GR 194270; (December, 2012) (Digest)
G.R. No. 194270 ; December 3, 2012
LORETO BOTE, Petitioner, vs. SPOUSES ROBERT VELOSO and GLORIA VELOSO, Respondents.
FACTS
The National Housing Authority (NHA) took possession of a parcel of land in Caloocan City, originally owned by the Baello and Rodriguez families, for the Dagat-Dagatan Project during the Marcos regime. The NHA subsequently awarded a residential lot within this property to respondent Gloria Veloso in 1985. She built a house and resided there until 1991. In 1995, she leased the house to petitioner Loreto Bote. In 1996, Bote executed a promissory note agreeing to pay the spouses Veloso P850,000 as a purchase price for the property, with payment to be sourced from a credit assigned to him by a certain Carlos De Leon. Bote failed to pay.
The spouses Veloso filed a complaint for sum of money and/or recovery of possession against Bote before the Marikina RTC. During pre-trial, the parties stipulated that the action would be treated solely as one for sum of money, not for recovery of possession, and that the plaintiffs (spouses Veloso) were not the registered owners of the lot. The RTC dismissed the complaint, finding the promissory note unsupported by consideration since the Velosos had no ownership to convey. The CA reversed, ruling the promissory note was a valid contract to sell and ordering Bote to pay the stipulated amount.
ISSUE
Whether the Court of Appeals erred in reversing the RTC and enforcing the promissory note executed by Bote in favor of the spouses Veloso.
RULING
Yes. The Supreme Court reversed the CA and reinstated the RTC’s dismissal. The core legal principle is that a contract must have a cause or consideration. The promissory note was predicated on a sale of the property. However, the pre-trial stipulations established that the spouses Veloso were not the owners of the land. They could not sell what they did not own. Consequently, the promised payment of P850,000 lacked a lawful cause or consideration. The Velosos’ attempt to shift theories on appeal—arguing they were builders in good faith entitled to reimbursement—was impermissible. A party cannot change its theory on appeal, as this would violate due process by depriving the other party of the opportunity to present contrary evidence at the trial court. Since the action was confined by stipulation to a sum of money based on a void contract for lack of consideration, the complaint was correctly dismissed for lack of cause of action.