Philippine Supreme Court Jurisprudence > Year 2002 > April 2002 Decisions > G.R. No. 146504 April 9, 2002 - HONORIO L. CARLOS v. MANUEL T. ABELARDO:

Assailed in this petition for review on certiorari under Rule 45 of the Rules of Court is the decision of the Court of Appeals dated November 10, 2000 in CA-G.R. CV No. 54464 which reversed and set aside the decision of the Regional Trial Court of Valenzuela, Branch 172, and dismissed for insufficiency of evidence the complaint for a sum of money and damages filed by herein petitioner Honorio Carlos against respondent Manuel Abelardo, his son-in-law, and the latter’s wife, Maria Theresa Carlos-Abelardo.chanrob1es virtua1 1aw 1ibrary

Petitioner averred in his complaint filed on October 13, 1994 that in October 1989, respondent and his wife Maria Theresa Carlos-Abelardo approached him and requested him to advance the amount of US$25,000.00 for the purchase of a house and lot located at #19952 Chestnut Street, Executive Heights Village, Parañaque, Metro Manila. To enable and assist the spouses conduct their married life independently and on their own, Petitioner, in October 31, 1989, issued a check in the name of a certain Pura Vallejo, seller of the property, who acknowledged receipt thereof. 1 The amount was in full payment of the property.chanrob1es virtua1 1aw 1ibrary

When petitioner inquired from the spouses in July 1991 as to the status of the amount he loaned to them, the latter acknowledged their obligation but pleaded that they were not yet in a position to make a definite settlement of the same. 2 Thereafter, respondent expressed violent resistance to petitioner’s inquiries on the amount to the extent of making various death threats against petitioner. 3chanrob1es virtua1 1aw 1ibrary

On August 24, 1994, petitioner made a formal demand for the payment of the amount of US$25,000.00 but the spouses failed to comply with their obligation. 4 Thus, on October 13, 1994, petitioner filed a complaint for collection of a sum of money and damages against respondent and his wife before the Regional Trial Court of Valenzuela, Branch 172, docketed as Civil Case No. 4490V-94. In the complaint, petitioner asked for the payment of the US$25,000.00 or P625,000.00, its equivalent in Philippine currency plus legal interest from date of extra judicial demand. 5 Petitioner likewise claimed moral and exemplary damages, attorney’s fees and costs of suit from Respondent. 6chanrob1es virtua1 1aw 1ibrary

As they were separated in fact for more than a year prior to the filing of the complaint, respondent and his wife filed separate answers. Maria Theresa Carlos-Abelardo admitted securing a loan together with her husband, from petitioner. 7 She claimed, however, that said loan was payable on a staggered basis so she was surprised when petitioner demanded immediate payment of the full amount. 8chanrob1es virtua1 1aw 1ibrary

In his separate Answer, respondent admitted receiving the amount of US$25,000.00 but claimed that:chanrob1es virtual 1aw library



a. Defendant (respondent) . . . revived that otherwise dormant construction firm H.L. CARLOS CONSTRUCTION of herein plaintiff which suffered tremendous setback after the assassination of Senator Benigno Aquino;chanrob1es virtua1 1aw 1ibrary

b. Working day and night and almost beyond human endurance, defendant devoted all his efforts and skill, used all his business and personal connection to be able to revive the construction business of plaintiff;chanrob1es virtua1 1aw 1ibrary

c. Little-by-little, starting with small construction business, defendant was able to obtain various construction jobs using the name H.L. CARLOS CONSTRUCTION and the income derived therefrom were deposited in the name of such firm of plaintiff;chanrob1es virtua1 1aw 1ibrary

d. Defendant . . . was made to believe that the earnings derived from such construction will be for him and his family since he was the one working to secure the contract and its completion, he was allowed to use the facilities of the plaintiff;chanrob1es virtua1 1aw 1ibrary

e. The plaintiff seeing the progress brought about by defendant . . . to his company proposed a profit sharing scheme to the effect that all projects amounting to more than P10 million shall be for the account of plaintiff; lower amount shall be for defendant’s account but still using H.L. CARLOS CONSTRUCTION.chanrob1es virtua1 1aw 1ibrary

