VILLANUEVA V.

CA
GR NO. 114870
MAY 26, 1995

FACTS:
Two disputed lots were originally owned by the spouses Celestino and Miguela
Villanueva. In 1975, Miguela sought the help of Jose Viudez, the officer-in-charge of PVB to
obtain a loan. Jose Viudez told the Miguela to subject the said properties as collaterals. Jose also
connived with Andres Sebastian in order to sway Miguela to execute a deed of sale, which was
without the signature of her husband. However, Miguela never got her loan and was unable to
contact Jose. The original titles to the property was also issued to Jose, which in turn was
transferred to Andres, and was finally issued in favor of PVB after the foreclosure of the
properties for the failure to pay the loan granted in the name of Andres. Miguela sought to
repurchase the lots before they were about to sold at auction. Ong, the private respondent,
offered PVB the purchase of the foreclosed property. However, his offer was accepted by the
said bank through a board resolution which was not relayed to him. Ong was only able to know
the acceptance after PVB was placed under the receivership by the Central Bank due to its
insolvency.

ISSUE:
Whether or not Ong’s offer to purchase the lots was still effective, considering PVB’s
insolvency and being placed under receivership by the Central Bank.

RULING:
Ong’s offer to purchase the subject lots became ineffective because the PVB became
insolvent BEFORE the bank’s ACCEPTANCE of the offer came to his knowledge. Article 132
provides that, “An offer becomes ineffective upon death, civil interdiction, insanity, or
insolvency of either party before acceptance is conveyed”. In the case at bar, Ong did not
receivedany notice of the approval of his offer. It was only when he returned from the US and
inquired about the status of his Bid that he came to know of the approval. However, the
acceptance of his offer came to his only to his knowledge only after PVB’s insolvency. Thus,
Ong’s offer to purchase the lots became ineffective pursuant to Article 1323 of the Civil Code on
death, insanity, civil interdiction, or INSOLVENCY of either party before the acceptance is
conveyed. Hence the purported contract of sale between them did not reach the stage of
perfection. Corollarily, he cannot invoke the resolution of the Bank approving his Bid as basis
for his alleged right to buy the disputed properties.