G.R. No. 207407 - Estipona vs. Estate of Aquino

Case Summary (G.R. No. 207407)

Procedural History

A petition to probate the will was filed and the Regional Trial Court (probate court) approved the will and appointed an administrator. Claimants (Raquel and spouses Co) filed claims against the estate in 2004 seeking recognition of (a) a P600,000 loan secured by a real estate mortgage and (b) alleged sales/instalment transactions over units 632 and 632A, with prayers for partition, conveyance and preliminary injunctive relief. The probate court denied those claims on April 23, 2007 as beyond its special jurisdiction. The Court of Appeals dismissed the appeal. The Supreme Court partly granted review, reversed and set aside the CA decision and the probate court order in the respects described below.

Facts Relevant to the Dispute

Decedent Anacleto Aquino had executed a will devising the three‑door apartment (including units 632 and 632A) to four grandchildren. Before his death, two transactions are contested: (1) a P600,000 loan obtained by Anacleto, secured by a REM executed November 15, 1996 in favor of spouses Rafael and Raquel Estipona and spouses Jessie and Roselyn Cacanando; and (2) a Sale of Real Estate on Installment (SREI) notarized February 21, 1997 purporting to sell a 50 sqm portion (identified in inventory as unit 632A) to Rafael Estipona for P800,000, P200,000 paid at execution and P600,000 to be paid on or before April 30, 1997. Raquel alleges an oral option/purge sale of unit 632 with payments totaling P544,000. Post‑death, certain payments were made to the administrator (e.g., check dated October 23, 1997 payable to then‑administrator Victor Espinosa). The administratrix and devisees contest the conveyances and sought partition and distribution under the will; separate ejectment and forcible entry cases were also initiated in Metropolitan Trial Court branches.

Issues Presented

The Supreme Court framed and addressed three principal issues: (1) whether the P600,000 loan secured by the REM constitutes a money claim under Section 5, Rule 86 and thus is cognizable in the probate proceedings; (2) whether the SREI regarding unit 632A is a conveyance of realty covered by Section 8, Rule 89 authorizing the probate court to direct conveyance; and (3) whether the Dead Man’s Statute (Section 23, Rule 130) barred Raquel from testifying about an alleged oral option/sale of unit 632, thereby affecting proof of ownership.

Ruling on the P600,000 Loan (REM) — Money Claim

The Court concluded the P600,000 loan evidences a mutuum and therefore is a money claim within the meaning of Section 5, Rule 86 and Section 1, Rule 87 (money claim = claim for money, debt or interest thereon). The REM shows Anacleto received P600,000 (P300,000 from each pair of spouses), and the inventory submitted by the former administrator correctly listed “Mortgage Payable” of P600,000. The Court therefore recognized the P600,000 as claims for money against the testate estate. Additionally, because the REM predated the will, Article 934 was invoked: where a testator devises a thing pledged or mortgaged to secure a recoverable debt before execution of the will, the estate is obliged to pay the debt unless a contrary intention appears. Consequently the obligation to pay the mortgage debt remains a charge against the estate, and the creditors should have their money claims presented in probate proceedings rather than being denied as matters of title.

Ruling on the SREI (Unit 632A) — Contract to Sell, Not Enforceable Conveyance in Probate

The Court analyzed whether the SREI constituted a contract binding in law to deed real property such that Section 8, Rule 89 would permit the probate court to authorize conveyance by the administrator. Examining the SREI terms (title to pass “automatically and without further formality” upon full payment; second installment of P600,000 due on or before April 30, 1997), the Court treated the instrument as a contract to sell (conditional sale) rather than an immediate, absolute sale. Jurisprudential distinctions were applied: in a contract to sell, ownership is retained by the vendor until full payment (a positive suspensive condition). Because full payment by the stipulated date was a positive suspensive condition, non‑fulfillment prevents the obligation to convey from acquiring binding force. Raquel’s alleged payment of the P600,000 balance occurred only on October 23, 1997 (173 days late) by check to the then‑administrator, and the probate court approval and heir consent were not shown. Article 1592 (which allows late payment where rescission has not been demanded) does not apply to contracts to sell; therefore late payment did not validate the SREI. The Court further indicated that Raquel could have resorted to consignation (Article 1256) or an appropriate action against heirs (Article 1311) to preserve rights. On that basis the Court provisionally declared the SREI without obligatory force; payments received by the estate in relation to unit 632A should be treated as money claims or subject to recovery if the SREI is ultimately held ineffective in a separate proper action.

