Facts:

The case involves a judicial dispute between Advance Textile Mills, Inc. (the petitioner) and Willy C. Tan, who operates under the name WCT Manufacturing (the respondent). The case was deliberated by the First Division of the Supreme Court of the Philippines with a decision promulgated on July 28, 2005, involving an appeal of a decision rendered by the Court of Appeals in CA-G.R. CV No. 49607 dated June 17, 2002. The facts of the case trace back to an alleged sale of textile materials where Advance Textile Mills, Inc. claimed that it sold these materials to Willy C. Tan, resulting in an unpaid balance of Php 1,751,892.67. Following multiple unsuccessful attempts to collect this debt, including a final demand letter dated November 11, 1993, which provided the respondent with a ten-day period to settle the debt under the threat of legal action, Advance Textile Mills, Inc. initiated a formal legal action for the collection of the outstanding amount.

In the Regional Trial Court of M

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Facts:

Parties Involved

• Petitioner: Advance Textile Mills, Inc. – a textile supplier alleging a credit sale.
• Respondent: Willy C. Tan, doing business as WCT Manufacturing – accused of defaulting on payment.

Transaction and Dispute Background

• Advance Textile Mills, Inc. sold textile materials to respondent on credit.
• The unpaid balance amounted to P1,751,892.67.
• After several unsuccessful attempts at collection, on November 11, 1993, petitioner sent a final demand letter giving the respondent ten days to pay the debt under the threat of legal action.

Initiation of Legal Proceedings

• Petitioner instituted an action for collection of a sum of money before the Regional Trial Court (RTC) of Makati City, Branch 147, in Civil Case No. 94-1683.
• In his Answer, respondent denied having purchased fabric materials on credit, claiming all purchases were settled in cash.
• Respondent also denied ever receiving any demand letter from the petitioner.

Pre-Trial Conference Developments

• A pre-trial conference was initially scheduled for March 6, 1995.
• On a motion by respondent’s counsel, the trial court canceled and reset the pre-trial conference to April 5, 1995.
• Both respondent and his counsel failed to appear on April 5, 1995.
• Consequently, at petitioner’s motion, the trial court declared respondent in default and allowed the presentation of evidence ex parte.

RTC Decision

• On April 19, 1995, the RTC rendered a decision ordering respondent to pay:
• The principal sum of P1,751,892.67 with interest at 12% per annum from filing date until full payment.
• Attorney’s fees amounting to P150,000.
• The costs of the proceedings.

Appeal to the Court of Appeals (CA)

• Respondent appealed the RTC decision.
• On June 17, 2002, the CA ruled that the RTC’s Order of Default was null and void because the trial court failed to serve the respondent directly with the notice of the reset pre-trial.
• The CA held that proper notice must be sent to both the party-litigant and his counsel, not solely to counsel.
• The CA annulled both the RTC’s default order (dated April 5, 1995) and its subsequent judgment of April 19, 1995, and remanded the case for further proceedings.

Petitioner’s Arguments on Appeal

• Petitioner contended that:
• The respondent, by filing the ex-parte motion to cancel, had implicitly acknowledged that the service of the first notice (served solely on his counsel) was sufficient.
• The respondent cannot now claim that the subsequent notice of the reset pre-trial was defective or inadequate.
• The respondent’s failure to appear was not attributable to fraud, accident, mistake, or excusable negligence.
• Petitioner cited prior jurisprudence (e.g., Five Star Bus Co., Inc. v. Court of Appeals) to support the notion that notice to a party-litigant via counsel should suffice.
• Petitioner further emphasized that the substantive defense on the merits was not adequately raised by the respondent.

Respondent’s Position

• Respondent argued that the rules require a separate notice to be sent directly to the party-litigant as well as to his counsel.
• He maintained that the lack of such a separate notice renders the judgment of default void.

Applicable Procedural Rules

• The proceedings were governed by the old Rules of Civil Procedure (circa 1994–1995).
• Under Rule 20, Section 1, the notice of pre-trial must be served on the party affected, separately from his counsel, failing which the proceedings risk being null and void.

Precedent and Comparative Cases

• The decision reflected guidance from cases such as Pineda v. Court of Appeals, which underscored the necessity of personally notifying the party of a reset pre-trial date.
• The outcome in Pineda reinforced that even if counsel is notified, the absence of direct notice to the party can lead to nullification of a default judgment.

Issue:

Whether the Court of Appeals seriously erred in:

• Disregarding the trial court's authority to declare the respondent in default on the ground of his failure to appear at the reset pre-trial, and
• Relying solely on the traditional presumption of correctness in the court's action despite alleged procedural lapses.

• Whether a separate notice to the party-litigant (in addition to notice to counsel) is mandatory before declaring a party in default, specifically in the context of pre-trial conferences under the old Rules of Civil Procedure.

• Whether the appellant's argument that the ex-parte motion to cancel the hearing implied consent to the sufficiency of notice served solely to counsel is valid.

• How the failure to serve a separate notice of the reset pre-trial conference affects the validity of the trial court’s default order and subsequent judgment.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)