FACTS:

This case involves a dispute between respondent Ester F. Maramba and the City of Dagupan. The dispute arose when the City of Dagupan demolished Maramba's commercial fish center without directly notifying her and with a threat of taking over the property. In response, Maramba filed a complaint for injunction and damages, claiming that the demolition was unlawful and seeking damages worth P10 million.

The trial court ruled in favor of Maramba, awarding her P10 million as actual damages, P500,000 as moral damages, and P500,000 as attorney's fees. The City of Dagupan filed a motion for reconsideration, which was denied due to lack of notice. The City of Dagupan then filed a petition for relief, arguing that the damages awarded were excessive.

The trial court granted the petition for relief and reduced the award of actual damages from P10 million to P75,000. Maramba filed a petition for certiorari before the Court of Appeals, challenging the trial court's decision. The Court of Appeals granted Maramba's petition and held that the previous decision had become final and executory. The Court of Appeals also denied reconsideration.

The City of Dagupan elevated the case to the Supreme Court, raising various issues including the timeliness of their motion for reconsideration, the correctness of the trial court's modification of damages, and the deprivation of due process. The petitioner argues that the lack of notice of hearing for their motion for reconsideration was due to an oversight by their then counsel. On the other hand, Maramba argues that the lack of notice is not excusable negligence and cites previous cases to support her position that courts have no legal power to amend or correct a final judgment, even if found to be erroneous. The trial court's order granting the petition for relief was timely appealed, preventing a final and executory decision. The parties present conflicting arguments regarding the excusability of the lack of notice based on previous rulings.

ISSUES:

1. Whether the lack of notice of hearing in the NFA's motions for reconsideration warrants their denial.

2. Whether the opposition filed by Jehan in response to the NFA's motions satisfies the requirement of procedural due process.

3. Whether the petitioner city is entitled to file a petition for relief from judgment based on mistake bordering on extrinsic fraud.

4. Whether the petitioner city sufficiently proved the presence of mistake or extrinsic fraud.

5. Whether the petitioner city's assistant legal officer's failure to include a notice of hearing in its motion for reconsideration is a ground to maintain the awarded amount in favor of Maramba.

6. Whether the petitioner city's petition for relief was filed within the reglementary period.

7. Whether the trial court's award of actual damages, moral damages, and attorney's fees to Maramba is supported by sufficient evidence.

8. Whether or not the petitioner filed its petition for relief from judgment on time.

9. Whether or not the amount of damages awarded to the respondent was proven with reasonable degree of certainty.

RULING:

1. The lack of notice of hearing in the NFA's motions for reconsideration does not warrant their denial. While the notice of hearing is mandatory under Rule 15 of the Rules of Court, when the adverse party has actually had the opportunity to be heard and has been heard through pleadings filed in opposition to the motion, the purpose behind the rule is deemed duly served. A literal application of the rule on notice of hearing may be departed from if compliance with the requirements of procedural due process has been substantially fulfilled.

2. The opposition filed by Jehan in response to the NFA's motions satisfies the requirement of procedural due process. The purpose of the notice of hearing is to give the adverse party the opportunity to study and meet the arguments in the motion before a resolution by the court. As long as the adverse party has had the opportunity to be heard and has been able to address the matters raised in the motion through its opposition, the requirement of procedural due process is considered fulfilled.

3. No, the petitioner city is not entitled to file a petition for relief from judgment based on mistake bordering on extrinsic fraud.

4. No, the petitioner city did not sufficiently prove the presence of mistake or extrinsic fraud.

5. The petitioner city's assistant legal officer's failure to include a notice of hearing in its motion for reconsideration is not a ground to maintain the awarded amount in favor of Maramba. The trial court's findings that Maramba's claimed amounts as damages were unsubstantiated, the gross disparity between the awarded amount and the amount proved during the trial, and the discrepancies and lack of proof on the amount of moral damages and attorney's fees all contributed to a conclusion that the mistake or negligence committed by counsel bordered on extrinsic fraud.

