G.R. No. 51765 March 3, 1997
REPUBLIC PLANTERS BANK, petitioner, vs. HON. ENRIQUE A. AGANA, SR., as Presiding Judge, Court of First Instance of Rizal, Branch XXVIII, Pasay City, ROBES-FRANCISCO REALTY & DEVELOPMENT CORPORATION and ADALIA F. ROBES, respondents.

FACTS

On September 18, 1961, petitioner Republic Planters Bank granted a loan to respondent Robes-Francisco Realty and Development Corporation. Part of the loan proceeds, totaling P8,000.00, was issued in the form of 800 preferred shares of the bank’s stock, with certificates stating the shares were entitled to a cumulative 1% quarterly dividend and were redeemable at the bank’s option by drawing lots any time after two years from issuance. The shares were issued in the names of corporate officers, later consolidated under respondent Adalia F. Robes.
On January 31, 1979, private respondents filed a complaint for specific performance to compel the bank to redeem the shares and pay accrued dividends. The trial court rendered a judgment on the pleadings in favor of private respondents, ordering the bank to pay the redemption price and accumulated dividends. The bank challenged this decision via certiorari, arguing the complaint failed to state a cause of action and the claim was barred by laches, among other grounds.

ISSUE

The primary issue is whether the trial court committed grave abuse of discretion in ordering the bank to redeem the shares and pay dividends, notwithstanding the defense of laches.

RULING

The Supreme Court granted the petition, setting aside the trial court’s decision and dismissing the complaint on the ground of laches. The Court clarified that while the stock certificates created a valid contractual obligation for redemption and dividends, the enforcement of such right was extinguished by private respondents’ unreasonable delay. Laches is the failure to assert a right for an unreasonable length of time, warranting a presumption of abandonment. The redemption option was exercisable after two years from 1961, yet private respondents waited approximately sixteen years until 1979 to formally demand redemption. This prolonged inaction, without valid justification, constituted neglect in asserting their claim. The Court emphasized that vigilant parties should have inquired about redemption soon after the two-year period lapsed. The bank’s subsequent financial difficulties, including a chronic reserve deficiency noted by the Central Bank, further underscored the inequity of compelling redemption after such delay. Thus, while the contractual terms were binding, the equitable doctrine of laches barred recovery due to the unreasonable lapse of time in seeking enforcement.