Moldex Realty, Inc. vs. Housing and Land Use Regulatory Board

Direct resort to the Supreme Court to nullify an administrative regulation will not be entertained where the dispute involves only proprietary interests determinable by lower courts, the constitutional question is avoidable or has been rendered moot by a superseding regulation, and the issuing agency as indispensable party was not impleaded. Dismissal was thus required notwithstanding a continuing injury claim, the lower courts being competent to resolve who bears streetlight electricity costs.

Moldex Realty, Inc. is the owner-developer of Metrogate Complex Phase I in Meycauayan, Marilao, Bulacan, while the Metrogate Complex Village Homeowners' Association, Inc. is the organization of lot buyers and homeowners therein. Subdivision development and sale are governed by Presidential Decree Nos. 957 and 1216 and their implementing rules, issued through the Housing and Urban Development Coordinating Council (HUDCC) and enforced by the Housing and Land Use Regulatory Board (HLURB).

In 1988, the HLURB issued to petitioner Moldex Realty, Inc., a domestic corporation engaged in real estate development and owner-developer of Metrogate Complex Phase I in Meycauayan, Marilao, Bulacan, a License to Sell 696 parcels of land within the subdivision. In 1993, a sufficient number of lot buyers and homeowners formally organized as respondent Metrogate Complex Village Homeowners' Association, Inc.

Since completion of the subdivision, petitioner had been subsidizing and advancing payment for delivery and maintenance of common facilities, including operation of streetlights and payment of corresponding electric bills. In 2000, however, petitioner decided to stop paying the electric bills for the streetlights and advised respondent association to assume the obligation. The association objected and refused to pay, Meralco discontinued service, and the association applied with the HLURB for a preliminary injunction and preliminary mandatory injunction against petitioner.

On 5 April 2001, Regional Officer Editha U. Barrameda granted the application, citing Presidential Decree Nos. 957 and 1216 and HUDCC Resolution No. R-562, series of 1994, which provides that developers shall continue to maintain streetlight facilities and, unless otherwise stipulated, pay electric consumption until turnover to the local government after completion under PD 957, PD 1216 and implementing rules. Reconsideration was denied by Order dated 28 May 2001, received by petitioner on 18 June 2001. After the association filed a bond, a writ of preliminary mandatory injunction dated 28 June 2001 ordered petitioner to assume payment of streetlight electricity from December 2000 until turnover or donation to the Municipality of Meycauayan.

Thereafter, petitioner elevated the matter to the Court of Appeals seeking reversal of the writ, Resolution and Order and nullification of HUDCC Resolution No. R-562, series of 1994 as unconstitutional. During pendency, the HUDCC approved Board Resolution No. R-699, series of 2001 amending the rules implementing the Subdivision and Condominium Buyer's Protective Decree and other related laws, including proportionate shouldering of streetlight electrical bills by users prior to issuance of Certificate of Completion and turnover of open space to the local government unit. On 27 August 2001, the Court of Appeals dismissed the petition for improper direct resort on the constitutional issue and defective verification authority, prompting the 21 September 2001 filing before the Supreme Court reiterating the same relief.

• Constitutionality of HUDCC Resolution: Petitioner argued that Resolution No. 526 Series of 1994 issued by the HUDCC is unconstitutional for being a void exercise of legislative power.
• Grave Abuse Based on Void Regulation: Petitioner maintained that public respondent gravely abused its discretion in issuing the mandatory injunction on the basis of a void regulation (HU[D]CC Resolution No. 526 Series of 1994).
• Liability for Maintenance and Streetlight Costs: Petitioner argued that public respondent abused its discretion in not holding that the obligation to maintain the subdivision including payment of streetlight consumption belongs exclusively to private respondents.
• Timeliness of Filing: Petitioner maintained that the instant petition was not time-barred because a petition for certiorari was filed with the Court of Appeals within the reglementary period but was dismissed and referred to the Supreme Court as it raised a constitutional issue.

• Tardiness / Non-Tolling: Respondent association countered that the instant petition assailing the HLURB issuances dated 5 April 2001 and 28 May 2001 was filed beyond the 60-day reglementary period under Rule 65, and the prior filing with the Court of Appeals did not toll the running of the period.
• Timeliness and Proper Forum: The Solicitor General, for the public respondent, argued that the petition assails the HLURB twin issuances and writ rather than the Court of Appeals decision and therefore should have been filed within 60 days from petitioner's 18 June 2001 receipt of the 28 May 2001 Order, and that jurisdiction over the original action for certiorari and prohibition lies with the Regional Trial Court notwithstanding Section 4, Rule 65.

