Facts:

This case involves Air Philippines Corporation (herein referred to as "API") as the petitioner and International Business Aviation Services Philippines, Inc. (herein referred to as "IBASPI") as the respondent. The events that gave rise to this legal dispute commenced when API sought the services of IBASPI to facilitate the transportation of a B-737 airplane from the United States to the Philippines via Subic Bay International Airport. IBASPI subsequently engaged Universal Weather & Aviation, Inc. (referred to as "UWAI") to carry out the ferrying of the airplane, and the total billed amount for these services was $65,131.55. However, API failed to settle this amount after receiving repeated reminders, including a letter from IBASPI dated December 2, 1996, urging for payment.

Consequently, IBASPI, seeking to uphold its reputation and avoid corporate embarrassment for API’s non-payment, advanced the said amount to UWAI on behalf of API. Subsequent

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Facts:

Background of the Transaction and Service Arrangement

• Air Philippines Corporation (API) required services to ferry its B-737 airplane from the United States to the Philippines.
• API, represented by its Vice-President for Operations, Captain Alex Villacampa, engaged International Business Aviation Services Phils., Inc. (IBASPI) to act as its agent in securing a ferrying enterprise.
• IBASPI, in turn, contracted Universal Weather & Aviation, Inc. (UWAI) to ferry the airplane to the designated airport at Subic Bay, Olongapo City.

Payment Issue and Subsequent Dispute

• UWAI issued a bill totaling US$65,131.55 to API for the ferry flight services rendered.
• API failed to settle the invoice, prompting IBASPI to write a demand letter and later advance the full payment to UWAI to avoid further corporate embarrassment and operational pressures.
• Following notification of the payment by UWAI (via its letter dated May 12, 1997), IBASPI demanded reimbursement from API for the amount advanced.
• A memorandum from API’s President and CEO, Rodolfo Estrellado (dated July 29, 1997), recommended settling only a portion of the claim, subject to IBASPI providing supporting documentation, which led to further disputes over the balance and additional commission claims.

Initiation of Legal Proceedings

• IBASPI filed a complaint with the Regional Trial Court (RTC) of Pasay City on June 24, 1998, seeking:

- Payment of the balance of US$65,131.55 or its equivalent; - Payment of a 10% commission (broker’s fee) on the billed amount; and - Attorney’s fees, litigation expenses, and other ancillary relief.

Pre-Trial and Procedural Irregularities

• The RTC issued a Pre-Trial Notice scheduling the pre-trial conference on December 7, 1998, requiring the parties to submit their respective pre-trial briefs.
• IBASPI complied by filing its pre-trial brief whereas API failed to do so initially.
• During the pre-trial conference, API’s counsel, Atty. Manolito A. Manalo, appeared without a proper Special Power of Attorney (SPA).
• The court granted a ten-day period for API to file its missing pre-trial brief and SPA; however, API subsequently failed to comply timely, leading to ex parte proceedings and the admission of respondent’s evidence.

Trial Court Proceedings and Entry of Judgment

• API eventually filed various motions, including urgent ex-parte motions for extension of time and a Motion for Reconsideration, citing the alleged gross negligence and unauthorized acts of its counsel, Atty. Manalo.
• Despite these motions, the RTC proceeded with the evidence presented by IBASPI, including documentary proofs such as the Certification, Memorandum, Billings, and the Receipt/Agreement.
• On April 7, 1999, the RTC rendered judgment in favor of IBASPI, ordering API to pay the sum of US$59,798.22 (after partial payment adjustments), attorney’s fees, and litigation costs while denying the claim for the 10% broker’s fee.

The Appeal and Court of Appeals (CA) Decision

• API appealed the lower court’s decision, arguing that its right to a fair trial was compromised by the alleged gross negligence, incompetence, and unauthorized acts of its counsel.
• The CA affirmed the RTC’s judgment with modifications, holding that:

- API’s counsel had committed simple—not gross—negligence; - API, being equally negligent through its lack of oversight, was bound by its counsel’s acts; and - The evidence, including the Receipt/Agreement and supporting documents, substantiated IBASPI’s claims (except for the broker’s fee, which was not adequately proven).

Issue:

Validity of the Denial of a New Trial Based on Counsel’s Negligence

• Whether API’s alleged deprivation of its day in court due to the alleged gross negligence, incompetence, and unauthorized acts of its counsel justified a new trial.
• Whether the negligence of the counsel amounted to excusable negligence or was merely simple, which would bind API to the actions taken by its counsel.

Admission and Weight of Documentary Evidence

• Whether the CA properly took judicial notice of the Memorandum of Rodolfo Estrellado, the Billings from UWAI, and other documentary evidence despite objections regarding hearsay and lack of probative value.
• Whether the Receipt/Agreement, executed by Atty. Manalo, is valid given the alleged absence of a Special Power of Attorney or a board resolution authorizing him to act on API’s behalf.

Determination of Liability and Monetary Awards

• Whether API should be held liable for the unpaid balance of US$59,798.22 and attorney’s fees as determined by the lower court.
• Whether claims for the 10% commission (broker’s fee) should stand, considering the quantum of evidence submitted by IBASPI in support of such claim.
• Whether the legal interest and damages awarded were properly computed and substantiated under applicable laws and precedents.

Overall Due Process and Fair Trial Considerations

• Whether procedural irregularities (e.g., failure to file a pre-trial brief and lack of proper authority shown by counsel) resulted in a violation of API’s right to due process.
• Whether API’s participation in its own defense was adequate despite its repeated delays and lapses in monitoring the progress of the litigation.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)