PHILIPPINE NATIONAL BANK, PETITIONER, VS. HON. JOSE G. PANEDA, IN HIS CAPACITY AS PRESIDING JUDGE OF THE RTC, BR. 67, CONSOLACION CHAN, ELIZABETH CAPULLA, CAROLINE REYES, BERNAR…

Philippine National Bank versus Paneda

The Case

This is a petition for review on certiorari brought by the Philippine National Bank against Judge Jose G. Paneda, in his capacity as presiding judge of the Regional Trial Court of Bauang, La Union, and against the private respondents, among them Consolacion Chan, Elizabeth Capulla, Caroline Reyes, and Bernardo de Vera. The Bank asks the Supreme Court to reverse the Court of Appeals, which had affirmed the trial court's order declaring its own judgment final and executory and directing the issuance of a writ of execution. The case matters because it fixes the test for when a motion for reconsideration is pro forma — that is, a mere formal or dilatory motion that does not interrupt the period to appeal — and because it protects the losing party's valuable right to appeal against a premature execution.

Procedural History

The dispute began in the Regional Trial Court of Bauang, La Union. Bernardo de Vera, who had bought a parcel of land from the Bank under a Contract of Sale with Option to Resell, was later impleaded as a third-party plaintiff, and he in turn filed a third-party complaint against the Bank. After trial, the trial court rendered judgment in favor of the private respondents, declaring them lawful owners and possessors of the lot and ordering the Bank to pay the value of the land, the improvements, attorney's fees, and litigation expenses. The Bank moved for new trial and reconsideration. The trial court denied the motion, ruling that it was pro forma and therefore did not toll the period to appeal, so that its judgment had become final and executory; it then ordered a writ of execution to issue.

The Bank went to the Court of Appeals on a petition for certiorari with a prayer for a restraining order and preliminary injunction. The appellate court issued a temporary restraining order and later a writ of preliminary injunction. On April 20, 2001, the Court of Appeals dismissed the petition and affirmed the trial court's order, agreeing that the motion was pro forma, that the documents offered as newly discovered evidence had already been marked and presented in the Bank's pre-trial brief, and that the notice of hearing had not been directed to the parties concerned. The Bank's motion for reconsideration was denied. Hence, the Bank filed the present petition for review on certiorari before the Supreme Court.

Facts

On October 9, 1985, Bernardo de Vera bought a parcel of land from the Philippine National Bank and signed a Contract of Sale with Option to Resell prepared by the Bank. Shortly after the sale, the Bank placed de Vera in possession, and he began introducing improvements, constructing roads and putting up a concrete fence. He was, however, later evicted by Consolacion Chan, Elizabeth Capulla, and Caroline Reyes.

Chan and her co-respondents then filed an action for quieting of title and damages against de Vera and his spouse. The de Veras in turn filed a third-party complaint against the Bank. Neither the de Veras nor the Bank contested the plaintiffs' claim of possession and ownership over the property. After trial, the trial court rendered judgment declaring the plaintiffs lawful owners and possessors, and ordering the Bank to pay the de Veras the value of the lot at one thousand pesos per square meter for the entire thirty-three thousand eight hundred seventy-three square meters, plus twenty thousand pesos for documentation, with legal interest, plus two hundred thousand pesos for improvements, plus fifty thousand pesos in attorney's fees and ten thousand pesos in actual and litigation expenses.

The Bank received a copy of the decision on November 19, 1998, and on December 3, 1998 filed a Motion for New Trial and Reconsideration. The trial court denied the motion on February 18, 1999, holding it pro forma and declaring its judgment final and executory. The Bank received the denial on March 2, 1999, filed its Notice of Appeal the next day, and, when the trial court instead issued a writ of execution, elevated the matter to the Court of Appeals.

Issues

• Whether or not the Bank's Motion for New Trial and Reconsideration was pro forma, such that it did not suspend the running of the period to appeal and the trial court's judgment had become final and executory.
• Whether or not the Bank substantially complied with the rules on notices of hearing for motions.
• Whether or not the Bank's Notice of Appeal should have been given due course.

