National Commercial Bank of Saudi Arabia v. Philippine Banking Corporation
REITERATIONFacts
The Antecedents: The underlying dispute arose from a claim by the National Commercial Bank of Saudi Arabia (NCBSA) against the Philippine Banking Corporation (PBC) for the recovery of duplicated payments made on a letter of credit issued by NCBSA. The duplication occurred because both the head office and a branch of PBC, acting as the negotiating bank, collected the proceeds of the same letter of credit. NCBSA initiated this action in the Regional Trial Court (RTC) of Makati on December 4, 1985. Procedural History: The RTC of Makati rendered a decision in favor of NCBSA on August 24, 1993. PBC received this 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 required notice of hearing. NCBSA pointed out this defect and filed a Motion for Writ of Execution on September 27, 1993. 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 and granted the writ of execution. PBC's subsequent Motion for Reconsideration of this order, arguing the defect was an honest mistake, 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 earlier ruling and directed the RTC to resolve PBC's Motion for Reconsideration, deeming the strict application of rules too harsh given PBC's subsequent motion to set a hearing. 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, specifically the mandatory requirement of a notice of hearing for motions, contending that the absence of such notice renders a motion a legal nullity and that the defect cannot be cured by a belated filing of a notice, especially after the appeal period has expired. NCBSA further contends that PBC's motion for reconsideration was pro forma, merely reiterating arguments already considered and rejected by the trial court, and that PBC has not presented any exceptional reasons to warrant a relaxation of the rules. PBC, conversely, sought a just and fair determination of the case, invoking liberality in the application of rules.
Issue(s)
Whether a Motion for Reconsideration without notice of hearing tolls the appeal period and can be cured by a subsequent Motion to Set for Hearing filed after the appeal period. Whether the RTC erred in its merits findings on prescription, laches, and double payment, warranting reconsideration.
Ruling
The petition is GRANTED. The Amended Decision of the Court of Appeals dated March 8, 1996 is SET ASIDE and the Resolutions of the Regional Trial Court declaring the Motion for Reconsideration filed by the Philippine Banking Corporation as pro forma is REINSTATED.
Ratio Decidendi
On Issue 1 (Procedural Defect of Motion for Reconsideration): The notice requirement under Sections 4 and 5, Rule 15 in connection with Section 2, Rule 37, Revised Rules of Court (restated in 1997 Rules), is mandatory and fatal; absence renders the motion a useless piece of paper with no legal effect, not tolling the appeal period, as held in Bank of the Philippine Islands v. Far East Molasses (198 SCRA 689) and a string of cases like Vlason Enterprises (310 SCRA 26), Tan (295 SCRA 755), and De la Peña (258 SCRA 298). PBC's Motion for Reconsideration, filed September 15, 1993, lacked notice, and its curative Motion to Set for Hearing on September 27, 1993—9 days post-appeal expiry—could not revive it, per People v. Court of Appeals (296 SCRA 418), as defects are incurable post-lapse. No persuasive excuse like honest oversight justified relaxation, as rules ensure fairness, not liberality at will (Limpot v. CA, 170 SCRA 367); PBC's allegation of need to 'amplify issues' implied hearing was optional, underscoring non-mandatory view. Even if excused, the motion was pro forma, reiterating trial issues on prescription, laches, and double payment already resolved adversely. CA's 'harsh' liberality reversal abused discretion, as PBC fully availed remedies sans oppression, prioritizing finality after 17 years. On Issue 2 (Merits Defenses): RTC correctly rejected prescription: action stemmed from letter of credit contract binding parties (NCBSA to pay PBC upon conditions), not solutio indebiti requiring no-duty payment by mistake (Power Commercial v. CA, 274 SCRA 597), thus 10-year period under Article 1144, Civil Code, not 6 years. Laches unavailing pre-prescription expiry (Imperial Valley v. NLRC, 200 SCRA 178). Double payment admitted by PBC's certiorari petition averring second set 'received and credited' for same amount, destined to beneficiary.
Main Doctrine
The requirement of notice of hearing under Sections 4 and 5, Rule 15 in connection with Section 2, Rule 37 of the Revised Rules of Court is mandatory and jurisdictional; thus, a motion for reconsideration filed without such notice is a mere scrap of paper devoid of legal effect and does not toll the running of the period to appeal. This defect cannot be cured by a subsequent motion to set the motion for hearing, especially if filed after the expiration of the appeal period, as the original motion remains fatally defective from inception. Courts should not relax this rule absent the most persuasive reasons, as procedural rules are not mere technicalities but essential to orderly justice administration, and liberality cannot override finality of judgments. A motion for reconsideration that merely reiterates arguments already raised and resolved during trial is pro forma and warrants denial even on merits. In letter of credit disputes, the action arises from contract, not solutio indebiti, prescribing in ten years under Article 1144, Civil Code, where parties are bound by the letter's terms and conditions.