G.R. No. L-22504 October 14, 1968
Guardianship of the Incompetent Federico Garlit, Ward. Philippine National Bank, guardian-appellant, vs. Erlinda G. Garlit, personal guardian-appellee.

FACTS

The Philippine National Bank was appointed guardian of the incompetent Federico Garlit under Republic Act No. 390 (the Uniform Veterans Guardianship Act). The guardian filed a petition for authority to invest P15,000.00 from the ward’s trust funds in 7% Socio-Economic Bonds issued by the Government. The ward’s wife, Erlinda G. Garlit, opposed the petition and suggested instead that the funds be invested in the purchase of productive agricultural lands, alleging this would be more profitable. The guardian and the Administrator of Veterans Affairs objected to this suggestion as not sanctioned by law. The lower court issued an order directing the wife to bring to the attention of the guardian or the court any agricultural land for such investment within one month, failing which the guardian would be authorized to invest in the bonds. The wife later manifested she had found agricultural land for sale with an option to sell in favor of the ward. The lower court then denied the guardian’s motion for reconsideration and issued an order directing the guardian to invest the ward’s funds in the purchase of said land if found to be first-class agricultural land capable of producing 300 cavans of palay per year.

ISSUE

Whether or not the investment of the trust funds of the ward in agricultural lands is sanctioned by Republic Act No. 390 .

RULING

No. The Supreme Court set aside the orders of the lower court. Under Section 16 of Republic Act No. 390 , a guardian has unrestrained authority to invest trust funds in direct, unconditional interest-bearing obligations of the Philippine or United States Governments and obligations guaranteed by them. For other securities or property, investment must be authorized under Philippine laws and made only upon prior court order. Regarding the purchase of real estate, Section 21(a) limits authorization to cases where the real estate is needed as a home for the ward, to protect his interest, or as a home for his dependent family. The agricultural land in question was not intended as a home but as an income source. To justify purchase under “to protect his interest,” the ward must have an already existing interest in the property prior to the purchase, as implied by Section 21(b). In this case, there was no suggestion that the ward had any pre-existing interest to protect in the land. Furthermore, the guardian raised practical concerns about managing the land. The 7% Socio-Economic Bonds meet the requirements of Section 16 and are more advantageous than the current savings deposit. Therefore, the guardian-appellant was authorized to invest P15,000.00 in the Socio-Economic Bonds as prayed for.