FACTS:

The respondent allegedly borrowed P409,000 from the petitioner and issued an Asian Bank Corporation (ABC) check to secure the loan. The check was dishonored due to a material alteration when the petitioner deposited it. The respondent made a partial payment of P235,000 to the petitioner, and the balance of P174,000 was due on or before December 8, 1994. The petitioner then filed a case against ABC for the full amount of the dishonored check, resulting in a decision in his favor. As a result, ABC was ordered to pay the petitioner the value of the check, which prevented the respondent from withdrawing money from her account. The respondent filed a petition in the Court of Appeals (CA) seeking to annul the trial court's decision. The CA granted the petition, ruling that there was extrinsic fraud. The petitioner filed a petition for review with the Supreme Court, but it was denied, affirming the CA's decision.

ISSUES:

1. Whether the Court of Appeals erred in annulling and setting aside the Regional Trial Court's decision on the ground of extrinsic fraud.

RULING:

1. The Court of Appeals did not err in annulling and setting aside the Regional Trial Court's decision on the ground of extrinsic fraud. The Court ruled that respondent may avail of the remedy of annulment of judgment under Rule 47 because she was not made a party to the suit against ABC, thus she was neither able to participate in the original proceedings nor resort to other remedies. The Court also upheld the appellate court's finding of extrinsic fraud based on the petitioner's apparent haste in filing the complaint and failure to implead the respondent despite being aware of the partial payment made.

PRINCIPLES:

• Annulment of judgment is a remedy in law independent of the case where the judgment sought to be annulled is promulgated. It can be filed by one who was not a party to the case in which the assailed judgment was rendered. (Section 1, Rule 47)

• Annulment of judgment may be based only on extrinsic fraud and lack of jurisdiction. Extrinsic or collateral fraud pertains to acts intended to keep the unsuccessful party away from the courts or to procure the judgment without fair submission of the controversy. (Case law)

• The absence of an indispensable party renders all subsequent actions of the court null and void. An indispensable party is one whose interest in the controversy is such that a final decree will necessarily affect his rights. (Rule 3, Section 7)