GR L 31366; (November, 1982) (Digest)
G.R. No. L-31366 November 15, 1982
ASIAN SURETY AND INSURANCE CO., INC., plaintiff-appellant, vs. ISLAND STEEL, INC. and CITY SHERIFF OF MANILA, defendants-appellants.
FACTS
Asian Surety issued a bond guaranteeing Leonor Villanueva’s obligation under a contract to sell with Island Steel. Upon Villanueva’s failure to pay for delivered galvanized iron sheets, Island Steel sued Asian Surety (Civil Case No. 51586) and obtained a favorable judgment, which was affirmed by the Court of Appeals. The Supreme Court subsequently noted Asian Surety’s failure to timely appeal. Asian Surety then filed a separate action (Civil Case No. 64849) to annul the judgment in Case No. 51586, alleging extrinsic fraud. It claimed Island Steel colluded with Villanueva in a simulated contract and fictitious delivery of goods, thereby misleading the court and preventing Asian Surety from presenting its real defenses.
ISSUE
Whether the trial court correctly dismissed Civil Case No. 64849, an independent action for annulment of judgment, on the ground that the alleged fraud was intrinsic and thus the proper remedy was a petition for relief under Rule 38.
RULING
Yes, the dismissal was correct. The Supreme Court affirmed, holding that the fraud alleged by Asian Surety was intrinsic, not extrinsic. Extrinsic fraud refers to acts like keeping a party away from court or a fraudulent attorney representation, which prevents a fair submission of the controversy. Here, the alleged fraud—the simulation of the contract and non-delivery of goods—pertained to matters directly in issue in the original case. Asian Surety had already raised and litigated these very issues in Civil Case No. 51586, where it presented evidence to prove non-delivery. The trial court resolved this issue against Asian Surety, a finding affirmed on appeal. An independent action for annulment cannot be used to relitigate intrinsic fraud or issues already adjudicated, as it would violate res judicata. The proper, but now time-barred, remedy was a petition for relief from judgment under Rule 38. The action was correctly dismissed.