The Alexandra Condominium Corporation vs. Laguna Lake Development Authority

A petition for certiorari under Rule 65 is premature when the petitioner fails to exhaust administrative remedies before the DENR Secretary and to file a motion for reconsideration of the assailed order, absent a concrete, compelling, and valid reason; the LLDA may impose penalties for effluent-discharge violations under RA 4850, and the condonation of a penalty exceeding ₱100,000 lies exclusively with Congress.

The Alexandra Condominium Corporation (TACC) is the condominium corporation for The Alexandra Condominium Complex at 29 Meralco Avenue, Pasig City. Philippine Realty and Holdings, Inc. (PhilRealty) developed, established, and constructed the complex from 1987 to 1993 and conveyed to TACC the land and common areas. The Laguna Lake Development Authority (LLDA) is a government agency with a special charter, Republic Act No. 4850, tasked to promote the development of the Laguna Lake area with due regard for environmental management and control and to protect inhabitants from pollutants. Executive Order No. 149 transferred LLDA to the DENR for policy and program coordination and/or administrative supervision, while Executive Order No. 192 reorganized the DENR and created the Pollution Adjudication Board under the DENR Secretary.

PhilRealty developed, established, and constructed The Alexandra Condominium Complex from 1987 to 1993. In a Deed of Conveyance dated 18 April 1988, PhilRealty transferred to TACC a parcel of land with an area of 9,876 square meters located at 29 Meralco Avenue, Pasig City, covered by Transfer Certificate of Title No. 64355, as well as all the common areas of the project. The condominium project consisted of Cluster A with three five-storey buildings, Cluster B with two eleven-storey buildings, Cluster C with two seven-storey buildings, Cluster D with two fourteen-storey buildings, and Cluster E with two eleven-storey buildings.

On 2 September 1987, the Human Settlements Regulatory Commission issued a Development Permit to PhilRealty to develop Cluster A, requiring PhilRealty to submit its condominium plans to the Building Official of Pasig City. Architect Walter R. Perez, then Building Official of Pasig City, reviewed the Site Development and Location Plan and the Sanitary/Plumbing Plans and Specifications. On 24 September 1987, Architect Perez issued a Building Permit. On 30 September 1987, he issued a Sanitary/Plumbing Permit acknowledging the fixtures to be installed but without indicating the System of Disposal, including a Waste Water Treatment Plan. On 15 December 1988, Architect Perez issued a Certificate of Final Inspection and a Certificate of Occupancy for Buildings A-1 to A-3. PhilRealty undertook the same process for Clusters B, C, D, and E, and Building Permits and Certificates of Final Inspection and Occupancy were issued for these clusters from 1991 to 1993. On 31 December 1993, upon completion of Buildings E-1 and E-2, PhilRealty formally turned over the project to TACC. However, PhilRealty did not turn over the as-built plans for the perimeter drainage layout, the foundation, and the electrical and plumbing layout of the project. Thereafter, TACC managed the project through Century Properties Management Corporation.

On 24 June 1998, LLDA advised TACC that its wastewater did not meet government effluent standards provided in Sections 68 and 69 of the 1978 National Pollution Control Commission Rules and Regulations, as amended by Department of Energy and Natural Resources Administrative Order No. 34. LLDA informed TACC that it must put up its own Sewage Treatment Plant for its effluent discharge to meet government standards. Since a sewage treatment plant would cost approximately ₱15 million, TACC experimented with a proposed solution from Larutan Resources Development Corporation, which treated the septic vault water with biological enzymes. Still, TACC’s water discharge failed to meet government standards.

On 26 March 1999, LLDA’s Environmental Division collected samples of TACC’s wastewater. In a report dated 6 April 1999, LLDA found two determinants in TACC’s samples: Chemical Oxygen Demand and Oil/Grease. LLDA found that TACC’s samples failed to meet government standards of 150 for COD and 5 for OG. In a Notice of Violation dated 6 May 1999, LLDA directed TACC to submit corrective measures to abate or control its water effluents discharged into Laguna de Bay, and imposed a daily fine of ₱1,000 from 26 March 1999 until full cessation of pollutive wastewater discharge. TACC entered into an agreement with World Chem Marketing for the construction of the Sewage Treatment Plant for ₱7,550,000, and construction was completed by the second week of October 2001.