Ruling on the Oral Option over Unit 632 and the Dead Man’s Statute

The Court addressed the alleged oral option/sale of unit 632 purportedly made by Anacleto to Raquel before his death. Section 23, Rule 130 (Dead Man’s Statute) disqualifies persons prosecuting a case against an executor or administrator from testifying as to matters of fact occurring before the decedent’s death. All requisites for the statute’s application were present: claim against the estate, adverse defendant is the administratrix, claimant/witness is the party prosecuting the claim, and testimony concerns pre‑death matters. Consequently Raquel was incompetent to testify about the oral option. Absent her testimony and without other convincing competent evidence, the alleged oral sale fails not only because of the statutory disq

Case Syllabus (G.R. No. 207407)

Procedural History

Petition for review on certiorari under Rule 45 of the Rules of Court filed in the Supreme Court assailing:
- Decision of the Court of Appeals (CA) dated August 15, 2012 in CA-G.R. CV No. 89818 which dismissed petitioners’ appeal and affirmed the Regional Trial Court (probate court) Order dated April 23, 2007 in Special Proceedings No. 97-83384.
- CA Resolution dated June 3, 2013 denying petitioners’ motion for reconsideration.
Original special proceeding: petition for probate of the will of decedent Anacleto Aquino (died April 26, 1997) filed May 16, 1997 (Special Proceeding No. 97-83384, Branch 7, RTC Manila).
Administrative chronology in probate court:
- RTC approved decedent’s will by Decision dated August 25, 1997 and appointed Victor L. Espinosa administrator.
- Victor submitted an inventory dated May 23, 2000; was later removed as administrator on July 6, 2000 for failure to comply with court order.
- Lorna Fe Espinosa appointed special administrator May 31, 2001; appointed regular administrator March 8, 2004.
Claimants (Raquel Estipona; spouses Alberto and Lulu Co; and others) filed claims against the estate with prayer for writs and specific reliefs on February 11, 2004; probate court denied the claims by Order dated April 23, 2007; motion for reconsideration denied July 3, 2007; CA dismissed appeal; certiorari petition filed to the Supreme Court.

Parties

Petitioners: Raquel Estipona (also identified in record variants as Racquel or Rachel Estipona), Lelandlord E. Sto. Domingo (claims assignment from Raquel by Deed of Assignment dated March 19, 2010), and spouses Alberto Co and Lulu Co.
Respondents: Estate of Anacleto Aquino and Lorna Fe Espinosa, administratrix of the estate (also referred to in parts of record with variant name spellings; other estate representatives and devisees referenced in the record).

Material Facts

Decedent Anacleto Aquino died April 26, 1997, leaving a will dated February 8, 1997; will devised a three-door apartment (including units subject of dispute) to four grandchildren.
Inventory (May 23, 2000) prepared by removed administrator Victor Espinosa included property at No. 632, 632A and 634 E. Quintos Street, Sampaloc, Manila (TCT No. 212562) described as Lot 45, Block 22 (150 sq. m. more or less) and reflecting a 66.6% (2/3) ownership interest of the estate and three fully depreciated two-storey apartment units.
Two contested transactions alleged by claimants:
1. Real Estate Mortgage (REM) dated November 15, 1996 and annotated in TCT No. 212562 on November 20, 1996 securing a P600,000.00 loan (P300,000.00 from spouses Rafael and Raquel Estipona and P300,000.00 from spouses Jessie and Roselyn Cacanando). REM provided, inter alia, that if mortgagor opted to sell the mortgaged property it must first be offered to the mortgagees at P800,000.00 per apartment unit within 30 days from notice.
2. Sale of Real Estate on Installment (SREI) notarized February 21, 1997 between Anacleto (vendor) and Rafael Estipona (vendee), described as a parcel of 50 sq. m. and apartment unit designated 632, for P800,000.00 payable in two installments (P200,000.00 upon signing; P600,000.00 on or before April 30, 1997) with clause that title shall pass automatically upon full payment.
Claimants allege: oral option to sell unit 632 was told to Raquel March 26, 1997; Raquel made payments totaling P544,000.00 (including P300,000.00 loan credited) leaving balance P256,000.00; spouses Rafael and Raquel Estipona paid P200,000.00 upon SREI, and allegedly paid the P600,000.00 balance by UCPB check dated October 23, 1997 issued in name of Victor Espinosa (administrator).
Administratrix Lorna Fe Espinosa contests validity of payments and transactions: argues late payment (173 days after due date), payment to Victor Espinosa and not the estate, lack of probate court approval in violation of Section 8, Rule 89 and Section 91 of the Property Registration Decree, and lack of assent by devisees of unit 632A.
Separate actions in Metropolitan Trial Court: unlawful detainer case against Raquel (Civil Case No. 175627) and forcible entry case against spouses Alberto and Lulu Co (Civil Case No. 177096-CV).

