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512 Phil. 253


[ G.R. No. 141241, November 22, 2005 ]




This petition for review on certiorari under Rule 45 of the Rules of Court assails the December 21, 1999 resolution[1] of the Court of Appeals (CA) dismissing the petition for annulment of judgment in CA-G.R. SP No. 53517.

On May 21, 1992, the Committee on Privatization approved the proposal of the Asset Privatization Trust (APT) for the negotiated sale of 90% of the shares of stock of the government-owned Maricalum Mining Corporation (MMC). Learning of the government's intention to sell MMC, the respondent "G" Holdings, Inc. signified its interest to purchase MMC and submitted the best bid.

The series of negotiations between the petitioner Republic of the Philippines, through the APT as its trustee,[2] and "G" Holdings culminated in the execution of a purchase and sale agreement on October 2, 1992. Under the agreement, the Republic undertook to sell and deliver 90% of the entire issued and outstanding shares of MMC, as well as its company notes, to "G" Holdings in consideration of the purchase price of P673,161,280. It also provided for a down payment of P98,704,000 with the balance divided into four tranches payable in installment over a period of ten years.

Subsequently, a disagreement on the matter of when the installment payments should commence arose between the parties. The Republic claimed that it should be on the seventh month from the signing of the agreement while "G" Holdings insisted that it should begin seven months after the fulfillment of the closing conditions.

Unable to settle the issue, "G" Holdings filed a complaint for specific performance and damages with the Regional Trial Court of Manila, Branch 49, against the Republic to compel it to close the sale in accordance with the purchase and sale agreement. The complaint was docketed as Civil Case No. 95-76132.

During the pre-trial, the respective counsels of the parties manifested that the issue involved in the case was one of law and submitted the case for decision. On June 11, 1996, the trial court rendered its decision. It ruled in favor of "G" Holdings and held:
In line with the foregoing, this Court having been convinced that the Purchase and Sale Agreement is indeed subject to the final closing conditions prescribed by Stipulation No. 5.02 and conformably to Rule 39, Section 10 of the Rules of Court, accordingly orders that the Asset Privatization Trust execute the corresponding Document of Transfer of the subject shares and financial notes and cause the actual delivery of subject shares and notes to "G" Holdings, Inc., within a period of thirty (30) days from receipt of this Decision, and after the "G" Holdings, Inc. shall have paid in full the entire balance, at its present value of P241,702,122.86, computed pursuant to the prepayment provisions of the Agreement. Plaintiff shall pay the balance simultaneously with the delivery of the Deed of Transfer and actual delivery of the shares and notes.

The Solicitor General filed a notice of appeal on behalf of the Republic on June 28, 1996. Contrary to the rules of procedure, however, the notice of appeal was filed with the Court of Appeals (CA), not with the trial court which rendered the judgment appealed from.

No other judicial remedy was resorted to until July 2, 1999 when the Republic, through the APT, filed a petition for annulment of judgment with the CA. It claimed that the decision should be annulled on the ground of abuse of discretion amounting to lack of jurisdiction on the part of the trial court. It characterized the fashion by which the trial court handled the case as highly aberrant and peculiar because the court a quo promulgated its decision prior to the submission of the Republic's formal offer of evidence and without ruling on the admissibility of the evidence offered by "G" Holdings. The Republic also asserted that the failure of the Solicitor General to file the notice of appeal with the proper forum amounted to extrinsic fraud which prevented it from appealing the case.

Finding that the grounds necessary for the annulment of judgment were inexistent, the appellate court dismissed the petition. It ruled that there was no extrinsic fraud because "G" Holdings had no participation in the failure of the Solicitor General to properly appeal the decision of the trial court. Neither was there any connivance between "G" Holdings' and the Republic's counsels in the commission of the error.

The appellate court also held that the trial court had jurisdiction over the subject matter of the case, as well as over the person of the parties. Hence, whatever error the trial court committed in the exercise of its jurisdiction was merely an error of judgment, not an error of jurisdiction. As an error of judgment, it was correctable by appeal. Unfortunately, appeal could no longer be availed of by the Republic.

The appellate court further declared that there was no grave abuse of discretion on the part of the court a quo when it decided the case before its receipt of the Republic's formal offer of evidence. The evidence of both parties was already in the possession of the court and painstakingly considered before the decision was arrived at. Thus, if at all, the trial court perpetrated an "irregularity" which should have been the subject of an appeal. But no appeal was perfected and the decision of the trial court thus attained finality.

The Republic now assails the resolution of the appellate court on the following grounds:





Before anything else, we note that the instant petition suffers from a basic infirmity for lack of the requisite imprimatur from the Office of the Solicitor General, hence, it is dismissible on that ground.[5] The general rule is that only the Solicitor General can bring or defend actions on behalf of the Republic of the Philippines and that actions filed in the name of the Republic, or its agencies and instrumentalities for that matter, if not initiated by the Solicitor General, should be summarily dismissed.[6] As an exception to the general rule, the Solicitor General is empowered to "deputize legal officers of government departments, bureaus, agencies and offices to assist the Solicitor General and appear or represent the Government in cases involving their respective offices, brought before the courts and exercise supervision and control over such legal officers with respect to such cases."[7]

Here, the petition was signed and filed on behalf of the Republic by Atty. Raul B. Villanueva, the executive officer of the legal department of the APT, and Atty. Rhoel Z. Mabazza.[8] However, they did not present any proof that they had been duly deputized by the Solicitor General to initiate and litigate this action. Thus, this petition can be dismissed on that ground.

