THIRD DIVISION

[G.R. No. 124267. January 31, 2003]

NATIONAL COMMERCIAL BANK OF SAUDI ARABIA, petitioner, vs. COURT

OF APPEALS and PHILIPPINE BANKING CORPORATION, respondents.
DECISION
CARPIO-MORALES, J.:

May the unrippled doctrine that a motion filed without the requisite notice of hearing is a
useless piece of paper with no legal effect be, under the facts of the case, relaxed?
[1]

Petitioner National Commercial Bank of Saudi Arabia (NCBSA) filed a case against
respondent Philippine Banking Corporation (PBC) in the Regional Trial Court (RTC) of Makati on
December 4, 1985 to recover the duplication in the payment of the proceeds of a letter of credit
[NCBSA] has issued ... brought about by the fact that both the head office and the Makati
branch of [PBC, the negotiating bank,] collected the proceeds of the letter of credit.
[2]

On August 24, 1993, the RTC of Makati rendered a decision in favor of NCBSA. PBC
received a copy of the decision on September 3, 1993 and on the 12th day of the period of
appeal or on September 15, 1993, it filed a Motion for Reconsideration. The motion, however,
did not contain a notice of hearing.
[3]

[4]

[5]

[6]

On September 21, 1993, NCBSA filed a Manifestation pointing out that PBCs Motion for
Reconsideration did not contain any notice of hearing.
[7]

On September 27, 1993, NCBSA filed a Motion for Writ of Execution of the decision of the
trial court. On even date, PBC filed a Motion to Set Motion for Reconsideration for
Hearing alleging as follows:
[8]

[9]

xxx
2. The Motion for Reconsideration raised both questions of facts and law arising from the
erroneous findings made by the Honorable Court in the said Decision;
3. In order that defendant can fully amplify and expound on the issues raised on the said
motions, there is a need to set the Motion for Hearing.
xxx

[10]

NCBSA opposed this motion vigorously, it praying that it be stricken off the records.

[11]

By Order of February 1, 1994, the trial court struck from the records of the case PBCs
Motion for Reconsideration of its decision and granted NCBSAs Motion for Writ of Execution.
[12]

PBC filed a Motion for Reconsideration of said Order of February 1, 1994, this time alleging
that PBCs failure to comply with the 3-day notice rule was essentially an honest mistake or
oversight of counsel. This motion was just as vigorously opposed by NCBSA.
[13]

[14]

By Order of March 2, 1994, the trial court denied PBCs Motion for Reconsideration of its
Order of February 1, 1994, finding that [t]here are no compelling reasons to warrant a liberal
construction of the rules on Motions.
[15]

PBC assailed before the Court of Appeals via Petition for Certiorari the trial courts March 2,
1994 Order.
[16]

Page 1 of 3

By Decision of February 27, 1995, the Court of Appeals dismissed PBCs Petition for
Certiorari. On PBCs Motion for Reconsideration, however, the Court of Appeals, by Amended
Decision of March 8, 1996, set aside its February 27, 1995 Decision and granted PBCs
Petition for Certiorari and directed the trial court to resolve PBCs Motion for Reconsideration (of
the trial courts August 24, 1993 Decision).
[17]

[18]

Justifying its setting aside of its February 27, 1995 Decision, the Court of Appeals held in its
Amended Decision:

[T]o deny petitioners motion for reconsideration on the ground of failure to contain a notice of
hearing is too harsh an application of procedural rules especially so when petitioner has filed a
motion to set the motion for reconsideration for hearing and had furnished private respondent
a copy of the motion, a fact which is not denied by the latter.
[19]

NCBSA thus comes to this Court assailing the Court of Appeals Amended Decision.
The petition is impressed with merit.
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. In the case at bar, it is not disputed that PBCs Motion for
Reconsideration of the August 24, 1993 decision of the trial court did not contain the requisite
notice of hearing.
[20]

[21]

In an attempt to cure the defect, PBC filed a Motion to Set the Motion for Reconsideration
for Hearing on September 27, 1993, or 9 days after the period for filing the Notice of Appeal had
expired.
The motion for reconsideration, however, being fatally defective for lack of notice of hearing,
cannot be cured by a belated filing of a notice of hearing. More so in the case at bar where the
Motion to Set the Motion for Reconsideration was filed after the expiration of the period for filing
an appeal.
[22]

NCBSA thus calls for the strict application of our rules of procedure to avoid further delays in
the disposition of the case, which has remained pending for more than 17 years.
[23]

PBC, on the other hand, invokes a just and fair determination of the case.

