G.R. No. 125986 January 28, 1999.
LUXURIA HOMES, INC., and/or AIDA M. POSADAS, petitioners, vs. HONORABLE COURT OF APPEALS, JAMES BUILDER CONSTRUCTION and/or JAIME T. BRAVO, respondents.

FACTS

Petitioner Aida M. Posadas co-owned a 1.6-hectare property in Sucat, Muntinlupa. She entered into negotiations with private respondent Jaime T. Bravo for its development into a residential subdivision and authorized him to negotiate with squatters on the property. On December 11, 1989, Posadas and her children assigned the property to petitioner Luxuria Homes, Inc., with Bravo signing as a witness to the Deed of Assignment and Articles of Incorporation. The relationship soured in 1992 when Posadas could not accept the management contracts Bravo proposed for development. Bravo then demanded payment of P1,708,489.00 for services rendered, including squatter relocation, preparation of architectural design and site development plan, survey, and fencing. Posadas refused to pay. Private respondents filed a complaint for specific performance. The trial court declared Posadas in default, allowed ex-parte presentation of evidence, and ordered Posadas and Luxuria Homes to pay various amounts and to execute a management contract. The Court of Appeals affirmed with modification, deleting moral damages and reducing exemplary damages. The Supreme Court initially denied the petition but later reinstated it for review.

ISSUE

1. Whether private respondents presented sufficient ex-parte evidence to substantiate their complaint.
2. Whether petitioner Luxuria Homes, Inc. can be held liable for transactions between petitioner Posadas and private respondents.
3. Whether petitioners can be compelled to enter into a management contract with private respondents.

RULING

1. Private respondents presented sufficient evidence for some, but not all, claims. Vouchers evidenced payments for services like squatter relocation, architectural design, survey, and fencing. Petitioner Posadas benefited from services for which HLURB issued permits. However, for the architectural design and site development plan, the claim was limited to the P450,000.00 stated in the complaint, despite testimony suggesting a higher amount, as a court cannot award a relief not specifically prayed for in a default judgment. The balance for these, plus the survey, after partial payments, was P435,000.00. Claims for squatter relocation and fencing failed due to lack of proof of complete performance.
2. Petitioner Luxuria Homes, Inc. cannot be held liable. The transactions occurred between Posadas and Bravo before the corporation’s existence. Bravo signed as a witness to the Deed of Assignment and Articles of Incorporation, which does not make the corporation a party to prior contracts. The corporation is a separate juridical entity.
3. Petitioners cannot be compelled to enter into a management contract. A contract is not perfected by mere negotiation. The management contract was only a proposal, and no meeting of the minds occurred. Compelling execution would be tantamount to putting a party under duress.
The Supreme Court PARTIALLY GRANTED the petition. It MODIFIED the Court of Appeals decision, ordering only petitioner Aida M. Posadas to pay private respondents P435,000.00 as balance for the architectural design, site development plan, and survey. All other claims were denied.