Sison vs. Teodoro

The premiums on an executor’s or administrator’s bond are not proper charges against the estate as expenses of administration, because the ability to give the bond is a qualification for the office and a condition precedent to assuming the trust; the expense is incurred to qualify for office, not in the subsequent care, management, and settlement of the estate. The rule applies with equal force when the administrator serves without compensation.

Carlos Moran Sison was appointed judicial administrator of the testate estate of Margarita David by the Court of First Instance of Manila. The appointment was without compensation, and the administrator posted the requisite bond. He subsequently filed an accounting in which he claimed as expenses of administration the premiums he had paid for the renewal of his bond. Narcisa F. Teodoro, one of the heirs, objected to these items.

• Carlos Moran Sison was appointed judicial administrator of the testate estate of Margarita David by the Court of First Instance of Manila on December 20, 1948. The appointment was expressly without compensation, conditioned upon the filing of a P5,000 bond.
• Sison took his oath, posted the bond through the Visayan Surety & Insurance Corporation, and the bond was approved; letters of administration were issued.
• On January 19, 1955, the administrator submitted an accounting of his administration. The account included two challenged disbursements: P380.70 paid on August 6, 1954 for renewal premiums covering December 20, 1949 to December 20, 1954, and P76.14 paid on December 21, 1954 for premiums covering December 21, 1954 to December 21, 1955.
• Narcisa F. Teodoro, an heir of the estate, objected to the approval of these two items, arguing that they were not necessary expenses of administration and should not be charged against the estate.
• The trial court approved the accounting but disallowed the contested premium items, ruling that they could not be considered expenses of administration. The administrator’s motion for reconsideration was denied.

• Allowance as necessary expense: The administrator maintained that the bond premiums were necessary expenses incurred in the administration of the estate and should be allowed as proper charges.
• Distinguishing lack of compensation: The administrator argued that his appointment was without compensation, differentiating the case from Sulit vs. Santos, 56 Phil. 626, where the administrator received the emoluments permitted by law; thus, the premiums on his bond should be chargeable to the estate.

• Premiums not chargeable under precedent: The heir relied on the rule in Sulit vs. Santos that the expense of procuring an administrator’s bond is not a proper charge against the estate, because the bond is a qualification for office and not an expense of administration within the meaning of the law.
• Waiver of compensation immaterial: The heir countered that the administrator’s lack of compensation did not change the character of the bond premiums as a personal qualification expense, and the administrator could not shift that burden to the estate merely because he had waived his statutory compensation.

• Chargeability of bond premiums: Whether the premiums paid by a judicial administrator on his bond may be charged as an expense of administration against the estate when the administrator serves without compensation.

• Chargeability of bond premiums: The premiums were not chargeable. The bond is required by law as a safeguard for the estate; the ability to give the bond is a qualification for the office, and its execution and approval are a condition precedent to acceptance of the trust. Because the expense is incurred to qualify for office, not in the subsequent care, management, and settlement of the estate, it is not an expense of administration within the contemplation of Section 680 of the Code of Civil Procedure (now Section 7, Rule 86 of the Rules of Court). The rule in Sulit vs. Santos, 56 Phil. 626, controlled. The fact that the administrator served without compensation did not distinguish the case. The administrator voluntarily accepted the position and voluntarily waived the compensation allowed by law; having done so, he could not complain of the expenses incident to his qualification.

• Premiums on an administrator’s bond are not expenses of administration — The bond required of an executor or administrator is a prerequisite to qualification; it is not an expense incurred in the care, management, and settlement of the estate. The statutory authorization for necessary expenses of administration does not encompass the cost of presenting, filing, or substituting a bond.
• Waiver of compensation does not convert qualification expenses into administration expenses — An administrator who accepts the trust without compensation voluntarily assumes all incidents of the office. The character of bond premiums as a personal qualification expense remains unchanged by the absence of compensation, and the administrator cannot shift the cost to the estate.

• “The position of an executor or administrator is one of trust. … The ability to give this bond is in the nature of a qualification for the office. The execution and approval of the bond constitute a condition precedent to acceptance of the responsibilities of the trust. … It would be a very far-fetched construction to deduce the giving of a bond in order to qualify for the office of executor or administrator is a necessary expense in the care, management, and settlement of the estate within the meaning of section 680 of the Code of Civil Procedure, for these are expenses incurred after the executor or administrator has met the requirements of the law and has entered upon the performance of his duties.”
• “Appellant having waived compensation, he cannot now be heard to complain of the expenses incident to his qualification.”

• Sulit vs. Santos, 56 Phil. 626 — Followed and applied. This case directly ruled that the expense incurred by an executor or administrator to procure a bond is not a proper charge against the estate, a principle the Court expressly reaffirmed and held controlling despite the factual difference of waiver of compensation.

• Section 680 of the Code of Civil Procedure (now Section 7, Rule 86 of the Rules of Court) — The provision authorizes executors and administrators to charge necessary expenses in the care, management, and settlement of the estate. The Court interpreted this as not including the cost of obtaining or renewing the administrator’s bond, since that expense is a prerequisite to qualifying for office, not an expense of administration incurred after assumption of duties.

Paras, C.J., Bengzon, Reyes, A., Labrador, Concepcion, Reyes, J.B.L., Endencia, and Felix, JJ., all concurred.