RULE 94 : BONDS OF GUARDIANS

SECTION 1 Bond to be given before issuance of letters; Amount; Conditions. Before a guardian appointed enters upon the execution of his trust, or letters of guardianship issue, he shall give a bond, in such sum as the court directs, conditioned as follows: (a.)To make and return to the court, within three (3) months, a true and complete inventory of all the estate, real and personal, of his ward which shall come to his possession or knowledge or to the possession or knowledge of any other person for him; (b) To faithfully execute the duties of his trust, to manage and dispose of the estate according to these rules for the best interests of the ward, and to provide for the proper care, custody, and education of the ward; (c) To render a true and just account of all the estate of the ward in his hands, and of all proceeds or interest derived therefrom, and of the management and disposition of the same, at the time designated by these rules and such other times as the court directs; and at the expiration of his trust to settle his accounts with the court and deliver and pay over all the estate, effects, and moneys remaining in his hands, or due from him on such settlement, to the person lawfully entitled thereto; d) To perform all orders of the court by him to be performed.

CONDITIONS OF THE BOND: 1. To file with the court a complete inventory of the estate if the ward within three (3) months. 2. To faithfully execute the duties of his trust to manage and dispose of the estatea according to the Rules of Court for the best interest of the ward, and to provide for the proper care, custody and education of the ward. 3. To render a true account of all the estate, and of the management and disposition of the same. 4. To settle his accounts with the court and deliver over all the estate remaining in his hands to the person entitled thereto. 5. To perform all orders of the court by him to be performed. PURPOSES OF THE BOND: Protect the minor or incompetents property to the end that he may be assured of an honest administration of his funds. Provide security to those interested in the proper settlement of the estate. NECESSITY FOR THE BOND When required by statutes to give bond, no person can qualify and act as guardian without complying with this condition precedent. The court should not grant letters of guardianship without requiring a bond. Amount - Must be fixed by the court with reference to the infants estate; - In fixing the amount, the court is not bound by the allegations in the petition as to the value of the estate

TIME WHEN BOND TAKES EFFECT As of the day of its date and of his appointment, notwithstanding the bond may have been filed later.

SECTION 2 When new bond may be required and old sureties discharged Whenever it is deemed necessary, the court may require a new bond to be given by the guardian, and may discharge the sureties on the old bond from further liability, after due notice to interested persons, when no injury can result therefrom to those interested in the estate.

ADDITIONAL BOND It is within the authority of the court to accept a new bond from a guardian who has already given a bond to require additional security where such a course seems proper for the protection of the wards estate. While the power to require new or additional security is sometimes given by statute, it has been held to exist independently of any statutory provision. When the bond given is insufficient, it is not only the right but the duty of the court to require additional security. And a new bond may be required when the guardian is about to receive funds not in contemplation when the original bond was executed. SECTION 3 Bonds to be filed; Actions thereon Every bond given by a guardian shall be filed in the office of the clerk of the court, and, in case of the breach of a condition thereof, may be prosecuted in the same proceeding or in a separate action for the use and benefit of the ward or of any other person legally interested in the estate. HOW MAY A GUARDIANS BOND BE PROSECUTED? In case of breach of the conditions of the bond, it may be prosecuted in the (A.) same guardianship proceeding or in a (B.) separate action, for the use and benefit of the ward or of any other person legally interested in the estate. OTHER MATTERS Bonds How construed In accordance with the intention and scope of the guardian and his surety in giving it, to secure the wards in their individual rights. Liability of Sureties Depends on the extent of the obligation created by the terms of the bond and statutes. Right of Surety Sureties of the guardian against whom judgment has been entered may demand the benefit of a levy (exclusion) of the principals property even when judgment is rendered against both surety and principal. Duty of Surety See that the conditions are fulfilled by the guardian. CASE 1: GUERRERO vs. TERAN Facts: Salvador Guerrero (plaintiff) commenced an action against Leopoldo Teran to recover the sum of P4,129. 56 and costs. This amount was claimed by the Plaintiff from the Defendant upon the theory that the Defendant had been the administrator of the estate of Antonio Sanchez Munoz from the September, 1901, until October, 1906.

