Diona vs. Balangue

A judgment that grants relief exceeding what was prayed for in the complaint and unsupported by evidence violates the defendant's right to due process and is void ab initio; such judgment may be annulled under Rule 47 of the Rules of Court upon a showing that the loss of ordinary remedies was attributable to the gross negligence of counsel, not the party's own neglect.

On March 2, 1991, respondents obtained a loan of P45,000.00 from petitioner payable in six months, secured by a Real Estate Mortgage over their 202-square meter property in Marulas, Valenzuela covered by Transfer Certificate of Title No. V-12296. When the debt became due, respondents failed to pay despite demand. On September 17, 1999, petitioner filed a Complaint before the Regional Trial Court of Valenzuela praying for payment of the principal amount with 12% per annum interest, damages, attorney's fees, and foreclosure of the mortgage.

• On March 2, 1991, respondents obtained a loan of P45,000.00 from petitioner, payable in six months and secured by a Real Estate Mortgage over their 202-square meter property located in Marulas, Valenzuela, covered by Transfer Certificate of Title No. V-12296.
• When the debt became due, respondents failed to pay notwithstanding demand.
• On September 17, 1999, petitioner filed a Complaint before the RTC of Valenzuela, Branch 75, docketed as Civil Case No. 241-V-99, praying for: (a) payment of the principal obligation of P45,000.00 with interest at the rate of 12% per annum from March 2, 1991 until full payment; (b) actual damages and attorney's fees; and (c) a decree of foreclosure for the sale at public auction of the mortgaged property.
• Respondents were served with summons through respondent Sonny A. Balangue. On October 15, 1999, with the assistance of Atty. Arthur C. Coroza of the Public Attorney's Office, they filed a Motion to Extend Period to Answer, but failed to file any responsive pleading despite the extension.
• Upon motion of petitioner, the RTC declared respondents in default and allowed petitioner to present her evidence ex parte on December 29, 1999.
• In its Decision dated October 17, 2000, the RTC granted the Complaint but awarded interest at 5% per month (60% per annum) instead of the 12% per annum prayed for, plus P20,000.00 attorney's fees and foreclosure of the mortgage.
• Respondents received a copy of the RTC Decision on November 13, 2000, but did not appeal. Instead, they filed a Motion to Set Aside Judgment on January 26, 2001, based solely on the ground of lack of jurisdiction over the persons of some respondents.
• The RTC ordered the issuance of a Writ of Execution on March 16, 2001. An auction sale was conducted on November 7, 2001, where petitioner was the sole bidder at P420,000.00, and a Certificate of Sale was issued in her favor.
• On December 17, 2001, respondents filed a Motion to Correct/Amend Judgment and To Set Aside Execution Sale, claiming that the parties did not agree in writing on any rate of interest, that the complaint only sought 12% per annum, and that the awarded 5% monthly interest caused their indebtedness to balloon from P124,400.00 to P652,000.00.
• The RTC granted the motion on May 7, 2002, modifying the interest rate from 5% monthly to 12% per annum, admitting it made a "glaring mistake" in the original decision.

• A Petition for Annulment of Judgment under Rule 47 may only be availed of when ordinary remedies of new trial, appeal, petition for relief, or other appropriate remedies are no longer available through no fault of the claimant; respondents had every opportunity to question the October 17, 2000 Decision but failed to avail of these remedies due to their own inaction or negligence.
• The filing of a Motion to Set Aside Judgment and a Motion to Correct/Amend Judgment does not excuse the failure to file a new trial, appeal, or petition for relief.
• A Rule 47 petition must be based on extrinsic fraud or lack of jurisdiction; the allegations in respondents' petition do not constitute extrinsic fraud as they merely attribute the loss of remedies to the negligence of former counsel, and the RTC clearly had jurisdiction over the subject matter and the persons of the respondents.
• Even assuming the RTC patently erred in awarding 5% monthly interest, the doctrine of immutability of final judgment applies, and the decision can no longer be corrected or modified since it had long become final and executory.
• Respondents received a copy of the Decision on November 13, 2000 but did not question the award of 5% monthly interest in their Motion to Set Aside Judgment, which was anchored solely on lack of jurisdiction over some respondents.

