FACTS:

The case involves a dispute over the estate of the late Evaristo Cuyos. In a hearing held in 1973, both parties agreed to settle the case. The trial court appointed Gloria as the administratrix of the estate. In 1975, the Court of First Instance (CFI) appointed Atty. Taneo as Commissioner to effect the agreement. In his report, Atty. Taneo stated that three heirs failed to attend the meeting, but the majority of the present heirs agreed to sell the properties to Columba Cuyos-Benatiro for P40,000.00. The delay in the submission of the report was due to Gloria's request for time. The CFI approved the terms agreed upon by the heirs in a 1976 Order.

In the same case, in 1976, the CFI approved a compromise agreement between the heirs, ordering the administratrix to execute a deed of sale covering the estate properties in favor of Columba Cuyos-Benatiro after payment of P36,000.00. The money would be divided equally among the heirs. In 1978, Lope Cuyos was appointed as the new administrator and executed a deed of absolute sale over the properties in favor of Columba. In 1998, the heirs discovered that the properties' tax declarations and certificates of title were transferred to Columba and her family members. The heirs filed a complaint, attempted conciliation and mediation, and finally filed a petition for annulment of the CFI order before the CA in 2001. The CA granted the petition in light of fraud and deprivation of due process allegations. The CA annulled the CFI order, as well as the transfer of the certificates of title.

ISSUES:

1. Whether or not annulment of order under Rule 47 of the Rules of Court was a proper remedy where the aggrieved party had other appropriate remedies, such as new trial, appeal, or petition for relief, which they failed to take through their own fault.

2. Whether or not the Court of Appeals misapprehended the facts when it annulled the 24-year old Commissioner's Report of the Clerk of Court based merely on belated allegations of irregularities in the performance of said official act.

3. Whether or not upon the facts as found by the Court of Appeals in this case, extrinsic fraud existed which is a sufficient ground to annul the lower court's order under Rule 47 of the Rules of Court.

4. Whether the CFI Order should be annulled on the ground of extrinsic fraud.

5. Whether the CFI Order should be annulled on the ground of lack of due process.

6. Whether the Commissioner's Report is valid and binding on the heirs.

7. Whether the extrajudicial settlement and partition, which was published after its execution, is binding on heirs who had no knowledge or did not participate in it.

8. Whether the approval of the Commissioner's Report without all the heirs' signatures and without giving them a chance to be heard violates the constitutional guarantee of due process.

9. Whether or not the compromise agreement and the Order approving it are null and void.

10. Whether or not the respondents are barred from assailing the judgment on the ground of laches and estoppel.

RULING:

1. The Court ruled in the negative for all three issues. The remedy of annulment of judgment is extraordinary and can only be availed of under strict conditions, such as when the ordinary remedies of new trial, appeal, petition for relief, or other appropriate remedies are no longer available through no fault of the petitioner. The Court held that the petitioners failed to satisfy this condition as they had other available remedies but failed to take them. Additionally, the Court found that the Court of Appeals did not misapprehend the facts when it annulled the Commissioner's Report, as there were belated allegations of irregularities in its performance. Finally, the Court held that there was no extrinsic fraud present in this case, as the alleged fraud could have been availed of in a motion for new trial or petition for relief.

2. The CFI Order should not be annulled on the ground of extrinsic fraud, as there was insufficient evidence to prove fraud committed by the prevailing party.

3. The CFI Order should be annulled on the ground of lack of due process, as there was no evidence that the heirs were properly notified and given the opportunity to attend the conference to discuss the estate properties.

4. The Commissioner's Report is not valid and binding on the heirs, as it lacked the necessary signatures of the attendees and did not prove that a conference among the heirs actually took place.

5. The extrajudicial settlement and partition, published after its execution, is not binding on heirs who had no knowledge or did not participate in it. The publication requirement is for the protection of creditors and was not intended to deprive heirs of their lawful participation in the decedent's estate. The absence of notice before the execution of an extrajudicial settlement and partition means that the heirs who were not notified are not bound by it.

6. The approval of the Commissioner's Report without all the heirs' signatures and without giving them a chance to be heard violates the constitutional guarantee of due process. The court's action effectively deprived the other heirs of their opportunity to be heard, which goes against the principle that no person shall be deprived of property without due process of law.

7. The compromise agreement and the Order approving it are declared null and void and set aside. A void judgment is not entitled to the respect accorded to a valid judgment and has no legal or binding effect. It cannot create rights or affect any obligation.

8. The respondents are not barred from assailing the judgment based on laches and estoppel. The action for annulment of judgment must be filed within four years from its discovery and before it is barred by laches or estoppel. However, the principle of laches cannot be used to defeat justice or perpetrate fraud and injustice. In this case, the respondents filed the petition for annulment of judgment within a reasonable time after discovering the assailed order. The right to due process is the paramount consideration in annulling the order. An action to declare the nullity of a void judgment does not prescribe.

PRINCIPLES:

• The remedy of annulment of judgment is extraordinary and can only be resorted to under strict conditions.

• The grounds for annulment of judgment are extrinsic fraud and lack of jurisdiction.

• Denial of due process can also be a ground for annulment of judgment.

• An action to annul a final judgment on the ground of fraud will only lie if the fraud is extrinsic or collateral in character.

• Extrinsic fraud exists when there is a fraudulent act committed by the prevailing party outside of the trial of the case, preventing a party from presenting their entire case to the court.

• Lack of due process may render a court order void, as it violates a party's right to be heard and present their side of the case.

• The presumption of regularity in the performance of official duties may be rebutted by evidence to the contrary.

• An official report or document must be properly executed and signed to be considered valid and binding on the parties involved.

• The publication requirement in an extrajudicial settlement and partition is geared for the protection of creditors and does not bind heirs who had no knowledge or did not participate in it.

• Approval of a Commissioner's Report without all the heirs' signatures and without giving them a chance to be heard violates the constitutional guarantee of due process.

• A void judgment has no legal or binding effect and cannot create rights or affect any obligation. It may be disregarded or declared inoperative by any tribunal.

• A void judgment is regarded as a nullity and leaves the parties litigants in the same position they were in before the trial.

• The principle of laches or staleness of demand warrants a presumption that the party entitled to assert a right has abandoned it or declined to assert it. However, equitable considerations should guide the application of laches and it cannot be used to defeat justice or perpetrate fraud and injustice.

• An action for annulment of judgment based on extrinsic fraud must be filed within four years from its discovery and, if based on lack of jurisdiction, before it is barred by laches or estoppel.