G.R. No.

149926 February 23, 2005

On December 13, 1980, the FCCC and Efraim entered into another loan
agreement,4 this time in the amount of ₱123,156.00. It was intended to pay
UNION BANK OF THE PHILIPPINES, petitioner,
the balance of the purchase price of another unit of Ford 6600 Agricultural
vs. All-Purpose Diesel Tractor, with accessories, and one (1) unit Howard
Rotamotor Model AR 60K. Again, Efraim and his son, Edmund, executed a
EDMUND SANTIBAÑEZ and FLORENCE SANTIBAÑEZ ARIOLA, promissory note for the said amount in favor of the FCCC. Aside from such
respondents. promissory note, they also signed a Continuing Guaranty Agreement5 for
the loan dated December 13, 1980.

DECISION
Sometime in February 1981, Efraim died, leaving a holographic will. 6
Subsequently in March 1981, testate proceedings commenced before the
CALLEJO, SR., J.: RTC of Iloilo City, Branch 7, docketed as Special Proceedings No. 2706.
On April 9, 1981, Edmund, as one of the heirs, was appointed as the special
administrator of the estate of the decedent. 7 During the pendency of the
Before us is a petition for review on certiorari under Rule 45 of the Revised testate proceedings, the surviving heirs, Edmund and his sister Florence
Rules of Court which seeks the reversal of the Decision1 of the Court of Santibañez Ariola, executed a Joint Agreement8 dated July 22, 1981,
Appeals dated May 30, 2001 in CA-G.R. CV No. 48831 affirming the wherein they agreed to divide between themselves and take possession of
dismissal2 of the petitioner’s complaint in Civil Case No. 18909 by the the three (3) tractors; that is, two (2) tractors for Edmund and one (1) tractor
Regional Trial Court (RTC) of Makati City, Branch 63. for Florence. Each of them was to assume the indebtedness of their late
father to FCCC, corresponding to the tractor respectively taken by them.

The antecedent facts are as follows:

On August 20, 1981, a Deed of Assignment with Assumption of Liabilities9
was executed by and between FCCC and Union Savings and Mortgage
On May 31, 1980, the First Countryside Credit Corporation (FCCC) and Bank, wherein the FCCC as the assignor, among others, assigned all its
Efraim M. Santibañez entered into a loan agreement3 in the amount of assets and liabilities to Union Savings and Mortgage Bank.
₱128,000.00. The amount was intended for the payment of the purchase
price of one (1) unit Ford 6600 Agricultural All-Purpose Diesel Tractor. In
view thereof, Efraim and his son, Edmund, executed a promissory note in Demand letters10 for the settlement of his account were sent by petitioner
favor of the FCCC, the principal sum payable in five equal annual Union Bank of the Philippines (UBP) to Edmund, but the latter failed to
amortizations of ₱43,745.96 due on May 31, 1981 and every May 31st heed the same and refused to pay. Thus, on February 5, 1988, the petitioner
thereafter up to May 31, 1985. filed a Complaint11 for sum of money against the heirs of Efraim
Santibañez, Edmund and Florence, before the RTC of Makati City, Branch petitioner failed to prove that it was the now defunct Union Savings and
150, docketed as Civil Case No. 18909. Summonses were issued against Mortgage Bank to which the FCCC had assigned its assets and liabilities.
both, but the one intended for Edmund was not served since he was in the The court also agreed to the contention of respondent Florence S. Ariola
United States and there was no information on his address or the date of his that the list of assets and liabilities of the FCCC assigned to Union Savings
return to the Philippines. 12 Accordingly, the complaint was narrowed and Mortgage Bank did not clearly refer to the decedent’s account. Ruling
down to respondent Florence S. Ariola. that the joint agreement executed by the heirs was null and void, the trial
court held that the petitioner’s cause of action against respondent Florence
S. Ariola must necessarily fail.
On December 7, 1988, respondent Florence S. Ariola filed her Answer13
and alleged that the loan documents did not bind her since she was not a
party thereto. Considering that the joint agreement signed by her and her The petitioner appealed from the RTC decision and elevated its case to the
brother Edmund was not approved by the probate court, it was null and Court of Appeals (CA), assigning the following as errors of the trial court:
void; hence, she was not liable to the petitioner under the joint agreement.

