G.R. No. 141241 - Republic vs. "G" Holdings Inc.

Case Summary (G.R. No. 141241)

Factual Background

On May 21, 1992, the Committee on Privatization approved the negotiated sale of ninety percent of the shares of Maricalum Mining Corporation to the highest bidder. "G" Holdings, Inc. submitted the best bid and, after a series of negotiations with the Republic acting through the APT, executed a purchase and sale agreement on October 2, 1992. Under that agreement the Republic agreed to sell ninety percent of the issued and outstanding shares of MMC and company notes to "G" Holdings, Inc. for a purchase price of P673,161,280, with a down payment of P98,704,000 and the balance payable in four tranches over ten years.

Dispute Over Payment Schedule

A dispute arose concerning the triggering date for installment payments: the Republic maintained that payments should commence in the seventh month from signing, while "G" Holdings, Inc. contended that payments should begin seven months after fulfillment of the closing conditions. The parties were unable to reconcile the differing interpretations of the agreement's closing condition provisions.

Trial Court Proceedings and Decision

"G" Holdings, Inc. filed a complaint for specific performance and damages in the Regional Trial Court of Manila, Branch 49, docketed as Civil Case No. 95-76132, seeking to compel the Republic to close the sale in accordance with the agreement. During pre-trial the parties manifested that the controlling question was one of law and adopted the agreement and its exhibits as the common exhibit. On June 11, 1996, the trial court ruled for "G" Holdings, Inc., ordering the Asset Privatization Trust to execute the document of transfer and deliver the shares and notes within thirty days after "G" Holdings, Inc. paid in full the balance computed at present value.

Notice of Appeal and Procedural Irregularity

The Solicitor General filed a notice of appeal on behalf of the Republic on June 28, 1996, but contrary to procedural requirements the notice was filed with the Court of Appeals rather than with the trial court that rendered the judgment. No further steps toward appeal were taken until the Republic, through the APT, filed a petition for annulment of judgment with the Court of Appeals on July 2, 1999.

Petition for Annulment of Judgment in the Court of Appeals

In CA-G.R. SP No. 53517 the Republic sought annulment of the trial court decision, alleging that the court committed grave abuse of discretion amounting to lack of jurisdiction by rendering judgment before receipt of the Republic’s formal offer of evidence and without ruling on the admissibility of "G" Holdings, Inc.’s offered evidence. The Republic further alleged that the Solicitor General’s filing of the notice of appeal in the wrong forum constituted extrinsic fraud that prevented it from appealing.

Court of Appeals' Resolution

The Court of Appeals dismissed the petition for annulment of judgment. It found no extrinsic fraud because "G" Holdings, Inc. did not participate in the Solicitor General’s procedural error and there was no collusion between counsel. The appellate court held that the trial court had jurisdiction over the parties and the subject matter and that any error in the exercise of jurisdiction was an error of judgment correctable by appeal, which the Republic failed to perfect. The appellate court further concluded that the trial court did not commit grave abuse of discretion in ruling when it did because the parties had marked, offered, and admitted exhibits during pre-trial and the issue was a question of law.

Issues Presented to the Supreme Court

The Republic challenged the Court of Appeals’ dismissal on two principal grounds: that the trial court committed grave abuse of discretion amounting to lack of jurisdiction by deciding the case before the Republic’s formal offer of evidence and without ruling on the admission of the respondent’s evidence, and that the Solicitor General’s failure to file the notice of appeal with the proper forum amounted to extrinsic fraud preventing an appeal.

Threshold Procedural Defect: Deputation of Counsel

The Supreme Court first noted a procedural infirmity in the petition itself: the petition was filed and signed on behalf of the Republic by Atty. Raul B. Villanueva and Atty. Rhoel Z. Mabazza of the APT without proof of deputation by the Solicitor General. The Court reiterated the general rule that only the Solicitor General may bring or defend actions for the Republic and that deputies must be shown by appropriate proof; absent such proof the petition was dismissible for lack of the requisite imprimatur.

