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  • Luzon Surety Company vs. Quebrar

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    John Ludwig Bardoquillo Pormento
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    This case discusses whether administrator bonds were still in effect after the approval of a Project of Partition and Accounts. The Court ruled that the bonds remained in effect, for three reasons: 1) Section 1 of Rule 81 requires an administrator to put up a bond to indemnify creditors, heirs, and the estate as long as the administrator has duties. 2) The administrator's liability under the bond is co-extensive with his duties in administration, which were not fully completed after the project approval. 3) Administration involves fully liquidating the estate and distributing assets, which was not yet done after the project approval as there were still debts and expenses to pay. Therefore, the bonds were still in force

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    This case discusses whether administrator bonds were still in effect after the approval of a Project of Partition and Accounts. The Court ruled that the bonds remained in effect, for three reasons: 1) Section 1 of Rule 81 requires an administrator to put up a bond to indemnify creditors, heirs, and the estate as long as the administrator has duties. 2) The administrator's liability under the bond is co-extensive with his duties in administration, which were not fully completed after the project approval. 3) Administration involves fully liquidating the estate and distributing assets, which was not yet done after the project approval as there were still debts and expenses to pay. Therefore, the bonds were still in force

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    © All Rights Reserved
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    64 views2 pages

    Luzon Surety Company vs. Quebrar

    Uploaded by

    John Ludwig Bardoquillo Pormento
    This case discusses whether administrator bonds were still in effect after the approval of a Project of Partition and Accounts. The Court ruled that the bonds remained in effect, for three reasons: 1) Section 1 of Rule 81 requires an administrator to put up a bond to indemnify creditors, heirs, and the estate as long as the administrator has duties. 2) The administrator's liability under the bond is co-extensive with his duties in administration, which were not fully completed after the project approval. 3) Administration involves fully liquidating the estate and distributing assets, which was not yet done after the project approval as there were still debts and expenses to pay. Therefore, the bonds were still in force

    Copyright:

    © All Rights Reserved
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    of 2

    Luzon Surety Company, Inc. vs.

    Quebrar

    G.R. No. L-40517

    January 31, 1984

    Facts:

    On August 9, 1954, plaintiff-appellee issued two administrator's bond in the amount of


    P15,000.00 each, in behalf of the defendant-appellant Pastor T. Quebrar, as administrator in Special
    Proceedings Nos. 3075 and 3076 of the Court of First Instance of Negros Occidental, entitled " Re Testate
    Estate of A. B. Chinsuy," and Re Testate Estate of Cresenciana Lipa," respectively, (pp. 8-12, 17-21,
    ROA; p. 9 rec.). In consideration of the suretyship wherein the plaintiff-appellee Luzon Surety Company,
    Inc. was bound jointly and severally with the defendant appellant Pastor T. Quebrar, the latter, together
    with Francisco Kilayko, executed two indemnity agreements, where among other things, they agreed
    jointly and severally to pay the plaintiff-appellee "the sum of Three Hundred Pesos (P300.00) in advance
    as premium thereof for every 12 months or fraction thereof, this ... or any renewal or substitution thereof
    is in effect" and to indemnify plaintiff-appellee against any and all damages, losses, costs, stamps taxes,
    penalties, charges and expenses, whatsoever, including the 15% of the amount involved in any litigation,
    for attomey's fees (pp. 12-16, 21-25. ROA; p. 9, rec.).

    For the first year, from August 9, 1954 to August 9, 1955, the defendants-appellants paid P304.50
    under each indemnity agreement or a total of P609.00 for premiums and documentary stamps. On June 6,
    1957, the Court of First Instance of Negros Occidental approved the amended Project of Partition and
    Accounts of defendant-appellant (p. 87, ROA; p. 9, rec.). On May 8, 1962, the plaintiff-appellee
    demanded from the defendants-appellants the payment of the premiums and documentary stamps from
    August 9, 1955. On October 17, 1962, the defendants-appellants ordered 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" (pp. 69-70, ROA, p. 9, rec.).

    On October 20, 1962, the Court of First Instance of Negros Occidental acting on the motions filed
    by the defendants-appellants ordered the bonds cancelled. Plaintiff-appellee's demand amounted to
    P2,436.00 in each case, hence, a total of P4,872.00 for the period of August 9, 1955 to October 20, 1962,
    the defendants-appellants to pay the said amount of P4,872.00. On January 8, 1963, the plaintiff-appellee
    filed the case with the Court of First Instance of Manila During the pre-trial the parties presented their
    documentary evidences and agreed on the ultimate issue - "whether or not the administrator's bonds were
    in force and effect from and after the year that they were filed and approved by the court up to 1962,
    when they were cancelled." The CFI Manila ruled in favor of the plaintiff. Defendants-appellants
    appealed to the Court of Appeals. On March 20, 1975, the Court of Appeals in a resolution certified the
    herein case to this Court after finding that this case involves only errors or questions of law.

    Issue:

    Are the bonds still in full force and effect even after the approval of the Project of Partition and
    Accounts?

    Ruling:

    Yes, they are still in full force and effect.

    Section 1 of Rule 81 of the Rules of Court requires the administrator/executor to put up a bond for the
    purpose of indemnifying the creditors, heirs, legatees and the estate. It is conditioned upon the faithful
    performance of the administrator's trust (Mendoza vs. Pacheco, 64 Phil. 134).

    Having in mind the purpose and intent of the law, the surety is then liable under the
    administrator's bond, for as long as the administrator has duties to do as such administrator/executor.
    Since the liability of the sureties is co-extensive with that of the administrator and embraces the
    performance of every duty he is called upon to perform in the course of administration, it follows that the
    administrator is still duty bound to respect the indemnity agreements entered into by him in consideration
    of the suretyship It is shown that the defendant-appellant Pastor T. Quebrar, still had something to do as
    an administrator/executor even after the approval of the amended project of partition and accounts on
    June 6, 1957.

    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. The defendant-appellant Pastor T. Quebrar did not cease as administrator after June 6,
    1957, for administration is for the purpose of liquidation of the estate and distribution of the residue
    among the heirs and legatees. And liquidation means the determination of all the assets of the estate
    and payment of all the debts and expenses (Flores vs. Flores, 48 Phil. 982). It appears that there were still
    debts and expenses to be paid after June 6, 1957.

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