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LUXURIA HOMES v. CA

FACTS:

The case involves a dispute between petitioner Aida M. Posadas and private respondent James Builder Construction and/or Jaime T. Bravo over the development of a property in Sucat, Muntinlupa. Petitioner Posadas co-owned the 1.6 hectare property with her two minor children and authorized respondent Bravo to negotiate with the squatters occupying the property. Petitioner Posadas assigned the property to petitioner Luxuria Homes, Inc. through a Deed of Assignment.

The relationship between petitioner Posadas and respondent Bravo soured when the former refused to accept the management contracts proposed by the latter. Respondent Bravo demanded payment for services rendered in connection with the land development, amounting to P1,708,489.00. Petitioner Posadas refused to pay and, in September 1992, private respondents filed a complaint for specific performance against petitioners Posadas and Luxuria Homes, Inc. They alleged that petitioner Posadas asked them to clear the land of squatters, prepare a site development plan, and construct various structures on the property.

The trial court declared petitioner Posadas in default and ordered her and petitioner Luxuria Homes, Inc. to pay private respondents the amount demanded, as well as damages, attorney's fees, and costs of the suit. Petitioners appealed the decision to the Court of Appeals, which affirmed the trial court's decision with modifications. Petitioners' motion for reconsideration was denied.

Petitioner Posadas entered into a contract with respondents Bravo for the initial development of a property. Respondents provided various services, including squatter relocation, architectural design, survey, and fencing. Petitioner Posadas made partial payments for the services rendered by respondents but still owed a balance. In their complaint, respondents alleged that the contract price for the architectural designs and site development plan was Php450,000, while respondent Bravo claimed that the agreed price was Php950,000. The discrepancy in the amounts was not resolved. Petitioners, who were declared in default, argued that respondents failed to substantiate their allegations. The trial court awarded damages in favor of respondents, but the Court of Appeals reduced the amount granted. Petitioners filed a motion for reconsideration before the Supreme Court, which found merit in the motion and reinstated the petition.

ISSUES:

  1. Whether the amount claimed by the respondent in his complaint should be awarded even if there is a discrepancy or inconsistency regarding the amount in the pleadings.

  2. Whether the respondent has provided sufficient evidence to prove the fulfillment of their obligations in the contracts for ejectment of squatters and fencing.

  3. Whether the respondent has presented evidence to support their claim for actual damages.

  4. Whether the petitioner is entitled to recover actual damages.

  5. Whether Luxuria Homes, Inc. can be held jointly and severally liable with petitioner Posadas.

  6. Whether the court can compel petitioners to execute a management contract with private respondents.

  7. Whether or not the trial court erred in ordering the petitioner to execute a management contract with the private respondents.

  8. Whether or not the unaccepted offers and proposals made by the private respondents can be considered as binding commitments.

RULING:

  1. The Court cannot award an amount higher than what was claimed in the complaint. Therefore, the respondent is entitled to the amount of P450,000.00, which was claimed in the complaint, less partial payments made.

  2. The respondent failed to provide sufficient evidence to prove the fulfillment of their obligations in the contracts for ejectment of squatters and fencing. The respondent's testimony alone is not sufficient, and no other evidence was presented to support their claims.

  3. The respondent failed to provide evidence to support their claim for actual damages. No receipts or vouchers were presented to show that they actually spent the amount claimed. Therefore, no award for actual damages can be granted.

  4. The petitioner is not entitled to recover actual damages. To recover actual damages, the amount of loss must not only be capable of proof but must actually be proven with reasonable degree of certainty. In this case, the petitioner failed to prove the actual amount of damages suffered.

  5. Luxuria Homes, Inc. cannot be held jointly and severally liable with petitioner Posadas. The allegations of petitioner Posadas forming Luxuria Homes, Inc. and transferring the subject property to evade payment and defraud creditors were not supported by evidence. The court found that Luxuria Homes, Inc. was formed before the demand for payment was made, and the transfer of the property was with the full knowledge of the creditor.

  6. The court cannot compel petitioners to execute a management contract with private respondents. The authorization letter given to negotiate with squatters did not constitute a binding agreement for the development of the area. The proposed management contract was not finalized and the parties could not agree on its stipulations. Therefore, there is no contractual obligation for petitioners to execute a management contract with private respondents.

  7. The trial court erred in ordering the petitioner to execute a management contract with the private respondents. The assent of both parties is required for a contract to be binding. If one party does not give their assent, the contract is essentially void, similar to if it had been done under duress or by a person of unsound mind.

  8. The unaccepted offers and proposals made by the private respondents cannot be considered as binding commitments. Contractual obligations only arise upon the perfection of a contract, and unaccepted offers and proposals remain as such until accepted by the other party. Therefore, they cannot be considered demandable.

PRINCIPLES:

  • A court is bereft of jurisdiction to award a relief other than that specifically prayed for in the complaint.

  • The burden of proof rests upon the party who asserts the affirmative of an issue.

  • A judgment by default against a defendant does not imply admission of the facts and causes of action of the plaintiff, and the plaintiff must still prove all the material allegations of the complaint.

  • Favorable relief in judgments by default can only be granted if the evidence offered and the facts proven by the presenting party warrant such relief.

  • Only legal evidence should be considered against a defaulted defendant, and if the evidence presented is not sufficient to justify a judgment for the plaintiff, the complaint must be dismissed.

  • The burden of proof of damages suffered is on the party claiming such damages, and they must present evidence to support their claim.

  • To recover actual damages, the amount of loss must not only be capable of proof but must actually be proven with a reasonable degree of certainty.

  • The separate juridical personality of a corporation can only be disregarded when it is used as a cloak or cover for fraud or illegality or to work injustice, or where necessary for the protection of the creditors.

  • There can be no contract without the mutual assent or agreement of the parties. The principle of consensuality of contracts requires the parties to agree on the terms and conditions.

  • Consensuality of contracts - The principle that both parties must give their assent for a contract to be binding. If assent is lacking, the contract has no efficacy.

  • Perfection of contracts - Contractual obligations only arise upon the perfection of a contract. Prior to perfection, unaccepted offers and proposals remain non-binding and non-demandable.