5. Z. E. Lotho v Ice and Cold Storage  Lotho tried to win the franchises back but was unsuccessful.

GR NO. L-16563  Lotho alleged that ICS constituted to indirect sales within the former’s
December 28, 1961 territory, hence, an agreement was reached. However, the agreement
By: Gayares was never signed so each party blamed each other for non-
Topic: Natural Obligations; Estoppel; Laches consummation.
Petitioners: Z. E. Lotho, Inc  TC: Dismissed Lotho’s action to impute ICS of unfair competition and
Respondents: Ice and Cold Storage Industries of the Philippines, Inc. (ICS) payment for damages.
Ponente: Reyes, JBL.  CA: Denied Lotho’s claim based on the grounds of laches and consent.

RECIT-READY/SUMMARY: Lotho took a long time to institute an action against ICS ISSUE:
for violation of unfair competition. Therefore, he is barred by laches. W/N Lotho’s complaint is barred by laches (unreasonable delay)?

HELD/RATIO:
DOCTRINE:
YES
Inaction within a reasonable time to enforce a right underlies a valid defense of
laches and reveals implied consent to the violation of a right.
Essential elements of the defense of laches:
1. Conduct of the defendant giving rise to the situation of which complaint
FACTS:
is made for which the complaint seeks a remedy;
 Lotho was established in 1947 with a capital stock of P100k for the
2. Delay in asserting the complainant’s rights, the complainant having had
purpose of operating an ice plant and selling the ice at wholesale or
knowledge or notice of the defendant’s conduct and having been
retail. It served the towns of San Pedro, Binan, Sta. Rosa, Cabuyao, and
afforded an opportunity to institute a suit
Calamba, which are all in the province of Laguna.
3. Lack of knowledge or notice on the part of the defendant that the
 Lotho was operating a 10-ton ice-producing unit. It obtained gross
complainant would assert the right on which he bases his suit; and
revenue of P13.5k, while it suffered P200 loss from operating expenses.
4. Injury or prejudice to the defendant in the event relief is accorded to the
 It also suffered another loss in the following year worth P4.7k. Three
complainant or the suit is not held to be barred.
years after, Lotho suffered the heaviest loss amounting to 17k and it
discontinued its operations.
In this case, the elements are illustrated in the following manner: (1) Conceded by
 Due to its discontinuance, Lotho’s certificate of public convenience was
Lotho when it claimed that there was an invasion by the ICS of its rights under the
cancelled. It was revived eventually when it resumed operation and only
certificate of public convenience; (2) Evidence shows that Lotho already knew for
a 5-ton ice-producing unit was used since the old 10-ton unit was sold to
nine years that ICS was selling ice to its co-defendants and he tried to win them
Sps. Gomez to meet company obligations.
back but ultimately failed, which means that such delay is unreasonable; (3) Lotho
 From February to June of that year, until it closed business, Lotho would
was aware that IICS was selling ice to its co-defendants, yet it made no genuine
buy ice from the Farola Ice Plant of the ICS whenever its machine broke
effort to stop that practice, which is also evidenced by their “unconsummated”
down for resale to its customers.
agreement since it still allowed ICS to sell in Lotho’s area; (4) Inequity is apparent in
 Lotho’s certificate of public convenience was then definitely cancelled by this case since it is admitted that some of Lotho’s records were lost because of the
the Public Service Commission. long delay in bringing this case, and therefore, could not be produced when ICS
 ICS is also a corporation engaged in the same manner of business and it asked to have recourse to said records – in other words, Lotho has a stale claim
operates in Manila, Pasay, Quezon, Cavite, and Bulacan. The other since he cannot verify the damages he is claiming. It would be unjust to allow Lotho
defendants in this case are also ice dealers of the municipalities of to reap benefit from having slept on its rights.
Laguna, which are covered by Lotho’s franchise.
 These franchises depended on Lotho before. However, they eventually WHEREFORE, the decision appealed from is affirmed. Costs against Lotho.
shifted to buy ice from ICS since it was way more profitable.