MELITON ZABAT AND MARYLOU ZABAT, PETITIONERS, VS. THE HONORABLE COURT OF APPEALS, HONORABLE PRESIDING JUDGE, BRANCH 114, PASAY CITY, THE NATIONAL HOUSING AUTHORITY AND ALEJANDRA…

Zabat versus Court of Appeals

The Case

This is a petition for review on certiorari brought by the spouses Meliton and Marylou Zabat against the Court of Appeals, the presiding judge of the Regional Trial Court of Pasay City, the National Housing Authority, and the spouses Alejandra and Guillermo Mauris. The Zabats sought to stop the demolition of their structure and to overturn the award of a sixty square meter lot in the National Housing Authority's Tramo project to the Mauris. The case matters because it gathers in one decision the rules on injunction, laches, and exhaustion of administrative remedies, and shows how a beneficiary who sleeps on an administrative award loses the right to complain in court.

Procedural History

The dispute began in the administrative level. In 1981 the National Housing Authority found Marylou Zabat to be an absentee structure owner and disqualified her from a lot award. The lot was awarded to the Mauris. Marylou Zabat appealed to the Awards and Arbitration Committee, which in March 1985 declared her a project beneficiary but of another lot, since the controverted lot had already been allocated to the Mauris. Her motion for reconsideration was denied in August 1985, and she did not appeal. The lot was formally awarded to the Mauris on August 24, 1985, and a conditional contract to sell was executed in their favor.

In July 1991 the Zabats filed a complaint for injunction before the Regional Trial Court of Pasay City, docketed as Civil Case No. 8294. The records of that case were destroyed when the Pasay City Hall burned down, and the trial court denied the motion for reconstitution for being filed beyond the reglementary period. In October 1992 the Zabats filed a second complaint for injunction, Civil Case No. 9365. The trial court denied the motions to dismiss, but also denied the prayer for a writ of preliminary injunction for failure to establish a clear and positive right over the lot. On August 23, 1993, the trial court rendered judgment finding the award to the Mauris valid and lawful, dismissing the complaint, and ordering the Zabats to pay attorney's fees and costs.

The Zabats appealed to the Court of Appeals, which on February 24, 1995 affirmed the trial court, deleting only the award of attorney's fees. Its resolution of September 22, 1995 denied the motion for reconsideration. The Zabats then came to the Supreme Court by appeal by certiorari under Rule 45.

Facts

In 1977 the National Housing Authority conducted a census of residents and found two structures on the controverted lot, one owned by Marylou Zabat and the other by the Mauris. Marylou Zabat was included in the census as owner of a structure and given a tag number. In 1981 a verification census found that her structure was being rented out to a certain Conrado Briones, and on that basis she was declared an absentee structure owner, disqualified from a lot award.

The lot was then awarded to the Mauris. Marylou Zabat appealed to the Awards and Arbitration Committee, which in March 1985 reconsidered her status and declared her a project beneficiary, but of another lot, because the controverted lot had already been allocated to the Mauris. Her motion for reconsideration was denied in August 1985. On August 24, 1985, the lot was awarded to the Mauris and a conditional contract to sell was executed in their favor, and they made amortized payments. The National Housing Authority then sent the Zabats notices to transfer to the lot earmarked for them and notices of demolition.

Only in 1991, six years after the award to the Mauris, did the Zabats seek to enjoin their eviction. Their first complaint was lost to the fire at the Pasay City Hall and was not reconstituted. Their second complaint in 1992 again prayed that the National Housing Authority be enjoined from evicting them and demolishing their structure. In their complaint they described themselves merely as registered occupants, not as owners, and offered no legal basis for their claim to co-own the lot.

Issues

• Whether or not the filing of a complaint for injunction was the proper remedy available to the petitioners.
• Whether or not the petitioners should have availed of the administrative processes of the National Housing Authority before resorting to judicial relief.
• Whether or not the petitioners' complaint before the trial court had become stale or moot.

Applicable Provisions

Section 8 of Executive Order No. 19, prescribing the rules for appeals to the Office of the President, provides:

The foregoing rules shall apply to and be observed in appeals to this Office taken by private parties adversely affected by decisions of the departments, offices and entities specified below, as well as other appeals of similar nature not governed by special laws.