• Timeliness: Whether the instant petition assailing the HLURB issuances is time-barred under the 60-day reglementary period for certiorari under Rule 65.
• Hierarchy of Courts and Jurisdiction: Whether the Supreme Court should entertain at first instance the challenge to the constitutionality of HUDCC Resolution No. R-562, series of 1994, or the matter belongs to the lower courts.
• Avoidance of Constitutional Question and Mootness: Whether the constitutionality of HUDCC Resolution No. R-562, series of 1994 must still be decided where Board Resolution No. R-699, series of 2001 has superseded it.
• Indispensable Party: Whether failure to implead the HUDCC, as issuer of the assailed resolution, bars final determination.

• Timeliness: No. The petition is not time-barred, the question of constitutionality having been raised at the earliest opportunity before the Court of Appeals and a new cause of action accruing on each enforcement of a continuing obligation.
• Hierarchy of Courts and Jurisdiction: No. The petition violates the hierarchy of courts, lower courts having jurisdiction over constitutional questions and no transcendental importance justifying direct resort having been shown.
• Avoidance of Constitutional Question and Mootness: No. The constitutional issue need not and cannot be decided, it not being the unavoidable lis mota and the assailed provision having been superseded, rendering the case moot and academic.
• Indispensable Party: Yes. The HUDCC is an indispensable party whose non-joinder prevents finality, rendering subsequent actions void for want of authority, though remand is infeasible due to the hierarchy violation.

• Timeliness: When an administrative regulation is attacked as unconstitutional or invalid, it may be questioned on every occasion of enforcement, provided unconstitutionality is raised at the earliest opportunity. That standard does not require immediate challenge after state action, lest an otherwise unconstitutional law lapse into constitutionality by mere failure to promptly sue. Here, petitioner raised constitutionality before the Court of Appeals, and because liability for streetlight bills recurs while the resolution remains effective, each directive to comply creates a new cause of action.
• Hierarchy of Courts and Jurisdiction: Original jurisdiction over petitions assailing constitutionality is not exclusive to the Supreme Court; lower courts may resolve constitutionality at first instance under the general definition of judicial power and the Supreme Court's appellate jurisdiction under Article X, Section 5(2) of the Constitution over such cases. Only paramount, transcendental matters affecting social, economic and moral well-being warrant first-instance resolution by the Supreme Court. The appellate court thus erred in holding that constitutionality may be brought only to the Supreme Court, but the instant petition alleges no such transcendental importance, presenting only the proprietary question of who bears electricity costs which lower courts can competently resolve.
• Avoidance of Constitutional Question and Mootness: A court should not pass upon constitutionality unless raised by the parties and unavoidable because no other ground can dispose of the case; the constitutional issue must be the very lis mota. During pendency before the Court of Appeals, Board Resolution No. R-699, series of 2001 amended the design standards to require proportionate shouldering of streetlight electrical bills by users prior to Certificate of Completion and turnover, superseding the R-562 directive that developers shoulder the cost. Already effective at filing, the amendment left no live controversy and made resolution a pure theoretical exercise.
• Indispensable Party: An indispensable party is one without whom no final determination can be had and whose joinder is mandatory to vest jurisdiction to hear and determine the cause; absence renders subsequent actions null and void even as to those present. Although petitioner principally assails HUDCC Resolution No. R-562, series of 1994, the HUDCC was not impleaded either before the Court of Appeals or the Supreme Court. Ordinarily requiring remand to the court of origin, the defect here cannot be cured by remand because the initial action must be discarded for hierarchy violation.

• Repeated challenge to unconstitutional regulation — A party may raise the unconstitutionality or invalidity of an administrative regulation on every occasion it is enforced, provided the question is raised at the earliest opportunity; delay alone does not validate an otherwise unconstitutional regulation, and a continuing injury gives rise to a new cause of action upon each enforcement. Applied to hold the petition timely where constitutionality was first raised before the Court of Appeals and streetlight payment liability recurred.
• Hierarchy of courts in constitutional cases — The Supreme Court has only appellate jurisdiction as a general rule over constitutionality of statutes, treaties or regulations, with lower courts competent to decide constitutionality at first instance; direct resort is allowed only for paramount, transcendental matters immediately affecting public welfare. Applied to reject direct cognizance where only proprietary liability for electricity costs was involved.
• Avoidance of constitutional questions; lis mota — Courts will not decide a law or regulation to be unconstitutional unless the question is raised by the parties and unavoidable because no other ground disposes of the case; the constitutional issue must be the very lis mota. Applied to decline ruling on HUDCC Resolution No. R-562, series of 1994 where other grounds existed and supervening amendment removed necessity.
• Mootness by supersession — A case becomes moot and academic where a supervening regulation supersedes the assailed provision already in effect at filing, leaving no live controversy and making resolution a theoretical exercise. Applied where Board Resolution No. R-699, series of 2001 replaced developer-exclusive liability with proportionate sharing by users prior to completion and turnover.
• Indispensable party; effect of non-joinder — Joinder of indispensable parties, without whom no final determination can be had, is mandatory and necessary to vest jurisdiction; their absence renders subsequent actions null and void for want of authority. Applied where HUDCC, issuer of the assailed resolution, was never impleaded, precluding finality, with remand rendered infeasible by the hierarchy defect.

