Manila Golf & Country Club, Inc. vs. Intermediate Appellate Court and Fermin Llamar

A golf caddy is not an employee of a golf club for purposes of compulsory Social Security coverage when the club's rules and regulations over caddies are designed to impose personal discipline and regulate conduct within the premises, not to direct or control the means and methods by which the caddy performs his work. The "control test" — whether the employer controls or has reserved the right to control the employee not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished — is decisive in determining the existence of an employer-employee relationship.

The Manila Golf & Country Club, Inc. is a domestic corporation operating a golf course whose members and guests are served by caddies. The Social Security Act, as amended, requires compulsory coverage of employees, and the Social Security Commission administers claims for coverage and benefits under that law. Seventeen persons styling themselves "Caddies of Manila Golf and Country Club-PTCCEA" filed a petition with the Social Security Commission for coverage and availment of benefits under the Social Security Act, PTCCEA being the acronym of the "Philippine Technical, Clerical, Commercial Employees Association," a labor organization with which the petitioners claimed to be affiliated. At about the same time, two other proceedings bearing on the same question of employer-employee relationship were filed or pending: a certification election case filed with the Labor Relations Division of the Ministry of Labor, and a compulsory arbitration case initiated before the Arbitration Branch of the Ministry of Labor.

The Manila Golf & Country Club, Inc. is a domestic corporation operating a golf course. Seventeen persons who styled themselves "Caddies of Manila Golf and Country Club-PTCCEA" filed a petition with the Social Security Commission for coverage and availment of benefits under the Social Security Act, alleging that although they were employees of the Club, the latter had not registered them as such with the SSS. The Club filed an answer praying for dismissal, alleging that the petitioners, caddies by occupation, were allowed into the Club premises to render services to the individual members and guests playing the Club's golf course and who themselves paid for such services; that as such caddies, the petitioners were not subject to the direction and control of the Club as regards the manner in which they performed their work; and hence, they were not the Club's employees.

At about the same time, two other proceedings bearing on the same question were filed or pending. A certification election case was filed with the Labor Relations Division of the Ministry of Labor by the PTCCEA on behalf of the same caddies, docketed as Case No. R4-LRDX-M-10-504-78, which was resolved in favor of the petitioners by Med-Arbiter Orlando S. Rojo, who was thereafter upheld by Director Carmelo S. Noriel. A compulsory arbitration case was also initiated before the Arbitration Branch of the Ministry of Labor by the same labor organization, docketed as NCR Case No. AB-4-1771-79, which was dismissed for lack of merit by Labor Arbiter Cornelio T. Linsangan, a decision later affirmed on appeal by the National Labor Relations Commission on the ground that there was no employer-employee relationship between the petitioning caddies and the respondent Club.

Subsequently, all but two of the seventeen petitioners of their own accord withdrew their claim for social security coverage. The case continued as regards the two holdouts, Fermin Llamar and Raymundo Jomok. The Social Security Commission dismissed the petition for lack of merit, ruling that the caddy's fees were paid by the golf players themselves and not by the Club. The Commission found that petitioner Fermin Llamar admitted that a caddy works on his own in accordance with the rules and regulations, and petitioner Jomok could not state any policy of the respondent that directs the manner of caddying. While the Club promulgated rules and regulations on the assignment, deportment and conduct of caddies, the Commission found these were designed to impose personal discipline among the caddies but not to direct or conduct their actual work. A golf player was at liberty to choose a caddy of his preference regardless of the Club's group rotation system and had the discretion on whether or not to pay a caddy. The Commission also noted that the Club had reported for SS coverage its bat unloader, helper, ground men, house and administrative personnel, and that the ID cards issued to the caddies merely intended to identify the holders as accredited caddies of the Club and privileged to ply their trade or occupation within its premises.

From this Resolution, appeal was taken to the Intermediate Appellate Court by the union representing Llamar and Jomok. After the appeal was docketed, Raymundo Jomok's appeal was dismissed at his instance, leaving Fermin Llamar the lone appellant. The IAC reversed the SSC decision and declared Fermin Llamar an employee of the Club, ordering that he be reported as such for social security coverage and paid any corresponding benefits. The IAC drew basis for the reversal from the "control test" established in Investment Planning Corporation of the Philippines vs. Social Security System, finding the Club's control over the caddies encompassed: (a) the promulgation of no less than twenty-four rules and regulations about just about every aspect of the conduct that the caddy must observe when serving as such, any violation of which could subject him to disciplinary action, which may include suspending or cutting off his access to the club premises; (b) the devising and enforcement of a group rotation system whereby a caddy is assigned a number which designates his turn to serve a player; and (c) the Club's "suggesting" the rate of fees payable to the caddies. Deemed of little or no moment by the Appellate Court was the fact that the caddies were paid by the players, not by the Club, that they observed no definite working hours and earned no fixed income.

