G.R. No. L-5538. November 27, 1954

For the building of a service station at Cubao, Quezon City, the
Standard-Vacuum Oil Company engaged the services of Jose Cabigaoias
contractor who hired the plaintiffs as carpenters, masons and laborers
to work on the construction. The contractor Had been paid in full for
the construction of the station by the Standard-Vacuum Gil Company
but has not paid fully the wages of the artisans for work performed by
them from 1 November to 2 December 1948. For such failure the artisans
brought an action in the Municipal Court of Manila to recover from the
contractor and the company the sum of P1,264.50, lawful interests and
costs. The company having raised the point of unconstitutionality of
Act No. 3959 upon which the artisans rely to recover their due and
unpaid wages, the Municipal Court forwarded the case to the Court of
First Instance.

Upon a stipulation of facts which reads, as follows.:

Come now plaintiffs and defendant Standard-Vacuum
Oil Company, by their respective undersigned attorneys,; and to this
Honorable Court respectfully submit the following stipulations:

1. That Jose Cabigao, as contractor, and Standard-Vacuum Oil
   Company, as builder, entered into a contract for the construction of
   the latter’s Cubao Service Station at a price of P17,360.00; that,
   subsequently, the parties agreed that additional work be performed for
   which Standard-Vacuum Oil Company agreed to pay Jose” Cabigao P2,766.25;

2. That, the full amount aforesaid has been already paid by
   Standard-Vacuum Oil Company to Jose Cabigao although this is questioned
   by Jose Cabigao;

3. That Jose Cabigao has
   failed to pay his laborers, the plaintiffs, the full amount of their
   wages, the following being the balance still due:

 

Name	Balance Due
Faustino David	P85.50
Dely Macapagal	55.00
Adriario Sunga	211.50
Estanislao Olisco	122.50
Diosdado Regalado	122.50
Pedro Medina	107.50
Federico “Doe”	127.50
Edilberto Sunga	127.50
Florencio “Doe”	67.50
Irineo Sunga	76.50
Marcos Catbagan	92.00
Juanitio Catbagan	69.00
	Total…1,264.50

4. That Standard-Vacuum Oil Company has refused to pay the ‘said balance to plaintiffs for the following reasons:

(a); That as aforesaid, it has already paid
the entire price agreed for the construction of the service station in
question to Jose” Cabigao;

(b) That it has no privity of contract whatsoever with plaintiffs ; and

(c) That the law under which plaintiffs claim payment from Standard-Vacuum Oil Company is unconstitutional.

5. That plaintiffs and Standard-Vacuum Oil Company
   will file their respective memoranda within ten (10) days prom the
   submission of the stipulation to further amplify their respective
   contentions, and another ten (10) days to reply to each other, and
   thereafter this case shall be considered submitted for decision of the
   Court.

Manila, Philippines, February 7, 1950.

CECILIO I. LIM & ANTONIO S.	ROSS, SELPH, CARRASCOSO &
ATIENZA	JANDA
By (Sgd.) ANTONIO S. ATIENZA	By (Sgd.) DELFIN L. GONZALEZ
Attorneys for plaintiffs	Attorneys for defendant
Bureau of Labor, Manila	Standard-Vacuum Oil Company
	405 Ayala Building, Manila

the Court rendered judgment ordering the defendants jointly and
severally to pay to the plaintiffs the sum of P1,264.50 together with
lawful interest from the date of the filing of the complaint until paid
and Jose” Cabigao to pay to the Standard-Vacuum Oil Company the same
amount it shall have paid to the plaintiffs and lawful interest thereon
from the date of the filing of the cross-claim, and dismissing the
counterclaim of the company for lack of evidence to support it, with
costs against the defendants. Only the Standard-Vacuum Oil Company has
appealed.

The appellant assails the constitutionality of Act No. 3959.

Section 1 of the Act provides:

Any person, company, firm, or corporation, or any
agent or partner thereof, carrying on any construction or other work
through a contractor, shall require such contractor to furnish bond in
a sum equivalent to the cost of the labor, and shall take care not to
pay to such contractor the full amount which he is entitled to receive
by virtue of the contract, until he shall have shown that he first paid
the wages of the laborers employed in said work, by rowans of an
affidavit made and subscribed by said contractor before a notary public
or (other officer authorized by law to administer oaths: * * *.

