Benatiro vs. Heirs of Evaristo Cuyos

A court order approving a compromise agreement embodied in a Commissioner's Report is void for lack of due process where the heirs were not properly notified of the conference, did not sign the report to signify conformity, and the court approved the report despite knowing that not all compulsory heirs participated. A void judgment creates no rights or obligations, never acquires finality, and may be assailed anytime unless barred by laches — which cannot defeat justice or validate a judgment that is null for denial of due process.

Evaristo Cuyos and his wife Agatona Arrogante Cuyos had nine children: Francisco, Victoria, Columba, Lope, Salud, Gloria, Patrocenia, Numeriano, and Enrique. Evaristo died on August 28, 1966, leaving six parcels of land in Tapilon, Daanbantayan, Cebu, covered by tax declarations all in Agatona's name. Agatona subsequently died as well. The estate settlement proceedings were initiated by one heir, Gloria, who sought letters of administration, and were opposed by another heir, Francisco. The proceedings spanned decades and involved the appointment of a court Commissioner to facilitate an agreement among the heirs regarding the disposition of the estate properties.

Evaristo Cuyos and Agatona Arrogante Cuyos were blessed with nine children: Francisco, Victoria, Columba, Lope, Salud, Gloria, Patrocenia, Numeriano, and Enrique. On August 28, 1966, Evaristo died, leaving six parcels of land located in Tapilon, Daanbantayan, Cebu, covered by Tax Declaration Nos. 000725, 000728, 000729, 000730, 000731, and 000732, all under the name of Agatona Arrogante. Agatona herself subsequently died during the pendency of the estate proceedings.

On July 13, 1971, one of the heirs, Gloria Cuyos-Talian, represented by Atty. Victor Elliot Lepiten, filed before the Court of First Instance of Cebu, Branch XI, a petition for Letters of Administration over Evaristo's intestate estate, docketed as Special Proceeding No. 24-BN. The petition was opposed by Gloria's brother, Francisco, who was represented by Atty. Jesus Yray. At the hearing on January 30, 1973, both parties and their respective counsels appeared and manifested that they had agreed to settle the case amicably. The CFI on that date appointed Gloria as administratrix of the estate, including the undivided half accruing to the deceased Agatona, upon posting a nominal bond of ₱1,000.00.

On December 12, 1975, the CFI issued an Order stating that when the hearing was called, Gloria and Francisco, with their counsels, appeared; that Atty. Yray manifested the parties had agreed to settle amicably; and that both counsels suggested the Clerk of Court, Atty. Andres C. Taneo, be appointed as Commissioner to effect the agreement and prepare a project of partition for court approval. The CFI appointed Atty. Taneo and ordered him to submit the project of partition within 30 days. In his Commissioner's Report dated July 29, 1976, Atty. Taneo stated that he issued subpoenae supplemented by telegrams to all nine heirs to appear on February 28 and 29, 1976, in Tapilon, Daanbantayan, for a conference. He reported that only respondents Gloria, Salud, and Enrique failed to attend, as they could not be located at their given addresses, and that the heirs present decided to proceed. According to the Report, the attending heirs agreed not to partition the properties but to sell them for ₱40,000.00, with each of the other eight heirs receiving ₱4,000.00; that Columba informed those present of her desire to buy the properties, to which everybody agreed; and that Gloria subsequently signified amenability provided she receive ₱5,570.00 as her share, since one property was mortgaged to her to defray their father's hospitalization.

Quoting the Commissioner's Report, the CFI issued the assailed Order dated December 16, 1976, approving the compromise agreement and directing the administratrix to execute a deed of sale over all estate properties in favor of Columba upon payment of ₱36,000.00, which sum was to remain in custodia legis until claims, administration expenses, and estate taxes were paid, with the remainder to be divided equally among the heirs. The CFI disapproved Gloria's claim for ₱5,570.00. On January 11, 1978, the CFI appointed Lope Cuyos as the new administrator, replacing Gloria, who had relocated to Central Luzon. On May 25, 1979, administrator Lope executed a Deed of Absolute Sale over the six parcels of land in favor of Columba for ₱36,000.00.

Sometime in February 1998, the heirs of Evaristo Cuyos — Gloria, Patrocenia, Numeriano, and Enrique, represented by their attorney-in-fact Salud — allegedly learned that the tax declarations in their late mother's name had been canceled and new ones issued in Columba's name, that original certificates of title had been issued in Columba's favor, and that some parcels had been subsequently transferred to spouses Renato C. Benatiro and Rosie M. Benatiro, Columba's son and daughter-in-law. They also discovered the existence of the CFI Order dated December 16, 1976 and the Deed of Absolute Sale dated May 25, 1979. Respondents filed a complaint before COSLAP, which dismissed it for lack of jurisdiction on June 13, 2000. Barangay conciliation was likewise unsuccessful. On July 16, 2001, respondents filed a petition for annulment of judgment with the Court of Appeals under Rule 47, alleging that the CFI order was null and void for being based on a patently false and irregular Commissioner's Report that deprived them of due process, and that extrinsic fraud attended the proceedings. The CA granted the petition on July 18, 2003, annulling the CFI order and the certificates of title, and ordering the reopening of the special proceedings.

