G.R. No. L-9776 and L-9851, July 31, 1957.
TESTATE ESTATE OF CARLOS PALANCA Y TAGUINLAY, deceased. ROMAN OZAETA, Special Administrator, Appellant, vs. TERESA PALANCA DEL RIO, CARMEN PALANCA, CONSUELO PALANCA, MANUEL PALANCA and ALFREDO PALANCA, oppositors-appellees. (and) TESTATE ESTATE OF CARLOS PALANCA, deceased. SYCIP GORRES, VELAYO & CO., movant-appellant, vs. ROMAN OZAETA, Special Administrator and appellee. TERESA PALANCA DEL RIO, ET AL., oppositors-appellees.

FACTS

On May 5, 1955, the special administrator, Roman Ozaeta, filed a petition in court for authority to pay the accounting firm Sycip, Gorres, Velayo & Co. the sum of P3,650 for services rendered to the estate. These services consisted of taking an inventory of assets in 1950, providing tax consultations from 1950 to 1954, and preparing income tax returns for 1953 and 1954. The lower court denied the petition, ruling that the services were rendered to the former special administrator, the Philippine Trust Company. Upon denial, the accounting firm moved for reconsideration. The motion was opposed by several heirs (Teresa, Carmen, Consuelo, Manuel, Elena, and Alfredo Palanca y Cuartero) on the grounds that: (1) for the 1950 inventory, Ozaeta was not yet the special administrator when he requested the services; and (2) the tax consultations from 1950-1954 covered years when Ozaeta was not the special administrator and were rendered during the incumbency of Philippine Trust, so Ozaeta should pay personally. The court denied reconsideration, prompting an appeal. During the pendency of the appeal, the oppositors-appellees withdrew their opposition, stating they had assigned their interests in the estate to other parties and no longer had any interest or personality to intervene. Similar withdrawals were filed by other heirs, and the new interest holders expressed conformity to the payment. Despite the withdrawals, the Supreme Court deemed it necessary to resolve the legal issue presented.

ISSUE

Whether services rendered to a designated executor at his instance, but prior to his actual appointment as special administrator, and services rendered during the incumbency of a prior administrator, are chargeable against the estate.

RULING

Yes. The order denying payment is reversed, and authority for the special administrator to pay the sum of P3,650 from the estate’s funds is granted. The Supreme Court held that the services rendered were for the benefit of the estate. The Rules of Court require an administrator to submit an inventory within three months of appointment. As Ozaeta was designated executor in the will and expected immediate appointment, it was proper, necessary, and expedient for him to employ accountants beforehand to prepare the inventory within the prescribed period. The general rule is that acts done by an executor in the interest of the trust prior to his qualification become binding on the estate upon his qualification, as his authority relates back to the time of the decedent’s death. Citing Baker vs. Cauthorn, the Court ruled that services connected with the settlement of the estate, rendered before qualification but for the trust’s benefit, can be charged against the estate, especially when the claimants elect to hold the estate liable. The services for 1953-1954 were equally useful to the estate. Regardless of whether Ozaeta or the Philippine Trust Company contracted the services, they benefited the estate. Therefore, the fees are a proper charge against the estate.