1. THE COURT A QUO ERRED IN FINDING THAT THE JOINT

On January 29, 1990, the case was unloaded and re-raffled to the RTC of AGREEMENT (EXHIBIT A) SHOULD BE APPROVED BY THE
Makati City, Branch 63. 14 Consequently, trial on the merits ensued and a PROBATE COURT.
decision was subsequently rendered by the court dismissing the complaint
for lack of merit. The decretal portion of the RTC decision reads:
2. THE COURT A QUO ERRED IN FINDING THAT THERE CAN BE
NO VALID PARTITION AMONG THE HEIRS UNTIL AFTER THE
WHEREFORE, judgment is hereby rendered DISMISSING the complaint WILL HAS BEEN PROBATED.
for lack of merit. 15

3. THE COURT A QUO ERRED IN NOT FINDING THAT THE

The trial court found that the claim of the petitioner should have been filed DEFENDANT HAD WAIVED HER RIGHT TO HAVE THE CLAIM RE-
with the probate court before which the testate estate of the late Efraim LITIGATED IN THE ESTATE PROCEEDING. 16
Santibañez was pending, as the sum of money being claimed was an
obligation incurred by the said decedent. The trial court also found that the
Joint Agreement apparently executed by his heirs, Edmund and Florence, The petitioner asserted before the CA that the obligation of the deceased
on July 22, 1981, was, in effect, a partition of the estate of the decedent. had passed to his legitimate children and heirs, in this case, Edmund and
However, the said agreement was void, considering that it had not been Florence; the unconditional signing of the joint agreement marked as
approved by the probate court, and that there can be no valid partition until Exhibit "A" estopped respondent Florence S. Ariola, and that she cannot
after the will has been probated. The trial court further declared that deny her liability under the said document; as the agreement had been
signed by both heirs in their personal capacity, it was no longer necessary to In the present recourse, the petitioner ascribes the following errors to the
present the same before the probate court for approval; the property CA:
partitioned in the agreement was not one of those enumerated in the
holographic will made by the deceased; and the active participation of the
heirs, particularly respondent Florence S. Ariola, in the present ordinary I.
civil action was tantamount to a waiver to re-litigate the claim in the estate
proceedings.
THE HONORABLE COURT OF APPEALS ERRED IN FINDING THAT
THE JOINT AGREEMENT SHOULD BE APPROVED BY THE
On the other hand, respondent Florence S. Ariola maintained that the money PROBATE COURT.
claim of the petitioner should have been presented before the probate court.
17
II.

The appellate court found that the appeal was not meritorious and held that
the petitioner should have filed its claim with the probate court as provided THE COURT OF APPEALS ERRED IN FINDING THAT THERE CAN
under Sections 1 and 5, Rule 86 of the Rules of Court. It further held that BE NO VALID PARTITION AMONG THE HEIRS OF THE LATE
the partition made in the agreement was null and void, since no valid EFRAIM SANTIBAÑEZ UNTIL AFTER THE WILL HAS BEEN
partition may be had until after the will has been probated. According to the PROBATED.
CA, page 2, paragraph (e) of the holographic will covered the subject
properties (tractors) in generic terms when the deceased referred to them as
"all other properties." Moreover, the active participation of respondent III.
Florence S. Ariola in the case did not amount to a waiver. Thus, the CA
affirmed the RTC decision, viz.:
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE
RESPONDENT HAD WAIVED HER RIGHT TO HAVE THE CLAIM
WHEREFORE, premises considered, the appealed Decision of the Regional RE-LITIGATED IN THE ESTATE PROCEEDING.
Trial Court of Makati City, Branch 63, is hereby AFFIRMED in toto.