Reliefs Sought by Claimants in Probate Proceeding

Temporary restraining order and writ of preliminary injunction to enjoin Metropolitan Trial Court enforcement of eviction/ejectment proceedings to preserve status quo.
Specific performance and partition: order administrator to execute absolute deed of sale for apartment unit No. 632-A in favor of spouses Rafael and Raquel Estipona; partition and release of unit 632-A from the estate; order Raquel to pay remaining P256,000.00 and, upon payment, order administrator to execute absolute deed of sale for unit 632 in favor of Raquel and release it from the estate.

Probate Court Ruling (Order dated April 23, 2007)

Denied the claims of Raquel, spouses Co, and spouses Cacanando.
Reasoning:
- Claims sought to enforce provisions of a Real Estate Mortgage or sale on installment and sought consolidation of ownership and exclusion of properties from the estate inventory — matters beyond probate court’s special and limited jurisdiction.
- Probate court limited to money claims (Section 1, Rule 87 definition of “money claim”) and cannot determine ownership for finality in probate; any attempt to consolidate ownership in favor of mortgagees or claimants cannot be resolved in probate proceedings.

Court of Appeals Ruling (Decision dated August 15, 2012; dispositive)

Dismissed the appeal and affirmed the probate court Order dated April 23, 2007.
Held that controversy over alleged sales of units 632 and 632A requires an ordinary action against the administrator invoking general jurisdiction (Section 1, Rule 87), given probate court’s limited jurisdiction.
Denied claimants’ motion for reconsideration (CA Resolution June 3, 2013).

Issues Presented to the Supreme Court

Whether petitioners’ claims are “money claims” pursuant to Section 5, Rule 86 of the Rules of Court and hence within the jurisdiction of the probate court.
Whether the sale of apartment unit 632A in installment (SREI) is a conveyance of realty covered by Section 8, Rule 89 (i.e., a contract binding in law to deed real property) and thus susceptible of court authorization for administrator to convey.
Whether the Dead Man’s Statute (Section 23, Rule 130) barred Raquel from testifying about the alleged oral option to sell unit 632 effected by Anacleto.

Supreme Court’s Holdings — Overview

Petition is PARTLY MERITORIOUS; Supreme Court PARTIALLY GRANTS the petition.
Reversed and set aside:
- CA Decision dated August 15, 2012 and CA Resolution dated June 3, 2013.
- Order dated April 23, 2007 of the RTC, Branch 7, Special Proceedings No. 97-83384.
Recognized as money claims under Section 5, Rule 86:
- The P600,000.00 loan secured by REM (P300,000.00 from spouses Estipona; P300,000.00 from spouses Cacanando).
- Payments made in relation to unit 632 in the name of decedent by Raquel Estipona.
- Payments made by spouses Rafael and Raquel Estipona in relation to unit 632A.
Provisionally declared without obligatory force:
- The Sale of Real Estate on Installment notarized February 21, 1997 (SREI concerning unit 632A).
Provisionally declared invalid:
- The alleged oral