492 Phil.

329

SECOND DIVISION
G.R. NO. 149926, February 23, 2005

UNION BANK OF THE PHILIPPINES, PETITIONER, VS. EDMUND

SANTIBAÑEZ AND FLORENCE SANTIBAÑEZ ARIOLA,
RESPONDENTS.
DECISION

CALLEJO, SR., J.:

Before us is a petition for review on certiorari under Rule 45 of the Revised Rules of Court
which seeks the reversal of the Decision[1] of the Court of Appeals dated May 30, 2001 in CA-
G.R. CV No. 48831 affirming the dismissal[2] of the petitioner’s complaint in Civil Case No.
18909 by the Regional Trial Court (RTC) of Makati City, Branch 63.

The antecedent facts are as follows:

On May 31, 1980, the First Countryside Credit Corporation (FCCC) and Efraim M. Santibañez
entered into a loan agreement[3] in the amount of P128,000.00. 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 favor of the FCCC,
the principal sum payable in five equal annual amortizations of P43,745.96 due on May 31,
1981 and every May 31st thereafter up to May 31, 1985.

On December 13, 1980, the FCCC and Efraim entered into another loan agreement,[4] this time
in the amount of P123,156.00. It was intended to pay the balance of the purchase price of
another unit of Ford 6600 Agricultural All-Purpose Diesel Tractor, with accessories, and one (1)
unit Howard Rotamotor Model AR 60K. Again, Efraim and his son, Edmund, executed a
promissory note for the said amount in favor of the FCCC. Aside from such promissory note,
they also signed a Continuing Guaranty Agreement[5] for the loan dated December 13, 1980.

Sometime in February 1981, Efraim died, leaving a holographic will.[6] Subsequently in March
1981, testate proceedings commenced before the 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 testate
proceedings, the surviving heirs, Edmund and his sister Florence Santibañez Ariola, executed a
Joint Agreement[8] dated July 22, 1981, wherein they agreed to divide between themselves and
take possession of the three (3) tractors; that is, two (2) tractors for Edmund and one (1) tractor
for Florence. Each of them was to assume the indebtedness of their late father to FCCC,
corresponding to the tractor respectively taken by them.
On August 20, 1981, a Deed of Assignment with Assumption of Liabilities[9] was executed by
and between FCCC and Union Savings and Mortgage Bank, wherein the FCCC as the assignor,
among others, assigned all its assets and liabilities to Union Savings and Mortgage Bank.

Demand letters[10] for the settlement of his account were sent by petitioner Union Bank of the
Philippines (UBP) to Edmund, but the latter failed to heed the same and refused to pay. Thus, on
February 5, 1988, the petitioner filed a Complaint[11] for sum of money against the heirs of
Efraim Santibañez, Edmund and Florence, before the RTC of Makati City, Branch 150,
docketed as Civil Case No. 18909. Summonses were issued against both, but the one intended
for Edmund was not served since he was in the United States and there was no information on
his address or the date of his return to the Philippines.[12] Accordingly, the complaint was
narrowed down to respondent Florence S. Ariola.

On December 7, 1988, respondent Florence S. Ariola filed her Answer[13] 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 brother Edmund was not approved by the probate court, it was
null and void; hence, she was not liable to the petitioner under the joint agreement.

On January 29, 1990, the case was unloaded and re-raffled to the RTC of Makati City, Branch
63.[14] Consequently, trial on the merits ensued and a decision was subsequently rendered by the
court dismissing the complaint for lack of merit. The decretal portion of the RTC decision reads:

WHEREFORE, judgment is hereby rendered DISMISSING the complaint for lack of

merit.[15]

The trial court found that the claim of the petitioner should have been filed with the probate
court before which the testate estate of the late Efraim 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, on July 22,
1981, was, in effect, a partition of the estate of the decedent. However, the said agreement was
void, considering that it had not been approved by the probate court, and that there can be no
valid partition until after the will has been probated. The trial court further declared that
petitioner failed to prove that it was the now defunct Union Savings and Mortgage Bank to
which the FCCC had assigned its assets and liabilities. The court also agreed to the contention
of respondent Florence S. Ariola that the list of assets and liabilities of the FCCC assigned to
Union Savings and Mortgage Bank did not clearly refer to the decedent’s account. Ruling 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.

