ADDITION HILLS MANDALUYONG CIVIC & SOCIAL ORGANIZATION, INC., PETITIONER, VS. MEGAWORLD PROPERTIES & HOLDINGS, INC., WILFREDO I. IMPERIAL, IN HIS CAPACITY AS DIRECTOR, NCR, AND …

Addition Hills Mandaluyong Civic and Social Organization versus Megaworld Properties and Holdings

The Case

This is a petition for review on certiorari brought by the Addition Hills Mandaluyong Civic and Social Organization against Megaworld Properties and Holdings, the Regional Director of the Housing and Land Use Regulatory Board for the National Capital Region, and the Board itself. The petitioner is a civic organization that went to the Regional Trial Court of Pasig City to annul the permits granted to Megaworld for its Wack-Wack Heights Condominium project and to stop the project altogether. The case matters because it is the Supreme Court's clean statement of the doctrine of exhaustion of administrative remedies as it applies to housing and land use permits: a party who wants a locational clearance or a development permit annulled must first go to the Housing and Land Use Regulatory Board, not straight to the courts.

Procedural History

The petitioner filed a complaint before the Regional Trial Court of Pasig City, Branch 158, seeking to annul the building permit, the Certificate of Locational Viability, the Environmental Compliance Certificate, and the Development Permit issued to Megaworld, to prohibit the issuance of a Certificate of Registration and License to Sell, and to permanently enjoin building officials from issuing further permits. Megaworld moved to dismiss on the ground of lack of cause of action and on the ground that jurisdiction lay with the Housing and Land Use Regulatory Board. The trial court denied the motion, trial on the merits followed, and the trial court rendered judgment in favor of the petitioner, declaring the locational clearance, the development permit, the certificate of registration and license to sell, and the building permit void, and directing Megaworld to rectify its project to conform to the requirements of an R-2 zone and of the Metro Manila Zoning Ordinance. Megaworld appealed to the Court of Appeals, which reversed and set aside the trial court decision and entered a new one dismissing the complaint. The petitioner's motion for reconsideration was denied, and the petitioner then came to the Supreme Court by petition for review on certiorari under Rule 45.

Facts

Megaworld owned a parcel of land along Lee Street, Barangay Addition Hills, Mandaluyong City, with an area of about 6,148 square meters, covered by a transfer certificate of title. In 1994 it conceptualized a residential condominium complex on the land called the Wack-Wack Heights Condominium, consisting of a cluster of six four-storey buildings and one seventeen-storey tower.

Megaworld then secured the necessary clearances, licenses, and permits: a Certificate of Locational Viability issued in October 1994 and a Development Permit issued in November 1994, both by the Housing and Land Use Regulatory Board; an Environmental Compliance Certificate issued in March 1995 by the Department of Environment and Natural Resources; a Building Permit issued in February 1995 by the Office of the Building Official of Mandaluyong City; and a barangay clearance dated September 1994.

Construction began, and in June 1995 the petitioner filed its complaint before the trial court. Notably, when it did so, the petitioner already had a pending complaint with the Housing and Land Use Regulatory Board involving the development permit and the certificate of registration and license to sell, aside from complaints with the Building Official of Mandaluyong and the Metropolitan Manila Development Authority.

Issues

• Whether or not the Court of Appeals erred in finding that the petitioner failed to exhaust administrative remedies before seeking judicial intervention.
• Whether or not the Court of Appeals erred in finding that the case before the trial court did not fall under any of the exceptions to the rule on exhaustion of administrative remedies.
• Whether or not the Court of Appeals erred in concluding that the Housing and Land Use Regulatory Board had jurisdiction over actions to annul Certificates of Locational Viability and Development Permits.

Applicable Provisions

Section 5 of Executive Order Number 648, series of 1981, as carried in the Court of Appeals discussion, defines the regulatory board's appellate power:

Act as the appellate body on decisions and actions of local and regional planning and zoning bodies of the deputized officials of the Commission, on matters arising from the performance of these functions.

This provision establishes that the Board, not the trial court, reviews the actions of local zoning bodies, which is why the petitioner's attack on the permits belonged there first.

Section 4 of Executive Order Number 71 affirms the Board's power to review local government action on permits:

If in the course of evaluation of application for registration and licensing of projects within its jurisdiction, HLURB finds that a local government unit has overlooked or mistakenly applied a certain law, rule or standard in issuing a development permit, it shall suspend action with a corresponding advice to the local government concerned, so as to afford it an opportunity to take appropriate action thereon.

This shows that even a claim that a local unit misapplied a zoning standard is a matter the Board is equipped to address.

Section 18 of the Housing and Settlement Regulatory Commission Administrative Order Number 20 treats opposition as a complaint:

Opposition to application shall be considered as a complaint, the resolution of which shall be a prerequisite to any action on the application.

This confirms that the petitioner's objections had an administrative home, and that the administrative process was a prerequisite to judicial action.

Ruling

On the first issue, the Court held that the petitioner unjustifiably failed to exhaust the administrative remedies available with the Housing and Land Use Regulatory Board. Under the rules then in effect, particularly Sections 4 and 6 of the Board's 1987 Rules of Procedure, a complaint to annul any permit issued by the Board may be filed before the Housing and Land Use Arbiter. The action to annul the locational clearance and the development permit should therefore have been filed there instead of the trial court. The Court stressed that a litigant cannot go around the authority of the concerned administrative agency and directly seek redress from the courts.

On the second issue, the Court found that none of the accepted exceptions to the doctrine existed in this case. It listed them, including estoppel, a patently illegal act amounting to lack of jurisdiction, unreasonable delay, a purely legal question, urgent judicial intervention, great and irreparable damage, violation of due process, mootness, absence of another plain, speedy and adequate remedy, strong public interest, and quo warranto proceedings. None applied.

On the third issue, the Court agreed with the Court of Appeals that the Board had jurisdiction. The power to act as appellate body over decisions of local and regional planning and zoning bodies was retained by the Board and remained unaffected by devolution under the Local Government Code. The Court also held that non-observance of the doctrine results in lack of cause of action, a ground for dismissal of the complaint. It found it unnecessary to resolve the other issues raised.

Doctrine

Before a party may seek the intervention of the courts, it must first avail of all the means afforded by administrative processes. The issues which administrative agencies are authorized to decide should not be summarily taken from them and submitted to a court without first giving the agency the opportunity to dispose of them after due deliberation.

Corollary to this is the doctrine of primary jurisdiction: courts cannot or will not determine a controversy involving a question within the jurisdiction of an administrative tribunal prior to the resolution of that question by that tribunal, where the question demands the exercise of sound administrative discretion requiring the special knowledge, experience, and services of the tribunal to determine technical and intricate matters of fact.

The doctrine admits of exceptions, but they are not inflexible rules and must be shown to exist. Where the law provides a remedy against an administrative act, relief from the courts may be had only after exhausting the remedies provided. Non-observance of the doctrine results in lack of cause of action, a ground for dismissal.

Disposition

The petition was denied, and the Court of Appeals decision and resolution were affirmed; Megaworld won, and the complaint was dismissed for failure to exhaust administrative remedies.

Remember This

Memorize the line that a litigant cannot go around the authority of the concerned administrative agency and directly seek redress from the courts, and that failure to exhaust administrative remedies results in lack of cause of action. Examiners use this case to test the doctrines of exhaustion of administrative remedies and primary jurisdiction in the context of housing and land use permits.