BARTOLOME PUZON, PETITIONER, VS. HON. MANUEL P. BARCELONA AND WILLIAM UY, RESPONDENTS.

This is a petition for certiorari to reverse a special order of Judge
Manuel P. Barcelona of the Court of First Instance of Manila in Civil
Case No. 36310 of said court, authorizing the immediate execution of
the judgment pending appeal, upon the amount of P145,385.00 in the
custody of the Bureau of Public Highways previously garnished upon a
bond of P150,000.00. The petition also contains a prayer for the
issuance of a writ of preliminary injunction. Upon filing of the
petition We granted the writ of preliminary injunction prayed for.

The facts necessary for the understanding of the petition may be
briefly stated as follows: Petitioner Bartolome B. Puzon is a public
works contractor, having contracts with the Bureau of Public Highways
for the construction of roads and bridges. In the year 1956 Puzon and
William Uy entered into a contract of partnership, the UP Construction
Company, whereby they, as partners, were to subcontract the contracts
for the construction of public highways and bridges that Puzon had
obtained from the Bureau of Public Highways. The partnership was
capitalized at P100,000.00, each partner contributing P50,000.00.

On March 18, 1959 Uy filed a second amended complaint against Puzon
alleging that Puzon had not complied strictly with his obligations
towards the partnership and that he tried to appropriate for himself
the amounts received in payment of the sub-contracts performed by the
partnership. Judge Barcelona rendered a decision on December 2, 1961
declaring the UPConstruction Company dissolved and ordering the
defendant to pay Uy the amount of P115,102.13, P200,000.00 as
unrealized profits, and P5,000.00 as attorney’s fees. Upon the
rendition of the judgment Uy presented a motion for immediate execution
of the judgment; the execution was issued against the amount of
P145,358.00 constituting the 10% retention fund of the Bureau of Public
Highways. The amount was previously garnished upon plaintiff’s bond.

The special reasons given in the order are that plaintiff has long been
deprived of his investment, not to say his profits; that the execution
against the 10% retention fund of the Bureau of Public Highways is the
only means of obtaining reparation of his investment and advances to
the defendant, and that the execution will not prejudice the Bureau
because Puzon had filed an indemnity bond to the Bureau on the amount
of P600,000.00, etc.

Upon the issuance of the order, the Solicitor General, representing the
Bureau of Public Highways, filed a motion in intervention dated May 24,
1962, calling attention to the fact that on February 24, 1962 the
Commissioner of Public Highways had sought to reconsider the execution
order, on the ground that the amount sought to be executed represents
the 10% retention fund authorized by law to be retained by the Bureau
of Public Highways, which fund was to answer for claims of the
Government against the contractor, such as taxes, repairs and materials
furnished by third parties. But the court overruled the intervention
and the objection to the execution ordered on the ground that the
Bureau of Public Highways is not a party to the action and is
sufficiently protected by the performance bond given by the contractor,
the defendant Puzon.

Objection was also made to the execution against the 10% retention fund
because on February 5, 1962 the contractor, Bartolome Puzon, had
already requested that the retention fund be applied for the payment of
the various bills for spare parts, rentals and repair of returned
equipment, etc., that had been used in the construction of the
highways. The judge, notwithstanding the objection, held that the
Bureau of Public Highways is sufficiently protected by the performance
bond of Puzon and the additional P160,000.00 bond that Uy had given
when he garnished the fund.

It is urged in the petition for certiorari filed before Us that the
reasons given by the court in its special order granting the execution
are not the special reasons required by the Rules of Court for the
issuance of a writ of execution pending appeal.

For its part the Republic of the Philippines, thru the Solicitor
General, has filed a motion for intervention, alleging that the
retention fund in the Bureau of Public Highways was to be applied for
payment for the use of various equipments borrowed by the contractor
Puzon from the Bureau of Public Highways. Attached to the motion for
intervention are the various contracts of lease of equipment entered
into by Puzon to secure the equipment from the Bureau of Public
Highways in the construction work. The motion for intervention also
attaches a summary of unpaid obligations of Puzon consisting of
P61,839.67 as unpaid rentals, P161,705.43 as spare parts, services,
etc., P13,596.00 as costs of repairs, labor claims amounting to
P36,212.86, etc., totalling P640,862.91. (See Annex “D” to Petition In
Intervention).

The accounts between Uy and Puzon are numerous and voluminous and
cannot be promptly settled. Assuming that Uy is entitled to a judgment,
his right to said judgment is a mere contractual right, the existence
of which depends upon the success of the subcontracts that the
partnership had entered into. Uy is less than an ordinary creditor
because his right to any amount depends upon the the result and success
of the subcontracts that they had undertaken. His right depends upon
the existence of profits in the subcontract, whereas the Bureau’s right
of retention is considered as a part of the expenses of the contractor.
There cannot, therefore, be a special reason why he should be entitled
to the immediate execution of the judgment.

But assuming that he has a right to immediate execution, still such
right cannot be enforced against the 10% retention fund in the
possession of the Bureau of Public Highways, the right of the Bureau
for services rendered and materials furnished by third persons being a
legal lien established in the original contract for the construction
and is recognized by law.

For all the foregoing considerations We find that the reasons adduced
by the court for granting execution pending appeal are not sufficient
to justify the immediate execution of the judgment. Furthermore, the
execution cannot prevail over the right of the intervenor, the Bureau
of Public Highways, to the 10% retention fund because such right is
guaranteed by the original contract with the contractor and is
recognized by law as a valid lien.

WHEREFORE, the writ prayed for is hereby granted and the writ of
preliminary injunction issued by Us is hereby made permanent. With
costs against the respondent Uy.

SO ORDERED.

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