Section 2 provides:

Any person, company, firm, or corporation, or any
agqnt or partner thereof, who;shall violate the provisions of the
preceding section by paying to the contractor the entire cost of ‘the
work before receiving the affidavit mentioned in said section, shall be
responsible jointly and severally with the contractor for the payment
of the wages of the laborers employed in the work covered by the
contract. In case the violation is committed by a company or
corporation, the liability for the violation of this Act shall devolve
upon the agent, director, or manager, or upon the person having charge
of the management, direction or administration of the work.

It does not appear from the stipulation of facts that the appellant,
as builder, required the contractor to furnish a bond in a sum
equivalent to the cost of labor and to execute an affidavit showing
that he had paid the wages of the laborers employed in the work. In the
absence thereof, it may be presumed that no such bond was furnished and
ho such affidavit was executed.

Act No. 3959 requires of any one ordering the construction of a
building or work to demand from the contractor that he furnish a bond
in a sum equivalent to the cost of the labor. For whose benefit is such
bond? For the one ordering the construction or for,the laborers to be
employed in it? If for the latter, the beneficiaries of the bond would
be innominate and the one ordering the construction would no longer
have any liability. If the amount of the bond furnished which is the
estimated or approximate cost of labor should be or should turn out to
be less than the amount actually incurred in or owed by the contractor
to the laborers. Could the one ordering the construction or work be
liable for the deficiency? Of course he would not be liable. The
contractor alone would be. If the bond is for the one ordering the
construction or work, it must be for the purpose of reimbursing him for
whatever amount he may be held liable to pay or had been ordered to pay
or had actually paid. If the bond be furnished, it would no longer be
necessary for the one ordering the construction to require the
contractor to execute an affidavit showing that he first paid the wages
of the laborers engaged in the construction, before paying him the full
amount to which he is entitled to receive under the contract, because
the bond, would reimburse him (the.builder) for whatever amount he may
be held liable to pay or had been ordered to pay or had actually paid.
If the builder required the contractor to execute and the latter
executed an affidavit stating “that he first paid the wages of the
laborers employed in said work,” before paying; him the full amount to
which he is entitled to receive under the contract, would that
affidavit alone be sufficient to relieve him (the builder) from the
liability created by the statute even if he had failed or neglected to
require the contractor to furnish the bond? If he is relieved, then
both thjs bond and the affidavit need not be required of the
contractor. Either one would be sufficient. ‘The bond, is to reimburse
the builder for whatever amount he may be held liable to pay or had
been ordered to pay or had actually paid and the affidavit, to relieve
the builder from his statutory liability to pay for wages not paid by
the contractor. If that is a correct interpretation of the law under
consideration, and this, construction finds justification in section 2
off the Act above quoted, then the bond requirement is not mandatory
but directory for the benefit and protection of the builder. It should
be noted that the joint and several liability of the builder and
contractor would only arise upon or from the failure of the builder to
require from the contractor to execute an affidavit showing “that he
first paid the wages of the laborers employed in said work,” before
paying him the full amount to which he is entitled to receive under the
contract. It does not arise from failure to require from the contractor
that he furnish the bond. Hence, even if there be no such bond, the
builder may still relieve himself from the liability created by the
statute by requiring the contractor to execute an affidavit described
and referred to in the Act. such being the case, the bond requirement,
whether for the benefit: of the laborers or of the builder, since it
assures the laborers payment of their wages or the builder
reimbursement for whatever amount he may be held liable to pay or had
been ordered to pay or had actually! paid, is no interference, or
curtailment, or restraint, much less a deprivation, of the builder’s
freedom to contract, because he may enter into a contract without
requiring the contractor to furnish the bond and simply require him
before paying the full amount to which he is Entitled under the
contract to execute the affidavit required by the Act, and still
relieve himself from the statutory liability. Such affidavit to be
executed by the contractor does not affect the builder’s freedom to
acquire property, because it is required after the construction or work
has been done or accomplished, but even if the provisions of the Act
under consideration be deemed to constitute, an interference, or
restraint, or curtailment of the freedom of the citizen to contract or
to acquire property, still such interference, or curtailment, or
restraint provided for in the Act being reasonable is a. valid exercise
of the police power of the state for the promotion of the general
welfare, because the Act concerns itself with and affects the welfare
of a great number of people—the wage earners—who live by the sweat of
their brow, and ultimately that of all the people and inhabitants of
the country who as a result of the contentment of such great number of
people will enjoy!peace and order.

The judgment is affirmed, without pronouncement as to costs in this instance.

Paras, C.J., Pablo, Bengzon, Jugo, Bautista Angelo, Concepcion and Reyes, J.B.L., JJ. concur

Montemayor and Reyes A., JJ., concur in the result.
Mr. Justice Labrador took no part.