Title
Philippine Surety and Insurance Co., Inc. vs. Jacala
Case
G.R. No. L-12766
Decision Date
May 25, 1960
Surety challenges CIR's jurisdiction, laborers' claims upheld; Government's priority claim rejected; certiorari denied due to failure to appeal.
writ of execution
lack of jurisdiction
nullity
A

Case Digest (G.R. No. L-32071)

Facts:

  • Parties Involved
    • Petitioner: Philippine Surety and Insurance Co., Inc. (the surety).
    • Respondents:
      • A group of laborers including S. Jacala and 34 others.
      • Officials such as D. Tiburcio, E. Capulong, H. Tejada, G. Tejada, D. Gabitanan, M. Gabitanan, J. Delumpa, A. Javier, E. Villafuertes, E. Pike, E. Rozo, R. Tulungan, E. Quijada, F. Francisco, Wildrino Labrio, Jaranilla Agustin, Pasquin Felipe, Jaime Rafael, Ibanez Gabriel, Gachero Paulino, Lumanog Claudio, Teofilo Prada, S. Villanueva, A. Joaquin, R. Bacungan, R. Alhambra, F. Dumandan, G. Figueroa, G. Palad, A. Javier, P. Gonzales, C. Espanola, A. Felipe, A. Bombate, Macario M. Ofilada.
      • The Court of Industrial Relations and the ex officio Sheriff of Manila (in his official capacity as clerk of court of the Court of First Instance of Manila).
  • Nature of the Case
    • A special civil action for a writ of certiorari to annul an earlier decision of the Court of Industrial Relations (dated March 2, 1954) and an alias writ of execution (dated August 7, 1957).
    • The surety also sought a writ of preliminary injunction to stop the Sheriff of Manila from enforcing the writ of execution—including the sale of its properties.
  • Background and Execution of Performance Bonds
    • On March 20, 1950, the surety executed two performance bonds in favor of the Republic of the Philippines:
      • One bond for P103,343.00.
      • Another bond for P15,927.00.
    • These bonds guaranteed the faithful performance of the International Construction and Engineering Company, Inc. (the contractor) under contracts for the construction of:
      • The Bugallon Bridge in Pangasinan.
      • The Concepcion Bridge in Tarlac.
    • The transactions arose under the provisions of Act No. 3688.
  • Laborers’ Claim and Initiation of Case
    • On or about December 4, 1950, S. Jacala along with thirty-four other laborers, alleging illegal dismissal by the contractor, filed Case No. 529-V before the Court of Industrial Relations.
    • The laborers' claims included:
      • Unpaid wages.
      • One month separation pay.
  • Decision of the Court of Industrial Relations
    • On February 16, 1954, the Court rendered a decision ordering:
      • The contractor and surety to pay jointly and severally the amounts due to the laborers, as evidenced by payroll exhibits submitted by the Director of Public Works, less any allowable deductions (such as advances or the value of materials taken).
      • The contractor to pay one month separation pay to each laborer.
      • Dismissal of the claims against other corporate officials (Manuel Padilla and Leon Patlach) involved in the matter.
    • No appeal was taken, rendering the decision final and executory.
  • Execution of the Decision and Subsequent Developments
    • On August 26, 1957, following a motion by the laborers, an alias writ of execution was issued.
    • The respondent Sheriff of Manila proceeded to levy the surety’s office equipment and other properties, threatening a public auction on September 4, 1957, for the recovery of P33,000.00 plus interest and costs.
  • Grounds for the Special Civil Action
    • The surety contended that both the Court of Industrial Relations’ decision and the alias writ of execution were null and void due to:
      • Lack of jurisdiction on the part of the Court of Industrial Relations to hear actions on performance bonds, as Act No. 3688 mandates such actions be brought by the Government or by persons supplying labor or materials, but in the name of the Government.
      • The requirement to initiate such actions only after complete performance of the construction contracts and in the proper venue—the court of first instance of the district where the projects (Bugallon Bridge and Concepcion Bridge) were located.
    • The surety also pointed to relevant precedents (e.g., Cristitu Bautista vs. Auditor General) which highlighted that claims by the Government under such circumstances enjoy priority over claims from laborers.
  • Involvement of the Government and its Defense
    • The Government of the Philippines, represented by the Director of Public Works, was joined as a defendant in compliance with a court order.
    • The Government argued that:
      • The contractor’s failure to complete the bridges rendered it liable for additional sums (P530,806.41 for Bugallon Bridge and P15,927.00 for the Concepcion Bridge).
      • Such government claims had priority over any claims by the laborers against the performance bonds provided by the surety.
  • Procedural Posture and Available Remedies
    • The surety, though a defendant in Case No. 529-V, did not avail of its right to appeal.
    • It partially complied with the decision by making payments aggregating approximately P9,000.00.
    • The surety later attempted to question the jurisdiction and venue issues via a petition for certiorari, rather than through an appeal, despite having a plain, speedy, and adequate remedy available.
  • Legal Arguments and Precedents Cited
    • The surety argued that the venue provisions of Act No. 3688 were procedural and did not confer jurisdiction upon the Court of Industrial Relations.
    • It invoked prior decisions such as Cristitu Bautista vs. Auditor General, Claudio vs. Zandueta, Haw Pia vs. San Jose, Dans vs. Court of Appeals, and others to underscore:
      • The distinction between errors of jurisdiction and errors of judgment.
      • That only errors of jurisdiction (which are foundational) warrant review by certiorari.
    • The surety’s failure to take timely appeal action suggested an abandonment of its right to press the jurisdictional and venue issues on certiorari.

Issues:

  • Jurisdiction and Venue
    • Whether the Court of Industrial Relations had the jurisdiction to adjudicate a case involving performance bonds under Act No. 3688.
    • Whether the venue provisions of Act No. 3688, as affected by Commonwealth Act No. 103, were properly applied in this case.
  • Adequacy and Appropriateness of Remedies
    • Whether the surety’s failure to appeal the Court of Industrial Relations’ decision, thereby using an available remedy, precludes the application of a writ of certiorari.
    • Whether the petitioner could claim that the lack of an appeal constitutes a lack of a plain, speedy, and adequate remedy in the ordinary course of law.
  • Impact of Government Claims on the Surety’s Liability
    • Whether the Government’s priority claim, based on the contractor’s failure to complete the works, affects the validity of the decision awarding unpaid wages and separation pay to the laborers.
    • How the priority of government claims under the construction contracts interacts with the surety’s obligations under the performance bonds.
  • Distinction Between Jurisdiction and Exercise of Jurisdiction
    • Whether errors related to the calculation of the surety’s liability or the determination of priorities affect the court’s underlying jurisdiction.
    • Whether the error committed by the surety in not appealing (an error in the exercise of its rights) is sufficient to nullify the proceedings on certiorari.

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)

Doctrine:

  • (Subscriber-Only)
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