Carandang vs In Re: Arthur Cuevas Jr. FACTS: Petitioner Arthur M. Cuevas, Jr. was convicted for Reckless Imprudence Resulting in Homicide, for his participation in the September 1991

9/18/2015 SUPREMECOURTREPORTSANNOTATEDVOLUME380

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VOL. 380, APRIL 9, 2002 361Carlos vs. Abelardo

G.R. No. 146504. April 9, 2002.*

HONORIO L. CARLOS, petitioner, vs. MANUEL T.ABELARDO, respondent.

Civil Law Family Code Loans The loan is the liability of theconjugal partnership pursuant to Article 121 of the Family Code.The loan is the liability of the conjugal partnership pursuant toArticle 121 of the Family Code: x x x While respondent did notand refused to sign the acknowledgment executed and signed byhis wife, undoubtedly, the loan redounded to the benefit of thefamily because it was used to purchase the house and lot whichbecame the conjugal home of respondent and his family. Hence,notwithstanding the alleged lack of consent of respondent, underArt. 21 of the Family Code, he shall be solidarily liable for suchloan together with his wife.

PETITION for review on certiorari of a decision of theCourt of Appeals.

The facts are stated in the opinion of the Court.Oscar L. Karaan for petitioner.Hildawa & Gomez for respondent.

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* FIRST DIVISION.

362

362 SUPREME COURT REPORTS ANNOTATEDCarlos vs. Abelardo

KAPUNAN, J.:



Assailed in this petition for review on certiorari under Rule45 of the Rules of Court is the decision of the Court ofAppeals dated November 10, 2000 in CAG.R. CV No.54464 which reversed and set aside the decision of theRegional Trial Court of Valenzuela, Branch 172, anddismissed for insufficiency of evidence the complaint for asum of money and damages filed by herein petitionerHonorio Carlos against respondent Manuel Abelardo, hissoninlaw, and the latters wife, Maria Theresa CarlosAbelardo.

Petitioner averred in his complaint filed on October 13,1994 that in October 1989, respondent and his wife MariaTheresa CarlosAbelardo approached him and requestedhim to advance the amount of US$25,000.00 for thepurchase of a house and lot located at #19952 ChestnutStreet, Executive Heights Village, Paraaque, MetroManila. To enable and assist the spouses conduct theirmarried life independently and on their own, petitioner, inOctober 31, 1989, issued a check in the name of a certainPura Vallejo, seller of the property, who acknowledgedreceipt thereof.

1 The amount was in full payment of the

property.When petitioner inquired from the spouses in July 1991

as to the status of the amount he loaned to them, the latteracknowledged their obligation but pleaded that they werenot yet in a position to make a definite settlement of thesame.

2 Thereafter, respondent expressed violent resistance

to petitioners inquiries on the amount to the extent ofmaking various death threats against petitioner.

3

On August 24, 1994, petitioner made a formal demandfor the payment of the amount of US$25,000.00 but thespouses failed to comply with their obligation.

4 Thus, on

October 13, 1994, petitioner filed a complaint for collectionof a sum of money and damages against respondent and hiswife before the Regional Trial Court of Valenzuela, Branch172, docketed as Civil Case No. 4490V94. In

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1 Paragraph 3 of Complaint, Records, p. 2.2 Paragraph 4, id.3 Paragraph 5, id.4 Paragraph 6, id., at 23.

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a.

b.

c.

d.

e.


the complaint, petitioner asked for the payment of theUS$25,000.00 or P625,000.00, its equivalent in Philippinecurrency plus legal interest from date of extrajudicialdemand.

5 Petitioner likewise claimed moral and exemplary

damages, attorneys fees and costs of suit from respondent.6

As they were separated in fact for more than a yearprior to the filing of the complaint, respondent and his wifefiled separate answers. Maria Theresa CarlosAbelardoadmitted securing a loan together with her husband, frompetitioner.

7 She claimed, however, that said loan was

payable on a staggered basis so she was surprised whenpetitioner demanded immediate payment of the fullamount.