In an Order dated 19 July 1999, LLDA stated that the daily penalty was imposed upon TACC for the pollutive wastewater discharge, and that to condone the penalty would be tantamount to tolerating pollution of the river bodies and Laguna de Bay, contrary to LLDA’s mandate. On 1 April 2002, TACC requested LLDA to dismiss the water pollution case against it because of the favorable analysis undertaken by LLDA’s Pollution Control Division on 28 February 2002. LLDA conducted a hearing on 26 April 2002. In its position paper filed on 15 May 2002, TACC requested LLDA to condone the imposition of the penalty of ₱1,000 per day since March 1999 in recognition of the remedial and corrective measures it undertook to comply with government standards. On 4 September 2003, LLDA issued an Order requiring TACC to pay a fine of ₱1,062,000 representing the penalty from 26 March 1999 to 20 February 2002. TACC then filed a petition for certiorari before the Court of Appeals with a prayer for the issuance of a temporary restraining order.

• Compliance Efforts and Condonation: TACC argued that it had exhaustively complied with government effluent standards and substantially spent to comply, so the daily penalty imposed by LLDA was an unwarranted financial burden on its unit owners and should be condoned.
• Fault of PhilRealty: TACC argued that the non-compliance with government standards was due to the omission and fault of PhilRealty, which did not turn over the as-built plans for the perimeter drainage layout, foundation, and electrical and plumbing layout.
• Premature Filing: TACC raised as an issue whether the Court of Appeals erred in finding that the petition for certiorari was prematurely filed.
• Review of LLDA’s Charter: TACC sought a review of LLDA’s mandate to help transform it from a regulatory agency into a developmental and promotional agency.

• Non-Exhaustion and Premature Certiorari: LLDA contended that TACC’s petition for certiorari was prematurely filed because TACC failed to file a motion for reconsideration of the 4 September 2003 Order and should have first resorted to an administrative remedy before the DENR Secretary prior to judicial action.
• Compromise Authority: LLDA alleged that TACC made an offer to compromise and advised that the offer be addressed to the Commission on Audit.
• Jurisdiction over Charter Review: LLDA argued that a review of LLDA’s charter is not within the jurisdiction of the Court.

• Non-Exhaustion of Administrative Remedies: Whether TACC should have first pursued an administrative remedy before the DENR Secretary prior to filing a petition for certiorari before the Court of Appeals.
• LLDA’s Power to Impose Penalty: Whether LLDA abused its discretion in imposing the daily fine despite TACC’s compliance efforts and the alleged fault of PhilRealty.
• Condonation of Penalty and Pending Offer to Compromise: Whether the penalty should be condoned and whether there was a pending offer to compromise when the petition for certiorari was filed.
• Failure to File a Motion for Reconsideration: Whether the petition for certiorari was prematurely filed for failure to file a motion for reconsideration of the 4 September 2003 Order.
• Review of LLDA’s Charter: Whether the Court may review LLDA’s mandate to transform it from a regulatory agency into a developmental and promotional agency.

• Non-Exhaustion of Administrative Remedies: Yes. TACC should have first pursued administrative recourse before the DENR Secretary; a premature invocation of judicial intervention renders the complaint without cause of action and dismissible.
• LLDA’s Power to Impose Penalty: No. LLDA did not abuse its discretion; under RA 4850, LLDA is entitled to compensation for damages from failure to meet water and effluent quality standards, and the responsibility to comply lay with TACC after the project was turned over to it.
• Condonation of Penalty and Pending Offer to Compromise: No. The power to compromise a claim exceeding ₱100,000 is vested exclusively in Congress under the Administrative Code of 1987, and there was no proof of a pending compromise when the petition was filed.
• Failure to File a Motion for Reconsideration: Yes. A motion for reconsideration is the plain and adequate remedy under Rule 65; TACC failed to file one and failed to show a sufficient reason to dispense with the requirement, so the petition was premature.
• Review of LLDA’s Charter: No. A review of LLDA’s charter is not within the jurisdiction of the Court.