f. But, to clear account on previous construction contracts that brought income to H.L.CARLOS CONSTRUCTION, out of which defendant derived his income, plaintiff gave the amount of US$25,000.00 to defendant to square off account and to start the arrangement in paragraph (e) supra;chanrob1es virtua1 1aw 1ibrary

g. That, the said US$25,000.00 was never intended as loan of defendant. It was his share of income on contracts obtained by defendant;chanrob1es virtua1 1aw 1ibrary

x       x       x 9

Respondent denied having made death threats to petitioner and by way of compulsory counterclaim, he asked for moral damages from petitioner for causing the alienation of his wife’s love and affection, attorney’s fees and costs of suit. 10chanrob1es virtua1 1aw 1ibrary

On June 26, 1996, the Regional Trial Court rendered a decision in favor of petitioner, the dispositive portion of which reads:chanrob1es virtual law library

WHEREFORE, judgment is hereby rendered as follows:chanrob1es virtual 1aw library

1. Ordering the defendants to pay plaintiff the amount of US$25,000.00 or its equivalent in Philippine Currency at the time of its payment, plus legal interest thereon from August 24, 1994 until fully paid;chanrob1es virtua1 1aw 1ibrary

2. Ordering the defendant Manuel T.Abelardo to pay the plaintiff the amount of P500,000.00 representing moral damages and the further amount of P50,000.00 as exemplary damages; andchanrob1es virtua1 1aw 1ibrary

3. Ordering the defendants to pay the plaintiff the amount of P100,000.00 as attorney’s fees, plus the costs of suit.chanrob1es virtua1 1aw 1ibrary

SO ORDERED. 11

Respondent appealed the decision of the trial court to the Court of Appeals. On November 10, 2000, the Court of Appeals reversed and set aside the trial court’s decision and dismissed the complaint for insufficiency of evidence to show that the subject amount was indeed loaned by petitioner to respondent and his wife. The Court of Appeals found that the amount of US$25,000.00 was respondent’s share in the profits of H.L. Carlos Construction. The dispositive portion of the Court of Appeals’ decision states:chanrob1es virtual 1aw library

WHEREFORE, premises considered, the Decision of the Regional Trial Court of Valenzuela, Branch 172 in Civil Case No. 4490-V-94 is hereby REVERSED and SET ASIDE and a new one entered DISMISSING the Complaint for insufficiency of evidence.chanrob1es virtua1 1aw 1ibrary

The claim for damages by defendant-appellant is likewise DISMISSED, also for insufficiency of evidence, because of his failure to present substantial evidence to prove that plaintiff-appellee caused the defendant-spouses’ separation.chanrob1es virtua1 1aw 1ibrary

Costs against the Plaintiff-Appellee.

SO ORDERED. 12

A motion for reconsideration of the above decision having been denied on, petitioner brought this appeal assigning the following errors:chanrob1es virtual 1aw library

THE COURT OF APPEALS ERRED IN FINDING INSUFFICIENT EVIDENCE TO PROVE THAT THE AMOUNT OF US$25,000.00 WAS A LOAN OBTAINED BY PRIVATE RESPONDENT AND HIS WIFE FROM PETITIONER.chanrob1es virtua1 1aw 1ibrary

THE COURT OF APPEALS ERRED IN HOLDING THAT THE US$25,000.00 WAS GIVEN AS PRIVATE RESPONDENT’S SHARE IN THE PROFITS OF H.L. CARLOS CONSTRUCTION, INC. AND THAT THE FILING OF THE COMPLAINT IS A HOAX.chanrob1es virtua1 1aw 1ibrary

THE COURT OF APPEALS ERRED IN NULLIFYING THE AWARD OF DAMAGES FOR LACK OF PROOF THEREOF.chanrob1es virtua1 1aw 1ibrary

We find merit in the petition.chanrob1es virtua1 1aw 1ibrary

As gleaned from the records, the following facts are undisputed: (1) there was a check in the amount of US$25,000.00 issued by petitioner; (2) this amount was received by respondent and his wife and given to a certain Pura Vallejo for the full payment of a house and lot located at #19952 Chestnut Street, Executive Heights Village, Parañaque, Metro Manila; (3) this house and lot became the conjugal dwelling of respondent and his wife; and (4) respondent’s wife executed an instrument acknowledging the loan but which respondent did not sign.chanrob1es virtua1 1aw 1ibrary

