INTESTATE ESTATE OF JAMES R. BURT, DECEASED. THE PHILIPPINE TRUST CO., ADMINISTRATOR AND APPELLEE, VS. LUZON SURETY CO., INC., SURETY AND APPELLANT.

On February 14, 1946, the Court of First Instance of Manila appointed
Francis R. Picard, Sr. as Administrator of the Intestate Estate of the deceased
James R. Burt (Civil Case No. 71872) upon a bond of P1,000. Thereafter he
submitted and the Court approved his bond in the required amount, with appellant
Luzon Surety Co., Inc. as his surety.

For reasons that do not fully appear of record, on May 19, 1948 the Court
dismissed Picard as administrator and appointed the Philippine Trust Co. in his
place. After qualifying for the position, the latter, on July 19, 1948,
submitted an inventory-report showing that the only asset of the Intestate
Estate of Burt that had come into its possession was the sum of P57.75
representing the balance of the checking account of said deceased with the
Philippine National Bank. In view thereof, on July 26, 1948 the Court issued an
order the pertinent portion of which reads as follows:

“A review, however, of the record of the case reveals that former
Administrator Francis Picard filed on February 6, 1947, an inventory of the
estate of the deceased, from which it appears that the sole property he found
was the amount of P8,873.73 in current account with the Philippine National
Bank. This amount was reduced to P7,986.53 after deducting therefrom his
expenses in the amount of P887.22; and as reported by him in his petition filed
on June 8, 1948, the. further expenses in the amount of P865.20 were deducted,
thereby leaving the balance of P7,121.33 as of May 27, 1948.

“In view of the foregoing, the Court hereby orders said Francis Picard to
deliver within forty-eight hours (48) from the receipt of a copy of the order
the difference of P7,063.58 to the present Administrator, Philippine Trust
Company; otherwise, he will be ordered committed to prison for contempt until he
shall have complied with this order.”

In compliance with the above order, Picard submitted an itemized statement of
disbursements made by him as administrator of the estate, showing that as of
February 6, 1947 the estate funds amounted to P7,986.53; that on June 8, 1948 he
reported to the Court additional expenses incurred amounting to P865.20, thus
leaving a balance of P7,121.33; that thereafter he disbursed the sum of P250 to
defray the burial expenses of the deceased, thus leaving a balance of P6,871.33;
that on several occasions during the period from February 22, 1946 to May 14,
1947, he had delivered to Feliciano Burt, adoptive son of the deceased James R.
Burt, different sums of money totalling P5,825, thus leaving a balance of
P972.33. After considering this statement, the Court, on September 18, 1948,
issued an order finding Picard guilty of having disbursed funds of the estate
amounting to about P8,000, without authority. For this reason, the Court
referred the matter to the City Fiscal of Manila for investigation. Result of
this was the prosecution of Picard for estafa. Having pleaded guilty to the
charge, judgment of conviction was accordingly rendered, and he was, besides,
held civilly liable in the sum of P8,000.

On July 8, 1957 the Court issued an order requiring; appellant Luzon Surety
Co., Inc. to show cause why the administrator’s bond filed by it on behalf of
Picard should not be confiscated. Appellant filed a motion to set aside said
order upon the following grounds: firstly, that the Court cannot order the
confiscation of the administrator’s bond, no prejudice or injury to creditors,
legatees or heirs of the estate of James R. Burt having been shown, and
secondly, that “a probate court cannot, ex proprio motu, prosecute the
probate bond”. On August 3, 1957 the Court denied appellant’s motion and ordered
the confiscation of its bond. After the denial of appellant’s motion for
reconsideration, it took the present appeal.

Appellant’s contention that the probate court, ex proprio motu, cannot
order the confiscation or forfeiture of an administrator’s bond, is clearly
without merit. Whatever may be the rule prevailing in other jurisdictions, in
ours a probate court is possessed with an all-embracing power not only in
requiring but also in fixing the amount, and executing or forfeiting an
administrator’s bond. The execution or forfeiture of en administrator’s bond, is
deemed to be a necessary part and incident of the administration proceedings as
much as its filing and the fixing of its amount. The rule, therefore, is that
the probate court may have said bond executed in the same probate
proceeding.

Moreover, the condition of the administrator’s bond in question is that
Francis L. Picard shall faithfully execute the orders and decrees of the court;
that if he did so, the obligation shall become void, otherwise it shall remain
in full force and effect. It having been established that Picard disbursed funds
of the estate without authority, the conclusion follows that, he and his surety
became bound upon the terms of their bond.

Appellant also contends that it was not proper for the lower Court to order
the confiscation of its bond because no prejudice or injury to any creditor,
heir or other interested person has been proved. This is also without merit.
According to the record, the claims against the estate filed by Antonio Gardiner
and Jose Teruel for the sums of P200 and P3,205, respectively, were approved by
the probate court but the same have remained unpaid because of lack of
funds.

Finally, appellant claims that it had been released from liability as surety
because it received no notice of the proceedings for the determination of the
accountability of the administrator. This contention we also find to be
untenable.

From the nature of the obligation entered into by the surety on an
administrator’s bond—which makes him privy to the proceedings against his
principal—he is bound and concluded, in the absence of fraud and collusion, by a
judgment against his principal, even though said surety was not a party to the
proceeding. In the case of De Mendoza vs. Pacheco, 64 Phil., 135, the
sureties oh the administrator’s bond were held liable thereon altho they were
not parties to the proceeding against the administrator, nor were they notified
in connection therewith prior to the issuance of the court order for the
confiscation of the bond. Lastly, according to Section 11, Rule 86 of the Rules
of Court, upon the settlement of the account of an executor or administrator,
his sureties “may, upon application, be admitted as a party to such accounting”.
The import of this provision is that the sureties are not entitled to notice but
may be allowed to intervene in the settlement of the accounts of the executor or
administrator if they ask for leave to do so in due time.

Wherefore, the decision appealed from is hereby affirmed, with
costs.

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion,
Reyes, J.B.L., Paredes, De Leon, and Natividad, JJ., concur.