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FORTUNE INSURANCE v. CA

FACTS:

Private respondent, Producers Bank of the Philippines, filed a complaint against petitioner, Fortune Insurance and Surety Co., Inc., for recovery of the sum of P725,000.00 under a Money, Security, and Payroll Robbery policy issued by Fortune. The money was allegedly lost during a robbery of Producers' armored vehicle while it was in transit from its Pasay City Branch to its head office in Makati. After joinder of issues, the trial court rendered a decision in favor of Producers, ruling that the driver and security guard involved in the robbery were not employees or authorized representatives of Producers. The Court of Appeals affirmed the decision of the trial court. Fortune filed a petition for review on certiorari before the Supreme Court, asserting that the driver and security guard were either authorized representatives or employees of Producers.

ISSUES:

  1. Whether or not Magalong and Atiga are considered authorized representatives or employees of Producers

  2. Whether or not PRC Management System and Unicorn Security Services are "labor-only" contractors

  3. Whether or not the Court of Appeals erred in reversing the decision of the Regional Trial Court.

  4. Whether or not the complaint in Civil Case No. 1817 should be dismissed.

RULING:

  1. Magalong and Atiga are considered authorized representatives or employees of Producers. The power of control over Magalong and Atiga was vested in and exercised by Producers. Therefore, the provisions in the contracts with PRC Management System and Unicorn Security Services stating that Producers is not their employer do not obliterate the employer-employee relationship.

  2. PRC Management System and Unicorn Security Services are considered "labor-only" contractors. The ruling in International Timber Corp. v. NLRC applies, which states that a finding that a contractor is a "labor-only" contractor is equivalent to a finding that there is an employer-employee relationship between the owner of the project and the employees of the "labor-only" contractor.

  3. Yes, the Court of Appeals erred in reversing the decision of the Regional Trial Court.

  4. Yes, the complaint in Civil Case No. 1817 should be dismissed.

PRINCIPLES:

  • The right-of-control test is the decisive factor in determining an employer-employee relationship.

  • Article 106 of the Labor Code provides for "labor-only" contracting and the responsibilities of the person or intermediary supplying workers.

  • The general provisions of the Insurance Code apply to casualty insurance, including theft or robbery insurance. The rights and obligations of the parties are determined by the terms of their contract in accordance with the general principles of insurance law.

  • The Court of Appeals may reverse a decision of the Regional Trial Court if it finds that the latter has erred in its judgment.

  • When the Court of Appeals reverses a decision of the Regional Trial Court, the decision of the latter is set aside and the case may be dismissed.