G.R. No. L-20821; August 31, 1966
TESTATE ESTATE OF JOSE CASTILLO Y REFUERZO, deceased, PHILIPPINE NATIONAL BANK, administrator. BEATRIZ M. VDA. DE CASTILLO, ET AL., movants-appellees, vs. BLANCA CASTILLO, ET AL., oppositors-appellants.

FACTS

On March 2, 1954, Blanca, Amelia, Amalia, and Concepcion Castillo (legitimate daughters of the deceased Jose Castillo) filed a petition for the probate of his will dated January 17, 1928. On March 12, 1954, the surviving widow, Beatriz M. Vda. de Castillo, and seven other children opposed this petition and applied for the probate of a carbon copy of another alleged will dated January 1945, the original of which was burned. This application was opposed by the petitioners for the first will. On April 15, 1955, both parties submitted a compromise agreement for court approval. The agreement stipulated: (1) withdrawal of both petitions for probate; (2) preparation of an inventory of the estate; (3) exclusive adjudication of specific properties to the surviving widow (paragraph 3), to Yvonne Castillo (paragraph 4), and to Lydia Castillo (paragraph 5); (4) exclusive adjudication of six vacant lots to Amelia, Amalia, and Concepcion Castillo (paragraph 6); (5) exclusion from the inventory of properties previously transferred to specific children, stating they already belong exclusively to them and are not subject to collation (paragraph 7); (6) a legacy for Adolfo Micu (paragraph 8); (7) the widow’s legitime (paragraph 9); and (8) division of the remaining estate equally among the eleven legitimate children after deducting the legacy and legitime (paragraph 10). The probate court approved the agreement on April 16, 1955, appointed the Philippine National Bank as special administrator, and directed the liquidation and distribution of the estate. On August 31, 1960, the widow and seven children filed a joint motion praying for the adjudication of the properties specified in paragraphs 3 to 7 of the agreement. Blanca, Amelia, Amalia, and Concepcion Castillo objected. The lower court granted the motion only insofar as the properties in paragraphs 3, 4, and 5 were concerned, authorizing partial distribution to the widow, Yvonne, and Lydia. It deemed distribution under paragraph 6 unnecessary as the adjudicatees thereunder (Amelia, Amalia, Concepcion) were opposed, and noted the properties in paragraph 7 were already in the possession of the named heirs. The order also stated the distributed properties were subject to creditors’ rights. Blanca, Amelia, Amalia, and Concepcion Castillo appealed.

ISSUE

Whether the lower court erred in ordering a partial distribution of the estate properties specified in paragraphs 3, 4, and 5 of the compromise agreement, prior to the complete liquidation of the estate and simultaneous execution of all adjudications stipulated in the agreement.

RULING

The Supreme Court modified the order of the lower court and affirmed it in all other respects. The Court held that the compromise agreement was a bilateral contract where each party’s obligation was the consideration for the others. However, the partial distribution ordered would not injure the appellants’ rights. The Court noted that the appellants were already in possession of the properties listed in paragraph 7, and the delivery to the appellees under paragraphs 3 to 5 would minimize disparity between the groups. To establish parity, the lower court should have also ordered the distribution of the properties in paragraph 6 to the heirs named therein (Amelia, Amalia, Concepcion), even if they objected. The only possible adverse effect on the appellants was that the fruits of the distributed properties would share in the expenses of administration until final distribution. This could be addressed by requiring the heirs receiving partial distribution to post a bond sufficient to guarantee their share of administration expenses. Subject to the modifications of (1) requiring and approving such a bond, and (2) ordering the distribution of the properties in paragraph 6 of the agreement, the order appealed from was affirmed. No costs were awarded.