To prove his claim that the amount was in the nature of a loan or an advance he extended to respondent and his wife, petitioner presented Banker’s Trust Check No. 337 in the amount of US$25,000.00 he issued on October 31, 1989 to Pura Vallejo. 13 He also introduced in evidence an instrument executed by respondent’s wife on July 31, 1991 acknowledging her and her husband’s accountability to petitioner for the said amount which was advanced in payment of a house and lot located at #19952 Chestnut Street, Executive Heights Subdivision, Parañaque. 14 A formal demand letter by counsel for petitioner dated August 24, 1994 sent to and received by respondent was also on record. 15chanrob1es virtua1 1aw 1ibrary

All these pieces of evidence, taken together with respondent’s admission that he and his wife received the subject amount and used the same to purchase their house and lot, sufficiently prove by a preponderance of evidence petitioner’s claim that the amount of US$25,000.00 was really in the nature of a loan.chanrob1es virtua1 1aw 1ibrary

Respondent tried to rebut petitioner’s evidence by claiming that the US$25,000.00 was not a loan but his share in the profits of H.L. Carlos Construction. He alleged that he received money from petitioner amounting to almost P3 million as his share in the profits of the corporation. To prove this, he presented ten (10) Bank of the Philippine Islands (BPI) checks allegedly given to him by petitioner. 16 He argued that if indeed, he and his wife were indebted to petitioner, the latter could have easily deducted the amount of the said loan from his share of the profits.chanrob1es virtua1 1aw 1ibrary

Respondent fails to convince this Court.

All the checks presented by respondent, which he claims to be his share in the profits of petitioner’s company, were all in the account of H.L. Carlos Construction. 17 On the other hand, the Banker’s Trust Check in the amount of US$25,000.00 was drawn from the personal account of petitioner. 18 Assuming to be true that the checks presented by respondent were his profits from the corporation, then all the more does this prove that the amount of US$25,000.00 was not part of such profits because it was issued by petitioner from his own account. Indeed, if such amount was respondent’s share of the profits, then the same should have been issued under the account of H.L. Carlos Construction.chanrob1es virtua1 1aw 1ibrary

Moreover, respondent failed to substantiate his claim that he is entitled to the profits and income of the corporation. There was no showing that respondent was a stockholder of H.L. Carlos Construction. His name does not appear in the Articles of Incorporation as well as the Organizational Profile of said company either as stockholder or officer. 19 Not being a stockholder, he cannot be entitled to the profits or income of said corporation. Neither did respondent prove that he was an employee or an agent so as to be entitled to salaries or commissions from the corporation.chanrob1es virtua1 1aw 1ibrary

We quote with favor the disquisition of the trial court on this point:chanrob1es virtual 1aw library

Early in time, it must be noted that payment of personal debts contracted by the husband or the wife before or during the marriage shall not be charged to the conjugal partnership except insofar as they redounded to the benefit of the family. The defendants never denied that the check of US$25,000.00 was used to purchase the subject house and lot. They do not deny that the same served as their conjugal home, thus benefiting the family. On the same principle, acknowledgment of the loan made by the defendant-wife binds the conjugal partnership since its proceeds redounded to the benefit of the family. Hence, defendant-husband and defendant-wife are jointly and severally liable in the payment of the loan.chanrob1es virtua1 1aw 1ibrary

Defendant-husband cannot allege as a defense that the amount of US $25,000.00 was received as his share in the income or profits of the corporation and not as a loan. Firstly, defendant-husband does not appear to be a stockholder nor an employee nor an agent of the corporation, H. L. Carlos Construction, Inc. Since he is not a stockholder, he has no right to participate in the income or profits thereof. In the same manner that as he is not an employee nor an agent of H. L. Carlos Construction, Inc., he has no right to receive any salary or commission therefrom. Secondly, the amount advanced for the purchase of the house and lot came from the personal account of the plaintiff. If, indeed, it was to be construed as defendant-husband’s share in the profits of the corporation, the checks should come from the corporation’s account and not from the plaintiffs personal account, considering that the corporation has a personality separate and distinct from that of its stockholders and officers.chanrob1es virtua1 1aw 1ibrary