8

In his separate Answer, respondent admitted receivingthe amount of US$25,000.00 but claimed that:

x x x

Defendant (respondent) xxx revived that otherwisedormant construction firm H.L. CARLOSCONSTRUCTION of herein plaintiff which sufferedtremendous setback after the assassination of SenatorBenigno AquinoWorking day and night and almost beyond humanendurance, defendant devoted all his efforts and skill,used all his business and personal connection to be able torevive the construction business of plaintiffLittlebylittle, starting with small construction business,defendant was able to obtain various construction jobsusing the name H.L. CARLOS CONSTRUCTION and theincome derived therefrom were deposited in the name ofsuch firm of plaintiffDefendant x x x was made to believe that the earningsderived from such construction will be for him and hisfamily since he was the one working to secure the contractand its completion, he was allowed to use the facilities ofthe plaintiffThe plaintiff seeing the progress brought about bydefendant x x x to his company proposed a profit sharingscheme to the effect that all projects amounting to morethan P10 million shall be for the account of



f.

g.

1.

2.

3.

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5 Id.6 Paragraphs 79, id., at 34.7 Paragraph 4 of Answer, id., at 25.8 Paragraphs 56, id., at 2526.

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plaintiff lower amount shall be for defendants accountbut still using H.L. CARLOS CONSTRUCTIONBut, to clear account on previous construction contractsthat brought income to H.L. CARLOS CONSTRUCTION,out of which defendant derived his income, plaintiff gavethe amount of US$25,000.00 to defendant to square offaccount and to start the arrangement in paragraph (e)supraThat, the said US$25,000.00 was never intended as loan ofdefendant. It was his share of income on contractsobtained by defendantx x x

9

Respondent denied having made death threats to petitionerand by way of compulsory counterclaim, he asked for moraldamages from petitioner for causing the alienation of hiswifes love and affection, attorneys fees and costs of suit.

10

On June 26, 1996, the Regional Trial Court rendered adecision in favor of petitioner, the dispositive portion ofwhich reads:

WHEREFORE, judgment is hereby rendered as follows:

Ordering the defendants to pay plaintiff the amount ofUS$25,000.00 or its equivalent in Philippine Currency atthe time of its payment, plus legal interest thereon fromAugust 24, 1994 until fully paidOrdering the defendant Manuel T. Abelardo to pay theplaintiff the amount of P500,000.00 representing moraldamages and the further amount of P50,000.00 asexemplary damages andOrdering the defendants to pay the plaintiff the amount ofP100,000.00 as attorneys fees, plus the costs of suit.

SO ORDERED.11



SO ORDERED.11

Respondent appealed the decision of the trial court to theCourt of Appeals. On November 10, 2000, the Court ofAppeals reversed and set aside the trial courts decisionand dismissed the complaint for insufficiency of evidence toshow that the subject amount was indeed loaned bypetitioner to respondent and his wife. The Court of Appealsfound that the amount of US$25,000.00 was respon

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9 Defendant Manuel Abelardos Answer, id., at 1719.10 Id., at 1920.11 Rollo, p. 59.

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dents share in the profits of H.L. Carlos Construction. Thedispositive portion of the Court of Appeals decision states:

WHEREFORE, premises considered, the Decision of the RegionalTrial Court of Valenzuela, Branch 172 in Civil Case No. 4490V94 is hereby REVERSED and SET ASIDE and a new one enteredDISMISSING the Complaint for insufficiency of evidence.

The claim for damages by defendantappellant is likewiseDISMISSED, also for insufficiency of evidence, because of hisfailure to present substantial evidence to prove that plaintiffappellee caused the defendantspouses separation.

Costs against the plaintiffappellee.SO ORDERED.

12

A motion for reconsideration of the above decision havingbeen denied on, petitioner brought this appeal assigningthe following errors:

THE COURT OF APPEALS ERRED IN FINDINGINSUFFICIENT EVIDENCE TO PROVE THAT THE AMOUNTOF US$25,000.00 WAS A LOAN OBTAINED BY PRIVATERESPONDENT AND HIS WIFE FROM PETITIONER.

THE COURT OF APPEALS ERRED IN HOLDING THATTHE US$25,000.00 WAS GIVEN AS PRIVATE RESPONDENTSSHARE IN THE PROFITS OF H.L. CARLOS CONSTRUCTION,



INC. AND THAT THE FILING OF THE COMPLAINT IS AHOAX.

THE COURT OF APPEALS ERRED IN NULLIFYING THEAWARD OF DAMAGES FOR LACK OF PROOF THEREOF.

We find merit in the petition.As gleaned from the records, the following facts are

undisputed: (1) there was a check in the amount ofUS$25,000.00 issued by petitioner (2) this amount wasreceived by respondent and his wife and given to a certainPura Vallejo for the full payment of a house and lot locatedat #19952 Chestnut Street, Executive Heights Village,Paraaque, Metro Manila (3) this house and lot becamethe conjugal dwelling of respondent and his wife and (4)respondents

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12 Id., at 8081.

