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CASE NUMBER: 6

NAME OF THE CASE: Nielson v. Lepanto, December 17, 1966

ACTION OF THE CASE: The present appeal was taken to this Court
directly by the plaintiff in view of the amount involved in the case.

FACTS OF THE CASE: The suit involves an operating agreement executed
before World War II between the plaintiff and the defendant whereby the
former operated and managed the mining properties owned by the latter.
The contract in question was made by the parties on January 30, 1937
for a period of five (5) years. In the latter part of 1941, the parties agreed
to renew the contract for another period of five (5) years, but in the
meantime, the Pacific War broke out in December, 1941.

In January, 1942 operation of the mining properties was disrupted on
account of the war. After the mining properties were liberated from the
Japanese forces, LEPANTO took possession thereof and embarked in
rebuilding and reconstructing the mines and mill.On June 26, 1948 the
mines resumed operation under the exclusive management of LEPANTO.
A disagreement arose between NIELSON and LEPANTO over the status of
the operating contract in question which as renewed expired in 1947.
Under the terms thereof, the management contract shall remain in
suspense in case fortuitous event or force majeure, such as war or civil
commotion, adversely affects the work of mining and milling.

On February 6, 1958, plaintiff brought this action against defendant
before the Court of First Instance of Manila to recover certain sums of
money representing damages allegedly suffered by the former in view of
the refusal of the latter to comply with the terms of a management
contract entered into between them on January 30, 1937, including
attorney's fees and costs. Defendant in its answer denied the material
allegations of the complaint and set up certain special defenses, among
them, prescription and laches, as bars against the institution of the
present action.

ISSUES: Whether or not appellant Nielson is guilty of laches and
prescription within the meaning contemplated by the authorities on the
matter?

RULING: We hereby reverse the decision of the court a quo and enter in
lieu thereof another, ordering the appellee Lepanto to pay appellant
Nielson the different amounts as specified in the decision.

Neither is the fourth element present. as contained in the minutes of the special meeting of the Board of Directors of Lepanto held on August 21. made in the management contract relative to the participation in the profits by appellant. we find the delay justified and as such cannot constitute laches. giving rise to the situation of which complaint is made and for which the complaint seeks a remedy. . its percentage of profits and refused to allow it to resume the management operation. therefore. or of one under whom he claims. The modification appears in the minutes of the special meeting of the Board of Directors of Lepanto held on August 21. for if there has been some delay in bringing the case to court it was mainly due to the attempts at arbitration and negotiation made by both parties. The third element of laches is absent in this case. This contention is untenable. The modification. Had the action of Nielson prescribed? Coming now to the question of prescription raised by defendant Lepanto. and (4) injury or prejudice to the defendant in the event relief is accorded to the complainant. the complainant having had knowledge or notice of the defendant's conduct and having been afforded an opportunity to institute a suit. this Court enumerated the essential elements of laches as follows: (1) conduct on the part of the defendant. because the modification of the sharing embodied in the management contract is merely verbal. it is contended by the latter that the period to be considered for the prescription of the claim regarding participation in the profits is only four years. Go Cho. and in said minutes the terms of the modification had been specified. the action thereon prescribes within ten (10) years pursuant to Section 43 of Act 190.RATIO DECIDENDI: In the leading case of Go Chi Gun. (3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right on which he bases his suit. 1940. et al. (2) delay in asserting the complainant's rights. Hence. it having been made upon the authority of its President. vs. or the suit is not held barred. no written document to that effect having been presented. The evidence shows that Nielson had been claiming for some time its rights under the contract. should be considered as a written contract insofar as the application of the statutes of limitations is concerned. Anent the second element. Are these requisites present in the case at bar? The first element is conceded by appellant Nielson when it claimed that defendant refused to pay its management fees. 1940.