Applicable Provisions

Section 5 of Rule 15 of the Rules of Court, on the notice of hearing, provides:

Section 5. Notice of hearing. The notice of hearing shall be addressed to all parties concerned, and shall specify the time and date of the hearing which must not be later than ten (10) days after the filing of the motion.

The trial court and the Court of Appeals relied on this provision to hold the Bank's motion defective, a point the Supreme Court resolves by the doctrine of substantial compliance.

Section 7 of Rule 15 of the Rules of Court, on motion day, provides:

Section 7. Motion day. Except for motions requiring immediate action, all motions shall be scheduled for hearing on Friday afternoon, or if Friday is a non-working day, in the afternoon the next working day.

The courts below faulted the Bank for setting its motion on a Monday rather than a Friday, a defect the Supreme Court likewise treats as curable.

Ruling

On the first issue, the Court held that the Bank's motion was not pro forma. It noted that the motion actually consisted of two parts, a motion for new trial and a motion for reconsideration. While the motion for new trial lacked merit because the documents sought to be presented were not newly discovered evidence, the motion for reconsideration was another matter. The Court quoted its ruling in Coquilla versus Commission on Elections:

The mere reiteration in a motion for reconsideration of the issues raised by the parties and passed upon by the court does not make a motion pro forma; otherwise, the movant's remedy would not be a reconsideration of the decision but a new trial or some other remedy.

The Court also quoted Marina Properties Corporation versus Court of Appeals:

A motion for reconsideration based on the foregoing grounds is deemed pro forma if the same does not specify the findings or conclusions in the judgment which are not supported by the evidence or contrary to law, making express reference to the pertinent evidence or legal provisions.

Measuring the Bank's motion against this test, the Court found that it pointed specifically to findings and conclusions in the judgment claimed to be unsupported by the evidence or contrary to law, and stated additional specific reasons for those grounds. The motion did not reveal an intent to delay, but a bona fide effort to present additional matters. Hence, the courts below seriously erred in declaring it pro forma.

On the second issue, the Court held that even if the notice of hearing was defective, the defect was cured by the court's taking cognizance of the motion and by the fact that the adverse party was otherwise notified. It quoted Maturan versus Araula:

As enjoined by the Rules of Court and the controlling jurisprudence, a liberal construction of the rules and the pleadings is the controlling principle to effect substantial justice.

The records showed that the notices were addressed to the respective counsels of the private respondents, who were duly furnished with copies. There was substantial compliance.

On the third issue, the Court held that since the motion for reconsideration was timely filed and did interrupt the period to appeal, the Bank's Notice of Appeal, filed the day after it received the denial, should have been given due course.

Doctrine

A motion for reconsideration is pro forma only if it does not specify the findings or conclusions in the judgment which are not supported by the evidence or contrary to law, making express reference to the pertinent evidence or legal provisions. The mere reiteration of issues already passed upon does not make it pro forma, because convincing the court that its ruling is erroneous necessarily requires dwelling on those issues. A bona fide motion for reconsideration interrupts the running of the period to appeal; a pro forma one does not. Defects in the notice of hearing under Section 5 and Section 7 of Rule 15 are cured by substantial compliance where the adverse party is otherwise notified and the court takes cognizance of the motion. The doctrine relating to pro forma motions bears directly on the movant's valuable right to appeal, and courts should be slow to declare a motion outright as pro forma.

Disposition

The petition was granted; the Court of Appeals decision and resolution were set aside, the trial court's order and writ of execution were set aside, the trial court was ordered to give due course to the Bank's appeal, and the respondents were permanently enjoined from enforcing the order and the writ.

Remember This

Memorize this line: a motion for reconsideration is pro forma only when it fails to specify the findings or conclusions claimed to be contrary to law or unsupported by the evidence — mere reiteration is not enough. Examiners use this case to test the requisites of a valid motion for reconsideration, the interruption of the appeal period, and substantial compliance with the notice of hearing.