Leveriza V. IAC, G.R. No.

L-66614, January 25, 1988

Facts:
The Republic of the Philippines (RP) through the Civil Aeronautics Administration (CAA)
entered into a lease contract (Contract A) on April 2, 1965 with Rosario C. Leveriza over a
parcel of land containing an area of 4,502 square meters, for 25 years.

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

On June 1, 1968, a new lease contract (Contract C) was entered into, by and between CAA
and MOPI over the same parcel of land, but reduced to 3,000 square meters, for 25 years,
without the approval of the secretary of the Public Works and Communications (PWC). 

Due to the overlapped term of the lease contracts between CAA, Leveriza and MOPI, the
CAA 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 CAA and maintains that Contract C with the 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, Leverizas' (heirs) 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 MOPI and CAA which should be declared void.

Respondent Leverizas and the CAA assailed the validity of such cancellation of Contract A,
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.

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."

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.

Issue/s:
1. Whether or not there is a valid ground for the cancellation of Contract "A."
2. Whether the billing of petitioners by Accounting Department of CAA is considered an error.
Ruling:
1. 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.

2.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. 

Estoppel
 The government is not estopped and can subsequently correct the mistake or the
erroneous application of the law. 
 it is not bound by the errors committed by its agents. 
 General Rule: The government may be estopped through the affirmative acts of
the public officers acting within their authority.
 Exception: No estoppel if by neglect or omission of public duties. 
 It is axiomatic that the government cannot and must not be estopped particularly
in matters involving taxes.

Shauf v CA, 191 SCRA 713 [1980]

Facts:
Petitioner Loida Q. Shauf, a Filipino by origin and married to an American who is a member of
the United States Air Force, applied for the vacant position of Guidance Counselor, GS17109, in
the Base Education Office at Clark Air Base, for which she is eminently qualified. The
application of Loida Q. Shauf was referred to Mr. Anthony Persi, with the applications of other
applicants. Persi felt that her application was quite complete except for a reply to an inquiry form
attached to the application, which raised some questions regarding her work experience. After
long reservation for that position, one Mr. Isarkon was found to be qualified for the position and
that petitioner Loida Q. Shauf was never appointed to the position. Feeling aggrieved by what
she considered a shabby treatment accorded her, petitioner Loida Q. Shauf wrote the U.S. Civil
Service Commission questioning the qualifications of Edward Isakson. Shauf also filed a
complaint with the RTC for the alleged discriminatory acts of respondents Don Detwiler and
Anthony Persi.

Issue/s:
Whether respondents Detwiler and Persi who are officials of another state are immune from
suit.
Ruling:
No, While the doctrine appears to prohibit only suits against the state without its consent, it is
also applicable to complaints filed against officials of the state for acts allegedly
performed by them in the discharge of their duties. The rule is that if the judgment against
such officials will require the state itself to perform an affirmative act to satisfy the same, such
as the appropriation of the amount needed to pay the damages awarded against them, the suit
must be regarded as against the state itself although it has been formally impleaded. It must be
noted, however, that the rule is not also all-encompassing as to be applicable under all
circumstances. It is a different matter where the public official is made to account in his
capacity as such for acts contrary to law and injurious to the rights of plaintiff. Inasmuch as
the State authorizes only legal acts by its officers, unauthorized acts of government
officials or officers are not acts of the State, and an action against the officials or officers by
one whose rights have been invaded or violated by such acts, for the protection of his rights, is
not a suit against the State within the rule of immunity of the State from suit. In the same
tenor, it has been said that an action at law or suit in equity against a State officer or the director
of a State department on the ground that, while claiming to act for the State, he violates or
invades the personal and property rights of the plaintiff, under an unconstitutional act or under
an assumption of authority which he does not have, is not a suit against the State within the
constitutional provision that the State may not be sued without its consent.

Tatad v Garcia, 60 SCAD 480 [1995]

Facts:
Petitioners Francisco Tatad, John Osmena, and Rodolfo Biazon are members of the Philippine
Senate and are suing in their capacities as Senators and as taxpayers. Respondent Jesus
Garcia was then Secretary of the DOTC, while private respondent EDSA LRT CORPORATION,
Ltd. is a private corporation organized under the laws of Hongkong. DOTC planned to construct
a light railway transit line along EDSA.

Subsequently, RA No. 6957 referred to as the Build-Operate-Transfer (BOT) was signed by

then President Corazon Aquino which Act provides for two schemes for the financing,
construction and operation of government projects through private initiative and investment:
BOT or Build-Transfer (BT). In accordance with the provisions of RA 6957 and to set the EDSA
LRT III project underway, the Prequalification Bids and Awards Committee and the Technical
Committee were formed.

Of the 5 applicants, only the EDSA LRT Consortium “met the requirements of garnering at least
21 points per criteria, except for Legal aspects, and obtaining an overall passing mark of at least
82 points.” The Legal aspects referred to provided that the BOT/BT contractor-applicant meet
the requirements specified in the Constitution and other pertinent laws.