IV.
SO ORDERED. 18

RESPONDENTS CAN, IN FACT, BE HELD JOINTLY AND

SEVERALLY LIABLE WITH THE PRINCIPAL DEBTOR THE LATE
EFRAIM SANTIBAÑEZ ON THE STRENGTH OF THE CONTINUING The petitioner, likewise, avers that the decisions of both the trial and
GUARANTY AGREEMENT EXECUTED IN FAVOR OF PETITIONER- appellate courts failed to consider the fact that respondent Florence S.
APPELLANT UNION BANK. Ariola and her brother Edmund executed loan documents, all establishing
the vinculum juris or the legal bond between the late Efraim Santibañez and
his heirs to be in the nature of a solidary obligation. Furthermore, the
V. Promissory Notes dated May 31, 1980 and December 13, 1980 executed by
the late Efraim Santibañez, together with his heirs, Edmund and respondent
Florence, made the obligation solidary as far as the said heirs are concerned.
THE PROMISSORY NOTES DATED MAY 31, 1980 IN THE SUM OF The petitioner also proffers that, considering the express provisions of the
₱128,000.00 AND DECEMBER 13, 1980 IN THE AMOUNT OF continuing guaranty agreement and the promissory notes executed by the
₱123,000.00 CATEGORICALLY ESTABLISHED THE FACT THAT named respondents, the latter must be held liable jointly and severally liable
THE RESPONDENTS BOUND THEMSELVES JOINTLY AND thereon. Thus, there was no need for the petitioner to file its money claim
SEVERALLY LIABLE WITH THE LATE DEBTOR EFRAIM before the probate court. Finally, the petitioner stresses that both surviving
SANTIBAÑEZ IN FAVOR OF PETITIONER UNION BANK. 19 heirs are being sued in their respective personal capacities, not as heirs of
the deceased.

The petitioner claims that the obligations of the deceased were transmitted
to the heirs as provided in Article 774 of the Civil Code; there was thus no In her comment to the petition, respondent Florence S. Ariola maintains that
need for the probate court to approve the joint agreement where the heirs the petitioner is trying to recover a sum of money from the deceased Efraim
partitioned the tractors owned by the deceased and assumed the obligations Santibañez; thus the claim should have been filed with the probate court.
related thereto. Since respondent Florence S. Ariola signed the joint She points out that at the time of the execution of the joint agreement there
agreement without any condition, she is now estopped from asserting any was already an existing probate proceedings of which the petitioner knew
position contrary thereto. The petitioner also points out that the holographic about. However, to avoid a claim in the probate court which might delay
will of the deceased did not include nor mention any of the tractors subject payment of the obligation, the petitioner opted to require them to execute
of the complaint, and, as such was beyond the ambit of the said will. The the said agreement. 1a\^/phi1.net
active participation and resistance of respondent Florence S. Ariola in the
ordinary civil action against the petitioner’s claim amounts to a waiver of
the right to have the claim presented in the probate proceedings, and to According to the respondent, the trial court and the CA did not err in
allow any one of the heirs who executed the joint agreement to escape declaring that the agreement was null and void. She asserts that even if the
liability to pay the value of the tractors under consideration would be agreement was voluntarily executed by her and her brother Edmund, it
equivalent to allowing the said heirs to enrich themselves to the damage and should still have been subjected to the approval of the court as it may
prejudice of the petitioner. prejudice the estate, the heirs or third parties. Furthermore, she had not
waived any rights, as she even stated in her answer in the court a quo that
the claim should be filed with the probate court. Thus, the petitioner could
not invoke or claim that she is in estoppel.
 compliance with those requirements or solemnities which the law prescribes
for the validity of a will. 22
Respondent Florence S. Ariola further asserts that she had not signed any
continuing guaranty agreement, nor was there any document presented as
evidence to show that she had caused herself to be bound by the obligation
This, of course, presupposes that the properties to be partitioned are the
of her late father.
same properties embraced in the will. 23 In the present case, the deceased,
Efraim Santibañez, left a holographic will24 which contained, inter alia, the
provision which reads as follows:
The petition is bereft of merit.

