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
documentary 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 stipulation did not provide
that it will terminate at the end of the 1st year if
the premium remains unpaid. Hence, it does not
necessarily extinguish or terminate the affectivity
of the counter bond in the absence of an express
stipulation 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.