FLOSENCIO MORENO, ETC. ET AL, PETITIONERS VS. HON. HIGINIO MACADAEG, ETC., ET AL., RESPONDENTS.

This is a petition for a writ of prohibition to enjoin respondent Judge
of the Court of First Instance of Manila from proceeding with Civil
Case No. 37552 filed by herein respondents Jose Carreon et al., as
plaintiffs, against their corespondent Juan R. Sumerariz, the
Associated Insurance Company Inc., and herein petitioners, namely, the
Secretary of Public Works and Communications, the Director of Public
Works, the Project Engineer and the Chief Architect of Public Works.

The complaint filed below on September 16, 1958 contains three causes
of action. The first is against herein respondent Juan R. Sumerariz and
alleges that he was the contractor for the construction of the National
Orthopedic Hospital in Quezon City; that the plaintiffs, laborers in
the construction project, had a claim for unpaid wages in the total
amount of P21,502.36; that they filed a claim for collection against
Suinerariz in Regional Office No. 3 of the Department of Labor which,
after hearing, upheld the same in its decision; that as a result of
that decision the Auditor General authorized the release of P6,144.00
as partial payment from the 10% retention fund withheld by the Bureau
of Public Works “from the collections” of the contractor; that the said
office released only P5,154.76, leaving an unpaid balance of
P16,382.36; and that the said amount has not been paid by defendant
Sumerariz in spite of repeated demands by the plaintiffs.

The second cause of action is against the Associated Insurance Company,
Inc., by virtue of a surety bond posted by it together with the
contractor as co-principal, to guarantee payment of wages of laborers
in the construction of the National Orthopedic Hospital.

The third cause of action is against herein petitioners Buendia,
Ignacio and Ilustre, seeking to hold them solidarity liable with the
other defendants on the ground that they opposed payment to the
plaintiffs from the redemption fund withheld by the Bureau of Public
Works precisely to answer for unpaid Wages of laborers according to the
contract with Juan Sumerariz. It is also alleged that these defendants,
now petitioners, were negligent in approving the surety bond referred
to in the second cause of action, which bond, according to the
Associated Insurance Co., Inc. was not binding upon it because it had
been signed without authority by its supposed agent, the Royal
Underwriters Co., Inc.

The prayer in all the three causes of action is that all the defendants
be ordered, jointly and severally, to pay plaintiffs the sum of
P16,382.36, plus 15% thereof as attorney’s fees, and costs.

In his answer to the complaint Sumerariz admitted some allegations and
denied others, and at the same time filed a cross-claim against
defendants Julian A. Buendia, Jose Ignacio and Pederico Ilustre, now
petitioners, alleging in substance that the contract for the
construction of the National Orthopedic Hospital in Quezon City was for
the price of P1,183,290.00, the work to be done within 400 calendar
days, excluding Sundays and holidays; that the cross-claimant started
to work on the project and was well ahead of schedule when, in March
1957, the said cross-defendants, as Director, Project Engineer and
Constructing Architect, respectively, of the Bureau of Public Works,
started harassing him by arbitrary and unreasonable actions (specified
in the cross-claim) calculated to impede him from fulfilling the
contract; that on June 14, 1957, upon their recommendation the
Secretary of Public works, who was thereafter made a party in the
amended cross-claim, rescinded the construction contract; that in
making such recommendation the cross-defendants acted arbitrarily, with
grave abuse and against the law, and in violation of the contract with
the cross-claimant; that as a result he suffered actual damages in the
sum of P344,132.68 and loss of expected profits” in the sum of
P148,329.00; and that because of the refusal of the cross-defendants to
pay the plaintiffs’ claim for unpaid wages out of the retention fund
withheld by the Bureau of Public Works the cross-claimant also stood to
suffer damages in the amount of such claim.

To the cross-claim herein petitioners filed their answer. Thereafter
they moved to dismiss both the complaint and the cross-claim against
them on two grounds: (1) that the said complaint and cross-claim do not
state a cause of action; and (2) that the Court of First Instance of
Manila is not the court of proper venue. Opposition to the motion was
filed by the plaintiffs, after which the motion to dismiss was denied
for lack of merit, as was also the motion for reconsideration
subsequently presented.

