1.

CIVIL LAW; CONTRACTS; VIOLATION OF THE TERMS AND CONDITIONS; BASIS

FOR CANCELLATION. — Contract "A" was entered into by CAA as the lessor and
the Leverizas as the lessee specifically "for the purpose of operating and
managing a gasoline station by the latter, to serve vehicles going in and out of
the airport." Paragraph 8 provides the sanction for the violation of the above-
mentioned terms and conditions of the contract. It is not disputed that the
Leverizas (lessees) entered into a contract of sublease (Contract "B") with Mobil
Oil Philippines without the consent of CAA (lessor). The cancellation of the
contract was made in a letter dated June 28, 1966 of Guillermo P. Jurado,
Airport General Manager of CAA addressed to Rosario Leveriza. Respondent
Leverizas and the CAA assailed the validity of such cancellation, claiming that the
Airport General Manager had no legal authority to make the cancellation. They
do admit, however, and it is evident from the records that the Airport General
Manager signed "For the Director." Under the circumstances, there is no question
that such act enjoys the presumption of regularity, not to mention the
unassailable fact that such act was subsequently affirmed or ratified by the
Director of the CAA himself (Record on Appeal, pp. 108-110).

2. ADMINISTRATIVE LAW; GOVERNMENT PERSONNEL; ERRORS IN THE

PERFORMANCE OF THEIR DUTIES; PUBLIC INTEREST. NOT PREJUDICED. — The
billing of the petitioners by the Accounting Department of the CAA if indeed it
transpired, after the cancellation of Contract "A" is obviously an error. However,
this Court has already ruled that the mistakes of government personnel should
not affect public interest. In San Mauricio Mining Company v. Ancheta (105 SCRA
391, 422), it has been held that as a matter of law rooted in the protection of
public interest, and also as a general policy to protect the government and the
people, errors of government personnel in the performance of their duties should
never deprive the people of the right to rectify such error and recover what
might be lost or be bartered away in any actuation, deal or transaction
concerned. In the case at bar, the lower court in its decision which has been
affirmed by the Court of Appeals, ordered the CAA to refund to the petitioners
the amount of rentals which was not due from them with 6% interest per annum
until fully paid.

3. STATUTORY CONSTRUCTION; WORDS OR LANGUAGE IN A DOCUMENT,

READILY UNDERSTANDABLE, REQUIRE NO INTERPRETATION ANYMORE. — In
Contract "A", it was categorically stated that it is the lessee (petitioner) who will
manage and operate the gasoline station. The fact that Mobil Oil was mentioned
in that contract was clearly not intended to give approval to a sublease between
petitioners and said company but rather to insure that in the arrangements to be
made between them, it must be understood that after the expiration of the lease
contract, whatever improvements have been constructed in the leased premises
shall be relinquished to CAA. Thus, this Court held that "the primary and
elementary rule of construction of documents is that when the words or language
thereof is clear and plain or readily understandable by any ordinary reader
thereof, there is absolutely no room for interpretation or construction anymore."
(San Mauricio Mining Company v. Ancheta, supra).

4. ADMINISTRATIVE LAW; DIRECTOR OF THE CIVIL AERONAUTICS

 ADMINISTRATION; POWER TO ENTER INTO LEASE CONTRACT UNDER THE
REVISED ADMINISTRATIVE CODE AND SECTION 32 PAR. 24 OF R.A. 776. —
Under 567 of the Revised Administrative Code, such contract of lease must be
executed: (1) by the President of the Philippines, or (2) by an officer duly
designated by him or (3) by an officer expressly vested by law. It is readily
apparent that in the case at bar, the Civil Aeronautics Administration has the
authority to enter into Contracts of Lease for the government under the third
category. Thus, as correctly ruled by the Court of Appeals, the Civil Aeronautics
Administration has the power to execute the deed or contract involving leases of
real properties belonging to the Republic of the Philippines, not because it is an
entity duly designated by the President but because the said authority to execute
the same is, by law expressly vested in it. Under Section 32 (par. 24) of Republic
Act 776, the Administrator (Director) of the Civil Aeronautics Administration by
reason of its creation and existence, administers properties belonging to the
Republic of the Philippines and it is on these properties that the Administrator
must exercise his vast power and discharge his duty to enter into, make and
execute contract of any kind with any person, firm, or public or private
corporation or entity and to acquire, hold, purchase, or lease any personal or
real property, right of ways and easements which may be proper or necessary.
The exception, however, is the sale of properties acquired by CAA or any other
real properties of the same which must have the approval of the President of the
Philippines. The Court of Appeals took cognizance of the striking absence of such
proviso in the other transactions contemplated in paragraph (24) and is
convinced as we are, that the Director of the Civil Aeronautics Administration
does not need the prior approval of the President or the Secretary of Public
Works and Communications in the execution of Contract "C." cralaw virtua1aw library

5. STATUTORY CONSTRUCTION; GENERAL LAW MUST GIVE WAY TO SPECIAL

LEGISLATION OF THE SAME SUBJECT. — Another basic principle of statutory
construction mandates that general legislation must give way to special
legislation on the same subject, and generally be so interpreted as to embrace
only cases in which the special provisions are not applicable (Sto. Domingo v. De
los Angeles, 96 SCRA 139), that specific statute prevails over a general statute
(De Jesus v. People, 120 SCRA 760) and that where two statutes are of equal
theoretical application to a particular case, the one designed therefor specially
should prevail (Wilhensen, Inc. v. Baluyot, 83 SCRA 38).

