In the course of its banking operations, the defendant
Producer Bank of the Philippines acquired 6 parcels of Ruling: land with a total area of 101 hectares located at Don Jose, Sta. Rosa, Laguna and covered by TCT No. T- While admittedly, the Central Bank law gives vast and 106932 to T-106937. The property used to be owned far-reaching powers to the conservator of a bank, it by BYME Investment and Development Corporation must be pointed out that such powers must be related which had them mortgaged with the bank as collateral to the "(preservation of) the assets of the bank (the for a loan. The plaintiff originals, Demetrio Demetria reorganization of) the management thereof and (the and Jose Janolo wanted to purchase the property and restoration of) its viability." Such powers, enormous thus initiated negotiations for that purpose. In the early and extensive as they are, cannot extend to the post- part of August 1987 said plaintiffs, upon the suggestion facto repudiation of perfected transactions, otherwise of BYME investments legal counsel, Fajardo met with they would infringe against the non-impairment clause defendant Mercurio Rivera, manager of the property of the Constitution. If the legislature itself cannot management department of the defendant bank. The revoke an existing valid contract, how can it delegate meeting was held in pursuant to plaintiffs plan to buy such non-existent powers to the conservator under the property. After the meeting, plaintiff Janolo, Section 28-A of said law? Obviously, therefore, Section following the advice of defendant Rivera made a formal 28-A merely gives the conservator power to revoke purchase offer to the Bank through a letter dated contracts that are, under existing law, deemed to be August 30, 1987. Negotiations took place and an offer defective i.e., void, voidable, unenforceable or price was fixed at P5.5million. During the course of the rescissible. Hence, the conservator merely takes the negotiations, the defendant bank was placed under place of a bank's board of directors. What the said board conservatorship and a new conservator was appointed cannot do such as repudiating a contract validly to which the name has been refused to recognize. A entered into under the doctrine of implied authority derivative suit has been filed against Rivera for the the conservator cannot do either. Ineluctably, his power damages suffered from the alleged perfect contract of is not unilateral and he cannot simply repudiate valid sale involving the 6 parcels of land. obligations of the Bank. His authority would be only to bring court actions to assail such contracts as he has already done so in the instant case. A contrary understanding of the law would simply not be permitted by the Constitution. Neither by common sense. To rule otherwise would be to enable a failing bank to become solvent, at the expense of third parties, by simply getting the conservator to unilaterally revoke all previous dealings which had one way or another come to be considered unfavorable to the Bank, yielding nothing to perfected contractual rights nor vested interests of the third parties who had dealt with the Bank.