Read also: CONTRACTS ENTERED BY MINORS
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The guardian may not purchase the property of the person under his guardianship.
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Public policy prohibits the transactions in view of the fiduciary relationship involved.
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Sales entered into in disregard of the prohibition are voidable
The guardians shall have the care and custody of the person of his ward, and the management of his estate, or the management of the estate only, as the case may be.
Every guardian appointed to manage the ward’s estate must pay the ward’s just debts out of his personal estate and the income of his real estate, if sufficient; if not, then out of his real estate upon obtaining an order for the sale thereof.
A guardian must also manage the estate of his ward frugally and without the waste, and apply the income and profits thereof, so far as may be necessary, to the comfortable and suitable maintenance of the ward and his family, if there be any. And if such income and profits be insufficient for that purpose, the guardian may sell or encumber the real estate, upon being authorized by order so to do, and apply to such of the proceeds as may be necessary to such maintenance.
In case the guardian sells the ward’s properties, may he be allowed to purchase property for sale?
Civil Code provides that:
“ART. 1491. The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or through the mediation of another:
(1) The guardian, the property of the person or persons who may be under his guardianship;”
Accordingly, the guardian may not purchase the ward’s property for sale which is under his guardianship. The reason for such prohibition is that, public policy prohibits the transactions in view of the fiduciary relationship involved.
The sales entered into in disregard of the prohibition are not however void. They are merely voidable or annullable.
According to US Supreme Court Daniel v. Tolon [1916 OK 446, 157 P. 756], the relation between guardian and ward is so intimate, the dependence so complete and the influence so great that any transaction between the two parties entered while the relationship exists are, in the highest sense, suspicious and presumptively fraudulent. This influence is presumed to last while the guardian’s functions are to any extent still unperformed, while the property is still under his control and until the accounts have been finally settled.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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