In the interest of justice, however, we shall proceed to discuss the issues propounded by the Republic.

A petition for annulment of judgment is an extraordinary action.[9] By virtue of its exceptional character, the action is restricted exclusively to the grounds specified in the rules,[10] namely, (1) extrinsic fraud and (2) lack of jurisdiction.[11] The rationale for the restriction is to prevent the extraordinary action from being used by a losing party to make a complete farce of a duly promulgated decision that has long become final and executory.[12] 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.[13]

Lack of jurisdiction as a ground for annulment of judgment refers to either lack of jurisdiction over the person of the defending party or over the subject matter of the claim.[14] Where the court has jurisdiction over the defendant and over the subject matter of the case, its decision will not be voided on the ground of absence of jurisdiction.

The Republic does not deny that the trial court had jurisdiction over it as well as over the subject matter of the case. What the Republic questions is the grave abuse of discretion allegedly committed by the court a quo in rendering the decision.

We cannot agree with the Republic.

First, the interpretation of the Republic contravenes the very rationale of the restrictive application of annulment of judgment. By seeking to include acts committed with grave abuse of discretion, it tends to enlarge the concept of lack of jurisdiction as a ground for the availment of the remedy.

In a petition for annulment of judgment based on lack of jurisdiction, the petitioner must show not merely an abuse of jurisdictional discretion but an absolute lack of jurisdiction.[15] Thus, the concept of lack of jurisdiction as a ground to annul a judgment does not embrace abuse of discretion.

Second, by claiming grave abuse of discretion on the part of the trial court, the Republic actually concedes and presupposes the jurisdiction of the court to take cognizance of the case. Hence, the Republic effectively admits that the two grounds for which lack of jurisdiction may be validly invoked to seek the annulment of a judgment – want of jurisdiction over the parties and want of jurisdiction over the subject matter – do not exist. It only assails the manner in which the trial court formulated its judgment in the exercise of its jurisdiction.

Jurisdiction is distinct from the exercise thereof. We amply explained the distinction between the two in Tolentino v. Leviste,[16] thus:
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. Where there is jurisdiction over the person and the subject matter, the decision on all other questions arising in the case is but an exercise of the jurisdiction. And the errors which the court may commit in the exercise of jurisdiction are merely errors of judgment which are the proper subject of an appeal.
Finally, no grave abuse of discretion can be imputed to the trial court when it rendered the decision. The pieces of evidence considered by the court a quo to arrive at its decision were documents attached as annexes to the various pleadings filed by the parties. It is well-settled that documents attached to the pleadings form part thereof and may be considered as evidence even if not formally introduced as evidence.[17] The court may and should consider as evidence documents attached to the pleadings filed by the parties and made a part thereof, without necessity of introducing them expressly as evidence when their authenticity and due execution have not been denied under oath.[18]

Moreover, the minutes of the pre-trial conference[19] on May 27, 1996 show that the exhibits presented by both parties were "marked, offered and admitted" during the pre-trial. This fact coupled with the manifestation of the parties during the pre-trial  that  the  sole  issue  to  be  resolved  was  one  of law — the interpretation of the provisions of the purchase and sale agreement which was adopted by the parties as their common exhibit — show that the trial court did not commit an abuse of discretion.

The conclusion that there was no abuse of discretion on the part of the trial court would be the same even if it were to be assumed that a procedural mistake was committed when it decided the case before the parties could formally offer their evidence. We have held that where the court has jurisdiction and, having all the facts necessary for a judgment, it renders a decision without holding any trial or hearing (where the parties are allowed to present their respective evidence in support of their cause of action and defense), such judgment cannot be assailed as having been rendered without or in excess of jurisdiction nor rendered with grave abuse of discretion.[20]

In the matter of extrinsic fraud, the circumstances of this case do not establish its existence.

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.[21] Fraud is regarded as extrinsic where it prevents a party from having a trial or from presenting his entire case to the court, or where it operates upon matters pertaining not to the judgment itself but to the manner in which it is procured.[22] The overriding consideration when extrinsic fraud is alleged is that the fraudulent scheme of the prevailing litigant prevented a party from having his day in court.[23]

The Republic has not proven, or even alleged, that "G" Holdings practiced deceit or employed subterfuge on it, precluding it from fully and completely presenting its case to the court. Since the prevailing party did not commit or participate in the commission of fraud which prevented the other party from having his day in court, there was no reason for the appellate court to annul the decision of the trial court.

