A.C. No. 12196 - Miranda Jr. vs. Alvarez Sr.

On March 2, 1991, respondents Sonny, Romeo, Reynaldo, and Esteban Balangue obtained a P45,000 loan from petitioner Leticia Diona, secured by real estate mortgage over their 202-sqm property in Marulas, Valenzuela (TCT No. V-12296).
The loan was payable in six months, but respondents defaulted despite demand.

On September 17, 1999, petitioner filed Civil Case No. 241-V-99 in RTC Valenzuela, Branch 75, praying for:

Payment of P45,000 with 12% per annum interest from March 2, 1991;
Actual damages (minimum P10,000), attorney’s fees (P25,000), and P2,000 appearance fee per hearing;
Foreclosure and public auction of the mortgaged property; and
Costs and other equitable reliefs.

Respondents, served through Sonny, filed a motion to extend time to answer but failed to answer. RTC declared them in default, allowed ex parte evidence, and in its October 17, 2000 Decision ordered:

Petitioner moved for execution; respondents filed a January 26, 2001 Motion to Set Aside Judgment alleging lack of summons on some respondents. RTC nonetheless issued writ of execution (March 16, 2001).
Auction held November 7, 2001: petitioner alone bid P420,000; Certificate of Sale issued and annotated on TCT No. V-12296.
December 17, 2001 Motion to Correct/Amend Judgment and To Set Aside Execution Sale alleged no agreement on 5% monthly interest; RTC on May 7, 2002 reduced interest to 12% per annum.
Respondents moved to consign deposit; petitioner elevated RTC’s modification to CA via Rule 65 certiorari.

CA held RTC exceeded jurisdiction by awarding 5% monthly instead of 12% per annum and gravely abused discretion by reducing rate to 12% per annum.
Declared both the 5% monthly award and the subsequent 12% order nullities; annulled May 7, 2002 and September 5, 2000 RTC orders.

Respondents filed Petition for Annulment of Judgment and Execution Sale, asserting the 5% monthly award exceeded relief prayed and violated due process.
CA initially denied due course (October 13, 2004), then on motion reinstated and on November 24, 2005 Resolution granted the petition, ordering:

Annulment of October 17, 2000 judgment insofar as it awarded 5% monthly interest;
Annulment of all proceedings relative to the public auction sale;
Recompute judgment debt at 12% per annum from March 2, 1991.

Petitioner sought review on certiorari, alleging CA erred in granting Rule 47 petition as substitute remedy and violating the immutability of final judgments doctrine.
Respondents countered that the 5% monthly award was void for lack of due process and that their failure to avail of ordinary remedies was due to counsel’s gross negligence.

Whether the Court of Appeals gravely erred in granting respondents’ Petition for Annulment of Judgment as an alternative remedy to a lost appeal.
Whether the Court of Appeals misapprehended law and facts in annulling the RTC’s October 17, 2000 Decision despite its finality and execution, contrary to the doctrine of immutability of judgments.