How Manifold implements EXISTS is standard SQL. As Chris Fehily puts it:
EXISTS and NOT EXISTS don’t compare values; rather, they simply look for the existence or nonexistence of rows in a subquery result.
EXISTS isn't a test for whether a table exists or doesn't exist. It is a test for whether a subquery returns any rows. Since a subquery returns a table, you can also use a table as a "subquery". But all you're asking is whether that table has any rows or not.
Strictly speaking, a construction such as EXISTS [no table by this name] should throw an error just like using EXISTS without any name of a table or any subquery at all. It's just as wrong as writing SELECT * FROM; without naming a table. That it works at all in some DBMS packages is a hackish convenience.
It's one of those deals like having an IF. SQL is a declarative language, not a procedural language. As Fehily puts it:
So sure, in 9 there is no IF, and there isn't a GOTO either.
But that's not going to stop some SQL implementations from doing hackish things that try to make SQL a procedural language, at least in a few small ways (keywords like IF and GOTO are tipoffs). Those small things can be convenient, and Manifold is happy to do things like that also if they make sense and they don't go too far afield, but they also can take you away from learning how to use SQL. It's a balance.
Another way of approaching the same thing is to say, OK, Manifold makes it exceptionally easy to use either a script or SQL whenever one or the other is a better choice, even mixing them. For doing procedural language things, use a procedural language. You can always call a short snippet of SQL, like DROP [table name], from within a script.
It seems that making it easy to use procedural languages as well as SQL is a better approach than, for lack of convenient integration with procedural languages, hacking SQL to try to make it a procedural language. But I don't think this is a matter worth making any sort of purist stand on principle. It's just a question of balance, tradeoffs between procedural conveniences and the fundamentally declarative nature of SQL.