This provision identifies government-owned or controlled corporations, including awards of contracts, as among the entities whose decisions may be appealed to the Office of the President, and it is the remedy the Zabats failed to pursue.

Section V, paragraph 7 of National Housing Authority Circular No. 13 provides:

All decisions of the AAC shall be subject to review and approval of the General Manager of the Authority.

This provision required the Zabats to elevate the denial of their motion for reconsideration to the General Manager of the National Housing Authority before going to court.

Ruling

On the first issue, the Court held that injunction was not the proper remedy. As a rule, injunction is not granted to take property out of the possession or control of one party to be placed into that of another whose title has not been clearly established by law. For a writ of preliminary injunction to issue, the invasion of the right must be material and substantial, the complainant's right must be clear and unmistakable, and there must be an urgent and paramount necessity for the writ to prevent serious damage. The Zabats failed to show clearly and unmistakably why they were entitled to co-own the lot with the Mauris. Though they were given a tag number, they were deemed absentee owners who should have been disqualified outright, and any other lot awarded to them was out of the National Housing Authority's beneficence. The Court also stressed that injunction could no longer be availed of where the act to be prevented had long been consummated. The award to the Mauris was accomplished on August 24, 1985, while the complaint was filed only on October 22, 1992, a span of seven years. Injunction would be an exercise in futility. Nor did the Zabats allege that the Awards and Arbitration Committee committed grave abuse of discretion or acted without or in excess of jurisdiction, and their claim of fraud was unsupported by proof. Courts cannot enjoin an agency from performing an act within its prerogative except when it gravely abused or exceeded its jurisdiction.

On the second issue, the Court applied the doctrine of exhaustion of administrative remedies. Before a party may seek the intervention of the court, it is a precondition that he should first avail of all the means afforded by administrative processes, and he must pursue them to their appropriate conclusion. After their motion for reconsideration was denied by the Awards and Arbitration Committee in 1985, the Zabats should have elevated the case to the General Manager of the National Housing Authority under Circular No. 13. Having failed to do so, and having failed to appeal the award and the contract to sell to the Office of the President under Executive Order No. 19, they foreclosed their right to seek judicial relief.

On the third issue, the Court held that the claim had become stale. Laches had set in. The Zabats failed, for an unreasonable and unexplained length of time, to do what by due diligence could or should have been done earlier, and their negligence warrants a presumption that they abandoned or declined to assert the right. Their failure to appeal the decision of the Awards and Arbitration Committee, and their silence from the 1985 award until the 1992 complaint, exemplify that delay. Administrative disputes must end sometime, just as public policy demands that finality be written in judicial controversies.

Doctrine

First, injunction will not be granted to take property out of the possession or control of one party and place it in that of another whose title has not been clearly established by law. The right of the complainant must be clear and unmistakable, and the writ will not lie where the act to be prevented has long been consummated.

Second, the doctrine of exhaustion of administrative remedies requires that before a party seeks the intervention of the court, he must first avail of all the means afforded by administrative processes and pursue them to their appropriate conclusion. Under National Housing Authority Circular No. 13, decisions of the Awards and Arbitration Committee are subject to review and approval by the General Manager, and under Executive Order No. 19, appeals from awards of contracts by government-owned or controlled corporations lie with the Office of the President.

Third, laches bars a claim where the claimant fails, for an unreasonable and unexplained length of time, to do what by due diligence could or should have been done earlier. The negligence or omission to assert a right within a reasonable time warrants a presumption that the claimant has abandoned or declined to assert it.

Fourth, administrative decisions on matters within the executive jurisdiction may be set aside only on proof of grave abuse of discretion, fraud, or error of law. Absent these badges of executive excess, no injunction may be granted against the agency.

Disposition

The Supreme Court affirmed the decision of the Court of Appeals and its resolution denying reconsideration, with no pronouncement as to costs. The Mauris kept the lot, and the Zabats lost their bid to enjoin the eviction and demolition.

Remember This

The one line to memorize: injunction will not lie to take property from one in possession and give it to another whose title is not clearly established, especially where the act sought to be restrained has long been consummated and the claimant slept on his administrative remedies. Examiners use this case for the interplay of injunction, laches, and exhaustion of administrative remedies against decisions of the National Housing Authority and other government-owned or controlled corporations.