• Non-Exhaustion of Administrative Remedies: The doctrine of non-exhaustion of administrative remedies requires that resort be first made with administrative authorities in the resolution of a controversy falling under their jurisdiction before the controversy may be elevated to a court of justice for review. A premature invocation of a court’s intervention renders the complaint without cause of action and dismissible. EO 149 transferred LLDA from the Office of the President to the DENR for policy and program coordination and/or administrative supervision, but EO 192 reorganized the DENR, mandated it to promulgate rules and regulations for the control of water, air, and land pollution and to promulgate ambient and effluent standards, and created the Pollution Adjudication Board under the Office of the DENR Secretary. The Pollution Adjudication Board assumed the powers and functions of the NPCC with respect to adjudication of pollution cases, including the function to serve as arbitrator for the determination of reparation or restitution of damages and losses resulting from pollution. Thus, TACC had an administrative recourse before the DENR Secretary which it should have first pursued before filing a petition for certiorari before the Court of Appeals.

• LLDA’s Power to Impose Penalty: RA 4850 mandates LLDA to carry out and make effective the declared national policy of promoting and accelerating the development and balanced growth of the Laguna Lake area and surrounding provinces and cities with due regard and adequate provisions for environmental management and control, preservation of the quality of human life and ecological systems, and prevention of undue ecological disturbances, deterioration, and pollution. By virtue of its special charter, LLDA has the responsibility to protect the inhabitants of the Laguna Lake region from the deleterious effects of pollutants emanating from the discharge of wastes from the surrounding areas. Under Section 4-A of RA 4850, as amended, LLDA is entitled to compensation for damages to the water and aquatic resources of Laguna de Bay and its tributaries resulting from failure to meet established water and effluent quality standards and from such other wrongful act or omission punishable under the law. TACC did not challenge LLDA’s authority to impose the fine, but argued that the penalty should be condoned because it had spent to comply and because the non-compliance was due to PhilRealty’s fault. PhilRealty formally turned over the project to TACC on 31 December 1993, and TACC managed the project thereafter; it was almost five years later, on 24 June 1998, when LLDA advised TACC that its wastewater did not meet government effluent standards. The responsibility to comply with government standards lies with TACC. If the non-compliance was due to PhilRealty’s omission or fault, TACC’s recourse is to file an action, if warranted, against PhilRealty in a proper court. TACC cannot escape its liability to LLDA by shifting the blame to PhilRealty. Hence, LLDA did not abuse its discretion in issuing its 4 September 2003 Order.

• Condonation of Penalty and Pending Offer to Compromise: The power to compromise claims is vested exclusively in the COA or Congress pursuant to Section 20(1), Chapter IV, Subtitle B, Title I, Book V of Executive Order No. 292, the Administrative Code of 1987. Under that provision, the COA may compromise or release in whole or in part any settled claim or liability to any government agency not exceeding ₱10,000; with the written approval of the President, it may likewise compromise or release any similar claim or liability not exceeding ₱100,000; and if the claim or liability exceeds ₱100,000, the application for relief shall be submitted, through the COA and the President, with their recommendations, to Congress. Since the penalty sought to be condoned is ₱1,062,000, the authority to compromise such claim is vested exclusively in Congress. This remedy is not administrative but legislative, and need not be resorted to before filing a judicial action. The Court could not sustain the Court of Appeals’ finding that there was a pending offer to compromise when the petition for certiorari was filed. Nothing in the records indicated that TACC withdrew its offer of compromise, and nothing indicated that TACC submitted a compromise offer to the COA as Auditor Malit had advised. Hence, it was not proven that the petition was simultaneously availed of with the offer to compromise.

• Failure to File a Motion for Reconsideration: For a petition for certiorari under Rule 65 of the Rules of Court to prosper, TACC must show that LLDA acted without or in excess of its jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction, and that there is no appeal or a plain, speedy, and adequate remedy in the ordinary course of law. The plain and adequate remedy referred to in Section 1 of Rule 65 is a motion for reconsideration of the assailed decision. The purpose of this requirement is to enable the court or agency to rectify its mistakes without the intervention of a higher court. To dispense with the requirement, there must be a concrete, compelling, and valid reason for the failure to comply. A petitioner may not arrogate to itself the determination of whether a motion for reconsideration is necessary or not. TACC did not file a motion for reconsideration of the 4 September 2003 Order and failed to show sufficient compelling and valid reason to dispense with the requirement. Hence, the petition for certiorari was prematurely filed before the Court of Appeals.

