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RepublicofthePhilippines
SUPREMECOURT
Manila

THIRDDIVISION

G.R.No.194270December3,2012

LORETOBOTE,Petitioner,
vs.
SPOUSESROBERTVELOSOandGLORIAVELOSO,Respondents.

DECISION

VELASCO,JR.,J.:

TheCase

This Petition for Review on Certiorari under Rule 45 of the Rules of Court seeks to annul the May 17, 2010
Decision1 and October 22, 2010 Resolution2 of the Court of Appeals (CA) in CAG.R. CV No. 69606 entitled
SpousesRobertVelosoandGloriaVelosov.LoretoBoteandCarlosDeLeon.TheassailedCADecisionmodified
theDecisiondatedDecember8,20003oftheRegionalTrialCourt,Branch273inMarikinaCity(MarikinaRTC)in
CivilCaseNo.96.282MKentitledSpousesRobertVelosoandGloriaVelosov.LoretoBoteandCarlosDeLeon
whichdismissedthecaseforlackofcauseofaction.

TheFacts

On September 21, 1951, Pedro T. Baello (Baello) and his sister, Nicanora BaelloRodrgiuez (Rodriguez), filed an
applicationforregistrationoftheirpropertyinCaloocanCitywiththethenCourtofFirstInstanceofRizalconsisting
of 147,972 square meters. On November 2, 1953, the land was successfully registered under their names under
OriginalCertificateofTitleNo.(OCT)(804)53839.4OnJuly27,1971,thelotwassubdividedintoLotAcovering
98,648 square meters in favor of Baello and Lot B covering 49,324 square meters in favor of Rodriguez.5 On
December 3, 1971, Baello died intestate leaving thirty two (32) surviving heirs while Rodriguez died intestate on
August22,1975withoutissue.6

ThesubjectpropertywasincludedintheDagatDagatanProjectlaunchedin1976bythethenFirstLadyImeldaR.
Marcos. Sometime thereafter, armed military personnel forcibly evicted the caretaker of the heirs of Baello and
Rodriguezfromtheproperty,destroyingtheresidentialstructureandthefishpondsthereon.Thereafter,theNational
Housing Authority (NHA), as the government agency tasked to undertake the DagatDagatan Project, took
possessionofthepropertypreparatorytoitssubdivisionandawardedthelotstochosenbeneficiaries.

AfterthefalloftheMarcosregime,theheirsofBaelloexecuted,onFebruary23,1987,anextrajudicialpartitionof
theirshareoftheproperty.

Then,onAugust18,1987,theNHAfiledacomplaintwiththeRTCofCaloocanCity,Branch120(CaloocanRTC),
fortheexpropriationofthesubjectland.ThecasewasdocketedasCivilCaseNo.C169.

Inthemeantime,LotAofOCT(804)53839wassubdividedandonAugust7,1989,TCTs191069,191070,191071,
191072, 191073 and 191074 were issued in the name of Baello. While TCTs 191062, 191063, 191064,
191065,191066,191067and191068wereissuedinthenameofRodriguezcoveringLotBofOCT(804)53839.7

Thereafter, the Baello and Rodriguez heirs filed separate motions to dismiss Civil Case No. C169 which the
CaloocanRTCgrantedonthegroundsofresjudicataandlackofcauseofaction.8TheNHAappealedtherulingof
theRTCtotheCAwhichrenderedaDecisiondatedAugust21,19929affirmingtherulingofthetrialcourt.Thecase
was elevated to this Court which denied due course to the petition in a Resolution dated May 3, 1993.10 The
ResolutionattainedfinalityinanEntryofJudgmentdatedJuly7,1993.11

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Unperturbed,onNovember5,1993,theNHAfiledanothercomplaintagainsttheBaelloandRodriguezheirswith
another RTC of Caloocan, this time for the declaration of nullity of OCT (804) 53839. The case was eventually
dismissedonthegroundsofestoppelandresjudicata.TheNHAappealedthecasetotheCAwhichaffirmedthe
rulingofthetrialcourt.OnAugust24,2004,thisCourtdeniedNHAsappealoftheCAdecision.12