DECISION

BIDIN, J.:

This is a Petition for Review on certiorari seeking the reversal of the decision of the
Intermediate Appellate Court, Third Division * dated February 29, 1984 in AC-G.R. No.
CV No. 61705 entitled Mobil Oil Philippines, Inc., plaintiff-appellee v. Primitivo Leveriza
Parungao, Antonio C. Vasco and Civil Aeronautics Administration, defendants-
appellants; Primitivo Leveriza, Fe Leveriza Parungao and Antonio C. Leveriza, cross-
defendant, affirming in toto the decision of the trial court dated April 6, 1976.
As found by the trial court and adopted by the Intermediate Appellate Court, the facts
of this case are as follows: jgc:chanrobles.com.ph

"Around three contracts of lease resolve the basic issues in the instant case. These
three contracts are as follows: chanrob1es virtual 1aw library

First Contract. — For purposes of easy reference and brevity, this contract shall be
referred to hereinafter as Contract A. This is a "CONTRACT OF LEASE", executed
between the REPUBLIC OF THE PHILIPPINES, represented by Defendant CIVIL
AERONAUTICS ADMINISTRATION, as lessor, and ROSARIO C. LEVERIZA, as lessee, on
April 2, 1965, over a certain parcel of land at the MIA area, consisting of approximately
4,502 square meters, at a monthly rental of P450.20, for a period of 25 years, (Exhibit
‘A’, Exhibit ‘I-Leverizas’, Exhibit ‘I-CAA).

Second Contracts. — For purposes of easy references and brevity, this contract shall be
referred to hereinafter as Contract B. This is a ‘LEASE AGREEMENT’, executed between
ROSARIO C. LEVERIZA, as lessor, and Plaintiff MOBIL OIL PHILIPPINES, INC., as lessee
on May 21, 1965, over 3,000 square meters of that SAME Parcel of land subject of
Contract A above mentioned, at a monthly rental of P1,500.00, for a period of 25 years
(Exhibit ‘B’, Exhibit 4-Leverizas’).

Third Contract.— For purposes of easy reference and brevity, this contract shall be
referred to hereinafter as Contract C. This is a ‘LEASE AGREEMENT’, executed between
Defendant CIVIL AERONAUTICS ADMINISTRATION, as lessor, and plaintiff MOBIL OIL
PHILIPPINES, INC., as lessee, on June 1, 1968 over that SAME parcel of land (Lot A, on
plan being a portion of Parcel, Psu 2031), containing an area of 3,000 square meters
more or less, at a monthly rental of P.25 per square meter for the second 200 square
meters, and P.20 per square meter for the rest, for a period of 29 (sic) years. (Exhibit
‘C’).

"There is no dispute among the parties that the subject matter of the three contracts of
lease above mentioned, Contract A, Contract B, and Contract C, is the same parcel of
land, with the noted difference that while in Contract A, the area leased is 4,502 square
meters, in Contract B and Contract C, the area has been reduced to 3,000 square
meters. To summarize: chanrob1es virtual 1aw library

Contract A — a lease contract of April 2, 1965 between the Republic of the Philippines,
represented by Defendant Civil Aeronautics Administration and Rosario C. Leveriza over
a parcel of land containing an area of 4,502 square meters, for 25 years.

Contract B — a lease contract (in effect a sublease) of May 21, 1965 between
defendant Rosario C. Leveriza and plaintiff Mobil Oil Philippines, Inc. over the same
parcel of land, but reduced to 3,000 square meters for 25 years; and

Contract C — a lease contract of June 1, 1968 between defendant Civil Aeronautics

Administration and plaintiff Mobil Oil Philippines, Inc., over the same parcel of land, but
reduced to 3,000 square meters, for 25 years.

"It is important to note, for a clear understanding of the issues involved, that it appears
that defendant Civil Aeronautics Administration as LESSOR, leased the same parcel of
land, for durations of time that overlapped to two lessees, to wit: (1) Defendant Rosario
C. Leveriza, and that plaintiff Mobil Oil Philippines, Inc., as LESSEE, leased the same
parcel of land from two lessors, to wit: (1) defendant Rosario C. Leveriza and (2)
defendant Civil Aeronautics Administration, Inc., for durations of time that also
overlapped.

"For purposes of brevity defendant Civil Aeronautics Administration shall be referred to

hereinafter as defendant CAA.

