G.R. No. 209605 , January 12, 2015
NEIL B. AGUILAR and RUBEN CALIMBAS, Petitioners, vs. LIGHTBRINGERS CREDIT COOPERATIVE, Respondent.

FACTS

This case originated from three consolidated complaints for sum of money filed by Lightbringers Credit Cooperative against Perlita Tantiangco and petitioners Neil B. Aguilar and Ruben Calimbas before the Municipal Circuit Trial Court (MCTC). The cooperative alleged the petitioners borrowed specific sums, evidenced by Cash Disbursement Vouchers and PNB Checks, but the amounts on the vouchers were higher than the check amounts. In their answers, the petitioners uniformly claimed the discrepancy proved they never borrowed the amounts being collected and that no interest could be claimed due to the lack of a written agreement. During the scheduled pre-trial conference, only the respondent and its counsel appeared. The MCTC issued an Order allowing the respondent to present evidence ex parte. The petitioners insisted on their right to cross-examine the respondent’s witness, but the MCTC ruled that a party declared “as in default” had no such right in ex parte proceedings. The MCTC later rendered decisions dismissing the case against Tantiangco but finding Aguilar and Calimbas liable for the amounts reflected in the PNB checks, plus interest and attorney’s fees. The petitioners appealed to the Regional Trial Court (RTC), which affirmed the MCTC decisions. The petitioners then filed a petition for review before the Court of Appeals (CA). The CA dismissed the petition outright via its April 5, 2013 Resolution, citing formal defects in the verification and affidavit of service, and, more significantly, for failure to attach the entire records of the case as required under Section 2, Rule 42 of the Rules of Court. The petitioners filed a motion for reconsideration, explaining they could not attach the entire records because they were damaged by flooding, and attached corrected pleadings. The CA denied the motion in its October 9, 2013 Resolution, maintaining that the attachment of the entire records was a mandatory requirement. Hence, this petition.

ISSUE

Whether the Court of Appeals committed grave abuse of discretion in dismissing the petition for review under Rule 42 for failure of the petitioners to attach the entire records of the appealed cases.

RULING

No, the Court of Appeals did not commit grave abuse of discretion. The Supreme Court held that the requirement under Section 2, Rule 42 to attach clearly legible duplicate originals or true copies of the judgments or final orders of both lower courts, together with the entire records of the proceedings, is mandatory. The petitioners’ failure to comply warranted the dismissal of their petition. The Court found that the petitioners did not attach material portions of the record, such as the transcript of stenographic notes (TSN) of the ex parte hearing, which was crucial as the case was decided based on that lone testimony. Their submission of other pleadings was insufficient. The excuse of flood-damaged records was not substantiated and, regardless, did not absolve them from complying with the mandatory rule. The Court also addressed the substantive issue raised by the petitioners regarding the MCTC’s conduct of ex parte proceedings. It ruled that the MCTC correctly applied Section 5, Rule 18 of the Rules of Court, which allows a plaintiff to present evidence ex parte when the defendant fails to appear at the pre-trial despite notice. A party declared in default loses the right to take part in the trial, including the right to cross-examine witnesses. However, the Supreme Court modified the MCTC and RTC decisions on the merits. It found that the respondent failed to substantiate its claim for interest, as no evidence of a written agreement on interest was presented. Consequently, the award of interest was deleted. The award of attorney’s fees was also deleted for lack of factual and legal basis. The dispositive portion affirmed the CA resolutions dismissing the petition, and affirmed the MCTC and RTC decisions with the modification that the awards of interest and attorney’s fees were deleted.