G.R. No. L-13489. January 29, 1960.
BANK OF THE PHILIPPINE ISLANDS, executor-appellant, vs. JOSE J. GONZALES, oppositor-appellee.

FACTS

The Bank of the Philippine Islands, as executor of the testate estate of Graciana de Jesus (Special Proceeding No. 18033), submitted a statement of accounts. The lower court disallowed two items as expenses not chargeable against the estate. The first item was P1,461.00, representing the cost of stenographic notes from a hearing in Civil Case No. 22828. That case was filed by the Bank against Jose J. Gonzales to annul a deed of donation inter vivos executed by the deceased in favor of Gonzales. The donated properties were the same three parcels of land devised by will to legatee Agustina Jimenez, who intervened in the civil case. The second item was P56.00, representing the printing cost of a brief filed by the Bank (as executor) in an appeal to the Supreme Court (G.R. No. L-12128). That appeal was taken from a resolution of the Land Registration Commission regarding a consulta on the annotation of a notice of lis pendens on the same properties. The Bank had filed the lis pendens in relation to Civil Case No. 22828. Gonzales had mortgaged the lands to Ramon Eugenio, and after foreclosure, the Eugenio estate sought a new title free of the lis pendens, prompting the Bank’s objection and the subsequent consulta and appeal.

ISSUE

Whether the disallowed items (P1,461.00 for stenographic notes in the annulment case and P56.00 for printing the brief in the land registration appeal) are legitimate administration expenses chargeable against the estate.

RULING

The Supreme Court reversed the lower court’s disallowance and held that both items are allowable administration expenses. The Bank, as executor with the will annexed, had the duty to carry out the provisions of the probated will, which included devising the subject properties to legatee Agustina Jimenez. It was the Bank’s primary duty to collect the assets of the estate for the benefit of creditors and legatees. The actions taken—filing the annulment suit to recover the properties devised in the will and opposing the removal of the lis pendens to protect the estate’s interest—were necessary steps incident to the performance of that duty. Under Section 7, Rule 86 of the Rules of Court, an executor is allowed necessary expenses in the care, management, and settlement of the estate. Therefore, the expenses incurred in these legal proceedings were properly chargeable against the estate as administration expenses. The order of disallowance was set aside, and the items were allowed.