This case raises a narrow question involving the 'contractor-under' provision of the Puerto Rico Workmen's Accident Compensation Act, 11 L.P.R.A. 1 et seq. Defendant, Puerto Rico Telephone Company, which we take to be a generally insured employer,1 subcontracted certain of its construction and maintenance work to Intercontinental Communications Corporation. Pursuant to a requirement in its contract with Telephone, Intercontinental maintained workmen's compensation insurance to cover its employees. Plaintiff-appellant,2 an employee of Intercontinental, was injured while working on the Telephone job, and recovered compensation under the policy. Alleging that his injuries were the result of Telephone's negligence, he brought this action for damages in the United States District Court for the District of Puerto Rico.

The court granted Telephone's motion for summary judgment, holding that it was plaintiff's statutory employer under the Act, and hence immune from suit. 11 L.P.R.A. 21.3 Plaintiff argues that Telephone is a 'third party,' subject to the ordinary loability of one who has negligently injured another. It is not disputed that if Telephone is a third party, plaintiff can recover against it even though he has already recovered workmen's compensation. 11 L.P.R.A. 32.

This case is one of first impression under the Puerto Rico Act. The district court relied on Porto Rican American Sugar Refinery, Inc. v. Industrial Commission, supra, n. 1, and defendant adds Montaner, Mgr. v. Industrial Commission, 1941, 59 P.R.R. 284. Under these decisions, Telephone would have been regarded as plaintiff's employer, and hence have acquired immunity to suit, if insured, if Intercontinental had failed to carry insurance. Alternatively, if Intercontinental had failed to carry insurance and Telephone, also, had failed to insure, Telephone would have been in a variety of difficulties. 11 L.P.R.A. 16, 18 and 19. Although these decisions do indicate that under some circumstances the primary contractor is the employer of his subcontractor's employees, they do not address themselves directly to the permutation presently before us. We turn to the statute itself.

Section 21, supra, n. 3, which exempts an employer from civil liability 'when an employer insures his workmen or employees,' is of central importance. To sustain Telephone's claim to immunity from suit we must find, first, that plaintiff was an employee of Telephone, and, second, that Telephone had insured the plaintiff.

Two sections of the Puerto Rico statute indirectly shed light on the first question. Section 16 states the consequences to 'any employer covered by this chapter (who) fails to insure * * *.' We believe the fair meaning of the third paragraph of this section to be that these unpleasant consequences will not be suffered by a contractor-employer guilty of negligence if his 'independent subcontractor' is insured.4 Section 20 provides that an employer shall pay the premiums for his employees, and for the employees of uninsured independent contractors working for it. This section clearly draws a distinction between insured and uninsured independent contractors on which plaintiff relies.5

No provision in the Act defines 'employer covered by this chapter,' or 'employer,' in terms specifically addressing our present question. Nevertheless, it seems implicit in section 16 that the party employing the independent contractor is an 'employer' of the independent contractor's employees. The language of the quoted proviso in section 20 does not reject this concept, but merely states that the 'employer' need not pay the premiums if this has been done by the independent contractor. In other words, the concept continues, but, not unreasonably, the suggestion that premiums should be paid twice is negatived.

As for the second question, we think that an employer who has required his independent contractor to take out the insurance and, presumably, has thereby increased the overall cost of the contract to itself, has 'insured' the employees.

We hold, in sum, that the employee of an insured independent contractor or subcontractor cannot entertain a tort action against the primary contractor. Not only does this seem the more probable resolution of the admittedly ambiguous statutory scheme, but we believe it is more consistent with the policies of workmen's compensation. See Bindbeutel v. Willcut & Sons Co., 1923, 244 Mass. 195, 138 N.E. 239; 2 Larson, Workmen's Compensation Law, 72.31.

We note, finally, that the provision in the contract between Telephone and Intercontinental, to the effect that employees of the latter were not to be regarded as employees of the former, cannot control the statute. What the contractors may agree to as between themselves cannot increase, or diminish, the rights of the plaintiff. 'What matters is that in any event the workman and those dependent upon him are secured through the State Insurance Fund.' Montaner, Mgr. v. Industrial Commission, supra, at 289.

Affirmed.