G.R. No. 124267 - NATIONAL COMMERCIAL BANK OF SAUDI ARABIA vs. COURT OF APPEALS, ET AL.

22/01/2021, 3(39 PM

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G.R. No. 124267 - NATIONAL COMMERCIAL BANK OF SAUDI ARABIA vs. COURT OF APPEALS, ET AL. 22/01/2021, 3(39 PM

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Ludo VS Saornido Ferdinand Ludo Ludo & Luym Corporation

Ludo & Luym Corporation Ludo V Luym Corp 2003 Ferdinand Saornido Case
Ludo & Luym Corporation Ludo V Luym Corp 2003 Ferdinand Saornido Case

THIRD DIVISION

G. R. No. 124267 - January 31, 2003

NATIONAL COMMERCIAL BANK OF SAUDI ARABIA, Petitioner, v. 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, 19934 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

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G.R. No. 124267 - NATIONAL COMMERCIAL BANK OF SAUDI ARABIA vs. COURT OF APPEALS, ET AL. 22/01/2021, 3(39 PM

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

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G.R. No. 124267 - NATIONAL COMMERCIAL BANK OF SAUDI ARABIA vs. COURT OF APPEALS, ET AL. 22/01/2021, 3(39 PM

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.

Endnotes:
1 See Vlason Enterprises Corp. v. Court of Appeals, 310 SCRA 26 (1999); Tan v. Court of Appeals, 295 SCRA 755
(1998); De la Peña v. De la Peña, 258 SCRA 298 (1996); MERALCO v. La Campana Food Products, Inc., 247 SCRA 77
(1995); Goldloop Properties, Inc. v. Court of Appeals, 212 SCRA 498 (1992); Tamargo v. Court of Appeals, 209 SCRA
519 (1992); Pojas v. Gozo-Da[d]ole, 192 SCRA 575 (1990); New Japan Motors, Inc. v. Perucho, 74, SCRA 14 (1976);
Manila Surety and Fidelity Co., Inc. v. Bath Construction and Co., 14 SCRA 435 (1965).

2 Rollo, p. 11.

3 Id. at 11, 303316.

4 Id. at 11.

5 Id. at 11, 2838.

6 Id. at 11, 99, 213.

7 Id. at 3940.

8 Id. at 12, 4144.

9 Id. at 12, 4546.

10 Id. at 45.

11 Id. at 12, 4749.

12 Id. at 1213, 9899.

13 Id. at 13, 51, 104.

14 Id. at 13, 112116.

15 Id. at 125.

16 Id. at 13, 126166.

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G.R. No. 124267 - NATIONAL COMMERCIAL BANK OF SAUDI ARABIA vs. COURT OF APPEALS, ET AL. 22/01/2021, 3(39 PM

17 Id. at 14, 211219.

18 Id. at 14, 256260.

19 Id. at 14, 256257.

20 Restated in the same Rule and Section numbers in the 1997 Rules of Civil Procedure.

21 Bank of the Philippine Islands v. Far East Molasses, 198 SCRA 689, 698699 (1991).

22 People v. Court of Appeals, 296 SCRA 418, 426427 (1998).

23 Rollo at 23.

24 Id. at 323.

25 Id. at 217.

26 Id. at 218.

27 Limpot v. Court of Appeals, 170 SCRA 367, 377 (1989).

28 Rollo at 45.

29 Id. at 323330.

30 Rollo at 326.

31 Ibid.

32 CA Rollo at 85.

33 Power Commercial and Industrial Corp. v. Court of Appeals, 274 SCRA 597, 612 (1997).

34 Article 1144, Civil Code.

35 Imperial Valley Shipping Agency v. NLRC, 200 SCRA 178,184 (1991).

36 Rollo at 126166.

37 Id. at 149, penultimate paragraph.

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27 Limpot v. Court of Appeals, 170 SCRA 367, 377 (1989).

28 Rollo at 45.

29 Id. at 323330.

30
Rollo at 326.

31 Ibid.

32
CA Rollo at 85.

33 Power Commercial and Industrial Corp. v. Court of Appeals, 274 SCRA 597, 612 (1997).

34 Article 1144, Civil Code.

35
Imperial Valley Shipping Agency v. NLRC, 200 SCRA 178,184 (1991).

36 Rollo at 126166.

37
Id. at 149, penultimate paragraph.

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