Leveriza v. Intermediate Appellate Court
REITERATIONFacts
The Antecedents: Three contracts of lease were involved: Contract A (April 2, 1965) between the Republic of the Philippines (represented by Civil Aeronautics Administration - CAA) as lessor and Rosario C. Leveriza as lessee over 4,502 sq. meters for 25 years. Contract B (May 21, 1965) between Rosario C. Leveriza as lessor and Mobil Oil Philippines, Inc. (Mobil) as lessee over 3,000 sq. meters of the same land for 25 years. Contract C (June 1, 1968) between CAA as lessor and Mobil as lessee over 3,000 sq. meters of the same land for 25 years. Rosario C. Leveriza, the original lessee and sublessor, was deceased, and her heirs (Primitivo Leveriza, Fe Leveriza Parungao, and Antonio C. Vasco) were substituted as defendants. Mobil Oil Philippines (Plaintiff) sought rescission of Contracts A and B, asserting Contract C was the only valid subsisting contract. The Leveriza heirs claimed Contract A was valid and subsisting, and Contract C was void. CAA asserted Contract A was valid but unenforceable due to the sublease in Contract B without consent, and Contract C was invalid for lack of approval. Procedural History: The trial court declared Contract A validly cancelled on June 28, 1966, rendering Contract B ineffective. It declared Contract C valid and subsisting. It ordered CAA to refund P32,189.30 to the Leverizas and the Leverizas to refund P48,000.00 to Mobil. The Leverizas' motion for new trial was denied. CAA's motion for reconsideration, arguing the Airport General Manager lacked authority to cancel Contract A and Contract C was void, was also denied. The Intermediate Appellate Court affirmed the trial court's decision in toto. The Petition: Petitioners (Leveriza heirs) sought review, raising errors concerning the authority of the CAA Administrator to lease and cancel Contract A without the Secretary's approval, and the ruling that Contract B was entered into without CAA's consent.
Issue(s)
Whether the Administrator of the Civil Aeronautics Administration (CAA) had the statutory authority to lease real property belonging to the Republic of the Philippines without the approval of the Secretary of Public Works and Communications. Whether the Administrator of the CAA had the statutory authority to cancel Contract A without the approval of the Secretary of Public Works and Communications. Whether Contract B, a sublease between petitioners' predecessor-in-interest and respondent Mobil Oil Philippines, Inc., was entered into without the consent of the CAA.
Ruling
The petition is dismissed for lack of merit. The decision of the Court of Appeals affirming the trial court's decision is affirmed in toto.
Ratio Decidendi
On the authority of the CAA Administrator to lease real property: The Court affirmed the ruling that the CAA Administrator has the statutory authority to execute lease contracts over real properties under its administration belonging to the Republic of the Philippines, pursuant to Section 32(24) of Republic Act 776. This special law expressly vests such authority in the Administrator, making prior approval from the Secretary of Public Works and Communications unnecessary. The Court emphasized the principle that special legislation prevails over general legislation when they cover the same subject matter. Therefore, Contract C, executed by the CAA Administrator, was validly entered into. On the authority of the CAA Administrator to cancel Contract A: The Court held that the cancellation of Contract A by the Airport General Manager, acting "For the Director" and subsequently affirmed by the Director, was valid. Contract A itself provided that failure to comply with its terms and conditions would be sufficient cause for revocation by the lessor without need of judicial demand. The specific violation cited was the sublease of the property without the lessor's consent, as stipulated in paragraph 7 of Contract A. The Court found that the Airport General Manager's act, being done "For the Director," enjoyed the presumption of regularity and was ratified by the Director. The argument that the cancellation required the Department Head's approval was rejected, as the terms of revocation were already stipulated in Contract A, which had been approved by the Department Head, making further approval redundant for its implementation. On whether Contract B was entered into without CAA's consent: The Court found that Contract B, a sublease executed by the Leverizas (lessees under Contract A) with Mobil Oil Philippines, was indeed entered into without the prior consent of CAA (lessor). Paragraph 7 of Contract A explicitly stated that the lessee could transfer her rights to the leased premises only after securing the lessor's consent. The Court rejected the petitioners' argument that Contract B was a mere sublease not requiring prior consent under Article 1650 of the Civil Code, finding that paragraph 7 of Contract A clearly referred to a "transfer of rights" which encompassed subleasing, and that the intention was for the lessee to manage and operate the gasoline station, not for Mobil to have an independent right to use and occupy the lot in the form of a sublease without consent. The violation of this provision was a valid ground for the cancellation of Contract A.
Main Doctrine
The Administrator of the Civil Aeronautics Administration (CAA) has the statutory authority to enter into and cancel lease contracts over real property belonging to the Republic of the Philippines under its administration, pursuant to Section 32(24) of Republic Act 776, a special law, without needing the approval of the Secretary of Public Works and Communications, and this authority prevails over general provisions of the Revised Administrative Code.