• Notice to Counsel as Notice to Clients: Petitioners contended that respondents were represented by counsel in the intestate proceedings, so notice of the order to counsel constituted notice to the clients, making respondents' claim of discovering the assailed order only in February 1998 preposterous and a mere ploy to file within the four-year prescriptive period.
• Possession and Validity of Transfer: Petitioners asserted that they had been in possession of the six parcels of land since May 25, 1979, when the properties were sold to them pursuant to the assailed CFI Order.
• Absence of Extrinsic Fraud: Petitioners maintained that no extrinsic fraud attended the issuance of the assailed order.
• Receipt of Sale Proceeds: Petitioners pointed out that Numeriano executed an affidavit attesting to having received his share of the sale proceeds on May 18, 1988, and that affidavits of waiver and desistance were executed by the heirs of Lope Cuyos and by Patrocenia Cuyos-Mijares, stating they had received their shares and had no more interest in prosecuting the case.
• Estoppel and Finality: Petitioners argued that respondents were estopped from assailing the order, as it had already attained the status of finality after 24 years.
• Presumption of Regularity: Petitioners argued that the Commissioner was an officer of the court and a disinterested party, and that under Rule 133, Section 3(m) of the Rules on Evidence, the Commissioner's Report enjoyed the presumption that official duty had been regularly performed.
• Availability of Other Remedies: Petitioners contended that upon receipt of the assailed order by counsels, respondents could have taken appropriate remedies such as a motion for reconsideration, motion for new trial, or petition for relief under Rule 38, but failed to do so without cogent reason.

• Nullity of Commissioner's Report: Respondents alleged that the CFI Order dated December 16, 1976 was null and void, being based on a Commissioner's Report that was patently false and irregular, practically depriving them of due process in claiming their share of their father's estate.
• No Meeting Held: Respondents presented an affidavit by Patrocenia Cuyos-Mijares and an unnotarized statement by Gloria, both attesting that no meeting ever took place for the purpose of discussing the disposition of the estate and that they never received any payment from the supposed sale.
• Fraud and Collusion: Respondents alleged that the report was done in close confederacy with co-heir Columba, who stood to benefit from the Commissioner's recommendation, and that since the report was a falsity, any order proceeding therefrom was invalid.
• Defective Transfer and Non-Compliance with Order: Respondents argued that the certificates of title were procured fraudulently, as the copy of the Deed of Sale was not furnished the trial court, the ₱36,000.00 was never placed in custodia legis as directed, and the intestate case had not been terminated.
• Extrinsic Fraud: Respondents contended that the scheme utilized by petitioners in connivance with administrator Lope amounted to extrinsic fraud that denied them their right to the property without due process of law.

• Propriety of Rule 47 Annulment: Whether 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.
• Presumption of Regularity: Whether the Court of Appeals misapprehended the facts when it annulled the 24-year-old Commissioner's Report — an official act enjoying a strong presumption of regularity — based merely on belated allegations of irregularities.
• Extrinsic Fraud: Whether, upon the facts as found by the Court of Appeals, extrinsic fraud existed as a sufficient ground to annul the lower court's order under Rule 47.

• Propriety of Rule 47 Annulment: Yes, annulment was proper, but on the ground of lack of due process rather than extrinsic fraud. A void judgment for denial of due process may be assailed anytime, collaterally or in a direct action, unless barred by laches — which cannot defeat justice or validate a null judgment.
• Presumption of Regularity: No, the CA did not misapprehend the facts. The presumption of regularity in the performance of official duty was overcome by competent evidence of irregularity: the absence of names of attendees, the absence of heirs' signatures on the report, and the absence of proof that respondents were notified of the conference.
• Extrinsic Fraud: No, extrinsic fraud was not sufficiently established, there being no evidence to hold the Commissioner or any heir guilty of fraud. However, the assailed order was void for lack of due process, as the CFI approved the report despite knowing that three of nine heirs did not participate and without requiring the attendees' signatures to show conformity.