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wife executed an instrument acknowledging the loan butwhich respondent did not sign.

To prove his claim that the amount was in the nature ofa loan or an advance he extended to respondent and hiswife, petitioner presented Bankers Trust Check No. 337 inthe amount of US$25,000.00 he issued on October 31, 1989to Pura Vallejo.

13 He also introduced in evidence an

instrument executed by respondents wife on July 31, 1991acknowledging her and her husbands accountability topetitioner for the said amount which was advanced inpayment of a house and lot located at #19952 ChestnutStreet, Executive Heights Subdivision, Paraaque.

14 A

formal demand letter by counsel for petitioner datedAugust 24, 1994 sent to and received by respondent wasalso on record.

15

All these pieces of evidence, taken together withrespondents admission that he and his wife received thesubject amount and used the same to purchase their houseand lot, sufficiently prove by a preponderance of evidencepetitioners claim that the amount of US$25,000.00 was



really in the nature of a loan.Respondent tried to rebut petitioners evidence by

claiming that the US$25,000.00 was not a loan but hisshare in the profits of H.L. Carlos Construction. He allegedthat he received money from petitioner amounting toalmost P3 million as his share in the profits of thecorporation. To prove this, he presented ten (10) Bank ofthe Philippine Islands (BPI) checks allegedly given to himby petitioner.

16 He argued that if indeed, he and his wife

were indebted to petitioner, the latter could have easilydeducted the amount of the said loan from his share of theprofits.

Respondent fails to convince this Court.All the checks presented by respondent, which he claims

to be his share in the profits of petitioners company, wereall in the account of H.L. Carlos Construction.

17 On the

other hand, the Bankers Trust Check in the amount ofUS$25,000.00 was drawn

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13 Exhibits, p. 1.14 Id., at 11.15 Id., at 10.16 Id., at 3032.17 Id.

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from the personal account of petitioner.18 Assuming to be

true that the checks presented by respondent were hisprofits from the corporation, then all the more does thisprove that the amount of US$25,000.00 was not part ofsuch profits because it was issued by petitioner from hisown account. Indeed, if such amount was respondentsshare of the profits, then the same should have been issuedunder the account of H.L. Carlos Construction.

Moreover, respondent failed to substantiate his claimthat he is entitled to the profits and income of thecorporation. There was no showing that respondent was astockholder of H.L. Carlos Construction. His name does notappear in the Articles of Incorporation as well as the



Organizational Profile of said company either asstockholder 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 oran agent so as to be entitled to salaries or commissionsfrom the corporation.

We quote with favor the disquisition of the trial court onthis point:

Early in time, it must be noted that payment of personal debtscontracted by the husband or the wife before or during themarriage shall not be charged to the conjugal partnership exceptinsofar as they redounded to the benefit of the family. Thedefendants never denied that the check of US$25,000.00 was usedto purchase the subject house and lot. They do not deny that thesame served as their conjugal home, thus benefiting the family.On the same principle, acknowledgment of the loan made by thedefendantwife binds the conjugal partnership since its proceedsredounded to the benefit of the family. Hence, defendanthusbandand defendantwife are jointly and severally liable in the paymentof the loan.

Defendanthusband cannot allege as a defense that the amountof US $25,000.00 was received as his share in the income orprofits of the corporation and not as a loan. Firstly, defendanthusband does not appear to be a stockholder nor an employee noran agent of the corporation, H. L. Carlos Construction, Inc. Sincehe is not a stockholder, he has no right to participate in theincome or profits thereof. In the same manner that as he is not anemployee nor an agent of H.L. Carlos Construction, Inc., he hasno right to receive any salary or commission therefrom. Secondly,the

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18 Supra, Note 15.19 Id., at 1926.

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amount advanced for the purchase of the house and lot came fromthe personal account of the plaintiff. If, indeed, it was to beconstrued as defendanthusbands share in the profits of the



(2)

(3)

corporation, the checks should come from the corporationsaccount and not from the plaintiff s personal account, consideringthat the corporation has a personality separate and distinct fromthat of its stockholders and officers.