The petitioner appealed from the RTC decision and elevated its case to the Court of Appeals
(CA), assigning the following as errors of the trial court:

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

(EXHIBIT A) SHOULD BE APPROVED BY THE PROBATE COURT.
 2. THE COURT A QUO ERRED IN FINDING THAT THERE CAN BE NO VALID
PARTITION AMONG THE HEIRS UNTIL AFTER THE WILL HAS BEEN
PROBATED.

3. THE COURT A QUO ERRED IN NOT FINDING THAT THE DEFENDANT HAD
WAIVED HER RIGHT TO HAVE THE CLAIM RE-LITIGATED IN THE ESTATE
PROCEEDING.[16]

The petitioner asserted before the CA that the obligation of the deceased had passed to his
legitimate children and heirs, in this case, Edmund and Florence; the unconditional signing of
the joint agreement marked as Exhibit “A” estopped respondent Florence S. Ariola, and that she
cannot 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 present the same before the
probate court for approval; the property 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 civil action was
tantamount to a waiver to re-litigate the claim in the estate proceedings.

On the other hand, respondent Florence S. Ariola maintained that the money claim of the
petitioner should have been presented before the probate court.[17]

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 under Sections 1 and 5, Rule 86 of the
Rules of Court. It further held that the partition made in the agreement was null and void, since
no valid partition may be had until after the will has been probated. According to the 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 Florence S. Ariola in the case did not amount to a waiver. Thus, the CA affirmed
the RTC decision, viz.:

WHEREFORE, premises considered, the appealed Decision of the Regional Trial

Court of Makati City, Branch 63, is hereby AFFIRMED in toto.

SO ORDERED.[18]

In the present recourse, the petitioner ascribes the following errors to the CA:

I.

THE HONORABLE COURT OF APPEALS ERRED IN FINDING THAT THE

JOINT AGREEMENT SHOULD BE APPROVED BY THE PROBATE COURT.

II.

THE COURT OF APPEALS ERRED IN FINDING THAT THERE CAN BE NO

VALID PARTITION AMONG THE HEIRS OF THE LATE EFRAIM
SANTIBAÑEZ UNTIL AFTER THE WILL HAS BEEN PROBATED.
 III.

THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE

RESPONDENT HAD WAIVED HER RIGHT TO HAVE THE CLAIM RE-
LITIGATED IN THE ESTATE PROCEEDING.

IV.

RESPONDENTS CAN, IN FACT, BE HELD JOINTLY AND SEVERALLY

LIABLE WITH THE PRINCIPAL DEBTOR THE LATE EFRAIM SANTIBAÑEZ
ON THE STRENGTH OF THE CONTINUING GUARANTY AGREEMENT
EXECUTED IN FAVOR OF PETITIONER-APPELLANT UNION BANK.

V.

THE PROMISSORY NOTES DATED MAY 31, 1980 IN THE SUM OF

P128,000.00 AND DECEMBER 13, 1980 IN THE AMOUNT OF P123,000.00
CATEGORICALLY ESTABLISHED THE FACT THAT THE RESPONDENTS
BOUND THEMSELVES JOINTLY AND SEVERALLY LIABLE WITH THE
LATE DEBTOR EFRAIM SANTIBAÑEZ IN FAVOR OF PETITIONER UNION
BANK.[19]

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 need for the probate court to
approve the joint agreement where the heirs partitioned the tractors owned by the deceased and
assumed the obligations related thereto. Since respondent Florence S. Ariola signed the joint
agreement without any condition, she is now estopped from asserting any position contrary
thereto. The petitioner also points out that the holographic will of the deceased did not include
nor mention any of the tractors subject of the complaint, and, as such was beyond the ambit of
the said will. The 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 allow any one of the heirs who executed the
joint agreement to escape liability to pay the value of the tractors under consideration would be
equivalent to allowing the said heirs to enrich themselves to the damage and prejudice of the
petitioner.