In the meantime, on August 12, 1985, one Gloria Veloso (Gloria) was awarded a residential lot at the Dagat
Dagatan Project for the price of PhP 37,600 as evidenced by an Individual Notice of Award dated August 12,
1985.13TheawardwassubjecttotheconditionsthatGloriacommenceconstructionofaresidentialhouseonthe
property within six (6) months from the date of allocation and complete the same within one (1) year from the
commencementofconstruction,andthatsheoccupythehousealsowithinone(1)yearfromallocation.14

Thus,Gloriaconstructedatwo(2)storeyhouseonthepropertyawardedtoherandresidedthereinuntil1991.In
1995, Gloria leased the house to Loreto Bote (Bote) from October to December.15 On February 5, 1996, Bote
executedaPromissoryNote16undertakingtopayGloriaVelosoandherhusbandRobertVeloso(spousesVeloso)
theamountofeighthundredfiftythousandpesos(PhP850,000)onorbeforeMarch31,1996aspurchasepricefor
property. The Promissory Note effectively assigned to the spouses Veloso, Botes credit with a certain Carlos De
Leonwhoindicatedhisconformeinthenote.BotefailedtopaythepurchasepriceindicatedinthePromissoryNote.
Thus, the spouses Veloso, through counsel, issued a Demand Letter dated April 15, 199617 demanding the
payment of the purchase price of PhP 850,000. Despite such demand letter, Bote still failed to pay the purchase
price.

Thus,thespousesVelosofiledaComplaintdatedJune3,199618againstBoteforSumofMoneyand/orRecovery
ofPossessionofRealPropertywithDamages.Notably,thecasewasfiledattheMarikinaRTC,thereatdocketedas
CivilCaseNo.96282MKandraffledtoBranch273.

InhisAnswerdatedNovember21,1996,19 Bote alleged, as Special/Affirmative Defenses, that the Marikina RTC

hadnoterritorialjurisdictiontotryacaseforrecoveryofpossessionofrealpropertylocatedinCaloocanCityand
thatthesubjectpropertyisnotownedbythespousesVelosobutbyCynthiaT.Baello(Cynthia)asshowninTCT
No.290183coveringthesubjectproperty,anallegedheirofPedroBaello.Hefurtherallegedthathepurchasedthe
propertyfromCynthiaasevidencedbyaContracttoSelldatedMay9,1996.20

Itisnoteworthythat,atthePreTrialConference,andasreflectedinthePreTrialOrderdatedDecember9,1997,21
thepartiesagreedthatthecomplaintwouldonlybeoneforsumofmoneyandnolongerforrecoveryofpossession
ofthesubjectproperty.ThePreTrialOrderreads:

STIPULATIONOFFACTS

1)ThatthepresentactionshallbetreatedasoneforSumofMoneyandnotforRecoveryofPossessionof
Lot

2)ThatdefendantLoretoBoteistheonepresentlyoccupyingthehouseandlotand

3)Thatplaintiffsarenottheregisteredownersofthesubjectlot.(Emphasissupplied.)22

Notably, during the hearing of the case, Cynthia testified before the trial court claiming to be one of the heirs of
PedroBaello.23SuchcontentionwasneverrebuttedbythespousesVeloso.

Afterhearing,theRTCissueditsDecisiondatedDecember8,2000,24thedispositiveportionofwhichreads:

WHEREFORE,premisesconsidered,judgmentisherebyrenderedDISMISSINGthecomplaint.

WithCostsagainttheplaintiffs.

SOORDERED.

