G.R. No. 115278, 23 May 1995, 244 SCRA 308

FACTS:

Producers Bank was insured by Fortune Insurance.
Producers Bank filed against Fortune Insurance a complaint for recovery of the sum of P725,000.00 under the policy issued by Fortune. The sum was allegedly lost during arobbery of Producer’s armored vehicle while it was in transit to transfer the money from itsPasay City Branch to its head office in Makati

The said armored vehicle was robbed by its driver Benjamin Magalong and security guardSaturnino Atiga tasked to man the same. Both of them are not Producers Bank’s“employees” but were merely assigned by and affiliated with PRC Management Systemsand Unicorn Security Services.

Fortune Insurance refused to pay the amount as the loss, according to it, is excluded fromthe coverage of the insurance policy. “General Exceptions” provides: The company shallnot be liable under this policy in report of x x x (b) any loss caused by any dishonest,fraudulent or criminal act of the insured or any officer, employee, partner, director, trusteeor authorized representative of the Insured whether acting alone or in conjunction withothers…”

Producers Bank opposed the contention of Fortune Insurance and contends that Atiga andMagalong are not its officer, employee, trustee, or authorized representative at the time of the robbery.

According to Fortune Insurance, when Producers commissioned a guard and a driver totransfer its funds from one branch to another, they effectively and necessarily became itsauthorized representatives in the care and custody of the money. Assuming that theycould not be considered authorized representatives, they were, nevertheless, employeesof Producers.

ISSUE:

Wheter or not Magalong and Atiga qualify as employees or authorized representatives of Producers under paragraph (b) of the general exceptions clause of the insurance policy as toexempt Fortune Insurance from liability to pay Producers Bank under said policy?

HELD:

Yes.
Employer-employee relationship depends upon four standards: (1) the manner of selectionand engagement of the putative employee; (2) the mode of payment of wages; (3) thepresence or absence of a power to dismiss; and (4) the presence and absence of a powerto control the putative employee’s conduct
The power of control over Magalong and Atiga was vested in and exercised by ProducersBank; hence, an “employer-employee” relationship exists between Magalong and Atigaand Producers Bank.
PRC Management System and Unicorn Security Services are but “labor-only”contractors(not employers) under Article 106 of the Labor Code which provides: “Thereis “labor-only” contracting where the person supplying workers to an employer does nothave substantial capital or investment in the form of tools, equipment, machineries, workpremises, among others, and the workers recruited and placed by such persons areperforming activities which are directly related to the principal business of such employer.In such cases, the person or intermediary shall be considered merely as an agent of theemployer who shall be responsible to the workers in the same manner and extent as if thelatter were directly employed by him.”Magalong and Atiga were, in respect of the transfer of Producers Bank’s money from itsPasay City branch to its head office in Makati, its “authorized representatives” whoserved as such with its teller Maribeth Alampay. However viewed, Producers entrusted the three with the specific duty to safely transfer the money to its head office, withAlampay to be responsible for its custody in transit; Magalong to drive the armored vehicle which would carry the money; and Atiga to provide the needed security for the money, the vehicle, and his two other companions. In short, for these particular tasks, the three actedas agents of Producers. A “representative” is defined as one who represents or stands inthe place of another; one who represents others or another in a special capacity, as anagent, and is interchangeable with “agent.”

*Case digest by: Karl Bation, LLB-IV, Andres Bonifacio Law School, SY 2018-2019