Even granting that the checks amount to US $3,000.000.00given by the plaintiff to the defendantspouses was their share inthe profits of the corporation, still there is no sufficient evidenceto establish that the US $25,000.00 is to be treated similarly.Defendanthusband in invoking the defense of compensationargued that if indeed they were indebted to the plaintiff, thelatter could have applied their share in the proceeds or income ofthe corporation to the concurrent amount of the alleged loan,instead of giving the amount of P3,000,000.00 to them. Thisargument is untenable. Article 1278 of the Civil Code providesthat compensation shall take place when two persons, in theirown right, are debtors and creditors of each other. As itsindicates, compensation is a sort of balancing between twoobligations. In the instant case, the plaintiff and the defendanthusband are not debtors and creditors of each other. Evengranting that the defendanthusbands claim to the profits of thecorporation is justified, still compensation cannot extinguish hisloan obligation to the plaintiff because under such assumption,the defendant is dealing with the corporation and not with theplaintiff in his personal capacity. Hence, compensation cannottake place.

The Court of Appeals, thus, erred in finding thatrespondents liability was not proved by preponderance ofevidence. On the contrary, the evidence adduced bypetitioner sufficiently established his claim that theUS$25,000.00 he advanced to respondent and his wife wasa loan.

The loan is the liability of the conjugal partnershippursuant toArticle 121 of the Family Code:

Article 121. The conjugal partnership shall be liable for:x x x

All debts and obligations contracted during the marriageby the designated administratorspouse for the benefit ofthe conjugal partnership of gains, or by both spouses or byone of them with the consent of the otherDebts and obligations contracted by either spouse withoutthe consent of the other to the extent that the family mayhave been benefited



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If the conjugal partnership is insufficient to cover the foregoingliabilities, the spouses shall be solidarity liable for the unpaidbalance with their separate properties.

x x x

While respondent did not and refused to sign theacknowledgment executed and signed by his wife,undoubtedly, the loan redounded to the benefit of thefamily because it was used to purchase the house and lotwhich became the conjugal home of respondent and hisfamily. Hence, notwithstanding the alleged lack of consentof respondent, under Art. 21 of the Family Code, he shallbe solidarily liable for such loan together with his wife.

We also find sufficient basis for the award of damages topetitioner, contrary to the findings of the Court of Appealsthat petitioner is not entitled thereto.

Petitioners allegations of verbal and written threatsdirected against him by respondent is duly supported byevidence on record. He presented two witnesses, IrineoPajarin and Randy Rosal, who testified on separateincidents where threats were made by respondent againstpetitioner.

Randy Rosal, driver of petitioner, declared that aroundthree oclock in the afternoon of September 15, 1991, hewas sent by respondents wife on an errand to deliver theacknowledgment letter to respondent for him to sign.Respondent did not sign the acknowledgment and instead,wrote a letter addressed to petitioner threatening him. Henarrated what took place thereafter:

x x xQ When you were requested by Ma. Theresa C. Abelardo

to bring a letter to herein defendant Manuel Abelardofor him to sign the same, do you know whether thatletter was actually signed by Manuel Abelardo?

A No, sir. x x xQ And what happened when Manuel Abelardo refused to

sign that letter coming from the other defendant?



A He made me wait and he prepared a letter to Mr.Honorio Carlos, sir.

x x x

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Q Where were you at the time when this defendantManuel Abelardo prepared this letter?

A In his house, sir.Q And where did he actually prepare that letter?A At the dining table, sir.Q How far were you from Manuel Abelardo from the

dining table at the time when he was preparing a letter.A Around 1 meter, sir.Q And do you know where in, what particular paper did

Mr. Abelardo prepare or write this letter?A He wrote it in a Manila envelope, sir. x x xQ What happened after Manuel Abelardo prepared this

letter in a Manila envelope?A He got a small envelope and placed there the name of

Mr. Carlos as the addressee, sir. x x xQ After preparing this letter on a Manila envelope and

then getting another envelope and writing on it theaddress of herein plaintiff, what did the defendantManuel Abelardo do, if any?

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

x x xQ And did you actually accede to the request of herein

defendant Manuel Abelardo for you to mail that letter toEngr. Carlos?

A I got the envelope but I did not mail it, sir.



x x xQ May we know from you the reason why you did not mail

said letter?A Because Engr. Carlos might become frightened, sir.Q What did you do with that letter, although you did not

mail it?A I kept it, sir. x x xQ And what did you do next after keeping the letter for

several days?A I gave the letter personally to Engr. Carlos, sir.Q What prompted you to give that letter to Engr. Carlos

instead of mailing it?A So that Engr. Carlos can prepare, sir.

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x x x20

This incident was duly entered and recorded in the PoliceBlotter on October 7, 1991 by a certain Sgt. Casile of theValenzuela Police Station.