The defendant admitted that he owed the Plaintiff P188. 39 but claimed that the Plaintiff owed him the sum of P482. 14, and that the Plaintiff, therefore, still owed to the Defendant the difference between P188. 39 and P482. 14, or the sum of P293. 75, for which latter amount the Defendant prayed for judgment, with interest and costs against the Plaintiff. After hearing the lower court found from the evidence that the Defendant, as administrator of the estate of Antonio Sanchez Muoz, owed the Plaintiff the sum of P3,447. 46, with interest until fully paid. From this decision, the Defendant appealed averring that the court erred in holding that the Defendant, from September 1901 to October 1906 managed and administered the estate of Sanchez Muoz as a judicial administrator or executor. The record however discloses that upon the March 18, 1902, the Court of First Instance appointed Maria Munoz y Gomez as guardian for Maria Manuela and Maria del Carmen Sanchez Munoz. From the order of the judge annulling the appointment of the said Maria Munoz y Gomez her lawyers appealed to the Supreme Court, which appeal was subsequently withdrawn. The order therefore revoking the appointment of the said Maria Munoz y Gomez became final. Issue: Whether Munoz is relieved from her liability as guardian after her appointment as guardian has been revoked. Held: The Defendant Leopoldo Teran was, on the September 17, 1901, appointed as administrator of said estate. While there are some indications in the record that the Defendant continued to act as the administrator of said estate after the appointment of the said Maria Munoz y Gomez, up to and including the 6th day of October, 1906, yet the fact exists that the said Maria Munoz Gomez was the actual representative of the said Maria Manuela and Maria del Carmen Sanchez Munoz in the administration of their interests in the estate of the said Antonio Sanchez Munoz, from and after the 18th day of March, 1902, until the 6th day of October, 1906, and therefore the said Maria Munoz y Gomez, as such guardian and administratrix of the estate of the said minors, must be held responsible for the property belonging to said minors during the period while she (Maria Munoz y Gomez) was the actual guardian of said minors. The bond of the guardian is a continuing one against the obligors and their estates until all of its conditions are fulfilled. The mere fact, however, that she had been removed as said guardian did not relieve her, nor her bondsmen from liability to the minors during the time that she was duly acting as said guardian.

RULE 95 SELLING AND ENCUMBERING PROPERTY OF WARD

SECTION 1 Petition of guardian for leave to sell or encumber estate When the income of an estate under guardianship is insufficient to maintain the ward and his family, or to maintain and educate the ward when a minor, or when it appears that it is for the benefit of the ward that his real estate or some part thereof be sold, or mortgaged or otherwise encumbered, and the proceeds thereof put out at interest, or invested in some productive security, or in the improvement or security of other real estate of the ward, the guardian may present a

verified petition to the court by which he was appointed setting forth such facts, and praying that an order issue authorizing the sale or encumbrance.

GROUNDS (When Guardian may sell or encumber the Esate of the ward): 1. The income of the estate of the minor or incompetent is insufficient to maintain the ward and his family 2. The income is insufficient to maintain and educate ward and when a minor; or 3. It appears that it is for the benefit of the ward. 4. Petition must be verified 5. Notice must be given to the next of kin of the ward and all persons interested in the estate. 6. Hearing so that they may show cause why petition should not be granted. Note: Petition must be verified; Failure not a jurisdictional defect A guardian has no authority to sell real estate of his ward merely by reason of his general powers and in the absence of any authority to sell conferred by will, statute or order of court A sale of the wards realty by the guardian without authority of the court is void. SECTION 2 Order to show cause thereupon If it seems probable that such sale or encumbrance is necessary, or would be beneficial to the ward, the court shall make an order directing the next of kin of the ward, and all persons interested in the estate, to appear at a reasonable time and place therein specified to show cause why the prayer of the petition should not be granted.

WHEN SHALL THE COURT MAKE AN ORDER DIRECTING NEXT OF KIN AND ALL INTERESTED PERSONS TO SHOW CAUSE WHY PETITON SHOULD BE GRANTED: If it seems probable that such sale or encumbrance a.) necessary, or b.) beneficial to the ward CASE 2: LINDAIN VS. CA Facts: Plaintiffs as minors, owned a parel of registered land which their mother (Dolores) as guardian, sold for P2,000.00 under a deed of absolute sale to the spouses Apolonia and Federico. The latter knew that the sale was without judicial approval but still proceeded with the transaction. The plaintiffs now contend that the sale is null and void as it was without the court's approval. The Regional trial Court ruled that the sale is indeed null and void, while upon appeal, the Court of Appeals (CA) confirmed the sale as valid and dismissed the complaint. Hence this petition. Issue: Does the sale by a guardian of a minor's property require judicial approval? Held: YES. Under Art. 320 (NCC), a parent acting merely as a legal administrator of the property of his minor children does not have the power to dispose of or alienate the property of the said child without judicial approval. And under Rule 84 (Code of Civil Procedure), the powers and duties of the widow as legal administrator of her minor children's property are merely powers of possession and management. Hence, the power to sell, mortgage, encumber or dispose must

