G.R. No. 133317 June 29, 1999
ANTONIO R. AGRA, CAYETANO FERRERIA, NAPOLEON M. GAMO and VICENTE O. NOVALES, petitioners, vs. PHILIPPINE NATIONAL BANK, respondent.

FACTS

On July 17, 1967, Fil-Eastern Wood Industries, Inc. was granted a P2.5 million demand loan by Philippine National Bank (PNB). Petitioners, as corporate officers and sureties, executed a Surety Agreement jointly and severally guaranteeing the loan. After Fil-Eastern defaulted, PNB filed a collection suit on August 30, 1976 against the corporation and the sureties. The sureties contended their consent was vitiated by undue influence from their employer, Felipe Ysmael, Jr., who assured them the agreement was a mere formality. They argued laches barred the action, claiming PNB unreasonably delayed suit despite knowledge of Fil-Eastern’s insolvency, prejudicing them.

ISSUE

Whether the defense of laches can bar a collection suit filed within the prescriptive period provided by law.

RULING

No. The Supreme Court affirmed the Court of Appeals’ decision, holding laches inapplicable. Laches is an equitable doctrine applied in the absence of statutory law, not in contravention of it. The right to file a collection suit prescribes in ten years under Article 1144 of the Civil Code. PNB’s action, filed in 1976 concerning a 1967 obligation, was well within this prescriptive period. The Court emphasized that equity follows the law; laches cannot supersede a statutory prescriptive period. The petitioners’ claim of prejudice due to the debtor’s alleged insolvency was irrelevant, as the law fixed the period for enforcement. The sureties’ liability, being joint and several, remained enforceable against them. The defense of vitiated consent was also unavailing, as such a contract is merely voidable and must be annulled within four years, which petitioners failed to do.