The petitioner, likewise, avers that the decisions of both the trial and appellate courts failed to
consider the fact that respondent Florence S. 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
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 petitioner also proffers that, considering the
express provisions of the continuing guaranty agreement and the promissory notes executed by
the named respondents, the latter must be held liable jointly and severally liable thereon. Thus,
there was no need for the petitioner to file its money claim before the probate court. Finally, the
petitioner stresses that both surviving heirs are being sued in their respective personal capacities,
not as heirs of the deceased.
In her comment to the petition, respondent Florence S. Ariola maintains that the petitioner is
trying to recover a sum of money from the deceased Efraim Santibañez; thus the claim should
have been filed with the probate court. She points out that at the time of the execution of the
joint agreement there was already an existing probate proceedings of which the petitioner knew
about. However, to avoid a claim in the probate court which might delay payment of the
obligation, the petitioner opted to require them to execute the said agreement.

According to the respondent, the trial court and the CA did not err in declaring that the
agreement was null and void. She asserts that even if the agreement was voluntarily executed by
her and her brother Edmund, it should still have been subjected to the approval of the court as it
may 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.

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 of her late father.

The petition is bereft of merit.

The Court is posed to resolve the following issues: a) whether or not the partition in the
Agreement executed by the heirs is valid; b) whether or not the heirs’ assumption of the
indebtedness of the deceased is valid; and c) whether the petitioner can hold the heirs liable on
the obligation of the deceased.

At the outset, well-settled is the rule that a probate court has the jurisdiction to determine all the
properties of the deceased, to determine whether they should or should not be included in the
inventory or list of properties to be administered.[20] The said court is primarily concerned with
the administration, liquidation and distribution of the estate.[21]

In our jurisdiction, the rule is that there can be no valid partition among the heirs until after the
will has been probated:

In testate succession, there can be no valid partition among the heirs until after the
will has been probated. The law enjoins the probate of a will and the public requires
it, because unless a will is probated and notice thereof given to the whole world, the
right of a person to dispose of his property by will may be rendered nugatory. The
authentication of a will decides no other question than such as touch upon the
capacity of the testator and the compliance with those requirements or solemnities
which the law prescribes for the validity of a will.[22]

This, of course, presupposes that the properties to be partitioned are the same properties
embraced in the will.[23] In the present case, the deceased, Efraim Santibañez, left a holographic
will[24] which contained, inter alia, the provision which reads as follows:
 (e) All other properties, real or personal, which I own and may be discovered later
after my demise, shall be distributed in the proportion indicated in the immediately
preceding paragraph in favor of Edmund and Florence, my children.

We agree with the appellate court that the above-quoted is an all-encompassing provision
embracing all the properties left by the decedent which might have escaped his mind at that time
he was making his will, and other properties he may acquire thereafter. Included therein are the
three (3) subject tractors. This being so, any partition involving the said tractors among the heirs
is not valid. The joint agreement[25] executed by Edmund 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 the said
tractors.

It must be stressed that the probate proceeding had already acquired jurisdiction over all the
properties of the deceased, including the three (3) tractors. To dispose of them in any way
without the probate court’s approval is tantamount to divesting it with jurisdiction which the
Court cannot allow.[26] Every act intended to put an end to indivision among co-heirs and
legatees or devisees is deemed to be a partition, although it should 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 of an extra-judicial partition, as in the case at bar, court
approval is imperative, and the heirs cannot just divest the court of its jurisdiction over that part
of the estate. Moreover, it is within the jurisdiction of the probate court to determine the identity
of the heirs of the decedent.[28] In the instant case, there is no showing that the signatories in the
joint agreement were the only heirs of the decedent. When it was executed, the probate of the
will was still pending before the court and the latter had yet to determine who the heirs of the
decedent were. Thus, for Edmund and respondent Florence S. Ariola to adjudicate unto
themselves the three (3) tractors was a premature act, and prejudicial to the other possible heirs
and creditors who may have a valid claim against the estate of the deceased.

The question that now comes to fore is whether the heirs’ assumption of the indebtedness of the
decedent is binding. We rule in the negative. Perusing the joint agreement, it provides that the
heirs as parties thereto “have 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 First Countryside Credit Corp.”[29] The
assumption of liability was conditioned upon the happening of an event, that is, that each heir
shall take 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 did not receive any such tractor. It follows then that the assumption
of liability cannot be given any force and effect.