"Rosario C. Leveriza, the lessee in Contract A and the lessor in Contract B, is now
deceased. This is the reason why her successor-in-interest, her heirs, are sued,
namely: Defendant Primitivo Leveriza, her second husband, (now also deceased), Fe
Leveriza Parungao, her daughter by her second husband, and Antonio C. Vasco, her son
by her first husband. For purposes of brevity, these defendants shall be referred to
hereinafter as Defendants Leveriza.

"Plaintiff Mobil Oil Philippines, Inc., shall be referred to hereinafter simply as the
Plaintiff." (pp. 95-99, Record on Appeal)

"Plaintiff in this case seeks the rescission or cancellation of Contract A and Contract B
on the ground that Contract A from which Contract B is derived and depends has
already been cancelled by the defendant Civil Aeronautics Administration and maintains
that Contract C with the defendant CAA is the only valid and subsisting contract insofar
as the parcel of land, subject to the present litigation is concerned. On the other hand,
defendants Leverizas’ claim that Contract A which is their contract with CAA has never
been legally cancelled and still valid and subsisting; that it is Contract C between
plaintiff and defendant CAA which should be declared void.

"Defendant CAA asserts that Exhibit "A" is still valid and subsisting because its
cancellation by Guillermo Jurado was ineffective and asks the court to annul Contract A
because of the violation committed by defendant Leveriza in leasing the parcel of land
to plaintiff by virtue of Contract B without the consent of defendant CAA. Defendant
CAA further asserts that Contract C not having been approved by the Director of Public
Works and Communications is not valid . . ." cralaw virtua1aw library

x          x           x

After trial, the lower court render judgment on April 6, 1976 the dispositive part of
which reads: jgc:chanrobles.com.ph

"WHEREFORE, after having thus considered the evidence of all the parties, testimonial
and documentary, and their memoranda and reply-memoranda, this Court hereby
renders judgment: chanrob1es virtual 1aw library

1. Declaring Contract A as having been validly cancelled on June 28, 1966, and has
therefore ceased to have any effect as of that date;

2. Declaring that Contract B has likewise ceased to have any effect as of June 28, 1966
because of the cancellation of Contract A;

3. Declaring that Contract C was validly entered into on June 1, 1968, and that it is still
valid and subsisting;

4. Ordering defendant CAA to refund to defendants Leverizas the amount of P32,189.30

with 6% per annum until fully paid;

5. Ordering defendants Leverizas to refund to plaintiff the amount of P48,000.00 with

6% interest per annum until fully paid;

6. Dismissing defendants Leverizas’ four counterclaims against plaintiff;

7. Dismissing defendants Leverizas’ cross-claim against defendant CAA;

8. Dismissing defendant CAA’s counterclaim against plaintiff;

9. Dismissing defendant CAA’s counterclaim against defendant Leverizas.

No pronouncements as to costs." cralaw virtua1aw library

On June 2, 1976, defendant Leveriza filed a motion for new trial on the ground of newly
discovered evidence, lack of jurisdiction of the court over the case and lack of
evidentiary support of the decision which was denied in the order of November 12,
1976 (Rollo, p. 17).

On July 27, 1976, the CAA filed a Motion for Reconsideration, averring that because the
lot lease was properly registered in the name of the Republic of the Philippines, it was
only the President of the Philippines or an officer duly designated by him who could
execute the lease contract pursuant to Sec. 567 of the Revised Administrative Code;
that the Airport General Manager has no authority to cancel Contract A, the contract
entered into between the CAA and Leveriza, and that Contract C between the CAA and
Mobil was void for not having been approved by the Secretary of Public Works and
Communications. Said motion was however denied on November 12, 1976 (Rollo, p.
18).chanrobles.com:cralaw:red

On appeal, the Intermediate Appellate Court, being in full accord with the trial court,
rendered a decision on February 29, 1984, the dispositive part of which reads: jgc:chanrobles.com.ph

"WHEREFORE, finding no reversible error in the decision of the lower court dated April
6, 1976, the same is hereby affirmed in toto." cralaw virtua1aw library

Hence, this petition.

The petitioners raised the following assignment of errors: chanrob1es virtual 1aw library

"I

THE INTERMEDIATE APPELLATE COURT ERRED IN HOLDING THAT THE

ADMINISTRATOR OF THE CIVIL AERONAUTICS ADMINISTRATION (CAA) HAD THE
STATUTORY AUTHORITY TO LEASE, EVEN WITHOUT APPROVAL OF THE THEN
SECRETARY OF PUBLIC WORKS AND COMMUNICATIONS, REAL PROPERTY BELONGING
TO THE REPUBLIC OF THE PHILIPPINES.