Even granting that the checks amount to US $3,000.000.00 given by the plaintiff to the defendant spouses was their share in the profits of the corporation, still there is no sufficient evidence to establish that the US $25,000.00 is to be treated similarly. Defendant-husband in invoking the defense of compensation argued that if indeed they were indebted to the plaintiff, the latter could have applied their share in the proceeds or income of the corporation to the concurrent amount of the alleged loan, instead of giving the amount of P3,000,000.00 to them. This argument is untenable. Article 1278 of the Civil Code provides that compensation shall take place when two persons, in their own right, are debtors and creditors of each other. As its indicates, compensation is a sort of balancing between two obligations. In the instant case, the plaintiff and the defendant-husband are not debtors and creditors of each other. Even granting that the defendant-husband’s claim to the profits of the corporation is justified, still compensation cannot extinguish his loan obligation to the plaintiff because under such assumption, the defendant is dealing with the corporation and not with the plaintiff in his personal capacity. Hence, compensation cannot take place.chanrob1es virtua1 1aw 1ibrary

The Court of Appeals, thus, erred in finding that respondent’s liability was not proved by preponderance of evidence. On the contrary, the evidence adduced by petitioner sufficiently established his claim that the US$25,000.00 he advanced to respondent and his wife was a loan.

The loan is the liability of the conjugal partnership pursuant to Article 121 of the Family Code:chanrob1es virtual 1aw library

Article 121. — The conjugal partnership shall be liable for:chanrob1es virtua1 1aw 1ibrary



(2) All debts and obligations contracted during the marriage by the designated administrator-spouse for the benefit of the conjugal partnership of gains, or by both spouses or by one of them with the consent of the other;chanrob1es virtua1 1aw 1ibrary

(3) Debts and obligations contracted by either spouse without the consent of the other to the extent that the family may have been benefited;

If the conjugal partnership is insufficient to cover the foregoing liabilities, the spouses shall be solidarily liable for the unpaid balance with their separate properties.chanrob1es virtua1 1aw 1ibrary

While respondent did not and refused to sign the acknowledgment executed and signed by his wife, undoubtedly, the loan redounded to the benefit of the family because it was used to purchase the house and lot which became the conjugal home of respondent and his family. Hence, notwithstanding the alleged lack of consent of respondent, under Art. 21 of the Family Code, he shall be solidarily liable for such loan together with his wife.chanrob1es virtua1 1aw 1ibrary

We also find sufficient basis for the award of damages to petitioner, contrary to the findings of the Court of Appeals that petitioner is not entitled thereto.chanrob1es virtua1 1aw 1ibrary

Petitioner’s allegations of verbal and written threats directed against him by respondent is duly supported by evidence on record. He presented two witnesses, Irineo Pajarin and Randy Rosal, who testified on separate incidents where threats were made by respondent against petitioner.chanrob1es virtua1 1aw 1ibrary

Randy Rosal, driver of petitioner, declared that around three o’clock in the afternoon of September 15, 1991, he was sent by respondent’s wife on an errand to deliver the acknowledgment letter to respondent for him to sign. Respondent did not sign the acknowledgment and instead, wrote a letter addressed to petitioner threatening him. He narrated what took place thereafter:chanrob1es virtual 1aw library



Q. When you were requested by Ma. Theresa C. Abelardo to bring a letter to herein defendant Manuel Abelardo for him to sign the same, do you know whether that letter was actually signed by Manuel Abelardo?chanrob1es virtua1 1aw 1ibrary

A. No, sir.



Q. And what happened when Manuel Abelardo refused to sign that letter coming from the other defendant?chanrob1es virtua1 1aw 1ibrary

A. He made me wait and he prepared a letter to Mr. Honorio Carlos, sir.chanrob1es virtua1 1aw 1ibrary

Q. Where were you at the time when this defendant Manuel Abelardo prepared this letter?chanrob1es virtua1 1aw 1ibrary

A. In his house, sir.chanrob1es virtua1 1aw 1ibrary

Q. And where did he actually prepare that letter?

A. At the dining table, sir.chanrob1es virtua1 1aw 1ibrary

Q. How far were you from Manuel Abelardo from the dining table at the time when he was preparing a letter.chanrob1es virtua1 1aw 1ibrary