• Review of LLDA’s Charter: TACC wanted the Court to review the mandate of LLDA to help transform it from a regulatory agency into a developmental and promotional agency. Such a review of LLDA’s charter is not within the jurisdiction of the Court.

• Doctrine of Non-Exhaustion of Administrative Remedies — The doctrine requires that resort be first made with the administrative authorities in the resolution of a controversy falling under their jurisdiction before the controversy may be elevated to a court of justice for review. A premature invocation of a court’s intervention renders the complaint without cause of action and dismissible. The Court applied the doctrine by holding that TACC should have first pursued an administrative recourse before the DENR Secretary under EO 149 and EO 192 before filing a petition for certiorari before the Court of Appeals.

• LLDA’s Power to Impose Penalties for Effluent Violations — Under RA 4850, LLDA has a special charter to promote the development of the Laguna Lake area with due regard for environmental management and control and to protect inhabitants from pollutants. Section 4-A of RA 4850, as amended, entitles LLDA to compensation for damages to the water and aquatic resources of Laguna de Bay and its tributaries resulting from failure to meet established water and effluent quality standards. The Court applied this by holding that TACC was responsible for compliance after PhilRealty turned over the project, and that TACC’s remedy for PhilRealty’s alleged fault was an action against PhilRealty, not an escape from liability to LLDA.

• Power to Compromise Claims Against the Government — Under Section 20(1), Chapter IV, Subtitle B, Title I, Book V of the Administrative Code of 1987, the COA may compromise or release in whole or in part any settled claim or liability to any government agency not exceeding ₱10,000; with the written approval of the President, it may compromise or release any similar claim or liability not exceeding ₱100,000; and if the claim or liability exceeds ₱100,000, the application for relief shall be submitted, through the COA and the President, with their recommendations, to Congress. The Court applied this by holding that the ₱1,062,000 penalty could not be condoned by LLDA and that the remedy was legislative, not administrative.

• Motion for Reconsideration as Plain, Speedy, and Adequate Remedy in Rule 65 — For a petition for certiorari under Rule 65 to prosper, the petitioner must show that there is no appeal or a plain, speedy, and adequate remedy in the ordinary course of law. A motion for reconsideration of the assailed decision is such a plain and adequate remedy. Its purpose is to enable the court or agency to rectify its mistakes without the intervention of a higher court. To dispense with the requirement, there must be a concrete, compelling, and valid reason, and the petitioner may not decide for itself whether a motion for reconsideration is necessary. The Court applied this by holding that TACC’s failure to file a motion for reconsideration rendered its certiorari petition premature.

• Administrative Power and Pollution Adjudication — EO 149 transferred LLDA to the DENR for policy and program coordination and/or administrative supervision, and administrative power is concerned with the work of applying policies and enforcing orders as determined by proper governmental organs. EO 192, however, mandated the DENR to promulgate rules and regulations for the control of water, air, and land pollution and to promulgate ambient and effluent standards, and created the Pollution Adjudication Board under the Office of the DENR Secretary, which assumed the NPCC’s powers and functions in the adjudication of pollution cases, including arbitration for the determination of reparation or restitution of damages and losses resulting from pollution. The Court applied this by holding that TACC had an administrative recourse before the DENR Secretary.

• "The doctrine of non-exhaustion of administrative remedies requires that resort be first made with the administrative authorities in the resolution of a controversy falling under their jurisdiction before the controversy may be elevated to a court of justice for review." — This states the controlling doctrine that the Court used to affirm the dismissal of TACC’s certiorari petition for failure to first seek relief before the DENR Secretary.

• "It is clear that the responsibility to comply with government standards lies with TACC. If, as claimed by TACC, the non-compliance was due to the omission and fault of PhilRealty, TACC’s recourse is to file an action, if warranted, against PhilRealty in a proper court. TACC cannot escape its liability to LLDA by shifting the blame to PhilRealty." — This passage is the ratio for upholding LLDA’s penalty order and rejecting TACC’s effort to shift liability to PhilRealty.

• "The plain and adequate remedy referred to in Section 1 of Rule 65 is a motion for reconsideration of the assailed decision." — This defines the procedural requirement whose non-compliance made TACC’s certiorari petition premature.

