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MAGELLAN AEROSPACE CORPORATION v. PHILIPPINE AIR FORCE

FACTS:

The Philippine Air Force (PAF) entered into a contract with Chervin Enterprises, Inc. (Chervin) for the overhaul of two aircraft engines. Due to its lack of technical capability, Chervin commissioned Magellan Aerospace Corporation (MAC) to do the work. MAC then subcontracted the overhaul service to National Flight Services, Inc. (NFSI). After the engines were overhauled and delivered to PAF, MAC demanded payment but was not paid. PAF informed MAC that the amount was being held in trust for Chervin. MAC filed a complaint for sum of money against Chervin, PAF, and its Managing Director. PAF and Chervin moved to dismiss the complaint. The Regional Trial Court (RTC) granted the motions to dismiss and ordered the dismissal of the complaint. MAC appealed to the Court of Appeals (CA) which partly granted the appeal, reversing the dismissal of the complaint against Chervin but affirming the dismissal against PAF. MAC filed a petition for review on certiorari before the Supreme Court, praying for the reinstatement of the complaint against PAF.

ISSUES:

  1. Whether the complaint filed by MAC against PAF sufficiently states a cause of action.

  2. Whether there was substantial compliance with the requirements of due process in the lack of notice of hearing in a motion for reconsideration.

  3. Whether the three-day notice requirement was satisfied.

RULING:

  1. No, the complaint filed by MAC against PAF does not sufficiently state a cause of action. The allegations made by MAC that PAF acted as the principal of Chervin and should be held liable for non-payment of amounts due is not considered an ultimate fact. The assumption of truth, which applies to ultimate facts, does not cover legal conclusions or evidentiary facts. Without factual circumstances serving as predicates, MAC failed to provide a plausible basis for asserting PAF's liability. Therefore, the Court affirms the dismissal of MAC's complaint against PAF.

  2. Yes, there was substantial compliance with the requirements of due process. Even without the notice of hearing, if the adverse party had the opportunity to be heard and filed pleadings in opposition to the motion, there is substantial compliance.

  3. Yes, the three-day notice requirement was satisfied. The party opposing the motion to dismiss was given the opportunity to be heard and filed an opposition to the motion, fulfilling the purpose of the three-day notice requirement.

PRINCIPLES:

  • The sufficiency of allegations in a complaint is determined based on ultimate facts, not legal conclusions or evidentiary facts.

  • The three-day notice requirement in motions is mandatory as it is an integral component of procedural due process, but it may be relaxed as long as the adverse party has been given the opportunity to be heard through pleadings filed in opposition to the motion.

  • Lack of notice of hearing in a motion does not necessarily invalidate it if there is substantial compliance and the adverse party had the opportunity to be heard and filed pleadings in opposition to the motion.

  • The three-day notice requirement may be satisfied if the opposing party was given the opportunity to be heard and had filed pleadings in opposition to the motion.