[24]

PBCs appeal for justice and fairness does not lie, however, there being nothing on record to
show that it has been a victim of injustice or unfairness. On the contrary, as found by the Court
of Appeals in its original decision, PBC had the opportunity to participate in the trial and present
its defense and had actually made full use of the remedies under our rules of procedure. More
importantly, there was no oppressive exercise of judicial authority that would call for the
annulment of the trial courts resolutions.
[25]

[26]

The finality of the decision of the trial court cannot be set aside purely on the basis of
liberality for while it is true that a litigation is not a game of technicalities, this does not mean that
the Rules of Court may be ignored at will and at random. Only for the most persuasive of
reasons should the court allow a relaxation of its procedural rules.
[27]

PBC, however, has not advanced any persuasive or exceptional reason in failing to set its
Motion for Reconsideration of the trial courts decision for hearing. In fact, in its Motion to Set
Motion for Reconsideration for Hearing, PBC was completely silent on why it did not set the
Motion for Reconsideration for hearing. It just alleged that, as earlier quoted, [i]n order that
defendant can fully amplify and expound on the issues raised on said motion, there is a need to
set the Motion [for Reconsideration] for Hearing. This allegation conveys that, if there was no
need for PBC to fully amplify and expound on the issues raised in the Motion for
Reconsideration, no setting for hearing of said motion was needed. But as earlier stated, the
requirement of notice in this kind of motion is mandatory. The Motion for Reconsideration thus
remained a mere scrap of paper which deserved no consideration.
[28]

Page 2 of 3

But assuming that PBC had presented exceptional reason or excuse for its failure to comply
with the notice requirement, the Motion for Reconsideration would be denied on the ground that
it is pro forma.
In its Rejoinder to NCBSAs Reply to Comment to the petition at bar, PBC alleged that it
was, in its Motion for Reconsideration of the trial courts decision, raising serious questions
involving findings of fact and conclusions of law by the trial court, thus questioning the decision
as being contrary to law and the evidence on record. A reading of the records will show,
however, that the same three issues raised by PBC during the trial prescription, laches and
lack of double payment are what are being raised in its Motion for Reconsideration of the
decision of the trial court.
[29]

[30]

PBCs Motion for Reconsideration of the trial courts decision was thus in substance
a reiteration of reasons and arguments raised before the trial court for the dismissal of
NCBSAs complaint, which reasons and arguments had already been considered and resolved
against it on the merits by the trial court. The Motion for Reconsideration was thus merely pro
forma.
[31]

Technicality aside, en passant, on the merits of PBCs Motion for Reconsideration of the trial
courts decision, the trial court did not err in brushing aside its main defense of prescription that
NCBSAs complaint is based on the quasi-contract of solutio indebiti, hence, it prescribes in six
years and, therefore, when NCBSA filed its complaint nine years after the cause of action arose,
it had prescribed.
[32]

Solutio indebiti applies where: (1) a payment is made when there exists no binding
relation between the payor, who has no duty to pay, and the person who received the payment,
and (2) the payment is made through mistake, and not through liberality or some other cause.
In the case at bar, PBC and NCBSA were bound by their contract, the letter of credit, under
which NCBSA obliged itself to pay PBC, subject to compliance by the latter with certain
conditions provided therein. As such, the cause of action was based on a contract, and the
prescriptive period is ten, not six years.
[33]

[34]

Even PBCs defense of laches is bereft of merit, the cause of action not having yet
prescribed at the time NCBSAs complaint was filed.

Courts should never apply the doctrine of laches earlier than the expiration of time limited for
the commencement of actions at law.
[35]

And as to PBCs allegation that the trial court erred in finding the existence of double
payment, suffice it to state that PBC, while denying that there was double payment,
itself admitted having received a second set of payment for the same amount covered by the
letter of credit. Thus, in its petition for certiorari filed with the Court of Appeals, it alleged,
quoted verbatim:
[36]

The second set for the same amount, although it was received and credited to [PBCs]
account with Chemical Bank New York, were to be and subsequently transmitted to the
account of Labroco (International, Philippines) (Emphasis supplied.)
[37]

WHEREFORE, the instant petition for review on certiorari 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.
SO ORDERED.
Puno, (Chairman), Panganiban, Sandoval-Gutierrez and Corona, JJ., concur.

Page 3 of 3