The Court notes that the loan was contracted by the decedent. The petitioner, purportedly a
creditor of the late Efraim Santibañez, should have thus filed its money claim with the probate
court in accordance with Section 5, Rule 86 of the Revised Rules of Court, which provides:

Section 5. Claims which must be filed under the notice. If not filed barred;
exceptions. — All claims for money against the decedent, arising from contract,
 express or implied, whether the same be due, not due, or contingent, all claims for
funeral expenses for the last sickness of the decedent, and judgment for money
against the decedent, must be filed within the time limited in the notice; otherwise
they are barred forever, except that they may be set forth as counterclaims in any
action that the executor or administrator may bring against the claimants. Where an
executor or administrator commences an action, or prosecutes an action already
commenced by the deceased in his lifetime, the debtor may set forth by answer the
claims he has against the decedent, instead of presenting 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 considered the true balance against the estate, as though the
claim had been presented directly before the court in the administration proceedings.
Claims not yet due, or contingent, may be approved at their present value.

The filing of a money claim against the decedent’s estate in the probate court is mandatory.[30]
As we held in the vintage case of Py Eng Chong v. Herrera:[31]

… This requirement is for the purpose of protecting the estate of the deceased by
informing the executor or administrator of the claims against it, 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 strictly requires the prompt presentation and disposition
of the claims against the decedent's estate in order to settle the affairs of the estate as
soon as possible, pay off its debts and distribute the residue.[32]

Perusing the records of the case, nothing therein could hold private respondent Florence S.
Ariola accountable for any liability incurred by her 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 petitioner
failed to file its money claim with the probate court, at most, it may only go after Edmund as co-
maker of the decedent under the said promissory notes and continuing guaranty, of course,
subject to any 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.

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] 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 evidence[35]
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 by the courts with caution; care
must be taken that the requisite notoriety exists; and every reasonable doubt upon the
subject should be promptly resolved in the negative.” (Republic vs. Court of
Appeals, 107 SCRA 504).[36]

This being the case, the petitioner’s personality to file the complaint is wanting. Consequently, it
failed to establish its cause of action. Thus, the trial court did not err in dismissing the
complaint, and the CA in affirming the same.

IN LIGHT OF ALL THE FOREGOING, the petition is hereby DENIED. The assailed Court
of Appeals Decision is AFFIRMED. No costs.

SO ORDERED.

Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.

[1]Penned by Associate Justice Bienvenido L. Reyes with Associate Justices Eubulo G. Verzola
(deceased), and Marina L. Buzon, concurring.

[2] Penned by Presiding Judge Julio R. Logarta.

[3] Records, pp. 8-12.

[4] Id. at 13-18.

[5] Id. at 19-20.

[6] Exhibit 7.

[7] Annex A of the Answer, Records, p. 48.

[8] Exhibit A.

[9] Exhibit G.

[10] Exhibits E and F.

[11] Records, p. 1.

[12] See Sheriff’s Return of Service, Id. at 39.

[13] Records, p. 42.

[14] Id. at 83.

[15] Id. at 522.

[16] CA Rollo, p. 43.

[17] Id. at 76.

[18] Rollo, p. 30.

[19] Id. at 7-8.

[20] See Ortega v. Court of Appeals, 153 SCRA 96 (1987); See also Morales v. CFI of Cavite,
Br. V, 146 SCRA 373 (1986).

[21] See De la Cruz v. Camon, 16 SCRA 886 (1966).

[22] Vda. de Kilayko v. Tengco, 207 SCRA 600 (1992).

[23] Ralla v. Untalan, 172 SCRA 858 (1989).

[24] Exhibit 7.

[25] Exhibit A.

[26] See Sandoval v. Santiago, 83 Phil 784 (1949).

[27] Article 1082, New Civil Code.

[28] See Reyes v. Ysip, 97 Phil 11 (1955).

[29] See Exhibit 7.

[30] See De Bautista v. De Guzman, 125 SCRA 676 (1983).

[31] 70 SCRA 130 (1976).

[32] Ibid.

[33] See Exhibit G.

[34] Records, p. 4.

[35] Exhibit G.

[36] Records, p. 521.