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    Abacus v. Manila Banking

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    Sean Galvez
    This case involves a dispute over an "exclusive option to purchase" a parcel of land and building granted by Manila Bank's acting president to investors. Manila Bank was under receivership by the Central Bank at the time. The Court of Appeals ruled against enforcing the option. The Supreme Court affirms, holding that: 1) Manila Bank's appeal to the Court of Appeals was timely filed; and 2) the acting president lacked authority to grant the option as Manila Bank was under receivership, and the receiver also lacked power to ratify or approve the option, as his role was only to administer assets for creditors' benefit. Enforcing the option would improperly involve disposition of bank property.

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    Abacus v. Manila Banking

    Uploaded by

    Sean Galvez
    153 views3 pages
    This case involves a dispute over an "exclusive option to purchase" a parcel of land and building granted by Manila Bank's acting president to investors. Manila Bank was under receivership by the Central Bank at the time. The Court of Appeals ruled against enforcing the option. The Supreme Court affirms, holding that: 1) Manila Bank's appeal to the Court of Appeals was timely filed; and 2) the acting president lacked authority to grant the option as Manila Bank was under receivership, and the receiver also lacked power to ratify or approve the option, as his role was only to administer assets for creditors' benefit. Enforcing the option would improperly involve disposition of bank property.

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    DIGEST BANKING

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    This case involves a dispute over an "exclusive option to purchase" a parcel of land and building granted by Manila Bank's acting president to investors. Manila Bank was under receivership by the Central Bank at the time. The Court of Appeals ruled against enforcing the option. The Supreme Court affirms, holding that: 1) Manila Bank's appeal to the Court of Appeals was timely filed; and 2) the acting president lacked authority to grant the option as Manila Bank was under receivership, and the receiver also lacked power to ratify or approve the option, as his role was only to administer assets for creditors' benefit. Enforcing the option would improperly involve disposition of bank property.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    153 views3 pages

    Abacus v. Manila Banking

    Uploaded by

    Sean Galvez
    This case involves a dispute over an "exclusive option to purchase" a parcel of land and building granted by Manila Bank's acting president to investors. Manila Bank was under receivership by the Central Bank at the time. The Court of Appeals ruled against enforcing the option. The Supreme Court affirms, holding that: 1) Manila Bank's appeal to the Court of Appeals was timely filed; and 2) the acting president lacked authority to grant the option as Manila Bank was under receivership, and the receiver also lacked power to ratify or approve the option, as his role was only to administer assets for creditors' benefit. Enforcing the option would improperly involve disposition of bank property.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    CASE: ABACUS REAL ESTATE DEVELOPMENT CENTER, INC., v.

    THE MANILA BANKING


    CORPORATION,

    NATURE: petition for review on certiorari

    FACTS:
    - Manila Bank owns a 1,435-square meter parcel of land, on which it began
    constructing a 14-storey building but it unable to finish
    - 1987, (central bank) Bangko Sentral ng Pilipinas, ordered the closure of Manila
    Bank and placed it under receivership by virtue of Monetary Board (MB)
    Resolution No. 505, (however, the legality of closure was contested, the
    liquidation was held in abeyance)
    - Manila Banks then acting president, the late Vicente G. Puyat, scouted for
    possible investors who could finance the completion of the building
    - 1989, a group of investors, Laureano group, offered to lease the building for
    ten (10) years and to advance the cost to complete the same. Also with
    exclusive option to purchase the building and the lot. It was accepted
    - Since no disposition of assets could be made due to the litigation concerning
    Manila Banks closure, an arrangement was thought of whereby the property
    would first be leased to Manila Equities Corporation (MEQCO, for brevity), a
    wholly-owned subsidiary of Manila Bank, with MEQCO thereafter subleasing
    the property to the Laureano group.
    - On March 1, 1990, MEQCO subleased the property to petitioner Abacus Real
    Estate Development Center, Inc. (Abacus, for short), a corporation formed by
    the Laureano group for the purpose
    - The Laureano group was, however, unable to finish the building due to the
    economic crisis
    - On account thereof, the Laureano group offered its rights in Abacus and its
    exclusive option to purchase to Benjamin Bitanga (Bitanga hereinafter), for
    Twenty Million Five Hundred Thousand Pesos (P20,500,000.00).
    - Bitanga would later allege that because of the substantial amount involved,
    he first had to talk with Atty. Renan Santos, the Receiver appointed by the
    Central Bank, to discuss Abacus offer. Also, that Atty. Santos then verbally
    approved his entry into Abacus and his take-over of the sublease and option
    to purchase.
    - On September 16, 1994, Abacus sent a letter to Manila Bank informing the
    latter of its desire to exercise its exclusive option to purchase. However,
    Manila Bank refused to honor the same.
    - On November 10, 1995, in the Regional Trial Court (RTC) at Makati, Abacus
    Real Estate Development Center, Inc. filed a complaint for specific
    performance and damages against Manila Bank and/or the Estate of Vicente
    G. Puyat. In its complaint, prayed for a judgment ordering Manila Bank, inter
    alia, to sell, transfer and convey unto it for P150,000,000.00 the land and
    building in dispute free from all liens and encumbrances, plus payment of
    damages and attorneys fees.
    - TC - granted the motion to dismiss filed by the Estate of Vicente G. Puyat, but
    denied that of Manila Bank and directed the latter to file its answer.
    - The trial court rendered judgment for Abacus; Ordering the defendant
    [Manila Bank] to immediately sell to plaintiff the parcel of land and building,
    - CA: Reversed and Set Aside
    - Thus, this petition.

