G.R. No. 108855 - Metrolab Industries, Inc. vs. Roldan-Confesor

Producers Bank of the Philippines (petitioner) filed a complaint with a prayer for preliminary attachment against New Cotton (Phil.) Corporation and its affiliates on December 9, 1988.
The complaint arose from a three-million-peso loan advanced to New Cotton, evidencing a Promissory Note (No. PC 015/88) executed on March 22, 1988, with an agreed maturity of 55 days (May 16, 1988), later renewed once (maturity on July 15, 1988).

The Regional Trial Court of Makati, Branch 139, initially granted the writ of attachment on January 3, 1989, and approved the attachment bond on February 6, 1989, although the bond approval was later recalled.
On June 7, 1989, the petitioner moved for the issuance of summons. However, only private respondent Wilson Kho was served via substituted service because the whereabouts of the other defendants were unknown—the corporation had ceased operations and the two non-Filipino respondents were reportedly in Hongkong.
Wilson Kho later denied the genuineness and due execution of a surety agreement underlying a six-million-peso loan, alleging a forged signature and lack of authorization.

On February 27, 1990, petitioner filed a motion to reinstate the attachment order; however, the hearing was deferred because summonses for the remaining defendants had not been served.
In June 1990, Kho filed a motion to expedite the pre-trial process without awaiting proper service of the summonses; the court denied this motion and directed immediate service.
Petitioner subsequently resorted to service by publication, with the summonses published in The Philippine Star on August 14, 1990, after a significant lapse in time.
Beginning November 1990 and continuing through various dates in 1991 and 1992, the case experienced a series of postponements and re-scheduling of pre-trial conferences due to the petitioner’s failure to secure witness attendance, appearance of counsel, and other procedural obligations.
Even as the trial was about to commence in early 1993, petitioner repeatedly filed motions to postpone evidence presentation, citing unavailability of key witnesses and other commitments, which further delayed the proceedings.

On July 13, 1993, after numerous postponements and evident delays in prosecuting the case, the trial court issued an order dismissing the complaint for failure to prosecute, based on the prolonged inaction of the petitioner.
Petitioner filed a motion for reconsideration on August 10, 1993, which was denied on November 9, 1993.
The petitioner subsequently appealed to the Court of Appeals. On June 19, 1996, the Court of Appeals dismissed the appeal and affirmed the lower court’s order, finding that the dismissal was justified under the provisions of Section 3, Rule 17 of the Rules of Court.

Whether the Court of Appeals erred in affirming the trial court’s dismissal of the complaint for failure to prosecute.

The primary question was if the trial court’s application of Section 3, Rule 17, dismissing the case due to inordinate delays and failure to diligently prosecute, was proper.
Whether the appellate court’s review should have remanded or reversed the lower court’s decision.

Whether the dismissal should be rendered with prejudice or without prejudice.

The petitioner contended that even if dismissal was warranted, it should be without prejudice to allow a new action in the future.
The determination turned on whether the dismissal, under Section 3, Rule 17, typically carries the effect of adjudication on the merits unless the court expressly decides otherwise.

Whether the petitioner’s failure to pursue proper service and timely presentation of evidence constituted a valid ground for dismissal.

The issue also examined to what extent the petitioner’s repeated postponements and laxity in managing the litigation contributed to the final decision.