6. The petitioner city's petition for relief was filed within the reglementary period. The 60-day period to file a petition for relief from judgment is reckoned from actual receipt of the denial of the motion for reconsideration when one is filed. In this case, the petitioner city received a copy of the July 30, 2004 decision on August 11, 2004, and it filed a motion for reconsideration on August 26, 2004. The petition for relief, filed on October 29, 2004, was well within the reglementary period.

7. The trial court's award of actual damages, moral damages, and attorney's fees to Maramba is not supported by sufficient evidence. There were discrepancies in Maramba's testimony and failure to present documents to substantiate her claimed costs. The renewal lease agreement also indicated a lower amount for the improvements made on the leased premises. Furthermore, Maramba did not specify the amount of moral damages and only mentioned attorney's fees in passing without showing a legal retainer.

8. The petition for relief from judgment was considered filed on time. Even though the petition was filed four days after the denial of the motion for reconsideration, the court held that it was filed within the reglementary period because the motion for reconsideration tolled the running of the period.

9. The court ruled that the issue on the amount of damages is a factual question that cannot be resolved in a Rule 45 petition. However, the court cited the recognized exceptions to this rule, which include when the conclusion is a finding grounded entirely on speculation, surmise and conjecture; when the inference made is manifestly mistaken; and when there is a grave abuse of discretion. In this case, the court found that the trial court's award of P10 million as actual damages was not supported by competent proof of the actual amount of loss. Therefore, the court affirmed the trial court's order stating that Maramba was only able to prove the amount of P75,000 as the appraised value of the improvements made on the leased premises.

PRINCIPLES:

• The notice of hearing requirement in a motion is mandatory and failure to comply with the requirement renders the motion defective. (citing Sections 4 and 5 of Rule 15 of the Rules of Court)

• The notice of hearing requirement is for the purpose of avoiding surprises to the adverse party and giving it an opportunity to study and meet the arguments in the motion. (principles of natural justice)

• Procedural due process requires the presence of the opportunity to be heard and the opportunity to study and meaningfully oppose or controvert the grounds of the motion. (citing Jehan v. NFA)

• A liberal construction of procedural rules is proper when non-compliance does not prejudice the adverse party and does not deprive the court of its authority. (citing Preysler, Jr. v. Manila Southcoast Development Corporation)

• Procedural rules may be relaxed for the most persuasive of reasons in order to relieve a litigant of an injustice not commensurate with the degree of his thoughtlessness in not complying with the procedure prescribed. (citing Sy v. Local Government of Quezon City)

• Technicality should not hinder or delay the application of justice and deserves scant consideration when it becomes a hindrance to justice. (citing United Airlines v. Uy)

• Rules of procedure are tools designed to facilitate the attainment of justice and their strict and rigid application, especially on technical matters, must be avoided if it frustrates substantial justice.

• Excusable negligence as a ground for a petition for relief from judgment requires that the negligence be so gross that ordinary diligence and prudence could not have guarded against it.

• The binding effect of counsel's negligence ensures against the resulting uncertainty and tentativeness of proceedings if clients were allowed to disown their counsels' conduct.

• Fraud as a ground for a petition for relief from judgment pertains to extrinsic or collateral fraud that prevented a party from fully and fairly presenting their case or defense in court.

• Mistake as used in Rule 38 means mistake of fact and not mistake of law. Wrong choices in legal strategy or mode of procedure cannot be considered as a mistake for purposes of granting a petition for relief from judgment.

• Mistake or negligence committed by counsel that borders on extrinsic fraud may be a ground for relief from judgment.

• The double period required for filing a petition for relief from judgment is jurisdictional and should be strictly complied with.

• The 60-day period to file a petition for relief from judgment is reckoned from actual receipt of the denial of the motion for reconsideration when one is filed.

• Awards of damages must be supported by sufficient evidence and the claimant must substantiate the claimed amounts.

• The filing of a motion for reconsideration tolls the running of the period to file a petition for relief from judgment.

• Actual damages must be proven with a reasonable degree of certainty and competent proof of the actual amount of loss is required.

• Courts cannot simply rely on speculation, conjecture, or guesswork in determining the fact and amount of damages.