G.R. No. L-66614. January 25, 1988.
PRIMITIVO LEVERIZA, FE LEVERIZA PARUNGAO & ANTONIO C. VASCO, petitioners, vs. INTERMEDIATE APPELLATE COURT, MOBIL OIL PHILIPPINES & CIVIL AERONAUTICS ADMINISTRATION, respondents.

FACTS

This case involves three overlapping lease contracts over the same parcel of land within the Manila International Airport area. Contract A was executed on April 2, 1965, between the Republic, represented by the Civil Aeronautics Administration (CAA), as lessor, and Rosario C. Leveriza, as lessee, covering 4,502 square meters for 25 years. Contract B, a sublease, was executed on May 21, 1965, between Rosario Leveriza, as lessor, and Mobil Oil Philippines, Inc., as lessee, covering 3,000 square meters of the same land for 25 years. Subsequently, Contract C was executed on June 1, 1968, directly between CAA, as lessor, and Mobil Oil, as lessee, covering the same 3,000 square meters for 25 years.
Mobil Oil filed an action seeking the rescission of Contracts A and B, arguing that Contract A had been cancelled by CAA and that Contract C was the only valid lease. The Leveriza heirs, successors of Rosario Leveriza, contended that Contract A remained valid and subsisting, and that Contract C should be declared void. The CAA asserted that Contract A was still valid due to an ineffective cancellation, sought its annulation for violation of a non-sublease clause, and argued that Contract C was invalid for lack of approval by the Director of Public Works and Communications.

ISSUE

The core issue is the validity and effectivity of the three lease contracts, specifically whether Contract C, executed directly between CAA and Mobil Oil, is valid despite the absence of approval from the President or the Secretary of Public Works and Communications.

RULING

The Supreme Court affirmed the decisions of the lower courts, upholding the validity of Contract C and the cancellation of Contracts A and B. The legal logic centers on the statutory authority of the CAA Administrator. The Court ruled that under Section 32(24) of Republic Act No. 776 (the Civil Aeronautics Act), the CAA Administrator is expressly vested by law with the power to “enter into, make and execute contracts of any kind” and to “lease any personal or real property” necessary for CAA operations. This grant of authority is specific and comprehensive.
The requirement for presidential approval under Section 567 of the Revised Administrative Code, which petitioners invoked, is a general provision governing contracts for the national government. Applying the principle of statutory construction that a special law prevails over a general law, the specific authority granted to the CAA Administrator under R.A. 776 controls. The Court noted that the specific statutory provision (R.A. 776) only requires presidential approval for the sale of CAA-acquired or other real properties. The striking absence of such a requirement for lease contracts within the same paragraph indicates a deliberate legislative intent to exempt such transactions from higher executive approval. Therefore, Contract C was validly executed by the CAA Administrator under its express statutory power, without need for approval from the President or the Secretary of Public Works and Communications. Consequently, the cancellation of Contract A was valid, rendering Contract B ineffective.