National Commercial Bank of Saudi Arabia v. Court of Appeals
REITERATIONFacts
1. The Antecedents: Petitioner National Commercial Bank of Saudi Arabia (NCBSA) initiated a lawsuit against respondent Philippine Banking Corporation (PBC) in the Regional Trial Court (RTC) of Makati on December 4, 1985. The core of the dispute was NCBSA's claim for reimbursement due to a duplicated payment of a letter of credit, which occurred because both the head office and a branch of PBC, acting as the negotiating bank, collected the proceeds of the letter of credit. 2. Procedural History: The RTC of Makati ruled in favor of NCBSA on August 24, 1993. PBC received the decision on September 3, 1993, and subsequently filed a Motion for Reconsideration on September 15, 1993, within the appeal period. However, this motion lacked the mandatory notice of hearing. NCBSA pointed out this deficiency on September 21, 1993, and on September 27, 1993, filed a Motion for Writ of Execution. On the same date, PBC filed a Motion to Set its Motion for Reconsideration for Hearing. The RTC, by Order of February 1, 1994, struck PBC's Motion for Reconsideration from the records and granted NCBSA's Motion for Writ of Execution. PBC's subsequent Motion for Reconsideration of this order, citing an oversight by counsel, was denied by the RTC on March 2, 1994. PBC then filed a Petition for Certiorari with the Court of Appeals, which initially dismissed it but later, in an Amended Decision dated March 8, 1996, set aside its original ruling and granted PBC's Petition for Certiorari, directing the trial court to resolve PBC's Motion for Reconsideration. 3. The Petition: NCBSA filed the present petition for review on certiorari with the Supreme Court, assailing the Court of Appeals' Amended Decision. NCBSA argues for the strict application of procedural rules, emphasizing that a motion filed without the requisite notice of hearing is a fatal defect that cannot toll the period for appeal. NCBSA contends that PBC's Motion for Reconsideration was fatally defective due to the lack of notice and that the subsequent filing of a motion to set it for hearing, after the appeal period had expired, could not cure this defect. NCBSA also argues that PBC's motion was pro forma, merely reiterating previously rejected arguments. PBC, conversely, sought a just and fair determination of the case, appealing for a relaxation of the rules. The Supreme Court granted NCBSA's petition, setting aside the Court of Appeals' Amended Decision and reinstating the RTC's resolution declaring PBC's Motion for Reconsideration as pro forma.
Issue(s)
Whether the Court of Appeals erred in setting aside the Regional Trial Court's order and directing the resolution of PBC's Motion for Reconsideration despite its lack of notice of hearing. Whether PBC's Motion for Reconsideration was pro forma. Whether NCBSA's claim had prescribed. Whether PBC was guilty of laches. Whether there was double payment.
Ruling
The Supreme Court granted the petition, set aside the Amended Decision of the Court of Appeals, and reinstated the Resolutions of the Regional Trial Court declaring PBC's Motion for Reconsideration as pro forma. SO ORDERED.
Ratio Decidendi
On the lack of notice of hearing in PBC's Motion for Reconsideration: The requirement of notice under Sections 4 and 5, Rule 15 in connection with Section 2, Rule 37 of the Revised Rules of Court is mandatory. The absence of a notice of hearing is fatal, and in cases of motions to reconsider a decision, the running of the period to appeal is not tolled by their filing or pendency. It is undisputed that PBC's Motion for Reconsideration lacked the requisite notice of hearing. The subsequent filing of a Motion to Set the Motion for Reconsideration for Hearing, which was done after the period for filing the Notice of Appeal had expired, could not cure the fatal defect. The Court emphasized that procedural rules should not be ignored at will and at random, and relaxation is only allowed for the most persuasive of reasons, which PBC failed to provide. On whether PBC's Motion for Reconsideration was pro forma: The Court found that PBC's motion was pro forma because it merely reiterated the same three issues raised during the trial: prescription, laches, and lack of double payment. These issues had already been considered and resolved against PBC on the merits by the trial court. A motion that is merely a reiteration of reasons and arguments already considered and resolved is considered pro forma and does not toll the prescriptive period for appeal. On the defense of prescription: The Court ruled that the trial court did not err in brushing aside PBC's defense of prescription. PBC argued that the claim was based on quasi-contract (solutio indebiti) which prescribes in six years, and the complaint was filed nine years later. However, the Court clarified that the relationship between PBC and NCBSA was governed by a contract, the letter of credit, making the cause of action based on contract, which prescribes in ten years, not six. Therefore, the claim had not prescribed. On the defense of laches: The Court found PBC's defense of laches to be without merit. It reiterated the principle that courts should not apply the doctrine of laches earlier than the expiration of the time limited for the commencement of actions at law. Since the cause of action had not yet prescribed at the time NCBSA's complaint was filed, the defense of laches was inapplicable. On the issue of double payment: The Court found PBC's allegation of no double payment to be without merit. It pointed out that PBC, while denying double payment, admitted in its petition for certiorari to the Court of Appeals that it received a second set of payment for the same amount covered by the letter of credit, which was to be transmitted to another account. This admission directly contradicted its defense and supported the trial court's finding of double payment.
Main Doctrine
A motion for reconsideration filed without the requisite notice of hearing is a fatal defect, rendering it a mere scrap of paper with no legal effect, and does not toll the period for filing an appeal. Such defect cannot be cured by a belated filing of a notice of hearing, especially if done after the appeal period has expired. Furthermore, a motion for reconsideration that merely reiterates previously raised arguments without presenting new substantial issues may be considered pro forma.