(e) All other properties, real or personal, which I own and may be
The Court is posed to resolve the following issues: a) whether or not the
discovered later after my demise, shall be distributed in the proportion
partition in the Agreement executed by the heirs is valid; b) whether or not
indicated in the immediately preceding paragraph in favor of Edmund and
the heirs’ assumption of the indebtedness of the deceased is valid; and c)
Florence, my children.
whether the petitioner can hold the heirs liable on the obligation of the
deceased. 1awphi1.nét
We agree with the appellate court that the above-quoted is an all-
encompassing provision embracing all the properties left by the decedent
At the outset, well-settled is the rule that a probate court has the jurisdiction
which might have escaped his mind at that time he was making his will, and
to determine all the properties of the deceased, to determine whether they
other properties he may acquire thereafter. Included therein are the three (3)
should or should not be included in the inventory or list of properties to be
subject tractors. This being so, any partition involving the said tractors
administered. 20 The said court is primarily concerned with the
among the heirs is not valid. The joint agreement25 executed by Edmund
administration, liquidation and distribution of the estate. 21
and Florence, partitioning the tractors among themselves, is invalid,
specially so since at the time of its execution, there was already a pending
proceeding for the probate of their late father’s holographic will covering
In our jurisdiction, the rule is that there can be no valid partition among the the said tractors.
heirs until after the will has been probated:

