G.R. No. 124267 - National Commercial Bank of Saudi Arabia vs. Court of Appeals

On December 4, 1985, the National Commercial Bank of Saudi Arabia (NCBSA) filed a case against the Philippine Banking Corporation (PBC) in the Regional Trial Court (RTC) of Makati.
The complaint sought to recover a duplicate payment of the proceeds of a letter of credit, noting that both the head office and the Makati branch of PBC had collected funds for the same letter of credit.

On September 15, 1993, PBC filed a Motion for Reconsideration challenging the RTC decision.

On September 21, 1993, NCBSA filed a Manifestation pointing out the defect—the absence of a notice of hearing in PBC’s motion.
On September 27, 1993, NCBSA formally filed a Motion for Writ of Execution of the RTC decision.

In response to the manifestation filed by NCBSA, PBC filed a Motion to Set the Motion for Reconsideration for Hearing on the same day (September 27, 1993).

In the motion, PBC argued that the hearing was necessary to allow it to fully amplify and expound on the issues raised in the Motion for Reconsideration.

NCBSA opposed this motion vigorously, urging that it be stricken from the record.

On February 1, 1994, the RTC issued an order striking PBC’s Motion for Reconsideration from the records and granted NCBSA’s Motion for Writ of Execution.
PBC then filed a Motion for Reconsideration of that order on the ground that its failure to include the notice of hearing was an honest mistake or oversight by counsel.
On March 2, 1994, the RTC denied PBC’s Motion for Reconsideration, holding that there were no compelling reasons to justify a liberal construction of the procedural rules.

PBC assailed the RTC order by filing a Petition for Certiorari with the Court of Appeals, challenging the trial court’s ruling as entrenched in procedural strictness.
On February 27, 1995, the Court of Appeals dismissed PBC’s petition for certiorari.
Later, on March 8, 1996, the Court of Appeals issued an Amended Decision:

The Amended Decision set aside its February 27, 1995 ruling.
It granted PBC’s petition for certiorari and directed the RTC to resolve the Motion for Reconsideration.
The Court of Appeals justified its decision by stating that denying the motion solely for lack of hearing notice was an overly harsh application of the rules, particularly since PBC had filed a subsequent motion to set the hearing and had furnished a copy of the motion to NCBSA.

NCBSA assailed the Court of Appeals’ Amended Decision before the Supreme Court.
The Supreme Court focused on the mandatory nature of the notice requirement under Sections 4 and 5, Rule 15 in connection with Section 2, Rule 37 of the Revised Rules of Court.
It noted that:

The absence of the required notice of hearing in PBC’s Motion for Reconsideration was fatal.
The defect could not be cured by a belated filing of a notice of hearing, particularly as it was filed after the expiration of the appeal period.

PBC claimed that its motion raised serious questions involving factual findings and legal conclusions by the trial court.
However, the court observed that the issues raised (prescription, laches, and double payment) had already been presented and considered during the trial court proceedings.
The motion was effectively a reiteration of previously resolved issues and thus merely pro forma.

In conclusion, the Supreme Court reinstated the RTC’s resolution declaring the Motion for Reconsideration as pro forma and set aside the Court of Appeals’ Amended Decision.

Whether a Motion for Reconsideration filed without a notice of hearing can be given substantive effect or must be dismissed as a mere formality.
Whether the subsequent filing of a Motion to Set the Motion for Reconsideration for Hearing, filed after the appeal period had expired, can cure the defect caused by the absence of a notice of hearing.
The applicability of relaxing strict procedural requirements in motions to reconsider, considering the potential for substantive arguments being raised despite a technical defect.
Whether the material defenses raised by PBC such as prescription, laches, and the double payment issue were sufficient to warrant a hearing despite the procedural non-compliance.