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The defendants issued two administrator's bonds to Luzon Surety for two estates that Quebrar was administering. The parties signed an indemnity agreement where the defendants agreed to pay annual premiums. The defendants paid premiums from 1954-1955 but not from 1955 onwards. In 1962, Luzon Surety demanded payment of outstanding premiums and the court cancelled the bonds. The court ruled the bonds were still in force from 1955-1962 because the administrator has responsibilities until the complete liquidation and distribution of the estate, which had not occurred. Furthermore, the bond terms did not specify termination after one unpaid premium. As long as Quebrar remained administrator, the surety's liability continued.
The defendants issued two administrator's bonds to Luzon Surety for two estates that Quebrar was administering. The parties signed an indemnity agreement where the defendants agreed to pay annual premiums. The defendants paid premiums from 1954-1955 but not from 1955 onwards. In 1962, Luzon Surety demanded payment of outstanding premiums and the court cancelled the bonds. The court ruled the bonds were still in force from 1955-1962 because the administrator has responsibilities until the complete liquidation and distribution of the estate, which had not occurred. Furthermore, the bond terms did not specify termination after one unpaid premium. As long as Quebrar remained administrator, the surety's liability continued.
The defendants issued two administrator's bonds to Luzon Surety for two estates that Quebrar was administering. The parties signed an indemnity agreement where the defendants agreed to pay annual premiums. The defendants paid premiums from 1954-1955 but not from 1955 onwards. In 1962, Luzon Surety demanded payment of outstanding premiums and the court cancelled the bonds. The court ruled the bonds were still in force from 1955-1962 because the administrator has responsibilities until the complete liquidation and distribution of the estate, which had not occurred. Furthermore, the bond terms did not specify termination after one unpaid premium. As long as Quebrar remained administrator, the surety's liability continued.
Facts of the Case: Luzon Surety issued two administrator's bond in behalf of defendant Quebrar as administrator of 2 estates (Chinsuy and Lipa). The plaintiff and both Quebrar and Kilayko bound themselves solidarily after executing an indemnity agreement where both the defendants agreed to pay the premiums every year. In the years 1954-55, the defendants paid the premiums and the documnetary stamps. In 1957, the Court approved the project of partition, while in 1962, Luzon Surety demanded payments of premiums from 1955 onwards. It was also in the same year when the court granted the motion of the defendants to have both bonds cancelled. Hence, plaintiff file a case in the CFI. The court (CFI) allowed the plaintiff to recover since the bonds were in force and effect from the filing until 1962. The Court of Appeals certified the case to the Supreme Court on questions of law. Issue: Are the bonds still in force and effect from 1955 to 1962? Ruling. YES. Under Rule 81 (Sec.1) of the Rules of COurt, the administrator is required to put up a bond for the purpose of indemnifying creditors, heirs, legatees and the estate. It is conditioned upon the faithful performance of the administrator's trust. Hence, the surety is then liable under the administrator's bond. Even after the approved project of partitio, Quebrar as administrator still had something to do. The administration is for the purpose of liquidation of the estate and the distribution of the residue among the heirs and legatees. Liquidation means the determination of all the assets of the estate and the payment of all debts and expenses. it appears that there are still deblts and expenses to be paid after 1957. Moreover, the bond stipulationdd not provide that it will terminate at the end of the 1st year if the premium remains unpaid. Hence, it does not necessariy extinguish or terminate the effectivity of the coutner bond in the absence of an express stipualtion to this effect. As such, as long as the defendant remains
the administrator of the estate, the bond will be held liable and the plaintiff's liabilities subsist being the co-extensive with the administrator.