• They do not contest the existence of the obligation or the principal amount, but only seek to nullify the 5% monthly interest (60% per annum) imposed by the RTC.
• Section 3(d) of Rule 9 of the Rules of Court is clear that when a defendant is declared in default, the court cannot grant relief greater than or different in kind from that prayed for in the complaint; a judgment transgressing this rule is void for lack of jurisdiction and violative of due process.
• The loss of ordinary remedies (new trial, appeal, petition for relief) was not due to their own fault but to the gross negligence of their former counsel, Atty. Coroza, who failed to file an Answer despite obtaining an extension, failed to question the erroneous award of 5% monthly interest, and failed to perfect an appeal.
• Citing Legarda v. Court of Appeals, clients are not always bound by the actions of counsel, especially when the negligence amounts to a deprivation of property without due process.
• The doctrine of immutability of judgment applies only to valid judgments, not to void judgments; the portion of the RTC Decision awarding 5% monthly interest is void ab initio.

• Procedural Issues:
  • Whether a Petition for Annulment of Judgment under Rule 47 is the proper remedy to nullify a final and executory judgment that allegedly violated the defendant's right to due process.
  • Whether respondents lost their ordinary remedies (new trial, appeal, petition for relief) through their own fault or through the gross negligence of their former counsel.
  • Whether the doctrine of immutability of judgment bars the annulment of the portion of the RTC Decision awarding 5% monthly interest.
• Substantive Issues:
  • Whether the award of 5% monthly interest (60% per annum) violated Section 3(d) of Rule 9 of the Rules of Court and the respondents' right to due process.
  • Whether a judgment granting relief neither sought in the pleadings nor supported by evidence is void ab initio.
  • Whether the 5% monthly interest rate is unconscionable and should be equitably reduced.

• Procedural:
  • The Petition for Annulment of Judgment under Rule 47 is a remedy granted only under exceptional circumstances where a party, without fault on his part, has failed to avail of ordinary remedies; it is not available as a substitute for a remedy lost due to the party's own neglect.
  • While Rule 47 explicitly provides only two grounds (extrinsic fraud and lack of jurisdiction), jurisprudence recognizes lack of due process as an additional ground to annul a judgment.
  • Ordinarily, the negligence of counsel binds the client; however, an exception exists when counsel is grossly negligent in handling the client's cause to the extent of depriving the client of property without due process of law.
  • The gross negligence of respondents' former counsel (failing to file an Answer despite extension, failing to question the exorbitant interest rate, failing to appeal) prevented respondents from availing of ordinary remedies; thus, the loss of remedies was not through respondents' own fault.
  • The doctrine of immutability of final judgment applies only to valid judgments, not to void judgments; since the award of 5% monthly interest is void for violation of due process, it may be annulled even after the judgment has become final.
• Substantive:
  • Section 3(d) of Rule 9 of the Rules of Court provides that a judgment rendered against a party in default shall not exceed the amount or be different in kind from that prayed for nor award unliquidated damages.
  • The rationale for this rule is to safeguard the defendant's right to due process; it cannot be presumed that the defendant would not file an Answer had he known the plaintiff would be granted relief greater than that sought in the complaint.
  • The RTC's award of 5% monthly interest (60% per annum) exceeded the 12% per annum specifically prayed for in the complaint and was not supported by any evidence or testimony presented by petitioner.
  • The grant of relief neither sought in the pleadings nor supported by evidence violates the opposing party's right to due process and may be declared void ab initio.
  • Even assuming the 5% monthly interest was properly alleged and proven, it remains unconscionably excessive and ought to be equitably reduced to 12% per annum in accordance with prevailing jurisprudence.
  • The CA correctly annulled the portion of the RTC Decision awarding 5% monthly interest and ordered the recomputation of the judgment debt at 12% per annum.

