Luzon Surety Company, Inc. vs.

Quebrar

Bond of Executors and Administrators

RULE 81 OF THE RULES OF COURT
Case Title :
LUZON SURETY COMPANY, INC., plaintiff-appellee, v.
PASTOR T. QUEBRAR and FRANCISCO KILAYKO,
defendants-appellants.

Case Nature :
APPEAL from the judgment of the Court of First
Instance of Manila.
FACTS:
The LUZON SURETY COMPANY issued two administrator’s bond in the amount of
P15,000.00 each, in behalf of the Quebrar, as administrator in (2) estates. In consideration of the
suretyship, the Luzon Surety Company, Inc. bound themselves jointly and severally with the
defendant. The defendants executed two indemnity agreements, wherein they agreed, jointly and
severally, to pay the plaintiff the premiums every year.
- 1954-55, the defendants paid the premiums and the documnetary stamps.
- 1957, the Court approved the project of partition and accounts of defendant.
- 1962, Luzon Surety Company demanded payments of premiums from 1955 onwards

The defendants filed a motion for cancellation and/or reduction of executor’s bonds on the ground
that “the heirs of these testate estates have already received their respective shares”. The court
granted the motion of the defendants to have both bonds cancelled.
Hence, plaintiff file a case in the CFI.
-

-TRIAL-
both parties presented their documentary evidence, and agreed to resolve the issue whether the
administrator bonds were in force.... and a year after the case is filed and approved by the court.
The defendants offered by way of amicable settlement which the plaintiff refused.
The (T)court allowed the plaintiff to recover since the bonds were in force and effect from
the filing until 1962.
-

“We find for the plaintiff. It is clear from the terms of the Order of the Court, in
which these bonds were filed, that the same were in force and effect from and after
filing thereof up to and including October 20 1962, when the same were cancelled”.

“It follows that the defendants are liable under the terms of the Indemnity
Agreements, notwithstanding that they have not expressly sought the renewal of
these bonds, because the same were in force and effect until they were cancelled by
order of the Court”.

The renewal of said bonds is presumed from the fact that the defendants did not ask for the
cancellation of the same; and their liability springs from the fact that defendant
Administrator, Quebrar, benefitted from the bonds during their lifetime.

Wherefore, the judgment is rendered in favor of the plaintiff ordering the defendants to pay
the plaintiff. Hence, an appeal before CA.

The Court of Appeals certified the case to the Supreme Court on questions of law.
ISSUE:
Whether or not the contention of the defendants-appellants
that the administrator’s bond ceased to be of legal force and
effect with the approval of the project of partition and
statement of accounts on June 6, 1957 is without merit.
HELD:
No, under section 1 Rule 81 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 partition, (d) 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 debts and expenses to be paid after 1957.

Moreover, the bond stipulation did not provide that it will terminate at the end of the first
(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.
WHEREFORE, THE DECISION OF THE COURT OF
FIRST INSTANCE OF MANILA DATED NOVEMBER
3, 1964 IS HEREBY AFFIRMED. WITH COSTS
AGAINST DEFENDANTS-APPELLANTS.