**Facts:**
– **October 1989:** Honorio Carlos, petitioner, advanced US$25,000 to respondent Manuel Abelardo and Maria Theresa Carlos-Abelardo (respondent’s wife) upon their request to purchase a house and lot located at #19952 Chestnut Street, Executive Heights Village, Paranaque, Metro Manila.
– **October 31, 1989:** Carlos issued a check in the name of Pura Vallejo, the seller of the property.
– **July 1991:** Carlos inquired about the repayment of the amount. The spouses admitted the obligation but claimed an inability to pay. Manuel Abelardo later exhibited violent resistance and made threats against Carlos.
– **August 24, 1994:** Carlos issued a formal demand for payment. The spouses failed to comply.
– **October 13, 1994:** Carlos filed a complaint with the Regional Trial Court (RTC) of Valenzuela, Branch 172, docketed as Civil Case No. 4490-V-94, seeking the US$25,000 or its equivalent, plus interest, moral and exemplary damages.
– **Defendant’s Response:** Maria Theresa Carlos-Abelardo admitted the loan but anticipated staggered payments. Manuel Abelardo alleged the amount was his share of corporate profits from H.L. Carlos Construction, not a loan.
– **June 26, 1996:** RTC ruled in favor of Carlos, ordering the payment of US$25,000, legal interest, P500,000 in moral damages, P50,000 in exemplary damages, and P100,000 in attorney’s fees.
– **Court of Appeals:** Reversed RTC’s decision, dismissing Carlos’s complaint for insufficient evidence, claiming the amount was respondent’s share in corporate profits.
– **2023:** Supreme Court review of the case.
**Issues:**
1. Whether the Court of Appeals erred in finding insufficient evidence to prove that the US$25,000 was a loan.
2. Whether the Court of Appeals erred in concluding that the US$25,000 was respondent’s share in corporate profits.
3. Whether the Court of Appeals erred in nullifying the award for damages due to lack of proof.
**Court’s Decision:**
1. **Nature of US$25,000:**
– **Analysis:** The Supreme Court highlighted key evidence, such as the issuance of the check from Carlos’s personal account and not the corporate account. The acknowledgment letter signed by Maria Theresa confirmed the loan nature.
– **Ruling:** The Court found sufficient proof that the US$25,000 was a loan. The use of the money to purchase a conjugal dwelling verified the benefit to the family, fulfilling the legal definition of a loan by preponderance of evidence.
2. **Claim of Corporate Profits:**
– **Analysis:** The Court dismissed respondent’s assertion of profit sharing by pointing out the lack of evidence of Abelardo being a stockholder or an employee of H.L. Carlos Construction entitled to profits.
– **Ruling:** The Court clarified that any compensation should be from the corporation’s account and not from Carlos personally. This further reinforced the sum was a personal loan.
3. **Award for Damages:**
– **Analysis:** Testimony and evidence presented supported the allegations of threats and harassment by respondent against Carlos.
– **Ruling:** The Supreme Court found grounds for damages but modified the award amounts, reducing moral damages to P50,000, exemplary damages to P20,000, and attorney’s fees to P50,000.
**Doctrine:**
1. **Conjugal Partnership Liability:** A debt incurred by one spouse for the family’s benefit holds both spouses liable under Art. 121 of the Family Code.
2. **Nature of Evidence:** The burden of proving debts or profits rests on documentary and testimonial evidence. Personal checks affirm a personal loan, while corporate earnings require evidence of formal entitlement.
**Class Notes:**
– **Elements of a Loan:** Debtor’s acknowledgment, use of funds for specified purpose, formal demand for repayment.
– **Family Code Provisions:** Art. 121 details liabilities in a conjugal partnership, emphasizing benefit to family as criterion for shared debt.
– **Moral and Exemplary Damages:** Need proof of threat or harassment impacting claimant.
**Historical Background:**
This case reflects complexities in family finances and corporate entitlements, emphasizing clear contractual agreements and evidence. The backdrop of familial relationships highlights vulnerabilities in non-documented agreements and threats circulating through informal financial transactions in domestic contexts. The decision enforces documentation and precise usage of corporate and personal finances.
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