Mantruste Systems, Inc.

vs Court of Appeals
179 SCRA 136
Facts: Mantruste Systems, Inc. (MSI) entered into an interim lease agreement dated August
26, 1986 with the Development Bank of the Philippines, the owner of Bayview Plaza Hotel. The
agreement provides that MSI would operate the hotel for a minimum of three months or until
such time that the said properties are sold to MSI or other third parties by DBP.
During the said period, the President issued Proclamation No. 50 entitled Launching a Program
for the Expeditious Disposition or Privatization of certain Government Corporations and/or the
(acquired) assets thereof and creating a Committee on Privatization and the Asset Privatization
Trust. The Bayview Hotel has been one of the identified assets for privatization and it was
transferred from DBP to APT for disposition.
The DBP notified MSI that it was terminating the interim lease agreement. It has been agreed
that 30 days from the signing of the Certification, the lease contract will be considered as
terminated; the Bayview Hotel will be made available for inspection at all times by other bidders;
and said property will be ready for delivery to any new owners 30 days from signing the
Certification.
A letter granting an extension of 30 days was sent by APT to MSI. This is to allow the latter to
wind up affairs and to facilitate a smooth turn-over of the facilities to its new owners without
necessarily interrupting the hotels regular operation.
After 15 days, MSI informed APT that since its lease on the hotel properties has been for more
than one year now, its lessee status has taken the character of a long term one. As such MSI
as the lessee has acquired certain rights and privileges under the law and equity. It also
contends that it has acquired a priority right to purchase said properties above other interested
parties.
APT, on a reply said that it has not found any stipulation tending to support MSIs claim and
since the Pre-Bidding Conference has been conducted, for APT to consider the request of MSI
would not be in consonance with law, equity and fair play.
The MSI then wrote a letter to APT informing the latter of the alleged legal lien over the hotel
which amounts to P10,000,000 . It also demanded that APT consider MSI as very preferred
bidder. MSI also submit its bid to APT for P95,000,000 in cash or P120,000,000 in installment
terms.
MSI also asked APT to clarify the following: 10 whether APT has a clean title over the property;
2) whether the Trust knew the hotel had back taxes; 3) who should pay the tax arrears; and 4)
whether MSIs advances made in behalf of DBP would be treated as part of the bid offer.
In the view that MSI has been disqualified from the public bidding, the property was eventually
awarded to Makati Agro Trading and La Filipina Uy Gongco Corporation.
MSI filed a petition for preliminary injunction with the lower court. The said court granted the
petition but the Court of Appeals nullified the lower courts ruling for being violative to Section 1
of Proclamation No. 50 which provides:

No court or administrative agency shall issue any restraining order or injunction against the
trust in connection with the acquisition, sale or disposition of assets transferred to it. Nor shall
such order or injunction be issued against any purchaser of assets sold by the Trust to prevent
such purchaser from taking possession of any assets purchased by him.
The CA rejected the lower courts opinion that said proclamation is unconstitutional, rather it
upheld that it continues to be operative after the effectivity of the 1987 Constitution by virtue of
Section 3 Art. XVIII. It also noted that MSI has not been deprived of its property rights since
those rights are non-existent and its only property right was the alleged reimbursable advances
made to DBP, which it may sue to collect in a separate action. It further held that the issuance
of writ of preliminary injunction by the lower court against APT may not be justified as a valid
exercise of judicial power for MSI does not have a legally demandable and enforceable right of
retention over the said property.
The MSI then filed this petition for certiorari with this Court.
Issue: Whether or not the CA erred in holding that MSIs rights to the property are non-existent
except its right to use the refund of its alleged advances; and in not declaring unconstitutional
Section 31 of Proclamation No. 50.
Ruling: The Court upheld the ruling of the CA. It affirmed the Court of appeals finding that
MSIs claim to a patent contractual right to retain possession of the Bayview Hotel until all its
advances are paid is non-existent; and as the right of retention does not exist, neither does the
right to the relief demanded. A mere lessee like MSI is not a builder in good faith, hence the
right of retention given to a possessor in good faith pending reimbursement of his advances for
necessary repairs and useful improvements on anothers property is not available to a lessee
whose possession is not that of an owner. The Court stated that it is a settled rule that lessees
are not possessor in good faith because they know that their occupancy of the premises
continue only during the life of the lease, hence they cannot recover, as a matter of right, the
value of their improvements from the lessor, much less retain the premises until they are
reimbursed thereof.
The Court also ruled that Section 31 of Proclamation No. 50 does not impair the inherent
powers of the courts to settle actual controversies which are legally demandable and
enforceable and to determine whether or not there has been a grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the
government. It also noted that the power of the courts over the other branches and
instrumentalities of the government is limited only to the determination of whether or not there
has been a grave abuse of discretion amounting to lack or excess of jurisdiction in the exercise
of their authority and in the performance of their assigned tasks. There can be no justification
on judicial interference in the business of an administrative agency except when it violates a
citizens constitutional rights, or commits a grave abuse of discretion, or acts in excess of, or
without jurisdiction.
The petition is dismissed.