24. Villanueva v.

CA (Ian) DOCTRINE:
GR: 114870 | 26 May 1995 | Davide, Jr., J | Art. 1323: Acceptance of Offer Applying Article 1323 of the Civil Code, Ong's offer to purchase the
subject lots became ineffective because the PVB became insolvent
PETITIONER: Miguela R. Villanueva, Richard R. Villanueva, & before the bank's acceptance of the offer came to his knowledge. Hence,
Mercedita Villanueva the purported contract of sale between them did not reach the stage of
RESPONDENTS: Court of Appeals, Central Bank of the Philippines, perfection. Corollary, he cannot invoke the resolution of the bank
Ildefonso C. Ong, & Philippine Veterans Bank approving his bid as basis for his alleged right to buy the disputed
properties.
SUMMARY:
The petitioner, Villanueva, the original owner of the disputed lots, sought to Article 1323 of the Civil Code, an offer becomes ineffective upon the
repurchase the lots from the PVB after being informed that the lots were death, civil interdiction, insanity, or insolvency of either party before
about to be sold at auction. On the other hand, Private respondent, Ong, acceptance is conveyed.
offered to purchase said lots from PVB. Ong did not receive any notice of
the approval of his offer. It was only when he returned from the U.S and
inquired about the status of his bid that he came to know of the approval.
The PVB then was placed under receivership due to insolvency. Ong
tendered the sum of P100,000.00 representing the balance of the purchase
price of the litigated lots, with which, an employee of the PVB received the
amount conditioned upon approval by the Central Bank liquidator. Later, he
filed an action for specific performance against the Central Bank.
Villanueva also filed her claim in the liquidation proceeding. The RTC
ruled for petitioner but the CA held for Ong contending that the approval of
FACTS:
Ong’s offer constitutes an acceptance, which resulted to a perfected contract
1. The petitioner herein, the original owner of the disputed lots,
of sale. Thus, he has a better right over the disputed lots. The issue in this
sought the help of one Jose Viudez, the then Officer-in-Charge of
case is WON the offer of Ong of payment for the subject lands constitutes
the PVB branch in Makati if she could obtain a loan from said
an acceptance which results to a perfected contract. SC held in the negative.
bank.
the insolvency of a bank and the consequent appointment of a receiver
2. However, she was swayed to execute a deed of sale covering said
restrict the bank's capacity to act, especially in relation to its property.
lots in favour of Viudez and Andres Sebastian. New titles were
Applying Article 1323 of the Civil Code, Ong's offer to purchase the subject
issued in the name of the PVB after the disputed lots were
lots became ineffective because the PVB became insolvent before the bank's
foreclosed for failure to pay the loan granted in the name of Andres
acceptance of the offer came to his knowledge. Hence, the purported
Sebastian.
contract of sale between them did not reach the stage of perfection.
3. Miguela Villanueva sought to repurchase the lots from the PVB
Corollary, he cannot invoke the resolution of the bank approving his bid as
after being informed that the lots were about to be sold at auction.
basis for his alleged right to buy the disputed properties.
 4. On the other hand, Private respondent herein, offered to purchase
said lots. Ong did not receive any notice of the approval of his
offer. It was only when he returned from the U.S and inquired
about the status of his bid that he came to know of the approval.
5. The PVB then was placed under receivership due to insolvency.
Ong tendered the sum of P100,000.00 representing the balance of
the purchase price of the litigated lots.
6. An employee of the PVB received the amount conditioned upon
approval by the Central Bank liquidator.
7. Later, he filed an action for specific performance against the
Central Bank. Villanueva also filed her claim in the liquidation
proceeding.
8. The RTC ruled for petitioner but the CA held for Ong contending
that the approval of Ong’s offer constitutes an acceptance, which
resulted to a perfected contract of sale. Thus, he has a better right
over the disputed lots.
ISSUES:
13. WON the offer of Ong of payment for the subject lands constitutes
an acceptance which results to a perfected contract. NO
RATIO:
1. There is no doubt that the approval of Ong's offer constitutes an
acceptance, the effect of which is to perfect the contract of sale
upon notice thereof to Ong. However, the peculiar circumstances
in this case is a legal obstacle to his claim of a better right and
deny support to the conclusion of the Court of Appeals.
2. Ong did not receive any notice of the approval of his offer. It was
only sometime in mid-April 1985 when he returned from the
United States and inquired about the status of his bid that he came
to know of the approval.
3. It must be recalled that the PVB was placed under receivership
pursuant to the MB Resolution of 3 April 1985 after a finding that
it was insolvent, illiquid, and could not operate profitably, and that
its continuance in business would involve probable loss to its
depositors and creditors.
4. The PVB was then prohibited from doing business in the
Philippines, and the receiver appointed was directed to
"immediately take charge of its assets and liabilities, as
expeditiously as possible collect and gather all the assets and
administer the same for the benefit of its creditors, exercising all
the powers necessary for these purposes."
5. Under Article 1323 of the Civil Code, an offer becomes
ineffective upon the death, civil interdiction, insanity, or
insolvency of either party before acceptance is conveyed.
6. The reason for this is that: The contract is not perfected except by
the concurrence of two wills which exist and continue until the
moment that they occur. The contract is not yet perfected at any
time before acceptance is conveyed; hence, the disappearance of
either party or his loss of capacity before perfection prevents the
contractual tie from being formed.
7. It has been said that where upon the insolvency of a bank a
receiver therefore is appointed, the assets of the bank pass beyond
its control into the possession and control of the receiver whose
duty it is to administer to assets for the benefit of the creditors of
the bank. Thus, the appointment of a receiver operates to
suspend the authority of the bank and of its directors and
officers over its property and effects, such authority being
reposed in the receiver, and in this respect, the receivership is
equivalent to an injunction to restrain the bank officers from
intermeddling with the property of the bank in any way.
IN SUMMARY:
● the insolvency of a bank and the consequent appointment of a
receiver restrict the bank's capacity to act, especially in relation to
its property.
 ● Applying Article 1323 of the Civil Code, 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.
● Hence, the purported contract of sale between them did not reach
the stage of perfection. Corollary, he cannot invoke the resolution
of the bank approving his bid as basis for his alleged right to buy
the disputed properties.
● Nor may the acceptance by an employee of the PVB of Ong's
payment of P100,000.00 benefit him since the receipt of the
payment was made subject to the approval by the Central Bank
liquidator of the PVB and was likewise disapproved on the ground
that the subject property was already in custodia legis, and hence,
disposable only by public auction and subject to the approval of
the liquidation court.
● The Court of Appeals therefore erred when it held that Ong had a
better right than the petitioners to the purchase of the disputed lots.

DISPOSITIVE PART:
WHEREFORE, the instant petition is GRANTED and the challenged
decision of the Court of Appeals of 27 January 1994 in CA-G.R. CV No.
35890 is hereby SET ASIDE. The decision of Branch 39 of the Regional
Trial Court of Manila of 31 October 1991 in Civil Case No. 87-42550 and
Sp. Proc. No. 85-32311 is hereby REINSTATED.
Respondent Philippine Veterans Bank is further directed to return to private
respondent Ildefonso C. Ong the amount of P100,000.00.
No pronouncement as to costs.
SO ORDERED.