In the instant petition for prohibition it is contended by petitioners
that the complaint and cross-claim do not state facts sufficient to
constitute a cause of action in view of Section 52 of the “General
Conditions” in the contract for the construction of the National
Orthopedic Hospital, which reads as follows:

* * *. In the event that’ the total expenditures of the
Government on completion of the work, including all charges against the
project prior to the rescission of the contract are not in excess of
the contract price, then the difference between the said total
expenditures of the Government and the contract price may be applied to
settle claims filed under paragraph thirty seven (37), and the balance
if any may be paid to the contractor, but no amount in excess of the
combined value of the unpaid completed work, retained percentage and
usable materials taken over by the Government at the time of the
rescission of the contract shall be so paid, nor shall any claim for
prospective profits on the work done after rescission of the contract,
be considered or allowed.”

Under the foregoing stipulation, it is argued, no
action on the contrapt may be commenced until after the construction is
completed. It is doubtful, at least, whether or not the claims of
laborers for unpaid wages, directed against the retention fund in the
hands of the defendant Public Works officials, are within the
contemplation of the stipulation of the contract aforequoted. This
stipulation refers to the final liquidations between the Government and
the contractor-assuming that the contract has been rescinded-but does
not prohibit payment of laborers’ claims for wages in the meantime,
especially where, as in this case, such claims have already been
ajudicated favorably by Regional Office No. 3 of the Department of
Labor. In any event, as far as the complaint against herein petitioners
is concerned the grounds relied upon in their motion to dismiss is, at
best, not indubitable. The order denying such motion is merely
intercutory, and unless it constituted clearly a grave abuse of
discretion or was issued without or in excess of jurisdiction the
error, if any, should be corrected by appeal in due time, after trial
and judgement on the merits, and not by the extraordinary writ of
prohibition.

The same observations hold true concerning the crossclaim of respondent
Sumerariz, which is for damages allegedly suffered by him as a result
of the unjustified rescission of the contract by petitioners. If there
is any liability at all for such damages on the part of herein
petitioners, the determination thereof need not await the completion of
the construction project.

The second ground for the petition has reference to the venue of
the action, which according to petitioners should be in Quezon City in
view of section 1 of Act No. 3688 entitled “An Act for the Protection
of Persons Furnishing Materials and Labor for the Construction of
Public Works,” which states as follows:

* * * If no suit should be brought by the Government
of the Philippine Islands within six months from the competition and
final settlement of said contract, or if the Government expressly
waives its right to institute action on the penal bond, then the person
or persons supplying the contractor with the labor and materials shall,
upon application therefor, and furnishing affidavits to the department
under the direction of which said work has been prosecuted, that labor
or materials for prosecution of vsuch work have been supplied by him or
them, and payment for which has not been made, be furnished with a
certified copy of said contract and bond, upon which he or they shall
have a right of action, and shall be, and are hereby, authorized to
bring suit in the name of the Government of the Philippine Islands in
the Court of First Instance wt the district in which said contract was
to he performed and executed, and not elsewhere, for his or their
case and benefit, against said contractor and his sureties, and to
prosecute the same to final judgment and execution: Provided, That
where suit is instituted by any of such creditors on the bond of the
contractor it shall not he commenced until after the complete
performance of said contract and final settlement thereof, and shall be
commenced within one year after the performance and final settlement of
said contract, and no later: * * *” (Italics supplied)

The action of the laborers as against herein petitioners does not
fall under the foregoing provision. They seek to recover unpaid wages
not in the name of the Government but in their own, and insofar as they
do so against petitioning officials the action is not upon the bond but
rather for the release by them of the corresponding amount from the
retention fund withheld by the Bureau of Public Works. Plaintiff
laborers are residents of Manila, and therefore the venue of their
action is properly laid, pursuant to Section 1, Republic Act No. 1171,
which provides:

“Any provision of law or the Rules of Court the
contrary notwithstanding, civil actions on claims of employees,
laborers and the helps may be commenced and tried in the court of
competent jurisdiction where the defendants or any of the defendants
resides or may be found, or where the plaintiff or any of the plaintiff
resides, at the election of the plaintiff. Sec. 1, Republic Act No.
1171.” (Italics supplied).

With respect to petitioner’s contention that the action is in effect
one against the Government, which cannot be sued without its consent,
it need only be repeated that the action is only to compel said
petitioners to release the amount claimed from the funds already set
aside and retained for that purpose. A similar contention as that
advanced by petitioners, upon facts analogous to those obtaining here,
was rejected by us in Ruiz et al., vs. Hon. Sotero Cabahug, 54 Off.
Gaz., 351.

There being no grave abuse of discretion or excess of jurisdiction
committed by respondent court, the writ prayed for is denied, with
coats against petitioners.

Bengzon, C. J., Padilla, Bautista Angelo, Concepcion, Reyes, J. B. L., Barrera, Parades, Dizon, and Regala, JJ., concur.