    ISSUE:
    - WHETHER OR NOT RESPONDENT BANKS APPEAL TO THE COURT OF APPEALS WAS
    FILED ON TIME;
    - WHETHER OR NOT PETITIONER ABACUS HAS ACQUIRED THE RIGHT TO PURCHASE
    THE LOT AND BUILDING IN QUESTION.
    NOTE: The court rules for respondent Manila Bank on both issues.

    HELD: PETITION DENIED, DECISION AFFIRMED

    RATIO:
    FIRST ISSUE:
    - petitioner submits that respondent banks appeal to the Court of Appeals
    from the adverse decision of the trial court was belatedly filed. However, the
    appellate court declared that respondents appeal was filed on time.
    - It is evident that the issue raised by petitioner relates to the correctness of the
    factual finding of the Court of Appeals as to the precise date when
    respondent filed its motion for reconsideration before the trial court.
    - Such issue, however, is beyond the province of this Court to review. It is not
    the function of the Court to analyze or weigh all over again the evidence or
    premises supportive of such factual determination.

    SEOND ISSUE:
    (arguments)
    - Petitioner insists that the option to purchase the lot and building in question
    granted to it by the late Vicente G. Puyat, then acting president of Manila
    Bank, was binding upon the latter.
    - Respondent has consistently maintained that the late Vicente G. Puyat had
    no authority to act for and represent Manila Bank, the latter having been
    placed under receivership by the Central Bank at the time of the granting of
    the exclusive option to purchase.

    UNENFORCEABLE CONTRACT
    - There can be no quibbling that respondent Manila Bank was under
    receivership, PURSUANT TO CENTRAL BANKS MB RESOLUTION NO. 505 DATED
    MAY 22, 1987, at the time the late Vicente G. Puyat granted the exclusive
    option to purchase to the Laureano group of investors.
    - The appellate court was correct in declaring that Vicente G. Puyat was
    without authority to grant the exclusive option to purchase the lot and
    building in question.
    o Villanueva vs. Court of Appeals 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.
    - With respondent bank having been already placed under receivership, its
    officers, inclusive of its acting president, Vicente G. Puyat, WERE NO LONGER
    AUTHORIZED to transact business in connection with the banks assets and
    property.
    - Clearly then, the exclusive option to purchase granted by Vicente G. Puyat
    was and still is unenforceable against Manila Bank

    NOT RATIFIED
    - Petitioner asseverates that the exclusive option to purchase was ratified by
    Manila Banks receiver, Atty. Renan Santos, during a lunch meeting held with
    Benjamin Bitanga in March 1990.
    - Petitioners argument is tenuous at best.
    - Sec. 29. Proceedings upon insolvency. Whenever, upon examination by the
    head of the appropriate supervising and examining department or his
    examiners or agents into the condition of any banking institution, it shall be
    disclosed that the condition of the same is one of insolvency, or that its
    continuance in business would involve probable loss to its depositors or
    creditors, it shall be the duty of the department head concerned forthwith, in
    writing, to inform the Monetary Board of the facts, and the Board may, upon
    finding the statements of the department head to be true, forbid the
    institution to do business in the Philippines and shall designate an official of the
    Central Bank as receiver 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 including, but not limited to, bringing suits and
    foreclosing mortgages in the name of the banking institution. (Emphasis
    supplied)
    - Clearly, the receiver appointed by the Central Bank to take charge of the
    properties of Manila Bank only had authority to administer the same for the
    benefit of its creditors.
    - Granting or approving an exclusive option to purchase is not an act of
    administration, but an act of strict ownership, involving, as it does, the
    disposition of property of the bank.
    - Not being an act of administration, the so-called approval by Atty. Renan
    Santos amounts to no approval at all, a bank receiver not being authorized to
    do so on his own.
    - Respondent banks receiver was without any power to approve or ratify the
    exclusive option to purchase granted by the late Vicente G. Puyat, who, in
    the first place, was himself bereft of any authority, to bind the bank under such
    exclusive option.
    - Respondent Manila Bank may not thus be compelled to sell the land and
    building in question to petitioner Abacus under the terms of the latters
    exclusive option to purchase

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