GR L 13031; (May, 1961) (Digest)
G.R. No. L-13031. May 30, 1961. INTESTATE ESTATE OF JAMES R. BURT, deceased. THE PHILIPPINE TRUST CO., administrator-appellee, vs. LUZON SURETY CO., INC., surety-appellant.
FACTS
The Court of First Instance of Manila appointed Francis R. Picard, Sr. as administrator of the intestate estate of James R. Burt, with Luzon Surety Co., Inc. as surety on his bond. Picard was later replaced by Philippine Trust Co. The new administrator’s inventory showed only P57.75 in estate assets. The court, however, found that Picard had previously reported estate funds of over P8,000. It ordered him to account for and deliver the missing balance. Picard submitted a statement showing he had disbursed funds, including a sum delivered to the deceased’s adoptive son, without court approval. He was subsequently prosecuted for estafa, pleaded guilty, and was held civilly liable.
The probate court then issued an order for Luzon Surety to show cause why the administrator’s bond should not be confiscated. The surety opposed, arguing the court could not act ex proprio motu and that no prejudice to creditors or heirs was shown. The court denied the motion and ordered the bond confiscated, prompting this appeal.
ISSUE
May the probate court, on its own motion, order the confiscation of an administrator’s bond upon a finding that the administrator misappropriated estate funds, and is the surety liable despite lack of formal notice of the proceedings against the administrator?
RULING
Yes. The probate court has comprehensive authority over all incidents of administration, including the execution or forfeiture of an administrator’s bond. This power is integral to the court’s supervision of the estate and is exercised within the same probate proceeding. The bond’s condition was that Picard would faithfully execute court orders. His unauthorized disbursements constituted a breach, activating the surety’s liability under the bond.
The surety’s claim of no proven prejudice is untenable. The record shows approved claims from creditors remained unpaid due to the estate’s lack of funds, directly resulting from the administrator’s misappropriation. Finally, the surety is bound by the judgment against its principal. A surety on an administrator’s bond is privy to the proceedings and is concluded by a judgment against the administrator in the absence of fraud or collusion, even without being a formal party or receiving specific notice. The Rules of Court allow sureties to intervene in an accounting, but do not entitle them to notice as a matter of right. The lower court’s order of confiscation was proper. The decision is affirmed.