G.R. No. 124267             August 18, 2004




By Decision of January 31, 2003, this Court, finding no persuasive reason for the relaxation of the rules of procedure, declared the motion for reconsideration filed by private respondent Philippine Banking Corporation (PBC) before the trial court, which lacked the requisite notice of hearing, a mere scrap of paper and of no legal effect. PBC now seeks a reconsideration of the Decision.

The antecedents of the case are as follows:

Petitioner National Commercial Bank of Saudi Arabia (NCBSA) filed on December 4, 1985 a case against PBC before the Regional Trial Court (RTC) of Makati to recover "the duplication in the payment of the proceeds of a letter of credit [NCBSA] ha[d] 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."1

On August 24, 1993, Branch 134 of the RTC of Makati rendered a decision in favor of NCBSA, a copy of which was received by PBC on September 3, 1993. On the 12th day of the 15-day period to appeal or on September 15, 1993, PBC filed a Motion for Reconsideration2 of the decision which, however, did not contain a notice of hearing.3

On September 27, 1993, or twenty four days from its receipt of the decision and nine days after the period to file appeal had expired, PBC filed a "Motion to Set ‘Motion for Reconsideration’ for Hearing"4 alleging as follows:

x x x

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.5

The trial court, by Order6 of February 1, 1994, declared PBC’s Motion for Reconsideration a "useless piece of paper" for failure to observe the 3-day notice rule, and the same was struck from the records of the case.7 PBC filed a Motion for Reconsideration8 of said order, this time alleging that PBC’s failure to comply with the 3-day notice rule "was essentially an honest mistake or oversight of counsel."9 The motion was likewise denied by a Resolution10 of March 2, 1994 for want of any "compelling reason to warrant a liberal construction of the rules of Motions."11 PBC then assailed the trial court’s March 2, 1994 Order before the Court of Appeals via Petition for Certiorari.

The Court of Appeals dismissed PBC’s Petition for Certiorari by Decision12 of February 27, 1995. On PBC’s Motion for Reconsideration, however, the appellate court, by Amended Decision13 of March 8, 1996, set aside its February 27, 1995 Decision and directed the trial court to resolve PBC’s Motion for Reconsideration (of the trial court’s August 24, 1993 Decision) on the following justification:

. . . [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.14 (Underscoring supplied)

NCBSA thus filed a Petition for Review15 before this Court raising as sole error the following:

The Court of Appeals erred in reversing its original decision and in not ruling that the decision of the Regional Trial Court of Makati had become final, since the Motion for Reconsideration Respondent Bank filed did not contain any notice of hearing.16

NCBSA maintained that (1) since the Motion for Reconsideration of PBC did not contain a notice of hearing, it is a worthless scrap of paper, (2) the fatal defect of the Motion for Reconsideration was not cured by the filing of a "Motion to Set the ‘Motion for Reconsideration’ for Hearing," and (3) the finality of the decision of the trial court cannot be set aside on the basis of a plea for liberality.

In its Comment,17 PBC countered that a liberal interpretation of the rules is in order because there are several issues which warrant a "second hard look" by the trial court, to wit, (1) prescription of cause of action, (2) estoppel by laches, and (3) absence of double payment.18

Finding for NCBSA, this Court, by Decision of January 31, 2003, now the subject of the present Motion for Reconsideration, set aside the Amended Decision of the Court of Appeals and declared the Motion for Reconsideration of PBC filed before the RTC as pro forma on two grounds: (1) the absence of a notice of hearing and (2) the issues raised therein were mere reiteration of reasons and arguments raised before the trial court which were already passed upon on the merits. Ruled this Court:

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. x x x

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 elapsed.

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.

NCBSA thus calls for a 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.

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

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. More importantly, there was no oppressive exercise of judicial authority that would call for the annulment of the trial court’s resolutions.

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.19 (Emphasis in the original; underscoring supplied)

PBC now moves for a reconsideration of this Court’s decision on the following grounds:

The finality and execution of the Trial Court’s Decision shall result in manifest injustice to Private Respondent.20

The 31 January 2003 Decision’s discussion, en passant, of the merits of the case, with all due deference, is contrary to existing and latest jurisprudence on the matter.21

The resolution of PBC’s motion hinges on the issue of whether there exists a persuasive reason to justify the relaxation of the Rules of Procedure.

For the first time, PBC raises the correctness of the trial court’s ruling that the interest on the principal amount of $971,919.75 will run from 197522 when the double payment was "allegedly" received,23 which is at least 9 years earlier than NCBSA’s earliest demand for payment made in October 1985.24

While PBC had previously raised the issue of interest, it limited its argument to the propriety of imposing a 12% interest rate per annum, laying, as the only basis for its impropriety, the banking practice of imposing a maximum of 6% for dollar or foreign currency denominated obligations.25 It had not, until the filing of the instant motion for reconsideration, raised the propriety of imposing the 12% interest rate over the 9-year period when no demand had yet been made by NCBSA. Ordinarily, the issue would have been deemed waived based on our rule on omnibus motions.26

Considering, however, the vital government interest in the banking industry,27 the seeming error of the trial court and the amount involved, this Court is inclined to, as it does, grant PBC’s Motion for Reconsideration.28