IntheDecision,thetrialcourtruledthatthespousesVelosofailedtoadduceevidencetoshowarightfulclaimover
thesubjectproperty.Further,theRTCnotedthatthespousesVelososrelianceontheawardmadebytheNHAis
misplaced,theexpropriationcasefiledbytheNHAhavingbeendismissedbytheCAinaDecisiondatedAugust21,
1992inCAG.R.CVNo.29042.ThisCourtdeniedthepetitionforreviewoncertiorarifiledbytheNHAfromtheCA
DecisioninaResolutiondatedMay3,1993.ThisResolution,inturn,attainedfinalityasevidencedbyanEntryof
Judgment dated July 7, 1993. The trial court, thus, concluded that because the NHA failed to expropriate the
property,thespousesVelosocouldnotderiveanyrightfromtheaward.

Thereafter, the spouses Veloso appealed the RTC Decision to the CA. In their Appellants Brief dated May 23,
2001,25theyinterposedforthefirsttimetheirstatusasbuildersingoodfaithandare,thus,entitledtopossessionof
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thehousethatGloriabuilt.

Later,theCAissueditsassailedDecisiondatedMay17,2010,thedispositiveportionofwhichreads:

WHEREFORE,premisesconsidered,theappealisPARTLYGRANTED.Theassaileddecisionofthecourtaquois
hereby AFFIRMED WITH MODIFICATION that a proper determination of the value of the controverted residential
houseconstructedbytheplaintiffappellantGloriainthelot,nowownedbythedefendantappelleeshallbemade.

In line with the doctrinal pronouncement in the cited Pecson v. Court of Appeals, the present case is hereby
REMANDEDtothecourtaquoforittodeterminethecurrentmarketvalueoftheresidentialhouseintheaforesaid
lot. For this purpose, the parties shall be allowed to adduce evidence on the current market value of the said
residential house. The value so determined shall be forthwith paid by the defendantappellee to the plaintiffs
appellants,otherwise,thelattershallberestoredtothepossessionofthesaidresidentialhouseuntilpaymentofthe
requiredindemnity.

Nopronouncementastocosts.

SOORDERED.

TheCAdeniedBotesMotionforReconsiderationinitsOctober22,2010Resolution.

Hence,Wehavethispetition.

TheIssues

Petitionerraisesthefollowingissuesinthepetition:

WhetherornotPecsonv.CAetal.isapplicablesincethatcaseisarealactionforrecoveryofpossessionof
lotandapartmentswhile[sic]instantcaseisapersonalactionforSumofMoney.

II

Whether or not the prayer for PhP850,000.00 as full payment for house and lot should be the controlling
amount.

III

Whether or not the amount of PhP329,000.00 paid for the lot should be deducted from the
PhP850,000.00promissorynote.

IV

Whether or not the value of improvements on the house introduced by petitionerappellant should benefit
respondent.26

OurRuling

Thispetitionismeritorious.

Anentthefirstissue,Botesargumentisthat:

Although the original Complaint in Civil Case No. 96282MK is entitled: "For: Sum of Money and/or Recovery of
PossessionofRealPropertyWithDamages"theallegationsandtheprayerbothdonotsustaintheRecoverypart
ofthetitle.Itshould,therefore,beignored.TheallegationsandtheprayeroftheComplaintonlysupporttheSumof
Moneycase.Additionally,duringthepretrialofthecasebeforetheRTCthepartiesstipulatedtotreatthecase
purelyasasumofmoney.27(Emphasissupplied.)

Inessence,BoteclaimsthatthespousesVelosodidnotraisetheissueoftheirbeingbuildersingoodfaithbefore
thetrialcourtthus,theyareprecludedfromraisingtheissueforthefirsttimeonappeal.Pushingthepoint,Bote
arguesthatthespousesVeloso,infact,stipulatedinthePreTrialthattheissueofpossessionwasbeingwithdrawn
fromthecomplaint.Thus,Boteconcludes,theCAerredinconsideringandpassingonthenewissue.

Weagree.

Section15,Rule44oftheRulesofCourtlimitsthequestionsthatmayberaisedonappeal:

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Section15.Questionsthatmayberaisedonappeal.Whetherornottheappellanthasfiledamotionfornewtrial
inthecourtbelow,hemayincludeinhisassignmentoferrorsanyquestionoflaworfactthathasbeenraisedinthe
courtbelowandwhichiswithintheissuesframedbytheparties.(Emphasissupplied.)

