Union Bank of the Philippines v.

Edmund Santibanez and Florence Santibanez Ariola (2005)

PARTIES: (1) Efraim Santibanez (father/deceased) (2) Edmund Santibanez (son) (3) Florence
Santibanez (daughter/sister) (4) First Countryside Credit Corporation (FCCC - original creditor) (5) Union
Savings and Mortgage (USM second creditor thru deed of assignment) (6) Union Bank (UB --
petitioner and alleged successor-in-interest).

FACTS
1. Efraim entered into 2 loan contracts with FCCC for the purchase of two tractors. His son
Edmund was also party to the contracts and they both executed Continuing Guaranty
Agreement.
2. Efraim died. Left holographic will.
3. Testate proceedings were commenced with RTC Iloilo Branch 7 (probate court)
4. During the testate proceedings, Edmund and Florence entered into a JOINT AGREEMENT to
partition the tractors..
5. JOINT AGREEMENT: (a) two tractors would go to Edmund (b) one tractor would go to Florence
(c) both would assume the corresponding obligations attached to the tractors.
6. Meanwhile, FCCC assigned its debts to USM.

ACTION: UB filed a complaint for sum of money in RTC MAKATI to collect on debts. Complaint could
not be served on Edmund because he was in the United States. Only Florence was impleaded.
DEFENSE: (1) Florence was not a party to the original loan contract. (2) Joint agreement was invalid
because not approved by probate court. Thus, she did not assume obligation.
UB ARGUMENTS: (1) Florence was estopped from challenging agreement because she signed without
conditions. (2) No need for probate court approval because: (a) Florence signed in personal capacity (b)
the tractors were not expressly included in the holographic will.
RTC: (1) Complaint to collect sum of money from deceased must be filed in probate court. (2) Probate
court did not approve joint agreement. VOID. (3) Identity of UB as successor-in-interest of USM not
sufficiently proven.
CA: Upheld RTC.
ISSUES: (1) WON Joint Agreement was valid (NO) (2) WON assumption of debt was valid (NO) (3) WON
petitioner can hold heirs liable for obligations (NO)
SC
1. GENERAL RULE: No valid partition among heirs unless after the will has been probated.
2. JURISDICTION of probate court established when proceedings commenced. Jurisdiction
includes:
a. Determination of proper heirs.
b. Determination of properties of decedent
c. Evaluation and judgment of claims against inheritance
3. IN THIS CASE:
a. Proper venue to file money claim against decedent is probate court which already has
jurisdiction over proceedings. Joint Agreement void for lack of probate court approval.
b. Holographic will included stipulation: All other properties, real or personal, which I own
and may be discovered later after my demise, shall be distributed. this is an all
encompassing provision that included the tractors.
c. Also, the identity of the heirs not yet sufficiently established. Premature to execute
extra-judicial partition of decedents properties between only two siblings.
d. Assumption of liability conditioned on taking of possession of property which they did
not considering the Joint Agreement was void.
e. Only Edmund signed continuing guaranty. UB can go after him as co-maker, but not
Florence who was not party to the contracts.
f. Finally, identity of UB as successor in interest was not sufficiently established by
documentary evidence.