DOTC and EDSA LRT Corporation, Ltd., in substitution of the EDSA LRT Consortium,
entered into an “An Agreement to Build, Lease and Transfer a Light Rail Transit System
for EDSA” under the terms of the BOT Law. Secretary Prado, thereafter, requested presidential
approval of the contract. The request cannot, however, be granted for failure to comply with
the requirements of the BOT Law. In view whereof, Sec. Drilon, the DOTC, and private
respondent re-negotiated the agreement. Thereafter, the parties entered into a “Revised and
Restated Agreement to Build, Lease and Transfer and Light Rail Transit System for
EDSA.

Petitioners argued that the agreement, as amended by the Supplemental Agreement, in so far
as it grants EDSA LRT CORPORATION, LTD., a foreign corporation, the ownership of EDSA
LRT III, a public utility, violates the constitution, and hence, is unconstitutional. They
contend that the EDSA LRT III is a public utility, and the ownership and operation thereof is
limited by the Constitution to Filipino citizens and domestic corporations, not foreign
corporations like private respondent.

Issue/s:
Can respondent EDSA LRT Corporation, Ltd., a foreign corporation own EDSA LRT III; a public
utility?

Ruling:
YES. What private respondent owns are the rail tracks, rolling stocks like the coaches,
rail stations, terminals and the power plant, not a public utility. While a franchise is needed
to operate these facilities to serve the public, they do not by themselves constitute a public
utility. What constitutes a public utility is not their ownership but their use to serve the public.
The right to operate a public utility may exist independently and separately from the ownership
of the facilities thereof.

While private respondent is the owner of the facilities necessary to operate the EDSA LRT III, it
admits that it is not enfranchised to operate a public utility as per requirement of Section 11 of
Article XII of the Constitution. In view of this incapacity, private respondent and DOTC agreed
that on the completion date, the private respondent will immediately deliver possession of the
LRT system by of lease for 25 years, during which period DOTC shall operate the same as a
common carrier and private respondent shall provide technical maintenance and repair services
to DOTC.

Since DOTC shall operate the EDSA LRT III, it shall assume all the obligations and liabilities of
a common carrier. For this purpose, DOTC shall indemnify and hold harmless private
respondent from any losses, damages, injuries or death which may be claimed in the
operation or implementation of the system, except losses, damages, injury or death due to
defects in the EDSA LRT III on account of the defective condition of equipment or facilities or
the defective maintenance of such equipment facilities.

Presumption of regularity
 Government officials are presumed to perform their functions with regularity and strong
evidence is necessary to rebut this presumption. 
 Performance of official duties are protected by the presumption of good faith and even
mistakes are not actionable as long as it is not shown that they were motivated by
malice or gross negligence amounting to bad faith. 
Blue Bar Coconut Phil v Tantuico, 163 SCRA 716[1988]
Facts:
President issued Presidential Decree No. 276 establishing a coconut stabilization fund. Under
this decree, the Philippine Coconut Authority, in addition to its powers granted under
Presidential Decree No. 232, was authorized to formulate and immediately implement a
stabilization scheme for coconut-based consumer goods.

The petitioners are all end-users and as such, are levy-collectors and remitters.
Issue/s:
Ruling:
Sanders v. Veridiano, 162 SCRA 716
Facts:
Issue/s:
Ruling:

IV. Power of Control, Supervision and Investigation

 
A. Executive Power of the President
Marcos v Manglapus, 177 SCRA 668 [1989]

B. Control, Supervision and Review

Carpio v Executive Secretary, 206 SCRA 290 [1992]
Pelaez v Auditor-General, 15 SCRA 569 [1965]
Tecson v Salas, 34 SCRA 275 [1970]
Frache v Hernandez 109 Phil 782 [1960]
Noblejas v Salas, 67 SCRA 47 [1975]
Malayan Integrated Industries Corp v CA, 213 SCRA 640 [1992]
Extensive Ent. Corp. v. Sarbro & Co., Inc. 17 SCRA 41 [1966]
Larin v Executive Secretary, 88 SCAD 212 [1997]
Camarines Norte Electric Coop v Torres, 91 SCAD 995
United Christian Missionary Society v Social Security Commission, 30
SCRA983 [1969]
Villaluz v Zaldivar, 15 SCRA 710 [1965
Fortich v Corona, 289 SCRA 624 [1998]
Taule v Santos, 200 SCRA 512 [1991]
Sichangco v Board Commissioners of Immigration, 94 SCRA 61 [1979]
Philippine Gamefowl Commission v IAC, 46 SCRA 294 [1986]

C. Power of Investigation
Secretary of Justice v. Lantion, 322 SCRA 160 [2000]
Evangelista v Jarencio, 68 SCRA 99 [1975]
Larin v Executive Secretary, 88 SCAD 212 [1997]
Pefianco v Moral, 118 SCAD 391 [2000]
Carino v CHR, 204 SCRA 483 [1991]
Concerned Officials of MWSS v Vasquez, 58 SCRA 409
Deloso v Domingo, 191 SCRA 545 [1990]