I. Short Title: VILLANUEVA vs.

CA

II. Topic: INSOLVENCY OF BANKS

III. Full Title: MIGUELA R. VILLANUEVA, RICHARD R. VILLANUEVA, and

MERCEDITA VILLANUEVA-TIRADOS, petitioners, vs. COURT OF APPEALS,
CENTRAL BANK OF THE PHILIPPINES, ILDEFONSO C. ONG, and PHILIPPINE
VETERANS BANK, respondents.

IV. Statement of facts:

Spouses Celestino Villanueva and Miguela Villanueva acquired the disputed lots during
Celestino was in the US. Miguela sought the help of Jose Viudez, the then OIC of the PVB
branch in Makati to obtain a loan from said bank. She was told by Viudez to surrender the titles
of the lots as collaterals. She was swayed by Viudez and Andres Sebastian to execute a deed of
sale covering the two lots without her husbands signature but she never received the loan.

Miguela found out that new titles over the lots were issued in the name of the PVB. She
sought to repurchase the lots through auction and PVB told her that she can redeem them for
P110, 416 but negotiations were stalled when PVB was placed under receivership.

On the other hand, plaintiff-appellant Ildefonso Ong also has claims over the lots. Ong had
offered to buy the lots that PVB had acquired through foreclosure and he even deposited P10,
000. While he was abroad, PVB approved his offer. He returned to the country and formally
informed Central Bank, who is now in charge of PVB, of his desire to pay the balance of P100,
000. After his payment he demanded for CB to execute the corresponding deed of conveyance in
his favor but CB did not respond.

V. Statement of the case:

Ong filed an action for specific performance against CB and while it was pending, Miguela
and her children filed their claims with the Liquidation court averring that she is the lawful and
registered owner of the lots which were mortgage in favor of PVB through Viudez and
Sebastians falsification. Miguela asked for the lots to be excluded from the assets of the PVB
and that the lots should be conveyed to her.

The trial court held that while the board resolution approving Ong's offer may have created
in his favor a vested right which may be enforced against the PVB at the time or against the
liquidator after the bank was placed under liquidation proceedings, the said right was no longer
enforceable, as he failed to exercise it within the prescribed 15-day period.

As to Miguela's claim, the court ruled that the principle of estoppel bars her from
questioning the transaction with Viudez and the subsequent transactions because she was a co-
participant thereto, though only with respect to her undivided one-half conjugal share in the
disputed lots and her one-third hereditary share in the estate of her husband. The trial court still
allowed Miguela to purchase the lots if only to restore their status as conjugal properties without
charge on the interest.

Ong appealed the case to the CA and the trial courts decision was reversed. CA excused
Ongs failure to pay the balance within the prescribed period because PVB neither notified him
of the approval nor answered his letters; CB was in estoppel because it still accepted Ongs late
payment.

Petitioners motion for reconsideration was denied hence the petition for review on
certiorari.

VI. Issues/s:

Whether or not PVBs acceptance of Ongs offer was effective despite the banks
insolvency.

VII. Ruling:

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, PVB was placed
under receivership 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.
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."

Under Section 29 of the Central Bank Act, where a bank is insolvent a receiver therefor 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 the 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
 The insolvency of a bank and the consequent appointment of a receiver restrict the banks
capacity to act, especially in relation to its property. Ongs offer to purchase the lots became
ineffective because PVB became insolvent before its acceptance to the offer came to his
knowledge. Hence, the purported contract of sale between them did not reach the stage of
perfection.

CA erred when it held that Ong had a better right than the petitioners to the purchase of the
disputed lots.

VIII. Dispositive Portion:

WHEREFORE, the instant petition is GRANTED and the challenged decision of CA is

hereby SET ASIDE. The decision of RTC Manila is hereby REINSTATED.