A. Around 1 meter, sir.chanrob1es virtua1 1aw 1ibrary

Q. And do you know where in, what particular paper did Mr. Abelardo prepare or write this letter?chanrob1es virtua1 1aw 1ibrary

A. He wrote it in a Manila envelope, sir.

Q. What happened after Manuel Abelardo prepared this letter in a Manila envelope?chanrob1es virtua1 1aw 1ibrary

A. He got a small envelope and placed there the name of Mr. Carlos as the addressee, sir.chanrobles.com : virtuallawlibrary

Q. After preparing this letter on a Manila envelope and then getting another envelope and writing on it the address of herein plaintiff, what did the defendant Manuel Abelardo do, if any?

A. He instructed me to mail the letter which he prepared, sir.



Q. And did you actually accede to the request of herein defendant Manuel Abelardo for you to mail that letter to Engr. Carlos?chanrob1es virtua1 1aw 1ibrary

A. I got the envelope but I did not mail it, sir.chanrob1es virtua1 1aw 1ibrary



Q May we know from you the reason why you did not mail said letter?chanrob1es virtua1 1aw 1ibrary

A. Because Engr. Carlos might become frightened, sir.

Q. What did you do with that letter, although you did not mail it?chanrob1es virtua1 1aw 1ibrary

A. I kept it, sir.chanrob1es virtua1 1aw 1ibrary



Q. And what did you do next after keeping the letter for several days?

A. I gave the letter personally to Engr. Carlos, sir.chanrob1es virtua1 1aw 1ibrary

Q. What prompted you to give that letter to Engr. Carlos instead of mailing it?

A. So that Engr. Carlos can prepare, sir.chanrobles.com : virtual law library

x       x       x 20

This incident was duly entered and recorded in the Police Blotter on October 7, 1991 by a certain Sgt. Casile of the Valenzuela Police Station. 21 A photocopy of this written threat was also attached to the Police Report and presented in evidence. 22chanrob1es virtua1 1aw 1ibrary

Another witness, Irineo Pajarin, recounted an incident which occurred in the afternoon of May 25, 1994, to wit:chanrob1es virtual 1aw library



Q. Now Mr. Witness, on May 25, 1994 at around 2:30 in the afternoon do you recall where you were on that particular date and time?chanrob1es virtua1 1aw 1ibrary

A. I was at B.F. Homes, Parañaque, sir.

Q. What were you doing at that time?chanrob1es virtua1 1aw 1ibrary

A. I was waiting for Sargie Cornista, sir.



Q. Will you please narrate to this Honorable Court that unusual incident?chanrob1es virtua1 1aw 1ibrary

A. Manuel Abelardo passed by and when he saw me he called me. I approached him while he was then on board his car and asked me who was my companion, sir.

Q. And what was your answer to him?chanrob1es virtua1 1aw 1ibrary

A. I told him it was Sargie, sir.

Q. And what was his reply if any?cralaw : red

A. He again asked me if I have in my company one of his children, sir.chanrob1es virtua1 1aw 1ibrary

Q. What was your reply?

A. I answered none, sir.chanrob1es virtua1 1aw 1ibrary

Q. Incidentally Mr. Witness, where or in what particular place did this conversation between you and Manuel T. Abelardo take place?

A. Parking Area of Academy I, Gov. Santos corner Aguirre St., sir.

Q. Now what else happened after you talk[ed] with this Manuel T. Abelardo?chanrob1es virtua1 1aw 1ibrary

A. He said I may be fooling him because he said I once fooled him when I ran away with his children which he is going to take back, sir.chanrob1es virtua1 1aw 1ibrary

Q. And what was your reply to that?

A. I answered I did not do that and he said that once he discovered that I did it he would box me, sir.chanrob1es virtua1 1aw 1ibrary