II

THE INTERMEDIATE APPELLATE COURT ERRED IN HOLDING THAT THE

ADMINISTRATOR OF THE CIVIL AERONAUTICS ADMINISTRATION HAD STATUTORY
AUTHORITY, WITHOUT THE APPROVAL OF THE THEN SECRETARY OF PUBLIC WORKS
AND COMMUNICATIONS, TO CANCEL A LEASE CONTRACT OVER REAL PROPERTY
OWNED BY THE REPUBLIC OF THE PHILIPPINES, WHICH CONTRACT WAS APPROVED,
AS REQUIRED BY LAW, BY THE SECRETARY.

III

THE INTERMEDIATE APPELLATE COURT ERRED WHEN IT RULED THAT THE CONTRACT
OF SUBLEASE (CONTRACT B) ENTERED INTO BETWEEN PETITIONERS’ PREDECESSOR-
IN-INTEREST AND RESPONDENT MOBIL OIL PHILIPPINES, INC. WAS WITHOUT THE
CONSENT OF THE ADMINISTRATOR OF THE CIVIL AERONAUTICS ADMINISTRATION.

The petition is devoid of merit.

There is no dispute that Contract "A" at the time of its execution was a valid contract.
The issue therefore is whether or not said contract is still subsisting after its
cancellation by CAA on the ground of a sublease executed by petitioners with Mobil Oil
Philippines without the consent of CAA and the execution of another contract of lease
between CAA and Mobil Oil Philippines (Contract "C").

Petitioners contend that Contract "A" is still subsisting because Contract "B" is a valid
sublease and does not constitute a ground for the cancellation of Contract "A", while
Contract "C", a subsequent lease agreement between CAA and Mobil Oil Philippines is
null and void, for lack of approval by the Department Secretary. Petitioners anchor their
position on Sections 567 and 568 of the Revised Administrative Code which require
among others, that subject contracts should be executed by the President of the
Philippines or by an officer duly designated by him, unless authority to execute the
same is by law vested in some other officer (Petition, Rollo, pp. 15-16).

At the other extreme, respondent Mobil Oil Philippines asserts that Contract "A" was
validly cancelled on June 28, 1966 and so was Contract "B" which was derived
therefrom. Accordingly, it maintains that Contract "C" is the only valid contract insofar
as the parcel of land in question is concerned and that approval of the Department
Head is not necessary under Section 32 (par. 24) of the Republic Act 776 which
expressly vested authority to enter into such contracts in the Administrator of CAA
(Comment; Rollo, p. 83).

On its part, respondent Civil Aeronautics Administration took the middle ground with its
view that Contract "A" is still subsisting as its cancellation is ineffective without the
approval of the Department Head but said contract is not enforceable because of
petitioners’ violation of its terms and conditions by entering into Contract "B" of
sublease without the consent of CAA. The CAA further asserts that Contract "C" not
having been approved by the Secretary of Public Works and Communications, is not
valid (Rollo, p. 43). However, in its comment filed with the Supreme Court, the CAA
made a complete turnabout adopting the interpretation and ruling made by the trial
court which was affirmed by the Intermediate Appellate Court (Court of Appeals), that
the CAA Administrator has the power to execute the deed or contract of lease involving
real properties under its administration belonging to the Republic of the Philippines
without the approval of the Department Head as clearly provided in Section 32,
paragraph (24) of Republic Act 776. chanrobles virtual lawlibrary

The issue narrows down to whether or not there is a valid ground for the cancellation of
Contract "A." cralaw virtua1aw library

Contract "A" was entered into by CAA as the lessor and the Leverizas as the lessee
specifically "for the purpose of operating and managing a gasoline station by the latter,
to serve vehicles going in and out of the airport." cralaw virtua1aw library

As regards prior consent of the lessor to the transfer of rights to the leased premises,
the provision of paragraph 7 of said Contract reads in full: jgc:chanrobles.com.ph

"7. The Party of the Second part may transfer her rights to the leased premises but in
such eventuality, the consent of the Party of the First Part shall first be secured. In any
event, such transfer of rights shall have to respect the terms and conditions of this
agreement." cralaw virtua1aw library

Paragraph 8 provides the sanction for the violation of the above-mentioned terms and
conditions of the contract. Said paragraph reads: jgc:chanrobles.com.ph

"8. Failure on the part of the Party of the Second Part to comply with the terms and
conditions herein agreed upon shall be sufficient for revocation of this contract by the
Party of the First Part without need of judicial demand." cralaw virtua1aw library

It is not disputed that the Leverizas (lessees) entered into a contract of sublease
(Contract "B") with Mobil Oil Philippines without the consent of CAA (lessor). The
cancellation of the contract was made in a letter dated June 28, 1966 of Guillermo P.
Jurado, Airport General Manager of CAA addressed to Rosario Leveriza, as follows: chanrob1es virtual 1aw library

(Letterhead)

"June 28, 1966

Mrs. Rosario Leveriza

Manila International Airport.

Madam: chanrob1es virtual 1aw library

It has been found out by the undersigned that you have sublet the property of the CAA
leased to you and by virtue of this, your lease contract is hereby cancelled because of
the violation of the stipulations of the contract. I would like to inform you that even
without having sublet the said property the said contract would have been cancelled as
per attached communication.

