Luzon Surety v Quebrar & Kilayko Digest

G.R. No. L-40517 January 31, 1984

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 uponthe faithful performance of the administrator's trust. Hence, the surety is then liable udner 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.