Rule 95: Selling and Encumbering Property of Ward

RULE 95
SELLING AND ENCUMBERING

PROPERTY OF WARD
Section 1 Rule 95. Petition of guardian for
leave to sell or encumber estate
GROUNDS:
1. The income of the 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, mortgaged or otherwise encumbered,
GROUNDS:
1. The income of the estate under guardianship
is insufficient:
– and the proceeds thereof put out at interest, or
invested in some productive security, or in the
improvement or security or other real estate of
the ward
VERIFIED PETITION
• Presented by the guardian to the court by
which he was appointed setting forth such
facts
• Praying that an order issue authorizing the
sale or encumbrance
Sec. 19 A.M. NO. 03-02-05-SC
GROUNDS:
1. The income of a property under guardianship
is insufficient:
– to maintain to maintain and educate the ward
– or when it is for his benefit that his personal or
real property or any part thereof be sold,
mortgaged or otherwise encumbered,
– and the proceeds invested in safe and productive
security, or in the improvement or security of
other real property
II. ORDER TO SHOW CAUSE
Rule 95 Section 2 A.M. NO. 03-02-05-SC
Section 20
1. If it seems probable that such sale or 1. If the sale or encumbrance is necessary
encumbrance is necessary, or would be or would be beneficial to the ward:
beneficial to the ward:
2. The court shall make an order: 2. The court shall order:
• directing the next of kin of the ward, • his next of kin and all person/s
and all persons interested in the estate, to interested in the property to appear at a
appear at a reasonable time and place reasonable time and place therein
therein specified to show cause why the specified and show cause why the
prayer of the petition should not be petition should not be granted.
granted.
WHO ARE “NEXT OF KIN”?
• The term “next of kin” was defined in the case of
Lopez v. Judge Teodoro (GR No. L-1236 (1948) )
• It pertains to those relatives who are entitled to

share in the estate of the ward under the Law of
Intestate Succession including those who inherit
per stirpes or by right of representation. Thus,
being a sister, she is not one of the next of kin
contemplated under the law.
NOTICE IS A JURISICTIONAL
REQUIREMENT
• It must not be dispensed with.
• EXCEPTION: Pardo de Tavera v. El Hogar Filipino
Inc. and Magdalena Estate, 98 Phil 481 (1956)
• 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.
CONTENTS OF NOTICE
• It recites substantially that notice is thereby
given;
• That a petition to sell the ward’s 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.
WHEN TO ISSUE SHOW CAUSE ORDER
• If court finds that sale or encumbrance is
necessary or beneficial to the ward (minor)
(Sec 20 A.M. No. 03-02-05-SC)
• If it seems probable that the sale or

encumbrance is necessary or would be
beneficial to the ward (Sec 2, Rule 95)
III. HEARING, RETURN OF ORDER,
AND COSTS
Rule 95, Section 3. A.M. NO. 03-02-05-SC
Hearing on return of order. Costs. Section 21.
Hearing on return of order; costs.
1. At the time and place designated in the 1. At the time and place designated in the
order to show cause, the court shall: order to show cause, the court shall:
• Hear the proofs and allegations of the • Hear the allegations and evidence of
petitioner and next of kin, and other the petitioner and next of kin, and
persons interested together with their other persons interested, together
witnesses with their witnesses,
• Grant or refuse the prayer of the • and grant or deny the petition as the
petition as the best interest of the best interests of the ward may require.
ward requires
2. The court shall make such order as to
cost of the hearing as may be just.
IV. CONTENTS OF ORDER, HOW LONG
EFFECTIVE, AND BOND
• WHEN:
– After full examination;
– The court is satisfied that the sale or
encumbrance is necessary based on the
grounds mentioned.
• WHAT: The court shall order such sale or
encumbrance.
IV. CONTENTS OF ORDER, HOW LONG
EFFECTIVE, AND BOND
• CONTENTS OF ORDER:
• Specific causes why the sale or encumbrance is
necessary or beneficial;
– That the proceeds be expended for the
maintenance of the ward and his family, or put
out at interest, or invested;
– May direct that estate be disposed of at either
public or private sale, subject to conditions on
time and manner of payment and security.
BOND REQUIREMENT
• SEC. 1 Rule 94
• Bond before execution of trust;
mandatory.
• Sec. 4 Rule 95
–Additional bond as a condition for the
granting of the sale; discretionary.
PERIOD OF EFFECTIVITY
• 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.
PROHIBITION ON SALE OF WARD’S
ESTATE TO GUARDIAN
• Under Article 1491 of the New Civil Code, the guardian,
among others, cannot acquire by purchase even at a
public or judicial auction, either in person through the
mediation of another, the property of the person or
persons who may be under his guardianship.
• The Philippiine Trust Co v. Roldan GR No. L-8477, May 31
1956
– PhilTrust sought to annul two contracts regarding the sale of 17
parcels of land made by the then guardian of said minor,
Socorro Roldan on the ground that the first two sales were in
reality made by the guardian to herself.
– HELD: Subsequent acquisition by then guardian of the ward’s
properties are void.
REMEDY AGAINST
ORDER OF THE COURT
• APPEAL
–As held by the court held in
Lopez v. Judge Teodoro, “it is
evident that appeal and
not certiorari or mandamus is
the proper remedy.
V. INVESTMENT OF PROCEEDS AND
DIRECT MANAGEMENT OF ESTATE
Rule 95 Section 5. A.M. NO. 03-02-05-SC
Court may order investment of proceeds Section 23. Court may order investment
and direct management of estate. of proceeds and direct management of
property.
1. The court may: 1. The court may:
• authorize and require the guardian to • authorize and require the guardian to
invest the proceeds of sales or invest the proceeds of sales or
encumbrances, and any other of his encumbrances, and any other money
ward's money in his hands, of his ward in his hands,
• in real estate or otherwise, • in real or personal property,
• as shall be for the best interest of all • for the best interests of the ward,
concerned,
• and may make such other orders for • and may make such other orders for
the management, investment, and the management, investment, and
disposition of the estate and effects, as disposition of the property and effects,
circumstances may require as circumstances may warrant.

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RULE 95

SELLING AND ENCUMBERING

2. The court shall make an order: 2. The court shall order:

• It pertains to those relatives who are entitled to

• If it seems probable that the sale or

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