Very truly yours,

For the Director: chanrob1es virtual 1aw library

(Sgd.) Illegible

(Typed)

GUILLERMO P. JURADO

Airport General Manager

Respondent Leverizas and the CAA assailed the validity of such cancellation, claiming
that the Airport General Manager had no legal authority to make the cancellation. They
maintain that it is only the Secretary of Public Works and Communications, acting for
the President, or by delegation of power, the Director of Civil Aeronautics
Administration who could validly cancel the contract. They do admit, however, and it is
evident from the records that the Airport General Manager signed "For the Director."
Under the circumstances, there is no question that such act enjoys the presumption of
regularity, not to mention the unassailable fact that such act was subsequently affirmed
or ratified by the Director of the CAA himself (Record on Appeal, pp. 108-110).

Petitioners argue that cancelling or setting aside a contract approved by the Secretary
is, in effect, repealing an act of the Secretary which is beyond the authority of the
Administrator.

Such argument is untenable. The terms and conditions under which such revocation or
cancellation may be made, have already been specifically provided for in Contract "A"
which has already been approved by the Department Head. It is evident that in the
implementation of aforesaid contract, the approval of said Department Head is no
longer necessary if not redundant.

It is further contended that even granting that such cancellation was effective, a
subsequent billing by the Accounting Department of the CAA has in effect waived or
nullified the rescission of Contract "A." cralaw virtua1aw library

It will be recalled that the questioned cancellation of Contract "A" was among others,
mainly based on the violation of its terms and conditions, specifically, the sublease of
the property by the lessee without the consent of the lessor.

The billing of the petitioners by the Accounting Department of the CAA if indeed it
transpired, after the cancellation of Contract "A" is obviously an error. However, this
Court has already ruled that the mistakes of government personnel should not affect
public interest. In San Mauricio Mining Company v. Ancheta (105 SCRA 391, 422), it
has been held that as a matter of law rooted in the protection of public interest, and
also as a general policy to protect the government and the people, errors of
government personnel in the performance of their duties should never deprive the
people of the right to rectify such error and recover what might be lost or be bartered
away in any actuation, deal or transaction concerned. In the case at bar, the lower
court in its decision which has been affirmed by the Court of Appeals, ordered the CAA
to refund to the petitioners the amount of rentals which was not due from them with
6% interest per annum until fully paid.

Petitioners further assail the interpretation of Contract "A", claiming that Contract "B"
was a mere sublease to respondent Mobil Oil Philippines, Inc. and requires no prior
consent of CAA to perfect the same. Citing Article 1650 of the Civil Code, they assert
that the prohibition to sublease must be expressed and cannot be merely implied or
inferred (Rollo, p. 151).

As correctly found by the Court of Appeals, petitioners in asserting the non-necessity

for a prior consent interprets the first sentence of paragraph 7 of Contract "A" to refer
to an assignment of lease under Article 1649 of the Civil Code and not to a mere
sublease. A careful scrutiny of said paragraph of Contract "A" clearly shows that it
sneaks of transfer of rights of Rosario Leveriza to the leased premises and not to
assignment of the lease (Rollo, pp. 48-49).

Petitioners likewise argued that it was contemplated by the parties to Contract "A" that
Mobil Oil Philippines would be the owner of the gasoline station it would construct on
the leased premises during the period of the lease, hence, it is understood that it must
be given a right to use and occupy the lot in question in the form of a sub-lease (Rollo,
p. 152).chanrobles virtual lawlibrary

In Contract "A", it was categorically stated that it is the lessee (petitioner) who will
manage and operate the gasoline station. The fact that Mobil Oil was mentioned in that
contract was clearly not intended to give approval to a sublease between petitioners
and said company but rather to insure that in the arrangements to be made between
them, it must be understood that after the expiration of the lease contract, whatever
improvements have been constructed in the leased premises shall be relinquished to
CAA. Thus, this Court held that "the primary and elementary rule of construction of
documents is that when the words or language thereof is clear and plain or readily
understandable by any ordinary reader thereof, there is absolutely no room for
interpretation or construction anymore." (San Mauricio Mining Company v. Ancheta,
supra).

