Addition Hills Mandaluyong Civic & Social Organization, Inc. vs. Megaworld Properties & Holdings, Inc.

A party seeking to annul permits issued by the HLURB must first exhaust administrative remedies by filing a complaint before the Housing and Land Use Arbiter, and failure to do so results in a lack of cause of action warranting dismissal of the judicial complaint.

Megaworld Properties & Holdings, Inc. owned a 6,148-square-meter parcel of land in Barangay Addition Hills, Mandaluyong City, covered by Transfer Certificate of Title No. 12768. In 1994, Megaworld planned the construction of Wack-Wack Heights Condominium, a residential complex consisting of six four-story buildings and one seventeen-story tower. Megaworld subsequently secured the necessary government clearances and permits for the project: a Certificate of Locational Viability (CLV) and a Development Permit from the HLURB; an Environmental Compliance Certificate (ECC) from the DENR; a Building Permit from the Mandaluyong City Building Official; and a Barangay Clearance from the Barangay Chairman of Addition Hills. Construction commenced thereafter.

• The Condominium Project and Secured Permits: Megaworld conceptualized the Wack-Wack Heights Condominium project on its 6,148-square-meter property in Mandaluyong City. To proceed with construction, Megaworld obtained a Barangay Clearance on September 29, 1994; a CLV on October 25, 1994, and a Development Permit on November 11, 1994, both from the HLURB; a Building Permit on February 3, 1995, from the Mandaluyong City Building Official; and an ECC on March 15, 1995, from the DENR.
• Judicial Challenge: Construction began, but on June 30, 1995, AHMCSO filed a complaint with the RTC to annul the Building Permit, CLV, ECC, and Development Permit. AHMCSO likewise sought to prohibit the issuance of a Certificate of Registration and License to Sell Condominium Units and to permanently enjoin local and national building officials from issuing further licenses and permits to Megaworld.
• Pending Administrative Remedies: While the case was pending, AHMCSO admitted in its Reply that it had a pending complaint with the HLURB involving Megaworld’s Development Permit, Certificate of Registration, and License to Sell. AHMCSO also had pending complaints with the Building Official of Mandaluyong and the MMDA.

• Failure to Exhaust Administrative Remedies: Petitioner argued that the Court of Appeals erred in finding that it failed to exhaust administrative remedies before seeking judicial intervention.
• Applicability of Exceptions: Petitioner maintained that the Court of Appeals erred in ruling that the case does not fall under any of the recognized exceptions to the doctrine of exhaustion of administrative remedies.
• HLURB Jurisdiction: Petitioner contended that the Court of Appeals erred in concluding that the HLURB had jurisdiction over actions to annul Certificates of Locational Viability and Development Permits.

• Verification Defect: Respondent argued that the Petition for Review was fatally defective for being improperly verified.
• Exhaustion of Administrative Remedies: Respondent countered that the Court of Appeals correctly annulled the RTC Decision and dismissed the complaint for petitioner’s failure to exhaust administrative remedies.
• RTC Decision Contrary to Law and Facts: Respondent maintained that the RTC erred in holding that the CLV and Development Permit were improperly and irregularly issued. Specifically, respondent argued that the RTC erred in ruling that the HLURB had no power to grant an exception or variance to the requirements of Metro Manila Commission Ordinance No. 81-01; that the project failed to meet the requirements for an exception or deviation; and that the project deprived adjacent properties of air.

• Exhaustion of Administrative Remedies: Whether petitioner violated the doctrine of exhaustion of administrative remedies by seeking judicial intervention from the RTC without first availing itself of the remedies within the HLURB.
• Applicability of Exceptions: Whether the case falls under any of the recognized exceptions to the doctrine of exhaustion of administrative remedies.
• HLURB Jurisdiction: Whether the HLURB has jurisdiction over actions to annul Certificates of Locational Viability and Development Permits.

• Exhaustion of Administrative Remedies: The doctrine was violated. Under HLURB Resolution No. R-391, Series of 1987, a complaint to annul any permit issued by the HLURB must be filed before the Housing and Land Use Arbiter (HLA). The HLA's decision may be appealed to the Board of Commissioners, and subsequently to the Office of the President. Petitioner unjustifiably bypassed this administrative process by directly filing a complaint with the RTC, despite admitting it had a pending complaint with the HLURB involving the same permits. Non-observance of the doctrine results in a lack of cause of action, justifying the dismissal of the complaint.
• Applicability of Exceptions: None of the recognized exceptions to the exhaustion doctrine were found to exist in this case. The recognized exceptions—estoppel, patently illegal act, unreasonable delay, small amount involved, purely legal question, urgent judicial intervention, great and irreparable damage, due process violation, mooted issue, lack of plain, speedy, and adequate remedy, strong public interest, and quo warranto proceedings—were inapplicable.
• HLURB Jurisdiction: The HLURB possesses jurisdiction over actions to annul its own permits. Under Section 5 of Executive Order No. 648, the HLURB acts as the appellate body over decisions and actions of local and regional planning and zoning bodies. Section 4 of Executive Order No. 71 further affirms the HLURB's power to review actions of local government units regarding the issuance of permits. Additionally, Sections 18 and 19 of HSRC Administrative Order No. 20 provide that oppositions and complaints regarding locational clearances and development permits must be resolved within the issuing office or the Commission according to its Rules of Procedure.

