"x x x .
We shall first discuss the issue of laches.
Laches is defined as the failure or neglect for an unreasonable and unexplained length of time to do that which, by exercising due diligence, could or should have been done earlier; it is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it.[24]
In the case at bar, the RTC in Civil Case No. 00-942 held that laches attached when respondents allowed eight (8) years to pass before questioning the mortgage, which was constituted in 1990. Thus, the trial court said:
As it appears now, the mortgage on the land and building of Centro was first constituted in 1990 in favor of [the] Bank of the Philippine Islands. Individual plaintiffs stated that discovery of the mortgage was “sometime in 1998”, (par. 6, Affidavit of Chongking Kehyeng). He was in the Board of Directors of Centro and he holds office at the fourth floor of the building on the mortgaged property. There is evidence that the holding of meetings of the Board of Directors was irregular and purely “reportorial”.
Considering that as shown by planitiffs’ evidence, conduct of business in Centro was informal, vigilance over its property was required from all individual plaintiffs, particularly plaintiff Chongking Kehyeng who sits in the Board of Directors. Periodic inquiries and verification of documents pertaining to corporate properties should have been done and the existence of the mortgage was verifiable. A simple inquiry about the status of the title, information on the title number and actual verification with the Register of Deeds – a task which can be accomplished in an hour or two –will provide information about the existence of the mortgage. None of the individual plaintiffs did this.
The inaction of the plaintiffs for which no explanation was submitted resulted in the acquisition of rights by the defendant Bank adverse to them. Such neglect, taken in conjunction with the lapse of time of about eight (8) years operates as a bar.[25]
A perusal of the TCTs[26] of the subject properties would reveal that only the values of the mortgage securing the loans totalling ₱144 million were annotated, based on the MTIs executed on 21 March 1990, 31 March 1993 and 28 July 1994. As for the last annotation, it only stated that petitioner was the successor-trustee to all obligations due to the creditors. Respondents, in their Complaint, did not question these mortgages constituted by the MTIs executed on 21 March 1990, 31 March 1993 and 28 July 1994, respectively. What they questioned was the additional loans granted to San Carlos after the execution of the 27 September 1994 MTI and the foreclosure of the mortgage resulting from the nonpayment of San Carlos’ obligations. Thus, contrary to the finding of the trial court, only four years had lapsed from the execution of the 27 September 1994 MTI when respondents questioned the mortgage allegedly constituted to cover these loans.
Furthermore, as mentioned earlier, the TCTs were not accordingly annotated to cover these additional loans. Also, the mortgage of the property securing all the loans were not disclosed in Centro’s financial statements for the years 1991 to 1998.[27] Thus, absent any proof that the individual respondents were notified of the stockholders’ meeting on 12 August 1994 or that they were present during the meeting, these respondents could not have been informed of the alleged additional loans and the corresponding mortgage constituted over the properties.
It cannot therefore be said that laches had attached and that respondents were already barred from assailing the MTI in 1998. We now proceed to discuss the validity of the challenged MTI.
The 18 August 1994 Secretary’s Certificate issued by Maria Jacinta V. Go reads as follo
x x x."