Finally, petitioners contend that the administrator of CAA cannot execute without
approval of the Department Secretary, a valid contract of lease over real property
owned by the Republic of the Philippines, citing Sections 567 and 568 of the Revised
Administrative Code, which provide as follows: jgc:chanrobles.com.ph

"SEC. 567. Authority of the President of the Philippines to execute contracts relative to
real property. — When the Republic of the Philippines is party to a deed conveying the
title to real property or is party to any lease or other contract relating to real property
belonging to said government, said deed or contract shall be executed on behalf of said
government by the President of the Philippines or by an officer duly designated by him,
unless authority to execute the same is by law expressly vested in some other officer."
(Emphasis supplied)

"SEC. 568. Authority of national officials to make contract. — Written contracts not
within the purview of the preceding section shall, in the absence of special provision, be
executed, with the approval of the proper Department Head, by the Chief of the Bureau
or Office having control of the appropriation against which the contract would create a
charge; or if there is no such chief, by the proper Department Head himself or the
President of the Philippines as the case may require." cralaw virtua1aw library

On the other hand, respondent CAA avers that the CAA Administrator has the authority
to lease real property belonging to the Republic of the Philippines under its
administration even without the approval of the Secretary of Public Works and
Communications, which authority is expressly vested in it by law, more particularly
Section 32 (24) of Republic Act 776, which reads: jgc:chanrobles.com.ph

"Sec. 32. Powers and Duties of the Administrator. — Subject to the general control and
supervision of the Department Head, the Administrator shall have, among others, the
following powers and duties: chanrob1es virtual 1aw library

x          x           x

"(24) To administer, operate, manage, control, maintain and develop the Manila
International Airport and all government aerodromes except those controlled or
operated by the Armed Forces of the Philippines including such power and duties
as: . . . (b) to enter into, make and execute contracts of any kind with any person,
firm, or public or private corporation or entity; (c) to acquire, hold, purchase, or lease
any personal or real property, right of ways, and easements which may be proper or
necessary: Provided, that no real property thus acquired and any other real property of
the Civil Aeronautics Administration shall be sold without the approval of the President
of the Philippines . . ."
cralaw virtua1aw library

There is no dispute that the Revised Administrative Code is a general law while Republic
Act 776 is a special law nor in the fact that the real property subject of the lease in
Contract "C" is real property belonging to the Republic of the Philippines.

Under 567 of the Revised Administrative Code, such contract of lease must be
executed: (1) by the President of the Philippines, or (2) by an officer duly designated
by him or (3) by an officer expressly vested by law. It is readily apparent that in the
case at bar, the Civil Aeronautics Administration has the authority to enter into
Contracts of Lease for the government under the third category. Thus, as correctly
ruled by the Court of Appeals, the Civil Aeronautics Administration has the power to
execute the deed or contract involving leases of real properties belonging to the
Republic of the Philippines, not because it is an entity duly designated by the President
but because the said authority to execute the same is, by law expressly vested in it. chanrobles.com:cralaw:red

Under the above-cited Section 32 (par. 24) of Republic Act 776, the Administrator
(Director) of the Civil Aeronautics Administration by reason of its creation and
existence, administers properties belonging to the Republic of the Philippines and it is
on these properties that the Administrator must exercise his vast power and discharge
his duty to enter into, make and execute contract of any kind with any person, firm, or
public or private corporation or entity and to acquire, hold, purchase, or lease any
personal or real property, right of ways and easements which may be proper or
necessary. The exception, however, is the sale of properties acquired by CAA or any
other real properties of the same which must have the approval of the President of the
Philippines. The Court of Appeals took cognizance of the striking absence of such
proviso in the other transactions contemplated in paragraph (24) and is convinced as
we are, that the Director of the Civil Aeronautics Administration does not need the prior
approval of the President or the Secretary of Public Works and Communications in the
execution of Contract "C."cralaw virtua1aw library

In this regard, this Court ruled that another basic principle of statutory construction
mandates that general legislation must give way to special legislation on the same
subject, and generally be so interpreted as to embrace only cases in which the special
provisions are not applicable (Sto. Domingo v. De los Angeles, 96 SCRA 139), that
specific statute prevails over a general statute (De Jesus v. People, 120 SCRA 760) and
that where two statutes are of equal theoretical application to a particular case, the one
designed therefor specially should prevail (Wil Wilhensen, Inc. v. Baluyot, 83 SCRA 38).

WHEREFORE, the petition is DISMISSED for lack of merit and the decision of the Court
of Appeals appealed from is AFFIRMED in toto.

SO ORDERED.
FACTS:

The case involves three contracts of lease:

Contract A – executed a lease contract on April 2, 1965 between the Republic of the
Philippines, represented by Civil Aeronautics Administration (CAA), as lessor, and
Rosario C. Leveriza, as lessee, over a certain parcel of land at the MIA area, with
approximately 4,502 sq m at P450.20 for a period of 25 years

Contract B – executed a lease contract on May 21, 1965 between Rosario C. Leveriza, as
lessor, and Mobil Oil Philippines Inc, as lessee, over 3000 sq m of the same parcel of
land subject of Contract A at a monthly rental of P1,500 for 25 years.

Contract C –  executed a lease contract on June 1, 1968 between Civil Aeronautics

Administration and Mobil Oil Philippines, Inc, over the same parcel of land, but reduced
to 3000 sq m for 25 years.

It appears that CAA, as lessor,  leased the same parcel of land, for durations of time that
overlapped to two lessees, to wit: (1) Rosario Leveriza and the Mobile Oil Philippines,
Inc, as lessee, leased the same parcel of land from two lessors, to wit: (1) Rosario
Leveriza and (2) CAA, for durations of time that also overlapped.

