Case Digest (G.R. No. 266552)
Facts:
In Rico B. Escauriaga, Cristine Dela Cruz, Rene B. Severino, Ralph Errol Mercado, and Geraldine Guevarra v. Fitness First Philippines, Inc. and Liberty Cruz (G.R. No. 266552, January 22, 2024), petitioners were first engaged by Fitness First as fitness instructors between 2003 and 2012, receiving fixed monthly salaries, 13th-month pay, and commissions. On various dates from 2007 to 2013, they were reclassified as freelance personal trainers under one-year renewable contracts. Under these agreements, they lost holiday, overtime, and rest-day pay, were required to guarantee a minimum of 90 training hours per month and ₱80,000 in sales, and faced sanctions—including commission deductions and termination—for failure to meet quotas. In March 2017 they were asked to register their freelance “business” with the BIR under threat of commission cuts and non-renewal; believing themselves regular employees, they refused. On June 9, 2017, they filed a complaint for illegal dismissal, regularCase Digest (G.R. No. 266552)
Facts:
- Parties and Procedural History
- Petitioners: Rico B. Escauriaga, Cristine Dela Cruz, Rene B. Severino, Ralph Errol Mercado, and Geraldine Guevarra.
- Respondents: Fitness First Philippines, Inc. (“Fitness First”) and its Senior Human Resource Manager Liberty Cruz.
- Lower Proceedings:
- Labor Arbiter Decision (April 5, 2018) – dismissed petitioners’ illegal dismissal and regularization claims, finding them independent contractors.
- NLRC Decision (December 28, 2018) – affirmed the Labor Arbiter; Resolution (February 28, 2019) – denied reconsideration; Entry of Judgment (May 23, 2019) – became final.
- Petition for Relief from Judgment (August 27, 2019) – denied by the NLRC (October 31, 2019).
- Court of Appeals Decision (August 18, 2022) and Resolution (March 24, 2023) – affirmed NLRC’s rulings both procedurally and substantively.
- Employment Background and Dispute
- Initial Employment (2003–2012): Petitioners engaged as fitness instructors/trainers with fixed monthly salary, 13th-month pay, commissions, and standard employee benefits.
- Reclassification as Freelance Personal Trainers:
- Effective dates varied per petitioner (e.g., Escauriaga – May 1, 2012; Dela Cruz – May 1, 2012).
- Compensation shifted to commission basis; 13th-month pay, overtime, holiday, and rest-day pay discontinued.
- Quotas: minimum 90 training hours and agreed sales per month; failure led to salary deductions, warnings, suspension, or termination.
- BIR Regulation Compliance: On March 20, 2017 respondents required petitioners to register freelance businesses under BIR RR No. 4-2014, offering a 3% commission increase; non-compliance resulted in 20% commission cut and possible termination. Petitioners believed they remained regular employees and did not register.
- Freelance Personal Trainer Agreement
- Obligations:
- Guarantee monthly sales and training hours (80–90 hours, depending on trainer grade).
- Attend company‐mandated trainings; observe company rules and house policies; accept assignment to any club.
- Exclusive provision of training services using Fitness First equipment; collect all fees through the company.
- Compensation: Commission net of VAT per company schedule; company reserved right to unilaterally revise commission rates and performance standards without notice.
- Termination: Either party could terminate with or without cause by written notice; company could terminate for unfitness, just cause, or failure to meet quotas for three months.
- Lower Rulings on Employment Status
- Labor Arbiter: Found petitioners independent contractors under power-of-control test; dismissed all claims.
- NLRC: Affirmed lack of employer-employee relationship; denied petitioners’ prohibited Petition for Relief from Judgment.
- Court of Appeals: Upheld procedural rulings (prohibition against Petition for Relief from Judgment); on the merits, affirmed independent contractor status, rejecting labor-only contractor characterization.
Issues:
- Procedural Issues
- Whether petitioners’ failure to have all counsels sign and inclusion of NLRC as respondent warranted dismissal of the petition for review.
- Whether immutability of judgment bars relief given alleged lack of service of the NLRC Resolution.
- Substantive Issue
- Whether petitioners were independent contractors or regular employees of Fitness First.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)