GR 192716; (June, 2012) (Digest)
G.R. No. 192716 ; June 13, 2012
ELOISA MERCHANDISING, INC. and TREBEL INTERNATIONAL, INC., Petitioners, vs. BANCO DE ORO UNIVERSAL BANK and ENGRACIO M. ESCASINAS, JR., in his capacity as Ex-Officio Sheriff of the RTC of Makati City, Respondents.
FACTS
Petitioner Eloisa Merchandising, Inc. (EMI) executed a real estate mortgage (REM) in favor of respondent Banco de Oro Universal Bank (BDO) to secure credit accommodations for itself and its affiliate, Trebel International, Inc. Upon default, BDO initiated extrajudicial foreclosure. Petitioners filed a complaint for annulment of the REM, injunction, and damages, arguing the mortgage was an ultra vires third-party guarantee, the extensions granted to Trebel extinguished the suretyship, the floating interest rate was a void potestative condition, and the penalty was excessive. The trial court admitted petitioners’ amended complaints. After BDO filed its Answer and pre-trial briefs were submitted, the case underwent numerous postponements over several years, largely due to petitioners’ repeated motions for reconsideration of adverse interlocutory orders and failure to appear at scheduled hearings.
ISSUE
Whether the Court of Appeals correctly affirmed the trial court’s dismissal of the complaint for failure to prosecute.
RULING
Yes. The Supreme Court affirmed the dismissal. The legal logic rests on the trial court’s discretionary power to dismiss an action for failure to prosecute, as provided under Section 3, Rule 17 of the Rules of Court. This power is aimed at preventing undue delays and ensuring the orderly and expeditious disposition of cases. The record demonstrated a clear pattern of inaction and lack of interest by petitioners in pursuing their case with reasonable diligence. The protracted delays, spanning years, were primarily attributable to petitioners’ own conduct, including their repeated failures to appear at hearings and their strategy of filing multiple motions for reconsideration against interlocutory orders instead of proceeding to trial. The Court emphasized that while a litigant has the right to avail of procedural remedies, this right must be exercised within a reasonable time. The petitioners’ unreasonable delay in moving the case forward prejudiced the opposing party and constituted a violation of the rules and court orders, warranting dismissal for failure to prosecute. The dismissal, being for failure to prosecute, correctly carried the effect of an adjudication upon the merits.