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Article III, Section 1. Procedural Due Process Appeals .

G.R. No. 173559
January 7, 2013

On March 2, 1991, respondents obtained a P45 000 loan from petitioner payable in six months and secured
by a Real Mortgage over their 202-square meter property located in Marulas, Valenzuela. Respondents failed to
comply with the obligation when it became due and demandable. As a result, petitioners filed a Complaint with the
RTC on September 17, 1999 for the payment of the principal debt of the respondents plus interest at 12% per
annum, from March 2, 1991 until obligation is paid, payment of actual damages, issuance of a decree of foreclosure
for sale at a public auction the mortgaged property of the respondents, costs of the suit, and other reliefs and
remedies just and equitable under the premises are likewise prayed for. Several Motions in Court were filed
between the parties. Among these was the Motion for Execution by the petitioners when respondents allegedly did
not interpose a timely appeal despite receipt by their former counsel Atty. Sonny Balangue of the October 17, 2001
RTC Decision which judgment was rendered in favor of petitioner, which ordered the respondents to pay the
principal loan obligation plus interest at 5% per month reckoned from March 1991. Respondents claimed as
well that they did not receive their summons because their counsel Balangue did not inform them about the same.
Petitioner later on moved for a public auction for the mortgaged property and won as the only bidder in the amount
of P420, 000. Respondents further filed for a Motion to Correct/Amend Judgment and to Set Aside Execution Sale,
claiming that the parties did not agree on any interest rate and that the petitioner only sought for a 12% interest rate
per annum, hence a violation of their right to due process. When the RTC surprisingly awarded the 5% per month
(or 60% per annum) interest rate, respondents indebtedness ballooned from P124,000 to P652,000. As the
petitioners elevated the case to the Court of Appeals, the CA held that the RTC exceeded in its jurisdiction in
awarding the 5% monthly interest and later on reducing the same to 12% per annum. It also opined that the proper
remedy was to not amend the judgment (when the RTC reduced the interest rate after awarding the 5% monthly
interest rate), but to declare that portion as a nullity. The petitioners are assailing the CAs decision with the claim
that the October 2001 RTC Decision has been final and already executed as per the doctrine of the immutability of

1. Whether or not the doctrine of immutability of judgment can be applied in this case
2. Whether or not the respondents were denied due process of law

The Court dismissed the petition, affirmed the assailed decision of the Court of Appeals and held that:
1. Under Section 2, Rule 47 of the Rules of Court, a Petition for Annulment of Judgment may be based only
on the grounds of extrinsic fraud and lack of jurisdiction. Jurisprudence recognizes lack of due process
as an additional ground to annul a judgment. Hence, the doctrine of immutability of judgment, cannot
apply in this case.
2. The respondents were denied due process, hence the same can give ground to annul the judgment. There
was lack of due process because: 1. The grant of 5% monthly interest by the RTC was way beyond the
12% interest per annum originally sought by the petitioners. It is settled that Courts cannot grant a
relief not prayed for in the pleadings or in excess of what is being sought for by the party. The law protects
those with obligations who are in default as an embodiment of the sporting idea of fair play and in this
case, the law protects the respondents when they were not informed of the possibility that the RTC may
award the exorbitant and unconscionable 5% monthly interest. They were deprived of the opportunity to
refute and present controverting evidence because they believed that what can be filed against them is
based solely on what the petitioners originally sought for (12% interest rate per annum); 2. The respondents
former counsel, Atty. Sonny Balangue was grossly negligent in handling the case of the respondents. He
did not even mind seeking the proper action when the RTC rendered the judgment which awarded
petitioners the 5% monthly interest rate to protect his clients. The Court must step in to afford clients
protection in the face of their grossly negligent counsels.