Q. What else if any did he tell you at that time?

A. He asked me who instructed me, sir.chanrob1es virtua1 1aw 1ibrary

Q. Instructed you about what?chanrob1es virtua1 1aw 1ibrary

A. To run away with the children, sir.

Q. And what was your reply?

A. None, he was the one who said "was it your Ate Puppet?" But I did not answer, sir.chanrob1es virtua1 1aw 1ibrary

Q. What happened next when you failed to answer?chanrob1es virtua1 1aw 1ibrary

A. "Or my father in law?"

Q. And when he said his father in law to whom was he referring at that time?chanrob1es virtua1 1aw 1ibrary

A. Mr. Honorio Carlos, sir.

Q. After mentioning the name of his father in-law Mr. Honorio Carlos what happened next?chanrob1es virtua1 1aw 1ibrary

A. He told me "Sabihin mo sa biyenan ko babarilin ko siya pag nakita ko siya." chanrob1es virtua1 1aw 1ibrary

Q. Where was Manuel Abelardo at that particular time when he told this threatening remark against Honorio Carlos?

A. He was inside his car in Aguirre St., sir.chanrobles.com : chanrobles.com.ph

Q How about you where were you approximately at that particular time when he narrated that message to you threatening the herein plaintiff?chanrob1es virtua1 1aw 1ibrary

A. I was outside looking in his vehicle at Aguirre St., sir.



Q. And what was your reply or reaction when he made this threatening remarks?chanrob1es virtua1 1aw 1ibrary

A. None, because he left. I was left behind, sir . 23

This testimony was in part corroborated by an entry dated May 28, 1994 in the Police Blotter of the Parañaque Police Station narrating the aforementioned incident. 24chanrob1es virtua1 1aw 1ibrary

The testimonies of these witnesses on the two separate incidents of threat are positive, direct and straightforward. Petitioner also declared on the witness stand that on several occasions, he received telephone calls from respondent cursing and threatening him. 25 These incidents of threat were also evidenced by a letter written by respondent’s wife and addressed to her father-in law (father of respondent). 26 The letter recounted the instances when threats were made by her husband against petitioner, particularly, the incident reported by Pajarin and the threats made by respondent through the telephone. 27

All these circumstances sufficiently establish that threats were directed by respondent against petitioner justifying the award of moral damages in favor of petitioner. However, the Court finds the amount of P500,000.00 as moral damages too exorbitant under the circumstances and the same is reduced to P50,000.00. The exemplary damages and attorney’s fees are likewise reduced to P20,000.00 and P50,000.00, respectively.chanrob1es virtua1 1aw 1ibrary

WHEREFORE, the petition is hereby GRANTED and the decision of the Court of Appeals in CA-G.R. CV No. 54464 is MODIFIED in that respondent is ordered to pay petitioner the amounts of (1) US$25,000 or its equivalent in Philippine currency at the time of payment, plus legal interest from August 4, 1994, until fully paid; (2) P50,000.00 as moral damages; (3) P20,000.00 as exemplary damages; and (4) P50,000.00 as attorney’s fees.chanrob1es virtua1 1aw 1ibrary

SO ORDERED.

Davide, Jr., C.J., Puno and Ynares-Santiago, JJ., concur.

Endnotes:

---

1. Paragraph 3 of Complaint, Records, p. 2.

2. Paragraph 4, id.

3. Paragraph 5, id.

4. Paragraph 6, id., at 2-3.

5. Id.

6. Paragraphs 7-9, id., at 3-4.

7. Paragraph 4 of Answer, id., at 25.

8. Paragraphs 5-6, id., at 25-26.

9. Defendant Manuel Abelardo’s Answer, id., at 17-19.

10. Id., at 19-20.

11. Rollo, p. 59.

12. Id., at. 80-81.

13. Exhibits, p. 1

14. Id., at 11.

15. Id., at 10.

16. Id., at 30-32.

17. Id.

18. supra, Note 15.

19. Id., at. 19-26.

20. TSN of April 18, 1995, pp. 6-15.

21. Exhibits, p. 8.

22. Id., at 7.

23. TSN of March 16, 1995, pp. 7-12.

24. Exhibits, p. 9.

25. TSN of January 17, 1995, pp. 22-23, 32.

26. Exhibits, pp. 12-15.

27. Id.