• Absence of Employer-Employee Relationship: Petitioner argued that the caddies were not subject to the direction and control of the Club as regards the manner in which they performed their work, and hence, they were not the Club's employees.
• Payment of Wages by Players: Petitioner argued that the caddies' fees were paid by the golf players themselves and not by the Club, and that a golf player was at liberty to choose a caddy of his preference regardless of the Club's group rotation system and had the discretion on whether or not to pay a caddy.
• Res Judicata: Petitioner contended that the decision of the Med-Arbiter in the certification case had never become final, being in fact the subject of three pending and unresolved motions for reconsideration, as well as of a later motion for early resolution.
• Compulsory Arbitration Case as Decisive: Petitioner asserted, without dispute from the private respondent, that the issue of employer-employee relationship was squarely raised and litigated in the compulsory arbitration case (NCR Case No. AB-4-1771-79), resulting in a ruling that such relationship did not exist, which ruling was affirmed by the NLRC.
• Lack of Compulsion: Petitioner claimed that it has no means of compelling the presence of a caddy, that a caddy is not required to exercise his occupation in the premises of petitioner, and that he may work with any other golf club or seek employment as a caddy or otherwise with any entity or individual without restriction by petitioner.

• Res Judicata: Private respondent contended that the decision of the Med-Arbiter in the certification election case had been appealed to and been affirmed by the Director of the BLR, and that a certification election had in fact been held, which resulted in the PTCCEA being recognized as the sole bargaining agent of the caddies of the Manila Golf and Country Club with respect to wages, hours of work, terms of employment, etc.
• Control Test: Private respondent argued that the Club's control over the caddies encompassed the promulgation of no less than twenty-four rules and regulations about just about every aspect of the conduct that the caddy must observe, the devising and enforcement of a group rotation system, and the Club's "suggesting" the rate of fees payable to the caddies, which satisfied the "control test."

• Res Judicata: Whether the decision in the certification election case operates as res judicata to foreclose further dispute on the existence of an employer-employee relationship between the Club and the caddies.
• Employer-Employee Relationship: Whether Fermin Llamar, a golf caddy, is an employee of the Manila Golf & Country Club for purposes of compulsory coverage under the Social Security System.

• Res Judicata: No. The decision in a certification case, by the very nature of that proceeding, is not such as to foreclose all further dispute between the parties as to the existence, or non-existence, of employer-employee relationship between them, because a certification proceeding is not a "litigation" but a mere investigation of a non-adversary, fact-finding character.
• Employer-Employee Relationship: No. Fermin Llamar is not an employee of the Manila Golf & Country Club, and the Club is under no obligation to report him for compulsory coverage to the Social Security System, because the "control test" was not satisfied — the Club's regulations did not control the means and methods by which the caddy performed his work.

• Res Judicata: The Court held that for res judicata, or the principle of bar by prior judgment, to apply, the following essential requisites must concur: (1) there must be a final judgment or order; (2) said judgment or order must be on the merits; (3) the court rendering the same must have jurisdiction over the subject matter and the parties; and (4) there must be between the two cases identity of parties, identity of subject matter and identity of cause of action. Clearly implicit in these requisites is that the action or proceedings in which is issued the "prior judgment" that would operate in bar of a subsequent action between the same parties for the same cause, be adversarial, or contentious. A certification case is not such a proceeding, as the Court already ruled in LVN Pictures, Inc. vs. Phil. Musicians Guild and CIR: "A certification proceedings is not a 'litigation' in the sense in which the term is commonly understood, but mere investigation of a non-adversary, fact-finding character, in which the investigating agency plays the part of a disinterested investigator seeking merely to ascertain the desires of the employees as to the matter of their representation." The Court noted that if any ruling or judgment can be said to operate as res judicata on the contested issue, it would logically be that rendered in the compulsory arbitration case, where the issue was squarely raised and litigated, resulting in a ruling that such relationship did not exist, affirmed by the NLRC. The Court was not inclined to allow private respondent the benefit of any doubt as to which of the conflicting rulings should be accorded primacy, given the fact that it was he who actively sought them simultaneously from separate fora. Accordingly, the IAC was not to be faulted for ignoring private respondent's invocation of res judicata; on the contrary, it acted correctly in doing so.

