A catalytic system containing PdCl2(cod) (cod = 1,5-cyclooctadiene) and a water-soluble phosphine PNS (PNS = Ph2PCH2CH2C(O)NHC(CH3)(2)CH2SO3Li) in water/toluene solution exhibits activity in the carbonylation of benzyl bromide to benzeneacetic acid (87% yield) at 130 degrees C and 10 atm of CO. In a reaction carried out in water/alcohol solution, corresponding esters were obtained in yields dependent on the kind of alcohol used: 24% for BuOH, 62% for (PrOH)-Pr-i, 78% for EtOH, and 85% for MeOH. In the synthesis of benzeneacetic acid methyl ester C6H5CH2C(O)OCH3 at 50-100 degrees C under 5-10 atm of CO, TOF ca. 300 was achieved. The contribution of palladium(0) phosphine complexes was proved using the P-31{H-1} NMR and IR methods. The complex Pd(PNS)(4), obtained in the reaction of PdCl2(cod) with PNS and NaBH4, reacts with C6H5CH2Br yielding an oxidative addition product, PdBr(C6H5CH2)(PNS)(2), identified using the P-31{H-1} NMR method. In CD3OD solution containing Pd(PNS)(4) and C6H5CH2Br saturated with CO, the ester described by the formula C6H5CH2C(O)OCD3 was identified. This suggests that the reaction of CO-insertion into Pd-C bonding is relatively fast.