• Doctrine of Exhaustion of Administrative Remedies — Before a party may seek the intervention of the courts, it must first avail of all the means afforded by administrative processes. Issues that administrative agencies are authorized to decide should not be summarily taken from them and submitted to a court without first giving the administrative agency the opportunity to resolve the matter after due deliberation. The rationale is that it entails lesser expenses, provides for speedier resolution of controversies, and comity and convenience dictate that courts shy away from a dispute until the system of administrative redress has been completed. Applied: Petitioner was required to seek redress within the HLURB before resorting to the trial court.
• 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 the administrative tribunal, where the question demands the exercise of sound administrative discretion requiring the special knowledge, experience, and services of the administrative tribunal to determine technical and intricate matters of fact. Applied: The annulment of HLURB-issued permits requires the specialized competence of the HLURB.
• Exceptions to the Doctrine of Exhaustion of Administrative Remedies — The doctrine is not inflexible and admits of the following recognized exceptions: (a) estoppel on the part of the party invoking the doctrine; (b) the challenged administrative act is patently illegal, amounting to lack of jurisdiction; (c) unreasonable delay or official inaction that will irretrievably prejudice the complainant; (d) the amount involved is relatively small so as to make the rule impractical and oppressive; (e) the question involved is purely legal and will ultimately have to be decided by the courts of justice; (f) judicial intervention is urgent; (g) application of the doctrine may cause great and irreparable damage; (h) the controverted acts violate due process; (i) the issue of non-exhaustion has been rendered moot; (j) there is no other plain, speedy, and adequate remedy; (k) strong public interest is involved; and (l) in quo warranto proceedings. Applied: None of these exceptions were present to excuse petitioner's failure to exhaust administrative remedies.

• "The thrust of the rule is that courts must allow administrative agencies to carry out their functions and discharge their responsibilities within the specialized areas of their respective competence. The rationale for this doctrine is obvious. It entails lesser expenses and provides for the speedier resolution of controversies. Comity and convenience also impel courts of justice to shy away from a dispute until the system of administrative redress has been completed."
• "It is settled that the non-observance of the doctrine of exhaustion of administrative remedies results in lack of cause of action, which is one of the grounds in the Rules of Court justifying the dismissal of the complaint."

• Republic v. Lacap, G.R. No. 158253, March 2, 2007 — Followed. Cited for the explication of the doctrines of exhaustion of administrative remedies and primary jurisdiction, as well as the enumeration of the exceptions to the exhaustion doctrine.
• New Sun Valley Homeowners’ Association, Inc. v. Sangguniang Barangay, G.R. No. 156686, July 27, 2011 — Followed. Cited for the definition and rationale of the doctrine of exhaustion of administrative remedies.
• National Electrification Administration v. Villanueva, G.R. No. 168203, March 9, 2010 — Followed. Cited for the rule that non-observance of the doctrine of exhaustion of administrative remedies results in a lack of cause of action warranting dismissal.

• Section 5, Executive Order No. 648 (1981) — Vests the HLURB (formerly HSRC) with the power to act as the appellate body on decisions and actions of local and regional planning and zoning bodies of its deputized officials. Applied to establish that the HLURB retains appellate jurisdiction over zoning and planning matters.
• Section 4, Executive Order No. 71 — Affirms the HLURB's power to review actions of local government units on the issuance of permits and to suspend action if a local government unit overlooked or mistakenly applied a certain law, rule, or standard. Applied to reinforce HLURB's jurisdiction over permit issuances.
• Sections 18 and 19, HSRC Administrative Order No. 20 — Govern oppositions to applications and complaints filed after the issuance of locational clearances, directing that such complaints be resolved by the issuing office or the Commission according to its Rules of Procedure. Applied to show that administrative remedies were available to petitioner within the HLURB.
• Sections 4 and 6, HLURB Resolution No. R-391, Series of 1987 — Provide that a complaint to annul any permit issued by the HLURB may be filed before the Housing and Land Use Arbiter (HLA). Applied to demonstrate the specific administrative avenue petitioner failed to utilize before resorting to judicial intervention.

Presbitero J. Velasco, Jr., Lucas P. Bersamin, Mariano C. Del Castillo, Martin S. Villarama, Jr.