proceed from the court. Moreover, the private respondent spouses are not purchasers in good faith as they knew right from the beginning the the transaction was without judicial approval. Further, the minors' action for reconveyance has not yet prescribed. NEXT OF KIN Not the next of kindred but those relatives who share in the estate according to the statute of distribution, including those claiming per stirpes or by representation. NOTICE IS JURISDICTIONAL The notice to the next of kin mandated under the provision is a jurisdictional requirement, hence, may not be dispensed with. Note: Notice is not necessary where the next of kin to the ward and all persons interested in the estate are her mother and guardian, uncles and aunts who agreed to make the transfer of their respective shares in the property to the corporation to be organized. (Pardo de Tavera vs El Hogar Filipino Inc. and Magdalena Estate) WHEN NOTICE IS SUFFICIENT (CONTENTS) when it recites substantially that notice is thereby given, that a petition to sell the wards real estate will be presented to a named court, at a named place, on a named date, and when and where all persons interested may appear and show cause if they have any, why such petition should not be granted. If notice omits to state the time or states a time subsequent to that at which the application was acted on, the court acquires no jurisdiction to order the sale, and the sale is void. OPPOSITION TO SALE OR ENCUMBRANCE Only the children have an interest in the land of their father besides the creditors, and only they or the creditors who may have been prejudiced by the sale have a right to object thereto. CASE 3: LOPEZ vs. TEODORO Facts: Eulalio Lopez, Sr., an incapacitated under the judicial guardianship of Eulalio Lopez, Jr., was the absolute owner of a hacienda. Court of First Instance, acting upon a motion of Senen L. Gamboa and Adelaida Gamboa filed in the proceedings for guardianship, ordered the guardian to pay the movants amounts which represented loans properly authorized by court. The order provided that if the guardian did not have funds to pay those debts, he should take the necessary steps for the sale of some of the property of the guardianship. In pursuance of this authority, the guardian sold the above tract of land and bound himself to pay the mortgage debt and other obligations and to satisfy the balance in two installments. It is admitted that in authorizing the sale of some of the property of the incapacitated, the court did not follow the requirement of to the effect that the court shall direct the next of kin of the ward, and all persons interested in the estate, to appear at a reasonable time and place to be specified in the order, to show cause why the prayer for the sale should not be granted. Although Eulalio Lopez, Jr. was the judicial guardian, the incapacitated was and is under the actual care and custody of his sister, Salvacion Lopez. Believing that the sale was prejudicial to her brother's interest, Salvacion Lopez filed a motion for reconsideration of the court's order authorizing said sale, and upon the motion being denied, she brought this petition for certiorari and mandamus, contending that the sale was null and void by reason of the court's failure to adhere to Rule 96, and praying that the orders of the respondent court be corrected and the said court directed to revoke the sale.

Issue: Whether the petitioner has legal interest as Next of Kin. Held: "Next of kin are relatives whose relationship is such that they are entitled to share in the estate as distributees. Petitioner has no legal interest in her complaint. The incapacitated has children, all of age, one of whom is the judicial guardian, while the petitioner is only the ward's sister. Not being Eulalio Lopez's forced heir, she was not prejudiced by the sale she seeks to impugn. It is true that she was a creditor but she does not claim any right to be notified of the sale as such creditor, and her credit was not impaired. None of the children of the incapacitated is or was opposed to the sale sought to be set aside. Only these had an interest in the land of their father, besides the creditors, and only they or the creditors who may have been prejudiced by the sale have a right to object thereto. SECTION 3 Hearing on return of order. Costs At the time and place designated in the order to show cause, the court shall hear the proofs and allegations of the petitioner and next of kin, and other persons interested, together with their witnesses, and grant or refuse the prayer of the petition as the best interests of the ward require. The court shall make such order as to costs of the hearing as may be just. NATURE OF HEARING FOR SALE OF WARDS ESTATE The sole object of the inquiry on an application to sell wards real estate property is whether it is to the interest of the ward that the sale shall be made. The court should ascertain and determine whether the facts required to the granting of the petition exist, and should select the part or parts of the property which can be disposed of with the least injury to the ward. The court however, not inquire into the title of the property. SECTION 4 Contents of order for sale or encumbrance, and how long effective. Bond. If, after full examination, it appears that it is necessary, or would be beneficial to the ward, to sell or encumber the estate, or some portion of it, the court shall order such sale or encumbrance and that the proceeds thereof be expended for the maintenance of the ward and his family, or the education of the ward, if a minor, or for the putting of the same out at interest, or the investment of the same as the circumstances may require. The order shall specify the causes why the sale or encumbrance is necessary or beneficial, and may direct that estate ordered sold be disposed of at either public or private sale, subject to such conditions as to the time and manner of payment, and security where a part of the payment is deferred, as in the discretion of the court are deemed most beneficial to the ward. The original bond of the guardian shall stand as security for the proper appropriation of the proceeds of the sale, but the judge may, if deemed expedient, require an additional bond as a condition for the granting of the order of sale. No order of sale granted in pursuance of this section shall continue in force more than one (1) year after granting the same, without a sale being had.

