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JEROMIE D. ESCASINAS v. SHANGRI-LA'S MACTAN ISLAND RESORT

FACTS:

Registered nurses Jeromie D. Escasinas and Evan Rigor Singco were hired by Dr. Jessica Joyce R. Pepito to work in her clinic at Shangri-la's Mactan Island Resort in Cebu. The nurses later filed a complaint with the NLRC Regional Arbitration Branch claiming regularization, underpayment of wages, and non-payment of benefits. Shangri-la contested that the nurses were not its employees but were employed by Dr. Pepito, whom they retained through a Memorandum of Agreement (MOA). The labor arbiter ruled in favor of the nurses and declared them to be regular employees of Shangri-la. Subsequently, the NLRC granted the appeal of Shangri-la and Dr. Pepito, dismissing the nurses' complaint by stating that there was no employer-employee relationship between the nurses and Shangri-la, and that the MOA between Shangri-la and Dr. Pepito allowed her to hire her own nurses. The Court of Appeals upheld the decision of the NLRC, prompting the nurses to file an appeal with the Supreme Court. The main issue involved the interpretation of Article 157 of the Labor Code in relation to Article 280 and the provisions on job contracting.

ISSUES:

  1. Whether Art. 157 of the Labor Code requires the engagement of full-time nurses as regular employees

  2. Whether the respondent doctor can be considered a legitimate independent contractor

  3. Whether or not the respondent doctor is an independent contractor or an employee of the petitioner.

  4. Whether or not the petitioner exercises control and supervision over the work of the respondent doctor and the nurses.

RULING:

  1. Art. 157 of the Labor Code does not require the engagement of full-time nurses as regular employees. The provision only mandates employers to "furnish" their employees with the services of a full-time registered nurse, a part-time physician and dentist, and an emergency clinic. It does not necessitate the hiring or employment of a service provider. The term "full-time" in Art. 157 refers to the kind of services that the nurse will render, not the manner of his or her engagement.

  2. The respondent doctor cannot be considered a legitimate independent contractor. To be considered as such, the contractor must carry on an independent business and undertake the contract work on his or her own account under his or her own responsibility, free from the control and direction of the employer or principal. Additionally, the contractor must have substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials necessary in the conduct of the business. The respondent doctor does not meet these criteria and therefore cannot be considered a legitimate independent contractor.

  3. The Court held that the respondent doctor is a legitimate independent contractor. The Court considered various factors such as the nature and extent of the work, the skill required, the term and duration of the relationship, and the control and supervision of the work. The Court found that the respondent doctor had substantial capital and investment, underwrote salaries and benefits of the staff, and had control over how the nurses and clinic staff performed their tasks and responsibilities.

  4. The Court also found that the petitioner did not exercise control and supervision over the work of the respondent doctor and the nurses. The Court explained that the various office directives issued by the petitioner were administrative in nature and related to safety and financial policies, and did not imply control over how the work was performed.

PRINCIPLES:

  • Art. 157 of the Labor Code does not require the engagement of full-time nurses as regular employees.

  • The term "full-time" in Art. 157 refers to the kind of services that the nurse will render, not the manner of his or her engagement.

  • The existence of an employment relationship is not determined solely by Art. 280 of the Labor Code, which merely distinguishes between regular and casual employees.

  • To be considered a legitimate independent contractor, the contractor must carry on an independent business and have substantial capital or investment.

  • The existence of an independent contractor relationship is determined by considering factors such as carrying on an independent business, the nature and extent of the work, the skill required, and the control and supervision of the work.

  • The existence of an employer-employee relationship is established by the presence of factors such as selection and engagement of the workers, power of dismissal, payment of wages, and the power to control the worker's conduct.

  • The provision of clinic premises and medical supplies by the employer does not necessarily prove that an independent contractor lacks substantial capital and investment.

  • The maintenance of a clinic and provision of medical services to employees may be required by law and may not be directly related to the employer's principal business.

  • The underwriting of salaries, benefits, and taxes by the independent contractor supports the existence of an employer-employee relationship.

  • The existence of a document that governs the employment relationship and is acknowledged by the workers supports the existence of an independent contractor relationship.

  • Office directives issued by the employer may be administrative in nature and related to safety and financial policies, and do not necessarily imply control over how the work is performed.