Nature and Scope of Annulment of Judgment

The Court explained that a petition for annulment of judgment is extraordinary and strictly limited to the grounds specified in the rules, namely extrinsic fraud and lack of jurisdiction. The remedy cannot be used to relitigate errors correctable by ordinary remedies such as appeal or new trial. The Court emphasized that lack of jurisdiction as a ground for annulment refers to absence of jurisdiction over the person or over the subject matter, and not to errors in the exercise of jurisdiction.

Distinction Between Jurisdiction and Exercise Thereof

Applying settled doctrine, the Court held that the Republic’s claim of grave abuse of discretion presupposed the trial court’s jurisdiction and thus could not constitute the absolute lack of jurisdiction required to annul a judgment. The Court cited Tolentino v. Leviste and related authorities to reiterate that errors in the exercise of jurisdiction are errors of judgment and proper subjects of appeal, not of annulment.

Consideration of Exhibits and Pre-trial Record

The Supreme Court found no abuse of discretion in the trial court’s reliance on documentary exhibits attached to pleadings and on the pre-trial minutes showing that exhibits had been "marked, offered and admitted" and that the parties agreed the sole issue was one of law. The Court noted that documents annexed to pleadings may be considered as evidence without formal introduction when their authenticity is not denied under oath, and

Case Syllabus (G.R. No. 141241)

Parties and Procedural Posture

Republic of the Philippines, through its Trustee, the Asset Privatization Trust filed a petition for review on certiorari under Rule 45, Rules of Court assailing the December 21, 1999 resolution of the Court of Appeals in CA-G.R. SP No. 53517.
"G" Holdings, Inc. was the respondent in the underlying action for specific performance and damages instituted in the Regional Trial Court, Manila, Branch 49, docketed as Civil Case No. 95-76132.
The Solicitor General filed a notice of appeal on behalf of the Republic on June 28, 1996 but filed it with the Court of Appeals instead of the trial court.
The Republic filed a petition for annulment of judgment with the Court of Appeals on July 2, 1999 alleging extrinsic fraud and lack of jurisdiction due to alleged grave abuse of discretion by the trial court.
The Court of Appeals dismissed the petition for annulment on December 21, 1999 and this petition for certiorari followed to challenge that dismissal.

Key Factual Allegations

The Committee on Privatization approved the negotiated sale of ninety percent of the shares of Maricalum Mining Corporation to the Asset Privatization Trust on May 21, 1992.
"G" Holdings, Inc. signified interest, submitted the best bid, and a Purchase and Sale Agreement was executed on October 2, 1992 for a purchase price of P673,161,280.
The agreement provided for a down payment of P98,704,000 and the balance to be paid in four tranches over a period of ten years.
A dispute arose over when installment payments should commence, with the Republic contending that payments should begin on the seventh month from signing and "G" Holdings, Inc. insisting they should begin seven months after fulfillment of the closing conditions.
"G" Holdings, Inc. filed a complaint for specific performance and damages to compel closing in accordance with the Purchase and Sale Agreement.

Lower Court Proceedings

The trial court rendered judgment in favor of "G" Holdings, Inc. on June 11, 1996, ordering the Asset Privatization Trust to execute the Document of Transfer and cause actual delivery of the shares and notes within thirty days after payment in full of the balance at its present value of P241,702,122.86.
The Solicitor General purported to appeal the trial court decision on June 28, 1996 but filed the notice of appeal with the Court of Appeals rather than with the trial court.
No further remedies were pursued until the Republic, through the APT, filed a petition for annulment of judgment with the Court of Appeals on July 2, 1999.
The Court of Appeals dismissed the petition on grounds that there was no extrinsic fraud, no connivance by "G" Holdings, Inc., the trial court possessed jurisdiction, and any irregularity was an error of judgment correctable by appeal.

Issues Presented

Whether the trial court committed grave abuse of discretion amounting to lack of jurisdiction by rendering decision prior to the submission of the Republic's formal offer of evidence and without ruling on the admissibility of evidence offered by "G" Holdings, Inc..
Whether the failure of the Solicitor General to file the notice of appeal with the proper forum constituted extrinsic fraud which pr