THIRD DIVISION
NATIONAL
COMMERCIAL
BANK OF SAUDI ARABIA,
Petitioner,
G.R.
No.
124267
August 18, 2004
-versus-
COURT OF APPEALS
AND PHILIPPINE BANKING
CORPORATION,
Respondents.
R E S O L U T I O
N
CARPIO
MORALES, J.:chanroblesvirtuallawlibrary
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 Reconsideration[2]
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:chanrobles virtual law library
x
x xchanrobles virtual law library
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.cralaw:red
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
Order[6]
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 Reconsideration[8]
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 Resolution[10]
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.cralaw:red
The Court of Appeals
dismissed PBC’s Petition for Certiorari by Decision[12]
of February 27, 1995. On PBC’s Motion for Reconsideration,
however,
the appellate court, by Amended Decision[13]
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:
To 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 Review[15]
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]chanrobles virtual law library
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.cralaw:red
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 xchanrobles virtual law library
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.cralaw:red
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.cralaw:red
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.cralaw:red
PBC, on the other hand,
invokes a just and fair determination of the case.cralaw:red
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.chanrobles virtual law library
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]chanrobles virtual law library
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.cralaw:red
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 1975[22]
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]chanrobles virtual law library
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.cralaw:red
x
x x (Underscoring supplied.)chanrobles virtual law library
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.chanrobles virtual law library
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.chanrobles virtual law library
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.cralaw:red
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]chanrobles virtual law library
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.cralaw:red
In the meantime, the
parties are hereby directed to file, within thirty (30) days from
notice,
their respective memoranda in support of their positions.cralaw:red
SO ORDERED.
Puno, J., (Chairman),
Corona, J., concur.
Panganiban, J., on
official leave.
Sandoval-Gutierrez,
J., on leave.
____________________________
Endnotes:
[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.chanrobles virtual law library
[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.chanrobles virtual law library
[25]
Id. at 63, 118, 150-151, and 222.chanrobles virtual law library
[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.chanrobles virtual law library
[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:chanroblesvirtuallawlibrary
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 xchanrobles virtual law library
[29]
234 SCRA 78 (1994).chanrobles virtual law library
[30]
Rollo at 316.chanrobles virtual law library
[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). |