Extent of Joint and Solidarily Liability in Contracting or Subcontracting

The joint and several liability of the employer or principal was enacted to ensure compliance with the provisions of the Code, principally those on statutory minimum wage. The contractor or subcontractor is made liable by virtue of his or her status as a direct employer, and the principal as the indirect employer of the contractors employees. This liability facilitates, if not guarantees, payment of the workers compensation, thus, giving the workers ample protection as mandated by the 1987 Constitution. This is not unduly burdensome to the employer. Should the indirect employer be constrained to pay the workers, it can recover whatever amount it had paid in accordance with the terms of the service contract between itself and the contractor.

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Joint and Solidary Obligations

A joint and solidary obligation or solidary obligation is one wherein either one of several creditors has the right to demand full and complete compliance of an obligation against either one of the debtors. In such an obligation, the debtors are sureties who are liable for the full amount of the debt incurred by the principal debtor. A surety is liable regardless of whether it benefitted from the debt incurred by the principal debtor.

Example: In a loan document, a company president signed as a surety binding himself solidarily to pay a P10 million debt borrowed by his company from a bank. If the debt is unpaid, the bank may collect the full P10 million debt either from the company or its president.

Due to the consequences, a solidary obligation arises only when: (a) the obligation expressly so states; or (b) the law or the nature of the obligation requires solidarity.

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