G.R. No. 173559; January 7, 2013
LETICIA DIONA, represented by her Attorney-in-Fact, MARCELINA DIONA, Petitioner, vs. ROMEO A. BALANGUE, SONNY A. BALANGUE, REYNALDO A. BALANGUE, and ESTEBAN A. BALANGUE, JR., Respondents.

FACTS

Respondents obtained a loan of ₱45,000.00 from petitioner, secured by a real estate mortgage. Upon respondents’ default, petitioner filed a complaint praying for payment of the principal with 12% annual interest, damages, attorney’s fees, and foreclosure. Respondents were declared in default for failure to file an answer. The Regional Trial Court (RTC) rendered a decision ordering respondents to pay the principal plus interest at 5% per month (60% per annum), attorney’s fees, and decreed foreclosure if unpaid. A foreclosure sale was subsequently conducted.
Respondents later filed a motion to correct the judgment, arguing the awarded 5% monthly interest was unsupported as petitioner’s complaint only prayed for 12% per annum. The RTC granted the motion and modified the interest to 12% per annum. Petitioner challenged this modification via certiorari. The Court of Appeals (CA) initially held the RTC exceeded its jurisdiction in awarding the 5% interest but also gravely abused its discretion in amending the judgment, stating the proper remedy was annulment. Respondents then filed a separate Petition for Annulment of Judgment before the CA targeting the 5% interest award.

ISSUE

Whether the Court of Appeals correctly granted the Petition for Annulment of Judgment to nullify the portion of the RTC decision awarding 5% monthly interest.

RULING

Yes, the Court of Appeals correctly granted the annulment. A judgment that grants relief not prayed for in the complaint is void for lack of jurisdiction. Jurisdiction over the subject matter is conferred by law, but its exercise is limited by the pleadings. A court cannot award a relief not sought, as it violates the opposing party’s right to due process—the opportunity to be heard on that specific claim. Here, petitioner’s complaint explicitly prayed for 12% per annum interest. The RTC’s award of 5% monthly interest was a relief not sought and entirely outside the issues framed by the pleadings. Consequently, that portion of the decision was void ab initio. A void judgment can be assailed at any time, and annulment is a proper remedy. The CA correctly nullified only the void portion concerning the excessive interest, not the entire judgment. The legal interest remained at 12% per annum as originally prayed for, consistent with the court’s authority to award interest in the absence of a stipulated rate. The Supreme Court affirmed the CA’s resolutions, upholding the annulment of the unauthorized interest award.