G.R. No.

124267            January 31, 2003

NATIONAL COMMERCIAL BANK OF SAUDI ARABIA, petitioner,

vs.
COURT OF APPEALS and PHILIPPINE BANKING CORPORATION, respondents.

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 effect1 be, under the facts of the case, relaxed?

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.3 PBC received a
copy of the decision on September 3, 1993 4 and on the 12th day of the period of appeal or on
September 15, 1993, it filed a Motion for Reconsideration.5 The motion, however, did not contain a
notice of hearing.6

On September 21, 1993, NCBSA filed a Manifestation pointing out that PBC's 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.8 On even date, PBC filed a Motion to Set "Motion for Reconsideration" for Hearing9 alleging as
follows:

xxx           xxx           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           xxx           xxx10

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 PBC's Motion for
Reconsideration of its decision and granted NCBSA's Motion for Writ of Execution.12

PBC filed a Motion for Reconsideration of said Order of February 1, 1994, this time alleging that
PBC's failure to comply with the 3-day notice rule "was essentially an honest mistake or oversight of
counsel."13 This motion was just as vigorously opposed by NCBSA.14

By Order of March 2, 1994, the trial court denied PBC's 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 court's March 2, 1994
Order.16

By Decision of February 27, 1995, the Court of Appeals dismissed PBC's Petition for
Certiorari.17 On PBC's Motion for Reconsideration, however, the Court of Appeals, by Amended
Decision of March 8, 1996, set aside its February 27, 1995 Decision and granted PBC's Petition for
Certiorari and directed the trial court to resolve PBC's Motion for Reconsideration (of the trial
court's August 24, 1993 Decision).18

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

. . . [T]o deny petitioner's 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 Court20 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. 21 In the case at bar, it is not disputed that PBC's Motion for
Reconsideration of the August 24, 1993 decision of the trial court did not contain the requisite notice
of hearing.

In an attempt to cure the defect, PBC filed on 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. 22 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.

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

PBC, on the other hand, invokes a just and fair determination of the case.24

PBC's 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.25 More importantly, there
was no oppressive exercise of judicial authority that would call for the annulment of the trial court's
resolutions.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 court's 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."28 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.

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 Rejoinder29 to NCBSA's Reply to Comment to the petition at bar, PBC alleged that it was, in its
Motion for Reconsideration of the trial court's 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."30 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.

PBC's Motion for Reconsideration of the trial court's decision was thus "in substance . . . a reiteration
of reasons and arguments"31 raised before the trial court for the dismissal of NCBSA's 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.

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

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 cause33 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,34 not six years.

Even PBC's defense of laches is bereft of merit, the cause of action not having yet prescribed at the
time NCBSA's 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 PBC's 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 certiorari36 filed with the Court of Appeals, it alleged, quoted verbatim:

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

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, Panganiban, Sandoval-Gutierrez, and Corona JJ., concur.