• Annulment of Judgment under Rule 47 — A remedy granted only under exceptional circumstances where a party, without fault on his part, has failed to avail of the ordinary remedies of new trial, appeal, petition for relief, or other appropriate remedies; it is not available as a substitute for a remedy lost due to the party's own neglect. In this case, the Court allowed the petition because the loss of remedies was due to gross negligence of counsel, not the party's fault.
• Section 3(d) of Rule 9 of the Rules of Court — Provides that a judgment rendered against a party in default shall not exceed the amount or be different in kind from that prayed for nor award unliquidated damages. The Court applied this to hold that the award of 5% monthly interest when only 12% per annum was sought violated the defendant's right to due process.
• Gross Negligence of Counsel Exception — While the negligence of counsel generally binds the client, an exception exists when the lawyer is grossly negligent in maintaining the client's cause to the extent of depriving the client of property without due process. The Court found Atty. Coroza grossly negligent for failing to file an Answer, failing to notice the exorbitant interest award, and failing to appeal, thereby warranting relief from the final judgment.
• Immutability of Judgment — The doctrine that final and executory judgments can no longer be disturbed applies only to valid judgments, not to void judgments. The Court held that the portion of the RTC Decision awarding excessive interest is void ab initio and thus subject to annulment.
• Void Judgment — A judgment rendered without jurisdiction or in violation of due process is void ab initio; it is no judgment at all, cannot be the source of any right, never acquires finality, and any action to declare its nullity does not prescribe.

• "The grant of a relief neither sought by the party in whose favor it was given nor supported by the evidence presented violates the opposing party's right to due process and may be declared void ab initio in a proper proceeding."
• "It is settled that courts cannot grant a relief not prayed for in the pleadings or in excess of what is being sought by the party."
• "The raison d'être in limiting the extent of relief that may be granted is that it cannot be presumed that the defendant would not file an Answer and allow himself to be declared in default had he known that the plaintiff will be accorded a relief greater than or different in kind from that sought in the Complaint."
• "It embodies 'the sporting idea of fair play' and forbids the grant of relief on matters where the defendant was not given the opportunity to be heard thereon."
• "A lawyer owes entire devotion to the interest of his client, warmth and zeal in the maintenance and defense of his rights and the exertion of his utmost learning and ability, to the end that nothing can be taken or withheld from his client except in accordance with the law."
• "A void judgment never acquires finality and any action to declare its nullity does not prescribe."

• Leonor vs. CA (256 SCRA 69) — Cited for the principle that a void judgment for want of jurisdiction is no judgment at all and cannot be the source of any right nor the creator of any obligation.
• Fortich vs. Corona (312 SCRA 751) — Cited for the principle that no legal rights can emanate from a resolution that is null and void.
• Heirs of Mayor Nemencio Galvez vs. CA (255 SCRA 672) — Cited for the principle that a void judgment never acquires finality and any action to declare its nullity does not prescribe.
• Legarda v. Court of Appeals (G.R. No. 94457, March 18, 1991) — Cited for the exception that clients are not bound by the gross negligence of their counsel, which amounts to deprivation of property without due process.
• Development Bank of the Philippines v. Teston (G.R. No. 174966, February 14, 2008) — Cited for the due process considerations justifying the requirement that allegations of a complaint must provide the measure of recovery to prevent surprise to the defendant.
• Arcelona v. Court of Appeals (345 Phil. 250) — Cited for the recognition that lack of due process is a ground to annul a final judgment, in addition to extrinsic fraud and lack of jurisdiction.
• Bulos, Jr. v. Yasuma (G.R. No. 164159, July 17, 2007) — Cited for the principle that interest rates of 3% per month (36% per annum) are excessive and unconscionable, and should be equitably reduced to 1% per month or 12% per annum.
• Ramos v. Judge Combong, Jr. (510 Phil. 277) — Cited for the principle that annulment of judgment is not available as a substitute for a remedy which was lost due to the party's own neglect.
• Intestate Estate of the Late Nimfa Sian v. Philippine National Bank (G.R. No. 168882, January 31, 2007) — Cited for recognizing lack of due process as an additional ground for annulment of judgment under Rule 47.

• Rule 47, Section 2 of the Rules of Court — Limits the grounds for annulment of judgment to extrinsic fraud and lack of jurisdiction, though jurisprudence recognizes lack of due process as an additional ground.
• Rule 9, Section 3(d) of the Rules of Court — Provides that a judgment rendered against a party in default shall not exceed the amount or be different in kind from that prayed for nor award unliquidated damages; cited as the basis for holding the 5% monthly interest award void.
• Rule 10, Section 5 of the Rules of Court — Provides that amendment to conform to evidence is allowed during trial; distinguished from the default situation where Section 3(d) of Rule 9 applies strictly.