FRAUD DEFINED.

According to the Philippine Legal Encyclopedia by Sibal, fraud is the

conduct which operates prejudicially on the rights of others, and is so intended; It is a
deception practice to induce another to part with property, or surrender some legal right,
and which accomplished the end desired. As commonly used, the word implies deceit,
deception, artifice, trickery, (People vs. Yusingco, CA-G.R Nos. 01044-45-R. September 7,
1962) cited by Sibal, supra)

In the law of contract or torts, it is a false statement made with knowledge of its
falsity, intended to be acted on.

In equity, a fraud is used in a broader sense and double dealing, almost equivalent to
the Roman dolus. Unless damage or injury results from the fraud no action will lie. Remedies
for such damage are rescission or an action for damage.

The term “fraud” in its general sense, is deemed to comprise anything calculated to
deceive, including all acts, missions, and concealment involving a breach of legal or
equitable duty, trust, or confidence, justly reposed, resulting in damage to another, or by
which an undue and unconscientious advantage is taken of another. The term “fraud” in its
general sense, is deemed to comprise anything calculated to deceive, including all acts,
omissions, and concealment involving a breach of legal or equitable duty, trust, or
confidence justly reposed, resulting in damage to another, or by which an undue and
unconscientious advantage is taken of another. (Sibal, Philippine Legal Encyclopedia No.
251-252.

KINDS OF FRAUD
There are several kinds of fraud.

Fraud my be either criminal or civil. The swindling or defrauding of the victim, who is
the payee of the bouncing check may be classified as criminal fraud. When a debt is
fraudulently contracted and at the time of contracting it the debtor entertained an intention
not to pay, or an intention not to keep a collateral agreement regarding the disposition of
the property purchased on credit.

There are actual or positive frauds and legal or constructive frauds. The former exists
where there is intentional and successful employment of any cunning deception or artifice
used to circumvent or deceive another; the latter where the injury does not originate in any
actual or civil design or contrivance to perpetuate a fraud, but where nevertheless the
contract or act has a tendency to deceive or mislead others or to violate public or private
confidence, and is consequently prohibited by law as a matter of policy. Among constructive
frauds may be noted cases arising from some particular confidential or fiduciary relation
between the parties where advantage is taken of that relation by the person to whom the
trust or confidence is reposed.
 As to actual or positive frauds, they include suppressions of material facts which one
party is legally or equitably bound to disclose another. (Philippine Legal Encyclopedia by
Sibal, supra).

Fraud may be extrinsic or intrinsic. 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 is procured
(Teodoro vs. Court of Appeals, 388 SCRA 527).
Extrinsic fraud shall not be a valid ground if it was availed of, or could have been
availed of, in a motion for new trial or petition for relief (Teodoro vs. Court of Appeals, 388
SCRA 527).

Fraud may be shown from the actual facts and circumstances of imposition from the
intrinsic nature and subject matter of the bargain itself, that is, if it is of such character as no
man in his senses and not under delusion or imposition would make on the one hand and no
honest or fair man would accept as the other.

EFFECTS OF FRAUD:

Fraud is said to vitiate everything it touches. It contaminates and renders void all
contracts and transactions so far as concerns the party against how the fraud is committed.
Collusion and covin are combinations among two or more to work a fraud upon another and
deceit. Another means of perpetrating fraud, exists where those is a misrepresentation or
contrivance by words or acts to deceive a third person who, relying there upon without
carelessness or neglect on his part, sustains damage. If the party misrepresenting however,
was himself mistaken no blame can attach to him. Such fraud may occur by a deliberate
assertion of a falsehood to the injury of another or by failure to disclose a latent defect or by
conceding an apparent defect, but the party deceived must have been in such a situation as
to have no means of detecting the deceit. Where there is a combination of two or more to
practice fraud upon another, they may be charged for conspiracy.

Fraud is of two kinds: actual or constructive. Actual or positive fraud proceeds from an
intentional deception practiced by means of the misrepresentation or concealment of a
material fact. Constructive fraud is construed as a fraud because of its detrimental effect
upon public interests and public or private confidence, even though the act is not done with
an actual design to commit positive fraud or injury upon other persons.

Fraud may also be either extrinsic or intrinsic. Fraud is regarded as intrinsic where the
fraudulent acts pertain to an issue involved in the original action, or where the acts
constituting the fraud were or could have been litigated therein. The fraud is extrinsic if it is
employed to deprive parties of their day in court and thus prevent them from asserting their
right to the property registered in the name of the applicant.
The distinctions assume significance because only actual and extrinsic fraud had been
accepted and is contemplated by the law as a ground to review or reopen a decree of
registration. Thus, relief is granted to a party deprived of his interest in land where the fraud
consists in a deliberate misrepresentation that the lots are not contested when in fact they
are; or in willfully misrepresenting that there are no other claims; or in deliberately failing to
notify the party entitled to notice; or in inducing him not to oppose an application; or in
misrepresenting about the identity of the lot to the true owner by the applicant causing the
former to withdraw his application. In all these examples, the overriding consideration is that
the fraudulent scheme of the prevailing litigant prevented a party from having his day in
court or from presenting his case. The fraud, therefore, is one that affects and goes into the
jurisdiction of the court.

We have repeatedly held that relief on the ground of fraud will not be granted where the
alleged fraud goes into the merits of the case, is intrinsic and not collateral, and has been
controverted and decided. Thus, we have underscored the denial of relief where it appears
that the fraud consisted in the presentation at the trial of a supposed forged document, or a
false and perjured testimony, or in basing the judgment on a fraudulent compromise
agreement, or in the alleged fraudulent acts or omissions of the counsel which prevented
the petitioner from properly presenting the case.38