In Eastern Shipping Lines, Inc. v. Court of Appeals,29 this Court formulated the rules on the imposition of the proper interest on amounts due, and at no instance was interest to run until demand has been made absent any agreement between the parties. The formulation is in accordance with Article 1169 of the Civil Code which provides:

Art. 1169. Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation.

x x x (Underscoring supplied)

The dispositive portion of the trial court’s decision reads:

WHEREFORE, judgment is hereby rendered in favor of plaintiff, National Commercial Bank of Saudi Arabia and against defendant Philippine Banking Corporation ordering the said defendant:

1. To pay plaintiff the sum [of] $971,919.75 United States Currency, with legal rate of interest at 12% per annum from 1975 until defendant returns the entire amount of duplicate payments;

2. To pay plaintiff attorney’s fees the amount of $62,911.77, United States Currency and expenses of litigation in the amount of P236,628.66;

3. Costs of suit.

SO ORDERED.30 (Emphasis supplied.)

Without looking into the factual findings of the trial court, it has thus become apparent that the trial court committed an error in imposing interest over the period when no demand for payment had yet been made by NCBSA, in direct contravention of the rules laid down in Eastern Shipping.

Unquestionably, if there was indeed an erroneous imposition of interest, private respondent would be held liable for more than one million U.S. Dollars – even greater than the US$971,919.75 principal – definitely not picayune.

The rule of course that only for the most persuasive of reasons should a relaxation of its procedural rules be allowed bears reiterating.31

The following have been cited by this Court as persuasive reasons which allow a liberal construction of the requirement of notice of hearing in motions:

. . . (1) where a rigid application will result in manifest failure or miscarriage of justice; especially if a party successfully shows that the alleged defect in the questioned judgment is not apparent on its face from the recitals contained therein; (2) where the interest of substantial justice will be served; (3) where the resolution of the motion is addressed solely to the sound discretion of the court; and (4) where the injustice to the adverse party is not commensurate with the degree of his thoughtlessness in not complying with the procedure prescribed.32

The present case involves parties belonging to an industry over which, as priorly stated, the government has a vital interest. Private respondent faces severe prejudice in the amount of at least one million U.S. Dollars in interest alone if the date of reckoning payment thereof turns out to be erroneous. The negligence in complying with the requirement of notice and hearing is thus not commensurate to the prejudice likely to be suffered by private respondent.

The power of this Court to except a particular case from its rules whenever the purposes of justice require it cannot be questioned, even to relax procedural rules of the most mandatory character.33

Considering that this case has been pending for the past nineteen years and that the records on hand show that the trial court had received all the evidence intended to be presented by both parties,34 this Court will dispense with the regular procedure of remanding the case to the trial court in order to avoid further delays in the resolution of the case.35

WHEREFORE, respondent Philippine Banking Corporation’s Motion for Reconsideration is given DUE COURSE. The Regional Trial Court of Makati and the Court of Appeals are hereby ORDERED to elevate all the records of the case to this Court for the final resolution of the case.

In the meantime, the parties are hereby directed to file, within thirty (30) days from notice, their respective memoranda in support of their positions.


Puno, J., Chairman, and Corona, JJ., concur.
Panganiban, J., on official leave.
Angelina Sandoval-Gutierrez, J., official leave.


1 Rollo at 409-410.

2 Id. at 28-38.

3 Id. at 11.

4 Id. at 45-46.

5 Id. at 45.

6 Id. at 98-99.

7 Id. at 99.

8 Id. at 100-111.

9 Id. at 104.

10 Id. at 124-125.

11 Id. at 125.

12 Id. at 211-219.

13 Id. at 256-260.

14 Id. at 256-257.

15 Id. at 10-259.

16 Id. at 14.

17 Id. at 275-291.

18 Id. at 279-285.

19 Id. at 412-414.

20 Id. at 194.

21 Id. at 400.

22 Rollo at 396. PBC alleges that this "erroneous [ruling] . . . could have been questioned by [it] had it been allowed to pursue its remedies."

23 Id. at 34. The double payments allegedly took place on December 9, 1975 and January 14, 1976

24 Rollo at 60.

25 Id. at 63, 118, 150-151, and 222.

26 Sec. 8. Omnibus motion. – Subject to the provisions of Section 1 of Rule 9, a motion attacking a pleading, order, judgment, or proceeding shall include all objections then available, and all objections not so included shall be deemed waived.

27 Republic v. Court of Appeals, 292 SCRA 243 (1998).

28 Republic Act No. 8791, otherwise known as "The General Banking Law of 2000," provides:

Sec. 2 The State recognizes the vital role of banks providing an environment conducive to the sustained development of the national economy and the fiduciary nature of banking that requires high standards of integrity and performance. x x x

29 234 SCRA 78 (1994).

30 Rollo at 316.

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

32 Tan v. Court of Appeals, 295 SCRA 755, 767 (1998).

33 De Guzman v. Sandiganbayan, 256 SCRA 171, 177 (1996).

34 Hechanova v. Court of Appeals, 145 SCRA 550, 554 (1986).

35 Basco v. Court of Appeals, 337 SCRA 472, 487 (2000); Basco v. Court of Appeals, 326 SCRA 768, 785 (2000).

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