G.R. No. 45843; June 30, 1939
REYNALDO LABAYEN and TEODORO LABAYEN, plaintiffs-appellants, vs. TALISAY-SILAY CO., defendant-appellee.

FACTS

Plaintiffs-appellants Reynaldo and Teodoro Labayen were owners of Hacienda Dos Hermanos. They entered into a milling contract with defendant-appellee Talisay-Silay Co. on August 27, 1919. The contract obligated the defendant to construct a railway to the hacienda for transporting sugar cane. The defendant failed to construct the railway, leading the plaintiffs to file a previous case (Civil Case No. 3789) to recover losses from unmilled sugar cane. The defendant prevailed in that case, and a judgment for a counterclaim was affirmed by the Supreme Court (G.R. No. 29298). The hacienda was subsequently sold at auction to the defendant. The plaintiffs then filed the present action, alleging in their amended complaint two causes of action. First, that the judgments in the prior case were obtained by fraud through the defendant’s false testimony regarding the impossibility of constructing the railway, which the defendant later built after acquiring the hacienda. Second, that the defendant mortgaged the hacienda and refused to pay a promised bonus. The defendant demurred to the amended complaint. The trial court sustained the demurrer and granted the plaintiffs time to amend. The plaintiffs appealed.

ISSUE

1. Whether the amended complaint’s first cause of action, alleging fraud in obtaining the prior judgment, states a sufficient cause of action.
2. Whether the amended complaint’s second cause of action, regarding a mortgage and unpaid bonus, states a sufficient cause of action.

RULING

1. No. The first cause of action is insufficient. The alleged fraud, consisting of false testimony in the prior case, is intrinsic fraud, not extrinsic or collateral fraud. A judgment cannot be annulled based on intrinsic fraud, which pertains to matters that were or could have been litigated and decided in the original action. The veracity of the testimony was already considered by the court in the prior case. For fraud to be a ground to annul a final judgment, it must be extrinsic, such as fraud that prevented a party from presenting their case.
2. No. The second cause of action is insufficient. The allegations are vague and uncertain. The plaintiffs merely alleged they “received the information” about the mortgage without asserting personal knowledge or alleging the mortgage’s formal execution and registration. The defendant is entitled to more categorical and specific allegations to properly frame a cause of action and prepare a defense.
The order of the trial court sustaining the demurrer and granting leave to amend is affirmed.