• "subdivision owners/developers shall continue to maintain street lights facilities and, unless otherwise stipulated in the contract, pay the bills for electric consumption of the subdivision street lights until the facilities in the project are turned over to the local government until after completion of development in accordance with PD 957, PD 1216 and their implementing rules and regulations." — States the assailed R-562 mandate imposing interim streetlight maintenance and payment on developers, the core substantive obligation litigated.
• "We stress at the outset that the lower court had jurisdiction to consider the constitutionality of Section 187, this authority being embraced in the general definition of the judicial power to determine what are the valid and binding laws by the criterion of their conformity to the fundamental law." — Defines lower courts' competence over constitutional questions, grounding correction of the Court of Appeals' exclusive-Supreme Court view and enforcement of hierarchy.
• "the Court will not touch the issue of unconstitutionality unless it is the very lis mota of the case." — States the canonical avoidance rule justifying refusal to decide the validity of R-562 where non-constitutional and mootness grounds dispose of the petition.
• "The presence of indispensable parties is necessary to vest the court with jurisdiction, which is "the authority to hear and determine a cause, the right to act in a case."" — Defines the jurisdictional consequence of non-joinder, supporting dismissal where HUDCC was not impleaded.

• Allied Banking Corporation vs. Quezon City Government, G.R. No. 154126, 11 October 2005, 472 SCRA 303, 317 — Cited for the requirement that judicial review requires raising constitutionality at the earliest opportunity when an administrative regulation is attacked.
• La Bugal-B'Laan Tribal Association, Inc. vs. Ramos, 465 Phil. 860, 893 (2004) — Cited for the rule that failure to raise constitutionality immediately does not preclude later challenge and does not validate an unconstitutional law.
• Drilon vs. Lim, G.R. No. 112497, 4 August 1994, 235 SCRA 135 — Controlling precedent that lower courts have jurisdiction to consider constitutionality in the first instance, with Supreme Court jurisdiction generally appellate under Article X, Section 5(2).
• Intia, Jr. vs. COA, 366 Phil. 273, 292 (1999) — Cited for the avoidance doctrine that courts decide constitutional questions only when unavoidable and the very lis mota, preferring other dispositive grounds.
• Lotte Phil. Co. Inc. vs. Dela Cruz, G.R. No. 166302, 28 July 2005, 464 SCRA 591, 596 — Cited for the definition and mandatory joinder of indispensable parties and nullity of proceedings without them.

• Presidential Decree Nos. 957 and 1216 — Subdivision and condominium buyer's protective laws and related laws invoked as statutory bases for developer obligations on streetlight facilities and for HUDCC/HLURB regulation.
• HUDCC Resolution No. R-562, series of 1994 — Assailed regulation requiring subdivision owners/developers to maintain streetlight facilities and pay electric consumption until turnover to local government after completion; basis of HLURB injunction but claimed unconstitutional as void legislative exercise.
• HUDCC Board Resolution No. R-699, series of 2001, Rule I, Section 1.C.7. Electrical Power Supply System — Amendatory rule providing electrical bills for streetlights shall be proportionately shouldered by users prior to Certificate of Completion and turnover; held to have superseded R-562 and mooted the petition.
• Section 4, Rule 65, Rules of Court — Governs where certiorari/prohibition petitions are filed and the 60-day period; invoked on timeliness and on whether Regional Trial Court, Court of Appeals or Supreme Court is the proper forum, including cognizance over quasi-judicial agency acts by the Court of Appeals.
• Article X, Section 5(2), Constitution — Vests Supreme Court with appellate jurisdiction over final judgments of lower courts involving constitutionality or validity of laws and regulations; supports lower courts' first-instance authority and hierarchy rule.

Carpio, J., Carpio-Morales, J., Velasco, Jr., J., concur. Quisumbing, J., on official leave.