Case Summary (G.R. No. 158086)
Factual Background
Between January 13 and February 3, 1993, respondents delivered a total of 101,350 eggs under Setting Reports Nos. 108–113. Although service fees for earlier reports (Nos. 90–107) remained unpaid (aggregating ₱102,336.80), petitioners initially tolerated delays. Beginning with Report 108, petitioners refused release of chicks and by-products for failure to settle the accumulated balance. Respondents tendered partial payments (₱15,000 each on Reports 108 and 109) but could not fully satisfy their obligations. Petitioner’s threats of impounding respondents’ vehicle and detaining them at the hatchery led respondents to abandon further pick-up attempts under Reports 110–113.
Proceedings Below
Regional Trial Court (RTC), Branch 9, Malolos, Bulacan
• Disregarded ASJ Corporation’s separate juridical personality and held both petitioners solidarily liable
• Awarded respondents ₱529,644.80 as actual damages (value of withheld chicks and by-products), ₱100,000 moral damages, ₱50,000 attorney’s fees, plus interests and costs
Court of Appeals
• Affirmed RTC decision in CA-G.R. CV No. 56082
• Added exemplary damages of ₱10,000 in favor of respondents
• Maintained solidary liability of ASJ Corporation and Antonio San Juan
Issues Presented
- Whether petitioners unlawfully withheld chicks and by-products under Setting Reports 108–109 and whether the Court of Appeals erred in admitting hearsay testimony.
- Whether respondents’ failure to collect under Reports 110–113 precludes liability for withholding.
- Whether the veil of corporate fiction should have been pierced to hold petitioners jointly liable.
- Whether the awards of actual, moral, exemplary damages and attorney’s fees are proper under the New Civil Code and jurisprudence.
- Whether petitioners’ counterclaim should have been granted.
Applicable Law
• 1987 Philippine Constitution principles on due process and equal protection inform contract enforcement and corporate accountability.
• New Civil Code, Art. 1169 (reciprocal obligations), Art. 1248 (creditor’s right to refuse partial payment), Art. 19 (prohibition against abuse of rights), Art. 2208 (attorney’s fees when exemplary damages are awarded).
• Rule 45, Revised Rules of Court (certiorari limits review to questions of law; factual findings of the trial court, if supported by evidence and affirmed on appeal, are binding).
• Jurisprudence on piercing the corporate veil (no hard-and-fast rule; probative factors include common ownership, control, lack of separate assets, and use of corporate form to evade liabilities).
Standard of Review and Factual Findings
• The Supreme Court will not disturb RTC’s findings on witness credibility, retention of chicks, threats, non-return for pick-up, or corporate control—these were amply supported and adopted by the Court of Appeals.
• No exceptional circumstances exist to override the binding effect of these factual findings under Rule 45.
Piercing the Corporate Veil
The Court confirmed six factors justifying disregard of ASJ Corporation’s separate personality:
- Majority share ownership by the San Juan spouses
- Ownership of the hatchery lot by the same individuals
- Absence of corporate assets apart from the hatchery plant and lot
- Complete corporate control exercised by Antonio San Juan
- Lack of bona fide intent to treat the corporation as separate
- Use of the corporate entity to evade legitimate claims and public convenience
Right of Retention vs. Abuse of Rights
• Under Art. 1248 and the principle of reciprocal obligations (Art. 1169), petitioners lawfully withheld delivery pending full payment. Partial payments, absent stipulation, did not extinguish respondents’ debt.
• However, petitioner’s threats and intimidation constituted an abuse of right (Art. 19): a legal right exercised in bad faith solely to injure respondents.
Damages Award
Actual Damages (petitioner’s delay)
• Outstanding balance as of Report No. 107: ₱102,336.80
• Unpaid fees for Reports 108–113: 101,350 eggs × ₱0.80 = ₱81,080.00
• Total actual damages: ₱183,416.80, with 6% interest from filing of complaint and 12% legal interest from finalit
Case Syllabus (G.R. No. 158086)
Facts of the Case
- Respondents Efren and Maura Evangelista, trading as R.M. Sy Chicks, buy broiler eggs, hatch them, and sell chicks and egg by-products in Bulacan and Nueva Ecija.
- They delivered batches of eggs to ASJ Corporation’s hatchery (owned and controlled by Antonio San Juan and family) at a service fee of ₱0.80 per egg, payable upon pickup.
- Each delivery was documented by a “Setting Report” showing dates of setting, candling, hatching, and expected pickup.
- From January 13 to February 3, 1993, respondents delivered a total of 101,350 eggs under Setting Reports Nos. 108 to 113.
- Respondents fell into arrears on service fees due to ASJ Corp.’s tolerance of earlier payment delays, accumulating an unpaid balance as of SR 107.
- On February 3 and 10, 1993, respondents’ attempts to pick up hatchlings under SR 108 and SR 109 were refused for non-payment; partial payment (₱15,000 each time) was accepted but delivery withheld.
- San Juan threatened to impound respondents’ vehicle and detain them if they returned without full payment.
- Respondents never reclaimed the chicks and by-products under SR 110 to SR 113 due to fear of threats.
- Attempts at police-mediated settlement failed.
Procedural History
- Regional Trial Court (RTC), Malolos, Bulacan, Branch 9 (Civil Case No. 745-M-93), July 8, 1996:
- Found respondents owed ₱102,336.80 as of SR 107.
- Held ASJ Corp. and San Juan solidarily liable for unjustified retention of hatchlings under SR 108–113.
- Disregarded corporate fiction, awarded:
• ₱529,644.80 actual damages
• ₱100,000 moral damages
• ₱50,000 attorney’s fees
• Legal interest and costs.
- Court of Appeals (CA-G.R. CV No. 56082), April 30, 2003:
- Affirmed RTC decision.
- Applied doctrine of piercing the corporate veil.
- Added exemplary damages of ₱10,000.
- Petitioners filed a Rule 45 petition raising six assignments of error.