G.R. No. 178827 , March 4, 2009
Jeromie D. Escasinas and Evan Rigor Singco, Petitioners, vs. Shangri-La’s Mactan Island Resort and Dr. Jessica J.R. Pepito, Respondents.

FACTS

Petitioners Jeromie D. Escasinas and Evan Rigor Singco, registered nurses, were engaged in 1999 and 1996, respectively, by respondent Dr. Jessica Joyce R. Pepito to work in her clinic at respondent Shangri-La’s Mactan Island Resort, where she was a retained physician. In late 2002, petitioners filed a complaint for regularization and various monetary claims against respondents before the NLRC, asserting they were regular employees of Shangri-La. Shangri-La contended petitioners were employees of Dr. Pepito, whom it retained via a Memorandum of Agreement pursuant to Article 157 of the Labor Code. Dr. Pepito claimed petitioners were already working for previous retained physicians and she maintained their services upon their request. The Labor Arbiter declared petitioners as regular employees of Shangri-La, finding their work necessary to the resort’s business, that they observed clinic hours for the resort’s guests and employees, and that the MOA was an insidious mechanism to circumvent tenurial security. On appeal, the NLRC reversed, finding no employer-employee relationship between petitioners and Shangri-La, holding that Article 157 does not require nurses to be employed and that the MOA showed Dr. Pepito was engaged on a retainer basis with the power to hire her own clinic personnel. The Court of Appeals affirmed the NLRC decision. Petitioners filed the present recourse, insisting Article 157 requires the hiring of a full-time registered nurse, that the MOA is void as contrary to public policy, and that Dr. Pepito is a labor-only contractor lacking a license, business permit, and substantial capital.

ISSUE

Whether an employer-employee relationship exists between petitioners (nurses) and Shangri-La, thereby entitling them to regularization and the attendant benefits.

RULING

No. The Supreme Court held that no employer-employee relationship exists between petitioners and Shangri-La. The Court ruled that Article 157 of the Labor Code, which mandates employers to furnish medical services, does not require the employer to hire or employ medical personnel directly; it only requires the employer to provide or make such services available. The term “full-time” in Article 157 refers to the kind of services rendered, not the manner of engagement, and this provision cannot be read alongside Article 280 to automatically vest an employer-employee relationship. Furthermore, the Court found that Dr. Pepito was a legitimate independent contractor, not a labor-only contractor, as she had substantial capital and investment in the form of clinic equipment and medicines, and she exercised control over the means and methods of the nurses’ work, including the power to hire and fire them. The MOA between Shangri-La and Dr. Pepito was valid. Therefore, petitioners are employees of Dr. Pepito, not regular employees of Shangri-La.