The unfortunate predicament of the Republic was caused by the Solicitor General, its own counsel. We have consistently ruled that, to render a judgment void, the fraud must be committed by the adverse party and not by one's own counsel.[24]

While the Republic or the government is usually not estopped by the mistake or error on the part of its officials or agents,[25] the Republic cannot now take refuge in the rule as it does not afford a blanket or absolute immunity. Our pronouncement in Republic v. Court of Appeals[26] is instructive: the Solicitor General may not be excused from its shortcomings by invoking the doctrine as if it were some magic incantation that could benignly, if arbitrarily, condone and erase its errors.

Here, no fault had been ascribed to "G" Holdings and the proceedings in the trial court were proper. The judgment has already attained finality as a result of the fault and inaction of the Solicitor General. This was aggravated by the fact that this petition was filed by those who had no authority to do so.

Litigation should end and terminate sometime and somewhere.[27] It is essential to an effective and efficient administration of justice that, once a judgment has become final, the winning party should not be deprived of the fruits of the verdict.[28] Courts must therefore guard against any scheme calculated to bring about that undesirable result.[29] Thus, it is only proper for this Court to now write finis to this decade-old controversy.

WHEREFORE, the petition is hereby DENIED. The December 21, 1999 resolution of the Court of Appeals in CA-G.R. SP No. 53517 is AFFIRMED.

Costs against petitioner.


Panganiban, (Chairman), Sandoval-Gutierrez , Carpio-Morales, and Garcia, JJ., concur.

[1] Penned by Associate Justice Andres B. Reyes, Jr. and concurred in by Associate Justices Alicia Austria-Martinez (now an Associate Justice of this Court) and Salvador J. Valdez, Jr. of the Sixth Division of the Court of Appeals.

[2] Pursuant to RA 8758, the term of existence of the APT expired on December 31, 2000. (Section 1). Upon the expiration of the term of the APT, its powers, functions, duties and responsibilities, all properties, real or personal assets, equipment and records, as well as its obligations and liabilities, were transformed to the National Government. (Section 3). Further, its financial assets were transferred for disposition by the President of the Philippines to a trust department of the appropriate government financial institution. (Section 1).

On December 6, 2000, the President signed EO 323 creating, among others, the Privatization and Management Office (PMO). The PMO succeeded the APT and took over the latter's powers, duties and functions under Proclamation No. 50 (the law which created the APT), as amended.

[3] Decision dated June 11, 1996; CA Records, pp. 38-44.

[4] Petition, pp. 12-13; Rollo, pp. 50-87, 61-62.

[5] Cooperative Development Authority v. Dolefil Agrarian Reform Beneficiaries, Inc., 432 Phil. 290 (2002).

[6] Id. citing Republic v. Partisala, 203 Phil. 750 (1982) and People v. Nano, G.R. No. 94639, 13 January 1992, 205 SCRA 155.

[7] Id. citing Section 35(8), Chapter 12, Title III, Book IV of the Administrative Code of 1987.

[8] They were subsequently substituted by Attys. Juan G. Rañola, Jr. and Felix Darren R. Abante of the PMO, the successor of the APT.

[9] Cf. Cerezo v. Tuazon, G.R. No. 141538, 23 March 2004.

[10] Id.

[11] Cf. Section 2, Rule 47, Rules of Court.

[12] Cerezo v. Tuazon, supra.

[13] Macalalag v. Ombudsman, G.R. No. 147995, 4 March 2004.

[14] Tolentino v. Leviste, G.R. No. 156118, 19 November 2004.

[15] Durisol Philippines, Inc. v. Court of Appeals, 427 Phil. 604 (2002).

[16] Id.

[17] Philippine Bank of Communications v. Court of Appeals, G.R. No. 92067, 22 March 1991, 195 SCRA 567; See also Puromines, Inc. v. Court of Appeals, G.R. No. 91228, 22 March 1993, 220 SCRA 281.

[18] Asia Banking Corporation v. Walter E. Olsen & Co., 48 Phil. 529 (1925).

[19] CA Records, p. 129.

[20] Dizon v. Bayona, 98 Phil 942 (1956).

[21] Supra at note 10.

[22] Id.

[23] Id. citing Teodoro v. Court of Appeals, 437 Phil. 336 (2002).

[24] Gacutana-Fraile v. Domingo, G.R. No. 138518, 15 December 2000, 348 SCRA 414; Sanchez v. Tupas, G.R. No. L-76690, 29 February 1988, 158 SCRA 459 citing Velayo v. Shell Company of the Philippines, Ltd., 105 Phil. 1114 (1959).

[25] Republic v. Marcos, 152 Phil. 204 (1973) citing Luciano v. Estrella, 145 Phil. 454 (1970); Manila Lodge No. 761 v. Court of Appeals, G.R. No. L-41001, 30 September 1976, 73 SCRA 162; Republic v. Court of Appeals, G.R. No. L-45202, 11 September 1980, 99 SCRA 742.

[26] G.R. No. 104678, 20 July 1992, 211 SCRA 657.

[27] Teodoro v. Court of Appeals, supra.

[28] Id.

[29] Id.

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