991, 195 SCRA 567 — Followed with Puromines, Inc. vs. Court of Appeals and Asia Banking Corporation vs. Walter E. Olsen & Co. for the rule that documents attached to pleadings form part thereof and may be considered as evidence.

• Section 2, Rule 47, Rules of Court — Provides the exclusive grounds of extrinsic fraud and lack of jurisdiction for annulment of judgment; applied to confine and reject the Republic's grave-abuse and counsel-error claims.
• Section 35(8), Chapter 12, Title III, Book IV, Administrative Code of 1987 — Empowers the Solicitor General to deputize government legal officers under supervision and control; applied to find the Trust lawyers' filing without shown deputation dismissible.
• Rule 39, Section 10, Rules of Court — Cited by the trial court as basis for ordering execution of the document of transfer and delivery upon payment; referenced as part of the judgment sought to be annulled.

Panganiban, J., Chairman; Sandoval-Gutierrez, J.; Carpio Morales, J.; Garcia, J.