It must be stressed that the probate proceeding had already acquired

In testate succession, there can be no valid partition among the heirs until jurisdiction over all the properties of the deceased, including the three (3)
after the will has been probated. The law enjoins the probate of a will and tractors. To dispose of them in any way without the probate court’s
the public requires it, because unless a will is probated and notice thereof approval is tantamount to divesting it with jurisdiction which the Court
given to the whole world, the right of a person to dispose of his property by cannot allow. 26 Every act intended to put an end to indivision among co-
will may be rendered nugatory. The authentication of a will decides no heirs and legatees or devisees is deemed to be a partition, although it should
other question than such as touch upon the capacity of the testator and the
purport to be a sale, an exchange, a compromise, or any other transaction.
27 Thus, in executing any joint agreement which appears to be in the nature
Section 5. Claims which must be filed under the notice. If not filed barred;
of an extra-judicial partition, as in the case at bar, court approval is
exceptions. — All claims for money against the decedent, arising from
imperative, and the heirs cannot just divest the court of its jurisdiction over
contract, express or implied, whether the same be due, not due, or
that part of the estate. Moreover, it is within the jurisdiction of the probate
contingent, all claims for funeral expenses for the last sickness of the
court to determine the identity of the heirs of the decedent. 28 In the instant
decedent, and judgment for money against the decedent, must be filed
case, there is no showing that the signatories in the joint agreement were the
within the time limited in the notice; otherwise they are barred forever,
only heirs of the decedent. When it was executed, the probate of the will
except that they may be set forth as counterclaims in any action that the
was still pending before the court and the latter had yet to determine who
executor or administrator may bring against the claimants. Where an
the heirs of the decedent were. Thus, for Edmund and respondent Florence
executor or administrator commences an action, or prosecutes an action
S. Ariola to adjudicate unto themselves the three (3) tractors was a
already commenced by the deceased in his lifetime, the debtor may set forth
premature act, and prejudicial to the other possible heirs and creditors who
by answer the claims he has against the decedent, instead of presenting
may have a valid claim against the estate of the deceased.
them independently to the court as herein provided, and mutual claims may
be set off against each other in such action; and if final judgment is
rendered in favor of the defendant, the amount so determined shall be
The question that now comes to fore is whether the heirs’ assumption of the
considered the true balance against the estate, as though the claim had been
indebtedness of the decedent is binding. We rule in the negative. Perusing
presented directly before the court in the administration proceedings.
the joint agreement, it provides that the heirs as parties thereto " have
Claims not yet due, or contingent, may be approved at their present value.
agreed to divide between themselves and take possession and use the above-
described chattel and each of them to assume the indebtedness
corresponding to the chattel taken as herein after stated which is in favor of
The filing of a money claim against the decedent’s estate in the probate
First Countryside Credit Corp."29 The assumption of liability was
court is mandatory. 30 As we held in the vintage case of Py Eng Chong v.
conditioned upon the happening of an event, that is, that each heir shall take
Herrera:31
possession and use of their respective share under the agreement. It was
made dependent on the validity of the partition, and that they were to
assume the indebtedness corresponding to the chattel that they were each to
receive. The partition being invalid as earlier discussed, the heirs in effect … This requirement is for the purpose of protecting the estate of the
did not receive any such tractor. It follows then that the assumption of deceased by informing the executor or administrator of the claims against it,
liability cannot be given any force and effect. thus enabling him to examine each claim and to determine whether it is a
proper one which should be allowed. The plain and obvious design of the
rule is the speedy settlement of the affairs of the deceased and the early
delivery of the property to the distributees, legatees, or heirs. `The law
The Court notes that the loan was contracted by the decedent. l^vvphi1.net
strictly requires the prompt presentation and disposition of the claims
The petitioner, purportedly a creditor of the late Efraim Santibañez, should
against the decedent's estate in order to settle the affairs of the estate as soon
have thus filed its money claim with the probate court in accordance with
as possible, pay off its debts and distribute the residue. 32
Section 5, Rule 86 of the Revised Rules of Court, which provides:
 by the courts with caution; care must be taken that the requisite notoriety
exists; and every reasonable doubt upon the subject should be promptly
Perusing the records of the case, nothing therein could hold private
resolved in the negative." (Republic vs. Court of Appeals, 107 SCRA 504).
respondent Florence S. Ariola accountable for any liability incurred by her
36
late father. The documentary evidence presented, particularly the
promissory notes and the continuing guaranty agreement, were executed
and signed only by the late Efraim Santibañez and his son Edmund. As the
This being the case, the petitioner’s personality to file the complaint is
petitioner failed to file its money claim with the probate court, at most, it
wanting. Consequently, it failed to establish its cause of action. Thus, the
may only go after Edmund as co-maker of the decedent under the said
trial court did not err in dismissing the complaint, and the CA in affirming
promissory notes and continuing guaranty, of course, subject to any
the same.
defenses Edmund may have as against the petitioner. As the court had not
acquired jurisdiction over the person of Edmund, we find it unnecessary to
delve into the matter further.
IN LIGHT OF ALL THE FOREGOING, the petition is hereby DENIED.
The assailed Court of Appeals Decision is AFFIRMED. No costs.
We agree with the finding of the trial court that the petitioner had not
sufficiently shown that it is the successor-in-interest of the Union Savings
and Mortgage Bank to which the FCCC assigned its assets and liabilities. 33 SO ORDERED.
The petitioner in its complaint alleged that "by virtue of the Deed of
Assignment dated August 20, 1981 executed by and between First
Countryside Credit Corporation and Union Bank of the Philippines…"34
However, the documentary evidence35 clearly reflects that the parties in the
deed of assignment with assumption of liabilities were the FCCC, and the
Union Savings and Mortgage Bank, with the conformity of Bancom
Philippine Holdings, Inc. Nowhere can the petitioner’s participation therein
as a party be found. Furthermore, no documentary or testimonial evidence
was presented during trial to show that Union Savings and Mortgage Bank
is now, in fact, petitioner Union Bank of the Philippines. As the trial court
declared in its decision:

… [T]he court also finds merit to the contention of defendant that plaintiff
failed to prove or did not present evidence to prove that Union Savings and
Mortgage Bank is now the Union Bank of the Philippines. Judicial notice
does not apply here. "The power to take judicial notice is to [be] exercised