Mantruste Systems, Inc. v. CA

Mantruste Systems, Inc. v. CA

G.R. Nos. 86540-41 November 6, 1989

Griño-Aquino, J.

Facts:

                Mantruste System, Inc. (MSI) entered into an interim lease agreement with the Development Bank of the Philippines — owner of the Bayview Plaza Hotel — wherein the former 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.

                On December 8, 1986 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 properties were among the government assets Identified for privatization and were consequently transferred from DBP to APT for disposition.

To effect the disposition of the property, the DBP notified MSI that it was terminating the “interim lease agreement.” In a certificate signed by Ernesto S. Salgado, President and Chairman of the Board of herein private respondent the latter agreed to the termination.

                October 7, 1987 the APT sent a letter to MSI through Mr. Salgado granting the latter an extension of thirty days from October 18 within which to effect the delivery of the Bayview Prince Hotel to APT. The extension was given to allow (MSI) to wind up its affairs and to facilitate a smooth turn-over of the facilities to its new owners without necessarily interrupting the hotel’s regular operation. The signature of Mr. Salgado appears on the lower left hand of the letter under the word “CONFORME.”

                APT’s response to this demand was equally firm. It informed MSI that APT has “. . . not found any stipulation tending to support your claim that Mantruste System, Inc., as lessee, has acquired ... priority right to the purchase of Bayview Hotel . . .” The Trust also pointed out that the “Pre-Bidding Conference” for the sale of the hotel has already been conducted such that for APT to favorably consider your (MSI’s) request would not be in consonance with law, equity and fair play.

On October 28, Salgado, speaking for MSI, wrote APT informing the latter of the alleged “legal lien” over the hotel to the amount of P10,000,000 (should be P12,000,000). Moreover, he demanded that the Trust consider MSI a “very preferred” bidder. Nevertheless, on November 4, 1987 herein private respondent allegedly prepared to submit its bid to the APT for P95,000,000.00 in cash or P120,000,000 in installment terms.

On the same occasion, however, MSI asked the Trust for clarification on the following points: (1) whether APT had 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 MSI’S advances made in behalf of DBP would be treated as part of the bid offer.

On November 13, 1981, herein private respondent filed a complaint with respondent lower court — docketed as Civil Case No. 18319 — praying among others for: (1) the issuance of a restraining order enjoining APT from approving the winning bid and awarding the Bayview property to private petitioners, and from ejecting MSI from the property or from terminating the contract of lease; (2) the award of the Bayview property in favor of MSI as the highest bidder. On December 15, 1937, the lower court, as already said, granted the writ of preliminary injunction.

Issue:

                whether or not Sec. 31 of Proclamation No. 50-A is unconstitutional as it impinges upon judicial power in violation of Sec. 1, Art. VIII of the Constitution

Held:

                Section 31 of Proclamation No. 50-A does not infringe any provision of the Constitution. It does not impair the inherent power of 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” (Sec. 1, Art. VIII, 1987 Constitution). The power to define, prescribe and apportion the jurisdiction of the various courts belongs to the legislature, except that it may not deprive the Supreme Court of its jurisdiction over cases enumerated in Section 5, Article VIII of the Constitution (Sec. 2, Art. VIII, 1987 Constitution).

The President, in the exercise of her legislative power under the Freedom Constitution, issued Proclamation No. 50-A prohibiting the courts from issuing restraining orders and writs of injunction against the APT and the purchasers of any assets sold by it, to prevent courts from interfering in the discharge, by this instrumentality of the executive branch of the Government, of its task of carrying out “the expeditious disposition and privatization of certain government corporations and/or the assets thereof’ (Proc. No. 50), absent any grave abuse of discretion amounting to excess or lack of jurisdiction on its part. This proclamation, not being inconsistent with the Constitution and not having been repealed or revoked by Congress, has remained operative (Sec. 3, Art. XVIII, 1987 Constitution).

While the judicial power may appear to be pervasive, the truth is that under the system of separation of powers set up in the Constitution, 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 (by them) amounting to lack or excess of jurisdiction” in the exercise of their authority and in the performance of their assigned tasks (Sec. 1, Art. VIII, 1987 Constitution). Courts may not substitute their judgment for that of the APT, nor block, by an injunction, the discharge of its functions and the implementation of its decisions in connection with the acquisition, sale or disposition of assets transferred to it.