G.R. No. L-5538 November 27, 1954
FAUSTINO DAVID, ET AL., plaintiffs-appellees, vs. JOSE CABIGAO and THE STANDARD-VACUUM OIL COMPANY, defendants, THE STANDARD-VACUUM OIL COMPANY, defendants-appellant.

FACTS

The Standard-Vacuum Oil Company engaged Jose Cabigao as a contractor to build a service station in Cubao, Quezon City. Cabigao hired the plaintiffs as carpenters, masons, and laborers. The company paid Cabigao in full for the construction, but Cabigao failed to fully pay the plaintiffs’ wages for work performed from November 1 to December 2, 1948. The plaintiffs sued both Cabigao and the company in the Municipal Court of Manila to recover P1,264.50 in unpaid wages, relying on Act No. 3959. The company raised the unconstitutionality of Act No. 3959, prompting the Municipal Court to forward the case to the Court of First Instance. The parties submitted a stipulation of facts confirming the contractual relationship, the full payment by the company to Cabigao, and the unpaid wages totaling P1,264.50. The company refused payment, citing prior full payment to Cabigao, lack of privity of contract with the plaintiffs, and the alleged unconstitutionality of the law. The Court of First Instance rendered judgment ordering the defendants jointly and severally to pay the plaintiffs the sum, with lawful interest. Only Standard-Vacuum Oil Company appealed, assailing the constitutionality of Act No. 3959.

ISSUE

Whether Act No. 3959, which makes a builder jointly and severally liable with a contractor for unpaid laborers’ wages if the builder pays the contractor in full without first requiring an affidavit that the wages have been paid, is constitutional.

RULING

The Supreme Court affirmed the judgment of the lower court, upholding the constitutionality of Act No. 3959. The Court interpreted Sections 1 and 2 of the Act. It held that the joint and several liability of the builder and contractor arises specifically from the builder’s failure to require the contractor to execute an affidavit showing that the laborers’ wages have been paid before making final payment. The requirement for the contractor to furnish a bond equivalent to the cost of labor was deemed directory and for the benefit of the builder, not mandatory. The builder could relieve itself from statutory liability by requiring the affidavit, even without the bond. The Court ruled that the affidavit requirement does not impair the builder’s freedom to contract or acquire property, as it is imposed after the work is completed. Even if it constituted an interference, such interference is a reasonable and valid exercise of the state’s police power for the promotion of general welfare, as it protects wage earners and promotes social peace and order.