• Propriety of Rule 47 Annulment: Annulment of judgment under Rule 47 is an extraordinary remedy available only when ordinary remedies are no longer available through no fault of the petitioner, and may be based on extrinsic fraud or lack of jurisdiction — with denial of due process recognized as an additional ground. The assailed CFI order was void for lack of due process because the CFI approved a Commissioner's Report despite the absence of the heirs' signatures showing conformity and despite knowing that only six of nine heirs attended the alleged conference. A void judgment is no judgment at all; it cannot be the source of any right or obligation, never acquires finality, and may be assailed anytime. Respondents learned of the assailed order only in February 1998 and filed the petition in 2001. Because the right to due process is paramount and an action to declare the nullity of a void judgment does not prescribe, laches and estoppel cannot bar the challenge. The equitable doctrine of laches cannot be used to defeat justice or perpetrate fraud and injustice.

• Presumption of Regularity: While the general rule presumes that official acts are regularly performed, such presumption may be overcome by evidence to the contrary. The CA identified several particulars that rebutted the presumption: (1) the Commissioner's Report never mentioned the names of the heirs present at the alleged conference, naming only those absent; (2) the report bore no signatures of the attendees to signify consent; and (3) there was no physical evidence that respondents were properly notified. Respondent Patrocenia, who was presumably present since she was not listed among the absent, executed an affidavit stating she was never called to a meeting and never received any telegram or notice. Respondent Gloria likewise stated no meeting was held. Nothing in the records established that the subpoenae and telegrams were actually sent. Applying Cua vs. Vargas by analogy, what matters is whether the heirs were notified before the compromise agreement was arrived at — not whether they were notified of the report afterwards. The CFI adopted and approved the report without calling the heirs to a hearing to validate it, effectively depriving non-participating heirs of their chance to be heard.

• Extrinsic Fraud: Extrinsic fraud exists when a fraudulent act committed by the prevailing party outside the trial prevents the defeated party from presenting fully his side. While the CA annulled the order on the ground of extrinsic fraud, the Supreme Court found no sufficient evidence to hold Atty. Taneo or any heir guilty of fraud. The annulment was nonetheless proper on the ground that the assailed order was void for lack of due process. The CFI's approval of a report that lacked the heirs' signatures and that was based on a conference not all heirs attended was tantamount to a violation of the constitutional guarantee that no person shall be deprived of property without due process of law. Because the order was void, the Deed of Absolute Sale executed by Lope in favor of Columba, the issuance of titles pursuant thereto, and the subsequent transfers were all void ab initio. Petitioners' argument that notice to counsels Atty. Lepiten and Atty. Yray constituted notice to all heirs was rejected, as those lawyers represented only Gloria and Francisco respectively — not the other heirs, who were unrepresented and never received notice of the judgment approving the compromise.

• Void Judgment Doctrine — A void judgment is no judgment at all; it cannot be the source of any right or obligation, never acquires finality, and may be assailed anytime, collaterally or in a direct action, unless barred by laches. All acts performed pursuant to a void judgment and all claims emanating from it have no legal effect. In this case, the CFI order approving the Commissioner's Report was void for lack of due process, rendering the subsequent Deed of Absolute Sale, the issuance of certificates of title, and the subsequent transfers void ab initio.

• Due Process in Compromise Agreements in Estate Settlements — Where a court-appointed Commissioner is tasked to facilitate a compromise agreement among heirs, it is imperative that all compulsory heirs be present and heard to afford them the opportunity to protect their interests. Where no separate instrument of conveyance is executed, the Commissioner's Report must bear the signatures of the attendees to prove that a conference was held and that they conformed to the agreement. Court approval of a report lacking such signatures and based on a conference not all heirs attended violates due process and renders the approving order void.

• Presumption of Regularity of Official Duty — Under Section 3(m), Rule 133 of the Rules of Evidence, there is a presumption that official duty has been regularly performed. However, this presumption is not conclusive and may be overcome by competent evidence to the contrary. In this case, the absence of the names of attendees, the absence of heirs' signatures on the report, and the absence of proof of notification rebutted the presumption attaching to the Commissioner's Report.

• Extrinsic Fraud as Ground for Annulment — Extrinsic fraud exists when a fraudulent act committed by the prevailing party outside the trial prevents the defeated party from presenting fully his side of the case. The overriding consideration is that the fraudulent scheme prevented a party from having his day in court. In this case, while the CA found extrinsic fraud, the Supreme Court held there was insufficient evidence to hold the Commissioner or any heir guilty of fraud, and sustained the annulment on the ground of lack of due process instead.

• Laches Cannot Defeat Justice or Validate a Void Judgment — Laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which by exercising due diligence could or should have been done earlier. While laches is an equitable doctrine, it cannot be used to defeat justice or perpetrate fraud and injustice. An action to declare the nullity of a void judgment does not prescribe. In this case, respondents' right to due process was paramount, and laches could not bar their challenge to the void CFI order.

• Notice to Counsel Is Notice Only to the Client Represented — When a party is represented by counsel, service of notices of orders and pleadings upon the lawyer is notice to the client. However, this principle applies only to the parties actually represented by that counsel. In estate proceedings where some heirs are represented by lawyers for particular heirs and others are unrepresented, notice to the former's counsel does not constitute notice to the latter.