InUnionBankofthePhilippinesv.CourtofAppeals,28theCourtclarifiedthisprovisionoftheRulesofCourtstating
that,"Itissettledjurisprudencethatanissuewhichwasneitheraverredinthecomplaintnorraisedduringthetrialin
thecourtbelowcannotberaisedforthefirsttimeonappealasitwouldbeoffensivetothebasicrulesoffairplay,
justiceanddueprocess."

Thisprincipleforbidsthepartiesfromchangingtheirtheoryofthecase.

The"theoryofthecase"isdefinedinBlacksLawDictionaryas:

Acomprehensiveandorderlymentalarrangementofprincipleandfacts,conceivedandconstructedforthepurpose
ofsecuringajudgmentordecreeofacourtinfavorofalitiganttheparticularlineofreasoningofeitherpartytoa
suit,thepurposebeingtobringtogethercertainfactsofthecaseinalogicalsequenceandtocorrelatethemina
waythatproducesinthedecisionmakersmindadefiniteresultorconclusionfavoredbytheadvocate.29

ThesametermisdefinedinAgpalosLegalWordsandPhrasesas:

It is the legal basis of the cause of action or defense, which a party is not permitted to change on appeal. (San
Agustinv.Barrios,68Phil.475[1939])

Apartyisboundbythetheoryheadoptsandbythecauseofactionhestandsonandcannotbepermittedafter
havinglostthereontorepudiatehistheoryandcauseofactionandadoptanotherandseektorelitigatethematter
aneweitherinthesameforumoronappeal.(Arroyov.HouseofRepresentativesElectoralTribunal,246SCRA384
[1995)30

InCommissionerofInternalRevenuev.MirantPagbilaoCorporation(formerlySouthernEnergyQuezon,Inc.),31the
Courtreiteratedthethrustofthetheoryofthecaseprincipleinthiswise:

Itisalreadywellsettledinthisjurisdictionthatapartymaynotchangehistheoryofthecaseonappeal.Sucharule
hasbeenexpresslyadoptedinRule44,Section15ofthe1997RulesofCivilProcedure,whichprovides

SEC.15.Questionsthatmayberaisedonappeal.Whetherornottheappellanthasfiledamotionfornewtrialin
thecourtbelow,hemayincludeinhisassignmentoferrorsanyquestionoflaworfactthathasbeenraisedinthe
courtbelowandwhichiswithintheissuesframedbytheparties.

Thus,inCarantesv.CourtofAppeals,thisCourtemphasizedthat

Thesettledruleisthatdefensesnotpleadedintheanswermaynotberaisedforthefirsttimeonappeal.Aparty
cannot,onappeal,changefundamentallythenatureoftheissueinthecase.Whenapartydeliberatelyadoptsa
certaintheoryandthecaseisdecideduponthattheoryinthecourtbelow,hewillnotbepermittedtochangethe
sameonappeal,becausetopermithimtodosowouldbeunfairtotheadverseparty.

InthemorerecentcaseofMonv.CourtofAppeals,thisCourtagainpronouncedthat,inthisjurisdiction,thesettled
ruleisthatapartycannotchangehistheoryofthecaseorhiscauseofactiononappeal.Itaffirmsthat"courtsof
justice have no jurisdiction or power to decide a question not in issue." Thus, a judgment that goes beyond the
issuesandpurportstoadjudicatesomethingonwhichthecourtdidnotheartheparties,isnotonlyirregularbutalso
extrajudicialandinvalid.Therulerestsonthefundamentaltenetsoffairplay. (Emphasissupplied.)
1wphi1

Nevertheless,suchruleadmitsofanexceptionasenunciatedinCanlasv.Tubil,32towit:

As a rule, a change of theory cannot be allowed. However, when the factual bases thereof would not require
presentationofanyfurtherevidencebytheadversepartyinordertoenableittoproperlymeettheissueraisedin
thenewtheory,asinthiscase,theCourtmaygiveduecoursetothepetitionandresolvetheprincipalissuesraised
therein.

