Case Digest (G.R. No. 125986)
Facts:
Petitioner Aida M. Posadas and her two minor children owned a 1.6-hectare parcel in Sucat, Muntinlupa, and on May 3, 1989 authorized Jaime T. Bravo to negotiate with squatters and assist in developing the land; on December 11, 1989 Posadas assigned the property to Luxuria Homes, Inc., which Bravo witnessed.
In September 1992 Private respondents James Builder Construction and/or Jaime T. Bravo sued for specific performance and monetary claims; the RTC declared Posadas in default, awarded various sums and ordered execution of a management contract, the Court of Appeals affirmed with modification, and the case reached the Supreme Court by petition for review.
Issues:
- Were the ex parte proofs of Private respondents James Builder Construction and/or Jaime T. Bravo sufficient to substantiate their complaint?
- Can Luxuria Homes, Inc. be held jointly liable for the transactions between Aida M. Posadas and the private respondents?
- Can petitioners be compelled to execute a management contract with the private respondents?
Ruling:
The petition was partially granted. The Court held that private respondents proved only the unpaid balance for the preparation of the architectural design, site development plan and survey, and ordered Petitioner Aida M. Posadas to pay P435,000.00; all other claims were denied.
The Court held that Luxuria Homes, Inc. was not liable and that petitioners could not be compelled to execute the disputed management contract.
Ratio:
The Court applied the rule that a judgment by default does not relieve the plaintiff of the burden to prove all material allegations, citing Lopez v. Mendezona, Lim Tanhu v. Ramolete and related authorities, and thus disallowed awards unsupported by competent evidence (fencing, ejectment, bunkhouse and factory claims). The Court also reiterated that a court cannot award more than what is specifically prayed for in the complaint, relying on Policarpio v. RTC of Quezon City, and reduced recovery to the amount provable within the pleadings.
As to corporate liability, the Court held that piercing the corporate veil requires clear and convincing proof of fraud or that the corporation is an alter ego; here the assignment and incorporation predated demands and were known to Bravo, and Posadas did not own a controlling interest, so Luxuria Homes, Inc. was not liable. Finally, the alleged management contract remained unperfected and constituted unaccepted offers, and compelling execution would violate the requirement of mutual assent.
Doctrine:
- A plaintiff in default must still establish by competent evidence all material allegations of the complaint before judgment may be rendered.
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