Luxuria Homes Inc vs CA

G.R. No. 125986. January 28, 1999

Aida Posadas was the owner of a 1.6 hectare land in Sucat, Muntinlupa. In 1989, she entered into
an agreement with Jaime Bravo for the latter to draft a development and architectural design for
the said property. The contract price was P450,000.00. Posadas gave a down payment of
P25,000.00. Later, Posadas assigned her property to Luxuria Homes, Inc. One of the witnesses to
the deed of assignment and articles of incorporation was Jaime Bravo.

In 1992, Bravo finished the architectural design so he proposed that he and his company manage
the development of the property. But Posadas turned down the proposal and thereafter the
business relationship between the two went sour. Bravo then demanded Posadas to pay them
the balance of their agreement as regards the architectural design (P425k). Bravo also demanded
payment for some other expenses and fees he incurred i.e., negotiating and relocating the
informal settlers then occupying the land of Posadas. Posadas refused to make payment.

Bravo then filed a complaint for specific performance against Posadas but he included Luxuria
Homes as a co-defendant as he alleged that Luxuria Homes was a mere conduit of Posadas; that
the said corporation was created in order to defraud Bravo and avoid the payment of debt.

Issue: Whether Luxuria Homes, Inc., was a party to the transactions entered into by Posadas
with Bravo and James Builder Construction and thus could be held jointly and severally with
Posadas.

Held: It cannot be said then that the incorporation of Luxuria Homes and the eventual transfer
of the subject property to it were in fraud of Bravo and James Builder Construction as such
were done with the full knowledge of Bravo himself, as evidenced by the Deed of Assignment
dated 11 December 1989 and the Articles of Incorporation of Luxuria Homes, Inc., issued 26
January 1990 were both signed by Bravo himself as witness.

Further, Posadas is not the majority stockholder of Luxuria Homes, Inc. The Articles of
Incorporation of Luxuria Homes, Inc., clearly show that Posadas owns approximately 33% only
of the capital stock. Hence, Posadas cannot be considered as an alter ego of Luxuria Homes, Inc.

To disregard the separate juridical personality of a corporation, the wrongdoing must be clearly
and convincingly established. It cannot be presumed. Bravo, et. al. failed to show proof that
Posadas acted in bad faith, and consequently that Luxuria Homes, Inc., was a party to any of the
supposed transactions, not even to the agreement to negotiate with and relocate the squatters,
it cannot be held liable, nay jointly and in solidum, to pay Bravo, et. al.

Hence, since it was Posadas who contracted Bravo to render the subject services, only she is
liable to pay the amounts adjudged by the Court.