21 A photocopy of this written

threat was also attached to the Police Report and presentedin evidence.

22

Another witness, Irineo Pajarin, recounted an incidentwhich occurred in the afternoon of May 25, 1994, to wit:

x x xQ Now Mr. Witness, on May 25, 1994 at around 2:30 in the

afternoon do you recall where you were on thatparticular date and time?

A I was at B.F. Homes, Paraaque, sir.Q What were you doing at that time?A I was waiting for Sargie Cornista, sir. x x xQ Will you please narrate to this Honorable Court that



unusual incident?A Manuel Abelardo passed by and when he saw me he

called me. I approached him while he was then on boardhis car and asked me who was my companion, sir.

Q And what was your answer to him?A I told him it was Sargie, sir.Q And what was his reply if any?A He again asked me if I have in my company one of his

children, sir.Q What was your reply?A I answered none, sir.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 AguirreSt., sir.

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20 TSN of April 18, 1995, pp. 615.21 Exhibits, p. 8.22 Id., at 7.

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Q Now, what else happened after you talk[ed] with thisManuel T. Abelardo?

A He said I may be fooling him because he said I oncefooled him when I ran away with his children which heis going to take back, sir.

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.Q What else if any did he tell you at that time?A He asked me who instructed me, sir.Q Instructed you about what?



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.Q What happened next when you failed to answer?A Or my father in law?Q And when he said his father in law to whom was he

referring at that time?A Mr. Honorio Carlos, sir.Q After mentioning the name of his fatherinlaw Mr.

Honorio Carlos what happened next?A He told me Sabihin mo sa biyenan ko babarilin ko siya

pag nakita ko siya.Q Where was Manuel Abelardo at that particular time

when he told this threatening remark against HonorioCarlos?

A He was inside his car in Aguirre St., sir.Q How about you where were you approximately at that

particular time when he narrated that message to youthreatening the herein plaintiff?

A I was outside looking in his vehicle at Aguirre St., sir. x x xQ And what was your reply or reaction when he made this

threatening remarks?A None, because he left. I was left behind, sir.

23

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23 TSN of March 16, 1995, pp. 712.

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This testimony was in part corroborated by an entry datedMay 28, 1994 in the Police Blotter of the Paraaque PoliceStation narrating the aforementioned incident.

24

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 onseveral occasions, he received telephone calls fromrespondent cursing and threatening him.

25 These incidents

of threat were also evidenced by a letter written byrespondents wife and addressed to her fatherinlaw(father of respondent).

26 The letter recounted the instances

when threats were made by her husband againstpetitioner, particularly, the incident reported by Pajarinand the threats made by respondent through thetelephone.

27

All these circumstances sufficiently establish thatthreats were directed by respondent against petitionerjustifying the award of moral damages in favor ofpetitioner. However, the Court finds the amount ofP500,000.00 as moral damages too exorbitant under thecircumstances and the same is reduced to P50,000.00. Theexemplary damages and attorneys fees are likewisereduced to P20,000.00 and P50,000.00, respectively.

WHEREFORE, the petition is hereby GRANTED andthe decision of the Court of Appeals in CAG.R.CV No.54464 is MODIFIED in that respondent is ordered to paypetitioner the amounts of (1) US$25,000 or its equivalent inPhilippine currency at the time of payment, plus legalinterest from August 4, 1994, until fully paid (2)P50,000.00 as moral damages (3) P20,000.00 as exemplarydamages and (4) P50,000.00 as attorneys fees.

SO ORDERED.

Davide, Jr. (C.J., Chairman), Puno and YnaresSantiago, JJ., concur.

Petition granted, judgment modified.

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24 Exhibits, p. 9.25 TSN of January 17, 1995, pp. 2223, 32.26 Exhibits, pp. 1215.27 Id.

374

374 SUPREME COURT REPORTS ANNOTATEDMalayan Insurance Co., Inc. vs. Philippine Nails and Wires



Corporation

Note.Where the husband contracts obligations inbehalf of the family business, the law presumes and rightlyso that such obligation will redound to the benefit of theconjugal partnership. (Ayala Investment and DevelopmentCorporation vs. Court of Appeals, 286 SCRA 272 [1998])

o0o

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Documents

Carandang vs In Re: Arthur Cuevas Jr. FACTS: Petitioner Arthur M. Cuevas, Jr. was convicted for Reckless Imprudence Resulting in Homicide, for his participation in the September 1991