G.R. No. 115278 – FORTUNE INSURANCE AND SURETY CO., INC., petitioner, vs. COURT OF APPEALS and PRODUCERS BANK OF THE PHILIPPINES, respondents.
DAVIDE, JR., J.
Rule Synopsis
Manpower supplied by agencies may be considered employees or authorized representatives of the employer for purposes of construing exceptions to a robbery and theft policy exempting the insurer from liability for any loss caused by any dishonest, fraudulent or criminal act of its employees or authorized representatives, among others.
Facts
Producers Bank had a Money, Security, and Payroll Robbery policy with Fortune Insurance and Surety Co., Inc. The policy states that the insurer shall not be liable for: “any loss caused by any dishonest, fraudulent or criminal act of the insured or any officer, employee, partner, director, trustee or authorized representative of the Insured whether acting alone or in conjunction with others.” Producers then allegedly lost a sum of P725k during a robbery of its armored vehicle while it was in transit to transfer the money from Pasay to Makati. The vehicle was driven by one Magalong (assigned by PRC Management Systems). The security guard, Atiga, was assigned by Unicorn Security Services, Inc. The driver and the security guard, along with others, were charged with highway robbery. The criminal case was still pending as of writing of this decision. Producers filed a claim Fortune. Fortune denied on the ground that the robbery was due to the acts of Producers’ own employees, thus an excluded loss under the general exceptions in the policy.
Producers filed a case against Fortune for the recovery of the insurance proceeds.
The trial court ruled in favor of Producers Bank. The CA affirmed. The lower courts found that both Magalong and Atiga were not employees of the Bank. The SC reversed.
Issue
Was Fortune Insurance liable under the Money, Security, and Payroll Robbery policy it issued to Producers Bank or was the recovery thereunder is precluded under the general exceptions clause thereof?
Ruling and Discussion
No. Fortune Insurance was not liable. Recovery under the Money, Security, and Payroll Robbery policy is precluded.
On the applicable law. The Court said that theft or robbery insurance policy, as with the case at bar, is a form of casualty insurance governed by Sec. 174 of the Insurance Code. The Court also noted that the Code contains no provisions specifically applicable to casualty insurance. Thus, this shall be governed by the general provisions applicable to all types of insurance.
On the usual exceptions in robbery and theft policies. The numerous restrictions in the robbery and theft policies were intended to reduce the moral hazard. It was noted that in these types of insurance, the opportunity to defraud the insurer is so great (e.g. through conspiracy, etc.). Usually, losses occasioned on the acts of the persons under the insured’s service and employment, are excepted risks. The purpose of the exception is to guard against liability should the theft be committed by one having unrestricted access to the property. “Service” and “employment” in this case are to be understood in their ordinary sense.
On whether Magalong and Atiga were Producers’ employees, given that they were merely supplied by agencies. The Court held that Magalong and Atiga may be considered employees of Producers. This is under the assumption that the contract of Producers with the providers of concerned manpower were “labor-only.” And under the Labor Code, employees under labor-only contract are considered employees of the party employing them and not of the party who supplied them to the employer, the former merely acting as an agent for the latter.
However, the Court noted that there was still lack of evidence as to the real nature of the contract between producers and its suppliers of manpower, since the parties merely entered into stipulation without submitting additional evidence other than the insurance policy. Nevertheless, the Court held that even if Magalong and Atiga were not to be considered employees of Producers, then may still be deemed its authorized representatives for purposes of transferring the money in question. For the said particular task, the subject employees acted as agents of Producers.
Dispositive
Petition granted. Judgment on appeal reversed and set aside.