Bote v. Veloso
REITERATIONFacts
The Antecedents: Pedro T. Baello and Nicanora Baello-Rodriguez initially applied for and secured a land registration for a property in Caloocan City. Following their deaths, the property was subject to the government's Dagat-Dagatan Project, during which the heirs of Baello and Rodriguez were forcibly evicted, and the National Housing Authority (NHA) took possession for subdivision and distribution. The heirs of Baello later executed an extrajudicial partition of their share. Separately, Gloria Veloso was awarded a residential lot within the Dagat-Dagatan Project and constructed a house on it. She later leased this house to Loreto Bote, who subsequently executed a promissory note to purchase the property from the Velosos for PhP 850,000, assigning his credit with a third party, Carlos De Leon, to the Velosos. Bote failed to pay the agreed-upon purchase price. Procedural History: The NHA initiated expropriation proceedings for the subject land, which were dismissed by the Regional Trial Court (RTC) and affirmed by the Court of Appeals (CA), with the Supreme Court denying further review. The NHA filed another case seeking the nullity of the original land title, which was also dismissed by the RTC and CA, and subsequently denied by the Supreme Court. The spouses Veloso then filed a Complaint against Loreto Bote for Sum of Money and/or Recovery of Possession of Real Property with Damages. The RTC dismissed their complaint, finding that the Velosos failed to prove a rightful claim to the property and that their reliance on the NHA award was misplaced due to the prior dismissal of the expropriation case. The Velosos appealed to the CA, arguing for the first time their status as builders in good faith. The CA partly granted the appeal, affirming the RTC decision but modifying it to determine the value of the house constructed by Gloria Veloso, remanding the case for this determination and ordering payment to the Velosos, or restoration of possession if payment was not made. Bote's motion for reconsideration was denied. The Petition: Loreto Bote filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to annul the CA's decision and resolution. Bote argues that the CA erred in applying the case of Pecson v. Court of Appeals because the present case was stipulated by the parties to be a personal action for a sum of money, not a real action for recovery of possession. He contends that the Velosos' claim of being builders in good faith was raised for the first time on appeal, which is contrary to established jurisprudence and the parties' pre-trial stipulation to treat the case solely as a sum of money. Bote asserts that this change in theory on appeal is unfair and violates due process, as he did not present evidence to counter the good faith claim because it was not an issue in the trial court. The petition also questions the controlling amount for payment and potential deductions.
Issue(s)
Whether the Court of Appeals erred in applying the doctrine in Pecson v. CA when the instant case was stipulated to be a personal action for sum of money and not for recovery of possession, and whether the spouses Veloso's claim of being builders in good faith on appeal constituted a change in their theory of the case. Whether the prayer for PhP850,000.00 as full payment for house and lot should be the controlling amount. Whether the amount of PhP329,000.00 paid for the lot should be deducted from the PhP850,000.00 promissory note. Whether the value of improvements on the house introduced by petitioner-appellant should benefit respondent.
Ruling
The Supreme Court granted the petition, reversed and set aside the Decision and Resolution of the Court of Appeals, and reinstated the Decision of the Regional Trial Court dismissing the complaint.
Ratio Decidendi
On the Issue of Changing Theory of the Case: The Supreme Court agreed with the petitioner that the Court of Appeals erred in considering the issue of being builders in good faith, which was raised for the first time on appeal. Section 15, Rule 44 of the Rules of Court limits questions on appeal to those raised in the court below and within the issues framed by the parties. The Court reiterated the principle that an issue not averred in the complaint or raised during trial cannot be raised for the first time on appeal, as it is offensive to basic rules of fair play, justice, and due process. This principle forbids parties from changing their theory of the case. The petitioner correctly argued that the original complaint was for sum of money and/or recovery of possession, but the parties stipulated during pre-trial to treat the case purely as a sum of money, thereby withdrawing the issue of possession. The spouses Veloso's subsequent claim of being builders in good faith on appeal constituted a change in their theory of the case, which is not allowed. The Court noted that the exception to this rule, where the new theory does not require further evidence from the adverse party, was not applicable here because the issue of good faith is a factual question that would necessitate presenting evidence of bad faith by Bote, which he did not do as it was not an issue in the trial court. Therefore, the spouses Veloso's change of theory on appeal was disallowed. No corresponding ratio provided in the source text. No corresponding ratio provided in the source text. No corresponding ratio provided in the source text.
Main Doctrine
A party is bound by the theory of the case adopted and cannot change it on appeal, as doing so would violate basic rules of fair play, justice, and due process, unless the new theory does not require further evidence from the adverse party.