ASJ Corporation and Antonio San Juan vs Spouses Efren

and Maura Evangelista

FACTS

This case is a petition for review on certiorari on the decision of the Court of Appeals
affirming the decision of the Regional Trial Court of Malolos, Bulacan Branch 9 in Civil
Case No. 745-M-93.

Respondents Efren and Maura Evangelista are owners of R.M. Sy Chicks, a business
engaged in selling chicks and egg by-products. For hatching and incubation of eggs, they
availed the services of ASJ Corp., owned by San Juan and his family.

After years of doing business with the ASJ Corp., the respondents delayed payments for
the services of ASJ Corp, prompting owner San Juan to refuse the release of the hatched
egg. The respondents tendered Php 15,000 to San Juan for partial payment which San
Juan accepted but he still insisted on the full settlement of respondents’ accounts before
releasing the chicks and by-products. He also threated the respondents that he would
impound their vehicle and detain them at the hatchery compound if they should come
back unprepared to fully settle their accounts with him.

The parties tried to settle amicably before police authorities but failed. The respondents
then filed with the RTC an action for damages based on the retention of the chicks and
by-products by the petitioners.

The RTC held ASJ Corp. and San Juan solidarily liable for the actual and moral damages
and attorney’s fees. On appeal, the Court of Appeals affirmed the decision and added
exemplary damages. Hence, this petition.

ISSUE

Whether or not the petitioner’s retention of the chicks and by-products on account of
respondents’ failure to pay the corresponding fees justified.

HELD

Yes. The retention has legal basis, although the threats had none. Under Article 1248 of
the Civil Code, the creditor cannot be compelled to accept partial payments from the
debtor, unless there is an express stipulation to that effect. It was the respondents who
violated the reciprocity in contracts, hence, the petitioners have the right of retention. This
case is a case on non-performance of reciprocal obligation.
Reciprocal obligations are those which arise from the same cause, wherein each party is
a debtor and a creditor of the other such that the performance of one is conditioned upon
the simultaneous fulfillment of the other.

Since respondents are guilty of delay in the performance of their obligations, they are
liable to pay petitioners actual damages.

The petition was partly granted. The respondents were ordered to pay petitioners for
actual damages. The actual, exemplary and moral damages laid down by the Court of
Appeals were retained.