Theinstantcasedoesnotfallunderthisexception.

Tostress,theissueofwhetherornotthespousesVelosowerebuildersingoodfaithisafactualquestionthatwas
never alleged, let alone proven. And as aptly stated by the spouses Veloso themselves in their Appellants Brief
datedMay23,2001,33"underArticle527oftheCivilCode,goodfaithisevenalwayspresumedanduponhimwho
alleges bad faith on the part of a possessor rests the burden of proof."34 Thus, in order to refute the spouses
Velososcontentionthattheyarebuildersingoodfaith,itisnecessarythatBotepresentevidencethattheyactedin
badfaith.

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Understandably,Botedidnotpresentsuchevidencebeforethetrialcourtbecausegoodfaithwasnotanissuethen.
It was only on appeal that the spouses Veloso belatedly raised the issue that they were builders in good faith.
JusticeandfairplaydictatethatthespousesVelososchangeoftheirtheoryofthecaseonappealbedisallowed
andtheinstantpetitiongranted.

Assuch,theotherissuesraisedinthepetitionneednolongerbediscussed.

WHEREFORE,thepetitionisGRANTED.TheMay17,2010DecisionandOctober22,2010ResolutionoftheCAin
CAG.R.CVNo.69606areherebyREVERSEDandSETASIDE,andtheDecisiondatedDecember8,2000ofthe
RTC,Branch273inMarikinaCityinCivilCaseNo.96282MKisherebyREINSTATED.

Nocosts.

SOORDERED.

PRESBITEROJ.VELASCO,JR.
AssociateJustice

WECONCUR:

DISODADOM.PERALTA
AssociateJustice

ROBERTOA.ABAD JOSECATRALMENDOZA
AssociateJustice AssociateJustice

MARVICMARIOVICTORF.LEONEN
AssociateJustice

ATTESTATION

IattestthattheconclusionsintheaboveDecisionhadbeenreachedinconsultationbeforethecasewasassigned
tothewriteroftheopinionoftheCourt'sDivision.

PRESBITEROJ.VELASCO,JR.
AssociateJustice
Chairperson

CERTIFICATION

PursuanttoSection13,ArticleVIIIoftheConstitutionandtheDivisionChairperson'sAttestation,Icertifythatthe
conclusionsintheaboveDecisionhadbeenreachedinconsultationbeforethecasewasassignedtothewriterof
theopinionoftheCourt'sDivision.

MARIALOURDESP.A.SERENO
ChiefJustice

Footnotes
1Rollo,pp.2036.PennedbyAssociateJusticeAmelitaG.TolentinoandconcurredinbyAssociateJustices
NormandieB.PizarroandRubenC.Ayson.

2Id.at3738.

3CArollopp.3740.PennedbyJudgeOlgaPalancaEnriquez.

4Rollo,p.21.

5Records,p.211.

6NationalHousingAuthorityv.Baello,G.R.No.143230,August20,2004,437SCRA86,91.

7Records,pp.212213.

8Rollo,p.22.

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9Records,pp.207221.

10Id.at206.

11Id.at205.

12Rollo,pp.2223.

13Records,p.164.

14Rollo,pp.2324.

15Id.at24.

16Records,p.4.

17Id.at5.

18Id.at67.

19Id.at2527.

20Id.at2829.

21Id.at7879.

22Id.at78.

23TranscriptofStenographicNotes,February15,2000,p.7.

24Records,pp.235239.

25CArollo,pp.1936.

26Rollo,p.11.

27Id.at12.

28G.R.No.134068,June25,2001,359SCRA480,488.

29BLACKSLAWDICTIONARY1616(9thed.).

30R.E.Agpalo,AGPALOSWORDSANDPHRASES743(1997).

31G.R.No.159593,October12,2006,504SCRA484,494495.

32G.R.No.184285,September25,2009,601SCRA147,156.

33CArollo,pp.1936.

34Id.at30.

TheLawphilProjectArellanoLawFoundation

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