• "While we find that the CA correctly annulled the CFI Order dated December 16, 1976, we find that it should be annulled not on the ground of extrinsic fraud, as there is no sufficient evidence to hold Atty. Taneo or any of the heirs guilty of fraud, but on the ground that the assailed order is void for lack of due process." — This passage articulates the Court's critical departure from the CA's reasoning, substituting the ground of extrinsic fraud with lack of due process as the basis for annulment.

• "A void judgment never acquires finality. Hence, while admittedly, the petitioner in the case at bar failed to appeal timely the aforementioned decision of the Municipal Trial Court of Naic, Cavite, it cannot be deemed to have become final and executory. In contemplation of law, that void decision is deemed non-existent." — Quoted from Nazareno vs. Court of Appeals, this passage defines the canonical formulation of the void judgment doctrine and explains why the 24-year lapse did not bar the challenge.

• "The CFI's action was tantamount to a violation of the constitutional guarantee that no person shall be deprived of property without due process of law. We find that the assailed Order dated December 16, 1976, which approved a void Commissioner's Report, is a void judgment for lack of due process." — This passage states the ratio decidendi connecting the procedural deficiencies in the Commissioner's Report to the constitutional guarantee of due process.

• "It is the better rule that courts, under the principle of equity, will not be guided or bound strictly by the statute of limitations or the doctrine of laches when to be so, a manifest wrong or injustice would result." — This passage establishes the equitable limitation on the doctrine of laches, explaining why laches could not bar respondents' challenge to a void judgment.

• Cua vs. Vargas, G.R. No. 156536, October 31, 2006 — Applied by analogy. The Court held in Cua that publication of an extrajudicial settlement does not constitute constructive notice to heirs who had no knowledge or did not take part in it, because the notice must be given before the agreement is executed, not after. The Court used this principle to emphasize that what matters is whether the heirs were notified before the compromise agreement was arrived at, not whether they were notified of the Commissioner's Report afterwards.

• Nazareno vs. Court of Appeals, G.R. No. 111610, February 27, 2002 — Followed. The Court quoted Nazareno's formulation of the consequences of a void judgment: it never acquires finality, is deemed non-existent, cannot affect or create rights, and all proceedings founded on it are themselves invalid. This doctrine was central to the ruling that the CFI order could be assailed after 24 years.

• Quiban vs. Butalid, G.R. No. 90974, August 27, 1990 — Cited by the CA. Held that a compromise agreement entered into by a person not duly authorized to do so by the principal is void and has no legal effect. The CA relied on this in finding that the lawyers who received notice of the Commissioner's Report lacked special authority to compromise on behalf of the other heirs.

• Intestate Estate of the Late Nimfa Sian vs. Philippine National Bank, G.R. No. 168882, January 31, 2007 — Followed. Recognized denial of due process as an additional ground for annulment of judgment under Rule 47, beyond the statutory grounds of extrinsic fraud and lack of jurisdiction.

• Ramos vs. Combong, Jr., G.R. No. 144273, October 20, 2005 — Cited for the proposition that annulment of judgment is extraordinary in character and will not readily lend itself to abuse by parties aggrieved by final judgments.

• Rule 47, Sections 1 and 2, Rules of Court — Section 1 provides that annulment by the Court of Appeals of judgments or final orders in civil actions of RTCs is available when ordinary remedies are no longer available through no fault of the petitioner. Section 2 limits the grounds to extrinsic fraud and lack of jurisdiction. The Court recognized denial of due process as an additional ground, citing jurisprudence, and applied these provisions to sustain the annulment of the CFI order.

• Rule 47, Section 3, Rules of Court — Provides that an action for annulment based on extrinsic fraud must be filed within four years from discovery, and if based on lack of jurisdiction, before it is barred by laches or estoppel. The Court noted that because the assailed order was void for lack of due process, the action to declare its nullity does not prescribe, rendering the four-year period inapplicable.

• Rule 133, Section 3(m), Rules of Evidence — Establishes the presumption that official duty has been regularly performed. Petitioners invoked this presumption to defend the Commissioner's Report, but the Court held that the presumption was overcome by competent evidence of irregularity.

• Rule 74, Section 1, Rules of Court — Governs extrajudicial settlement of estates. The Court applied Cua vs. Vargas, which interpreted this provision, by analogy to emphasize that notice must be given before a settlement is agreed upon, not after, and that persons who do not participate or had no notice are not bound.

Consuelo Ynares-Santiago (Associate Justice, Chairperson), Minita V. Chico-Nazario (Associate Justice), Antonio Eduardo B. Nachura (Associate Justice), and Ruben T. Reyes (Associate Justice) concurred in the decision. No separate concurring opinions were written.