• "This remedy is not administrative but legislative, and need not be resorted to before filing a judicial action." — This explains why the compromise or condonation of the ₱1,062,000 penalty, being vested in Congress, did not excuse TACC’s failure to exhaust administrative remedies.

• Estrada vs. Court of Appeals, 484 Phil. 730 (2004) — Cited for the doctrine of non-exhaustion of administrative remedies and for the rule that a premature invocation of a court’s intervention renders the complaint without cause of action and dismissible.
• Review Center Association of the Philippines vs. Executive Secretary Ermita, G.R. No. 180046, 2 April 2009 — Cited for the definition of administrative power as concerned with the work of applying policies and enforcing orders as determined by proper governmental organs.
• LLDA vs. Court of Appeals, G.R. No. 110120, 16 March 1994, 231 SCRA 292 — Cited for LLDA’s responsibility under its special charter to protect the inhabitants of the Laguna Lake region from the deleterious effects of pollutants emanating from the discharge of wastes from surrounding areas.
• Metro Transit Organization, Inc. vs. Court of Appeals, 440 Phil. 743 (2002) — Cited for the Rule 65 requirement that a motion for reconsideration is the plain and adequate remedy, for its purpose of enabling the court or agency to rectify its mistakes without intervention of a higher court, for the need for a concrete, compelling, and valid reason to dispense with it, and for the rule that a petitioner may not determine for itself whether a motion for reconsideration is necessary.

• Section 4-A, Republic Act No. 4850, as amended — Entitles LLDA to compensation for damages to the water and aquatic resources of Laguna de Bay and its tributaries resulting from failure to meet established water and effluent quality standards and from other wrongful acts or omissions punishable under law. Applied to uphold the penalty imposed on TACC.
• Executive Order No. 149, Section 3.2 — Transferred LLDA from the Office of the President to the DENR for policy and program coordination and/or administrative supervision. Applied to establish that DENR had administrative power over LLDA, while EO 192 supplied the administrative recourse before the DENR Secretary.
• Executive Order No. 192, Sections 5(o), 5(p), and 19 — Mandated the DENR to promulgate rules and regulations for the control of water, air, and land pollution and to promulgate ambient and effluent standards for water and air quality, and created the Pollution Adjudication Board under the Office of the DENR Secretary. Applied to show that TACC had an administrative remedy before the DENR Secretary.
• Presidential Decree No. 984, Section 6(j) — Provides the NPCC function to serve as arbitrator for the determination of reparation or restitution of damages and losses resulting from pollution. Applied as part of the powers assumed by the Pollution Adjudication Board.
• Section 20(1), Chapter IV, Subtitle B, Title I, Book V, Executive Order No. 292 (Administrative Code of 1987) — Vests the power to compromise claims in the COA or Congress: the COA may compromise or release claims not exceeding ₱10,000; with the President’s written approval, claims not exceeding ₱100,000; and claims exceeding ₱100,000 require application through the COA and the President to Congress. Applied to hold that the ₱1,062,000 penalty could not be condoned by LLDA and that the remedy was legislative.
• Section 36, Presidential Decree No. 1445 — Cited by Auditor Malit as vesting the power to compromise claims exclusively in the COA. The Court ultimately applied the Administrative Code provision because the amount exceeded ₱100,000.
• Section 1, Rule 65, Rules of Court — Requires, for certiorari, that the tribunal acted without or in excess of jurisdiction or with grave abuse of discretion and that there is no appeal or plain, speedy, and adequate remedy in the ordinary course of law. Applied to hold that TACC’s failure to file a motion for reconsideration made its petition premature.
• Sections 68 and 69, 1978 National Pollution Control Commission Rules and Regulations, as amended by DENR Administrative Order No. 34 — Provided the government effluent standards that TACC’s wastewater failed to meet. Applied as the basis for LLDA’s notice of violation and penalty.
• Section 4, Executive Order No. 927, series of 1983 — Mandates LLDA to make, alter, or modify orders requiring the discontinuation of pollution, specifying the conditions and time within which discontinuance must be accomplished. Cited by the Court of Appeals in upholding LLDA’s authority.

Chief Justice Reynato S. Puno (Chairperson), Associate Justice Renato C. Corona, Associate Justice Teresita J. Leonardo-De Castro, and Associate Justice Lucas P. Bersamin concurred.