• Employer-Employee Relationship: The Court disagreed with the IAC's holding that the facts necessarily or logically point to an employer-employee relationship. The Court reasoned that as long as the list of regulations detailing the various matters of conduct, dress, language, etc. covered by the petitioner's regulations, it does not so circumscribe the actions or judgment of the caddies concerned as to leave them little or no freedom of choice whatsoever in the manner of carrying out their services. In the very nature of things, caddies must submit to some supervision of their conduct while enjoying the privilege of pursuing their occupation within the premises and grounds of whatever club they do their work in. For all that is made to appear, they work for the club to which they attach themselves on sufferance but, on the other hand, also without having to observe any working hours, free to leave anytime they please, to stay away for as long as they like. It is not pretended that if found remiss in the observance of said rules, any discipline may be meted them beyond barring them from the premises which, it may be supposed, the Club may do in any case even absent any breach of the rules, and without violating any right to work on their part. All these considerations clash frontally with the concept of employment. As to the Club's "suggesting" the rate of fees payable by the players to the caddies, the Court found the intendment of such fact to be to the contrary, showing that the Club has not the measure of control over the incidents of the caddies' work and compensation that an employer would possess. The Court agreed with petitioner that the group rotation system is less a measure of employer control than an assurance that the work is fairly distributed, a caddy who is absent when his turn number is called simply losing his turn to serve and being assigned instead the last number for the day. By and large, there appears nothing in the record to refute the petitioner's claim that it has no means of compelling the presence of a caddy, that a caddy is not required to exercise his occupation in the premises of petitioner, and that he may work with any other golf club or seek employment as a caddy or otherwise with any entity or individual without restriction by petitioner.

• Control Test — The decisive test for determining the existence of an employer-employee relationship is "whether the employer controls or has reserved the right to control the employee not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished." In this case, the Court applied the control test and found that the Club's regulations over caddies concerned personal discipline and conduct within the premises, not the means and methods of performing caddying work, and therefore the test was not satisfied.

• Res Judicata in Certification Cases — A certification proceeding is not a "litigation" in the sense in which the term is commonly understood, but a mere investigation of a non-adversary, fact-finding character, in which the investigating agency plays the part of a disinterested investigator seeking merely to ascertain the desires of the employees as to the matter of their representation. Therefore, the decision in a certification case, by the very nature of that proceeding, is not such as to foreclose all further dispute between the parties as to the existence, or non-existence, of employer-employee relationship between them.

• Requisites of Res Judicata — For res judicata, or the principle of bar by prior judgment, to apply, the following essential requisites must concur: (1) there must be a final judgment or order; (2) said judgment or order must be on the merits; (3) the court rendering the same must have jurisdiction over the subject matter and the parties; and (4) there must be between the two cases identity of parties, identity of subject matter and identity of cause of action. Implicit in these requisites is that the action or proceedings in which is issued the "prior judgment" that would operate in bar of a subsequent action between the same parties for the same cause, be adversarial, or contentious.

• "As long as it is, the list made in the appealed decision detailing the various matters of conduct, dress, language, etc. covered by the petitioner's regulations, does not, in the mind of the Court, so circumscribe the actions or judgment of the caddies concerned as to leave them little or no freedom of choice whatsoever in the manner of carrying out their services." — This passage articulates the Court's application of the control test, holding that the Club's regulations did not control the means and methods of the caddies' work.

• "In the very nature of things, caddies must submit to some supervision of their conduct while enjoying the privilege of pursuing their occupation within the premises and grounds of whatever club they do their work in. For all that is made to appear, they work for the club to which they attach themselves on sufference but, on the other hand, also without having to observe any working hours, free to leave anytime they please, to stay away for as long they like." — This passage explains why the Court found the facts inconsistent with the concept of employment, emphasizing the lack of fixed working hours and freedom to leave.

• "A certification proceedings is not a 'litigation' in the sense in which the term is commonly understood, but mere investigation of a non-adversary, fact-finding character, in which the investigating agency plays the part of a disinterested investigator seeking merely to ascertain the desires of the employees as to the matter of their representation." — This passage, quoting the Court's earlier ruling in LVN Pictures, Inc. vs. Phil. Musicians Guild and CIR, establishes the doctrine that certification cases cannot operate as res judicata on the issue of employer-employee relationship.

• Investment Planning Corporation of the Philippines vs. Social Security System, 21 SCRA 925 — Cited as the source of the "control test" formulation used by the IAC and considered by the Court in determining whether an employer-employee relationship existed.

• LVN Pictures, Inc. vs. Phil. Musicians Guild and CIR, 110 Phil. 725 — Cited as controlling authority for the proposition that a certification proceeding is not a litigation but a mere investigation of a non-adversary, fact-finding character, and therefore cannot operate as res judicata.

• Valencia vs. RTC of Quezon City, Br. 90, 184 SCRA 80 — Cited for the requisites of res judicata, along with Yusingco, et al. vs. Ong Hing Lian, 42 SCRA 589, and Daeng vs. IAC, et al., 154 SCRA 159.

• Indian Hill Club vs. Industrial Commission, et al., 140 NE 871, 309 III. 271 — Cited by the IAC with approval for the proposition that "whether the club paid the caddies and afterward collected in the first instance, the caddies were still employees of the club," though the Court noted the case had a slightly different factual cast.

• Social Security Act, as amended — The statute under which the caddies sought compulsory coverage and availment of benefits; the Court determined that the private respondent was not an employee of the Club and therefore the Club was under no obligation to report him for compulsory coverage to the Social Security System.

Regalado and Mendoza, JJ., concurred. Padilla, J., was on leave. Puno, J., took no part.