GR L 16563; (December,1961) (Digest)
G.R. No. L-16563 December 28, 1961
Z. E. LOTHO, INC., plaintiff-appellant, vs. ICE AND COLD STORAGE INDUSTRIES OF THE PHILIPPINES, INC., ET AL., defendants-appellees.
FACTS
Plaintiff Z. E. Lotho, Inc., holder of a certificate of public convenience to operate an ice plant and sell ice in specified Laguna towns, filed an action for unfair competition and damages against defendant Ice and Cold Storage Industries of the Philippines, Inc., and several ice dealers. The plaintiff alleged that the defendant corporation, whose franchise covered areas outside Laguna, unlawfully sold ice indirectly within the plaintiff’s territory by supplying the defendant dealers. The plaintiff’s business operated intermittently with financial losses, leading to a cancellation and later revival of its certificate. It eventually ceased operations in June 1955. The defendant dealers, who were once the plaintiff’s customers, began purchasing the bulk of their ice from the defendant corporation starting in 1948.
ISSUE
Whether the plaintiff’s action for unfair competition is barred by the equitable defense of laches.
RULING
Yes, the action is barred by laches. The Supreme Court affirmed the trial court’s dismissal, holding that the plaintiff’s inaction for an unreasonable period constituted laches, precluding recovery. The Court clarified that the defendants sufficiently pleaded the defense in their answers by alleging the plaintiff’s failure to act or prohibit the sales until the complaint was filed. Moreover, evidence on laches was presented at trial without objection, curing any formal pleading defect.
The Court applied the essential elements of laches: conduct giving rise to the complaint; delay in asserting rights despite knowledge; lack of notice to the defendant that the right would be asserted; and injury or prejudice to the defendant from the delay. The plaintiff knew of the defendant corporation’s sales to the dealers as early as 1948 but took no formal action to stop the practice until 1955. This seven-year delay, during which the plaintiff even purchased ice from the defendant for resale and attempted to negotiate an agreement allowing the continued sales, demonstrated acquiescence. The delay prejudiced the defendants, as material records supporting the damage claim were lost, making it difficult to controvert the plaintiff’s allegations. It would be inequitable to allow the plaintiff to enforce its rights after such neglect. The decision was affirmed.