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The heirs of Rosario Leveriza, were sued by Mobil Oil for the rescission or cancellation
of Contract A and Contract B on the ground that Contract A from which Contract B was
derived has already been cancelled by the CAA and that Contract C is the only valid and
subsisting contract. On the other hand, the Leverizas’ claim that Contract A was never
legally cancelled, and is still valid and subsisting. 

The Petitioners contend that the administrator of CAA cannot execute a contract of lease
over real property owned by the Republic of the Philippines without the approval of the
Secretary of the Department of Public Works and Communications as expressed in
Section 567 and 568 of the Revised Administrative Code. Said sections require that
subject contracts should be executed by the President of the Philippines or by an officer
duly designated by him, unless authority to execute the same is vested by law in some
other officer. Petitioners argue that cancelling a contract approved by the Secretary is
beyond the authority of the CAA administrator.

ISSUE:

Whether or not the administrator of the CAA can execute or cancel a contract without
the approval of the Department Secretary?
HELD:

The Petitioner’s argument is untenable and that the CAA has the authority to enter and
cancel a contract of lease over a real property owned by the Republic of the Philippines
without the approval of the Secretary of the Public Works and Communications.

Under Sec 567 of the Revised Administrative Code, such contract of lease must be
executed: (1) by the President of the Philippines, or (2) by an officer duly designated by
him or (3) by an officer expressly vested by law. It is readily apparent that in the case at
bar, the CAA has the authority to enter into Contracts of Lease for the government
under the third category.

As provided in Section 32 of Republic Act 776, the Administrator (Director) of the CAA
by reason of its creation and existence, administers properties belonging to the Republic
of the Philippines and it is on these properties that the Administrator must exercise his
vast power and discharge his duty to enter into, make and execute contract of any kind
with any person, firm, or public or private corporation or entity and to acquire, hold,
purchase, or lease any personal or real property, right of ways and easements which may
be proper or necessary. The basic principle of statutory construction mandates that
general legislation must give way to special legislation on the same subject, and
generally be so interpreted as to embrace only cases in which the special provisions are
not applicable, that specific statute prevails over a general statute and that where two
statutes are of equal theoretical application to a particular case, the one designed
therefore specially should prevail.
PRIMITIVO LEVERIZA v. IAC, GRNo. L-66614, 1988-01-25

Facts:
This is a Petition for Review on certiorari seeking the reversal of the decision of the
Intermediate Appellate Court, Third Division* dated February 29, 1984 in AC-G.R. No. CV
No. 61705 entitled Mobil Oil Philippines,... Inc., plaintiff-appellee vs. Primitivo Leveriza, Fe
Leveriza Parungao, Antonio C. Vasco and Civil Aeronautics Administration, defendants-
appellants; Primitivo Leveriza, Fe Leveriza Parungao and Antonio C. Leveriza, cross-
defendant, affirming in toto the decision of the trial... court dated April 6, 1976.
“There is no dispute among the parties that the subject matter of the three contracts of
lease above mentioned, Contract A, Contract B, and Contract C, is the same parcel of land,
with the noted difference that while in Contract A, the area leased is 4,502 square meters,...
in Contract B and Contract C, the area has been reduced to 3,000 square meters. To
summarize:
Contract A — a lease contract of April 2, 1965 between the Republic of the Philippines,
represented by Defendant Civil Aeronautics Administration and Rosario C. Leveriza over a
parcel of land containing an area of 4,502 square meters, for 25 years.
Contract B — a lease contract (in effect a sublease) of May 21,1965 between defendant
Rosario C. Leveriza and plaintiff Mobil Oil Philippines, Inc. over the same parcel of land, but
reduced to 3,000 square meters for 25 years; and
Contract C —-a lease contract of June 1, 1968 between defendant Civil Aeronautics
Administration and plaintiff Mobil Oil Philippines, Inc., over the same parcel of land, but
reduced to 3,000 square meters, for 25 years.
“It is important to note, for a clear understanding of the issues involved, that it appears that
defendant Civil Aeronautics Administration as LESSOR, leased the same parcel of land, for
durations of time that overlapped to two lessees, to wit: (1) Defendant Rosario C.
Leveriza,... and that plaintiff Mobil Oil Philippines, Inc., as LESSEE, leased the same parcel
of land from two lessors, to wit: (') defendant Rosario C. Leveriza and (2) defendant Civil
Aeronautics Administration, Inc., for durations of time that also overlapped.
“Plaintiff in this case seeks the rescission or cancellation of Contract A and Contract B on
the ground that Contract A from which Contract B is derived and depends has already been
cancelled by the defendant Civil Aeronautics Administration and maintains that Contract C
with... the defendant CAA is the only valid and subsisting contract insofar as the parcel of
land, subject to the present litigation  is concerned. On the other hand, defendants
Leverizas’ claim that Contract A which is their contract with CAA has never been legally
cancelled and... still valid and subsisting; that it is Contract C between plaintiff and
defendant CAA which should be declared void.
“Defendant CAA asserts that Exhibit “A” is still valid and subsisting because its cancellation
by Guillermo Jurado was ineffective and asks the court to annul Contract A because of the
violation committed by defendant Leveriza in leasing the parcel of land to plaintiff by virtue...
of Contract B without the consent of defendant CAA. Defendant CAA further asserts that
Contract C not having been approved by the Director of Public Works and Communications
is not valid,... On June 2, 1976, defendant Leveriza filed a motion for new trial on the ground
of newly discovered evidence, lack of jurisdiction of the court over the case and lack of
evidentiary support of the decision which was denied in the order of November 12, 1976
On July 27, 1976, the CAA filed a Motion for Reconsideration, averring that because the lot
leased was properly registered in the name of the Republic of the Philippines, it was only
the President of the Philippines or an officer duly designated by him who could execute
the... lease contract pursuant to Sec. 567 of the Revised Administrative Code; that the
Airport General Manager has no authority to cancel Contract A, the contract entered into
between the CAA and Leveriza, and that Contract C between the CAA and Mobil was void
for not having been... approved by the Secretary of Public Works and Communications.
On appeal, the Intermediate Appellate Court, being in full accord with the trial court,
rendered a decision on February 29, 1984, the dispositive part of which reads:
“WHEREFORE, finding no reversible error in the decision of the lower court dated April 6,
1976, the same is hereby affirmed in toto”