ORDER OF SALE AND ENCUMBRANCE OF PROPERTY GROUNDS: The Order of Sale must specify the grounds

DURATION: Unlike the power granted to executors and administrators, the order empowering the guardian to sell property belonging to the ward shall not be effective for more than one year after it has been granted. EXTENSION: Authority to sell or encumber shall not extend beyond 1 year unless renewed by the court GUARDIAN CANNOT PURCHASE: The guardian among others cannot acquire by purchase even at a public or judicial auction, either in person or through the mediation of another, the property of the person or persons who may be under his guardianship. (Art. 1491, Civil Code) Reason: Guardianship is a trust of the highest order. REMEDY: Appeal is the proper remedy against the order of the court authorizing the sale of the wards property. (Lopez vs Teodoro) Note: There being a presumption that the sale of the wards estate is valid, it cannot be attacked collateraly in the registration proceedings. (Margate vs. Rabacal) CASE 4: MARGATE VS RABACAL Facts: This is an application for the registration of a residential land with a house, situated in Iriga, Camarines Sur, by Jose Margate, who claims to have purchased the property from Julia Rabacal for P4,000.00. Rabacal and her minor children opposed the application, on the ground that the property was under guardianship proceedings when sold; that the sale was not authorized by the court; that the purchase price of P4,000.00 was not fully paid, as there was a remaining balance of P500.00 and that the market price of the lot and house was P10,000.00. After due hearing, the registration court confirmed the title of the applicant, and ordered that the same be registered in the name of Margate. Oppositors appealed to the Court of Appeals which certified the case to SC stating that the issues involved are purely legal in character. (facts as found by trial court: ) The parcel of land and house, was owned by Dr. Julio Berina, who died survived by his widow, Julia Rabacal, and his minor children, the oppositors herein. Rabacal was appointed guardian of her minor children. She filed a petition alleging that it was necessary to sell parcel 4 of the inventory, in order to defray the expenses in the prosecution of the Civil Case and for the support and education of the wards. This petition was approved by the court, authorizing the guardian to sell the residential lot and its improvements. Rabacal offered to sell to Margate the residential lot in question. After the agreement, Rabacal began getting money from Margate, such that when Rabacal secured the authority to sell from the court, she had already obtained from Margate the sum of P500.00. A deed of sale was executed by Julia Rabacal, acknowledged before a Notary Public, selling the land in question to Margate for P4,000.00, on which date Margate paid the balance of P3,500.00 to Rabacal. Notwithstanding the fact that Rabacal had sold parcel 4 of the inventory, and executed a deed of sale, Rabacal, in the guardianship proceedings, asserted that despite her efforts, she was unable to find a buyer for said parcel of land, leading the court to cancel the granted authority to sell Appellants argue that the deed of sale executed by Rabacal had no binding effect because the authority to sell was cancelled and the sale was not approved by the guardianship Court. Issue: Whether or not the sale to Margate is Valid.

Held: The cancellation of the authority to sell did not, and could not, affect, the rights of the buyer, where at the time that the order canceling the authority to sell was entered, the guardian had already acted in accordance with the authority and sold the property. The authority had already been exhausted, after it was fulfilled by the guardian and there was nothing to cancel.

SECTION 5 Court may order investment of proceeds and direct management of estate. The court may authorize and require the guardian to invest the proceeds of sales or encumbrances, and any other of his ward's money in his hands, in real estate or otherwise, as shall be for the best interest of all concerned, and may make such other orders for the management, investment, and disposition of the estate and effects, as circumstances may require.

INVESTMENT OF THE CHILDS MONEY In authorizing the guardian to invest the proceeds of the sale or encumbrance and any of his wards money in his hands in real estate or otherwise, the court must be guided by the best interest of the child. DUTY OF GUARDIAN IN INVESTING WARDS MONEY The guardian is normally the proper custodian of the moneys arising from the sale of the wards land. It is the guardians duty to apply the proceeds to the purposes for which the property was sold. If the sale was ordered for reinvestment, the guardian has no right to apply the proceeds for the support of the ward, unless necessity therefore, arising after the order of sale is clearly established. Account for and turn over the proceeds to ward once the latter reaches majority or becomes entitled.

COURT MAY RATIFY THE GUARDIANS INVESTMENT LEASE A guardian may lease the property of the ward. If the lease would be recorded proper authority of the court. The same rule applies if the term of the lease is longer than one year. This is deemed an act of dominion.