Issues:
THE INTERMEDIATE APPELLATE COURT ERRED IN HOLDING THAT THE
ADMINISTRATOR OF THE CIVIL AERONAUTICS ADMINISTRATION HAD STATUTORY
AUTHORITY, WITHOUT THE APPROVAL OF THE THEN SECRETARY OF PUBLIC
WORKS AND COMMUNICATIONS, TO CANCEL A LEASE CONTRACT OVER REAL
PROPERTY OWNED BY THE
REPUBLIC OF THE PHILIPPINES, WHICH CONTRACT WAS APPROVED, AS
REQUIRED BY LAW, BY THE SECRETARY.

Ruling:
Such argument is untenable. The terms and conditions under which such revocation or
cancellation may be made, have already been specifically provided for in Contract “A” which
has already been approved by the Department Head. It is evident that in the implementation
of aforesaid... contract, the approval of said Department Head is no longer necessary if not
redundant.
There is no dispute that the Revised Administrative Code is  a general law while Republic
Act 776 is a special law nor in the fact that the real property subject of the lease in Contract
“C” is real property belonging to the Republic of the Philippines.
Under 567 of the Revised Administrative Code, such contract of lease must be executed:
(1) by the President of the Philippines, or (2) by an officer duly designated by him or (3) by
an officer expressly vested by law. It is readily apparent that in the case at bar, the Civil
Aeronautics Administration has the authority to enter into Contracts of Lease for the
government under the third category. Thus, as correctly ruled by the Court of Appeals, the
Civil Aeronautics Administration has the power to execute the deed or contract involving
leases of... real properties belonging to the Republic of the Philippines, not because it is an
entity duly designated by the President but because the said authority to execute the same
is, by law expressly vested in it.
Under the above-cited Section 32 (par. 24) of Republic Act 776, the Administrator (Director)
of the Civil Aeronautics Administration by reason of its creation and existence, administers
properties belonging to the Republic of the Philippines and it is on these properties that...
the Administrator must exercise his vast power and discharge his duty to enter into, make
and execute contract of any kind with any person, firm, or public or private corporation or
entity and to acquire, hold, purchase, or lease any personal or real property, right of ways
and... easements which may be proper or necessary. The exception, however, is the sale of
properties acquired by CAA or any other real properties of the same which must have the
approval of the President of the Philippines. The Court of Appeals took cognizance of the
striking absence... of such proviso in the other transactions contemplated in paragraph (24)
and is convinced as we are, that the Director of the Civil Aeronautics Administration does
not need the prior approval of the President or the Secretary of Public Works and
Communications in the execution... of Contract “C”.
In this regard, this Court ruled that another basic principle  of statutory construction
mandates that general legislation must give way to special legislation on the same subject,
and generally be so interpreted as to embrace only cases in which the special provisions
are... not applicable (Sto. Domingo v. De los Angeles, 96 SCRA 139), that specific statute
prevails over a general statute (De Jesus v. People, 120 SCRA 760) and that where two
statutes are of equal theoretical application to a particular case, the one designed therefor...
specially should prevail (Wil Wilhensen, Inc. v. Baluyot, 83 SCRA 38).
WHEREFORE, the petition is DISMISSED for lack of merit and the decision of the Court of
Appeals appealed from is AFFIRMED in toto.
SO ORDERED.