Title
Manila Golf and Country Club, Inc. vs. Intermediate Appellate Court
Case
G.R. No. 64948
Decision Date
Sep 27, 1994
Caddies at Manila Golf & Country Club sought SSS coverage, claiming employee status. SC ruled no employer-employee relationship, citing lack of control, direct payment, and work freedom.
caddies
employees
social security coverage
A

Case Summary (G.R. No. 64948)

Procedural Background — Three Parallel Proceedings

Three contemporaneous but distinct proceedings raised the central question whether caddies rendering services to members and guests on the Club’s premises were employees of the Club and therefore subject to mandatory Social Security coverage: (1) an SSC petition (SSC Case No. 5443) filed by seventeen individuals styled “Caddies of Manila Golf and Country Club–PTCCEA” seeking SSS coverage; (2) a certification election case filed by PTCCEA with the Labor Relations Division (R4-LRD-M-10-504-78), in which a Med-Arbiter and subsequently Director Carmelo S. Noriel ruled in favor of the petitioning caddies and ordered a certification election; and (3) a compulsory arbitration case before the Arbitration Branch (NCR Case No. AB-4-1771-79) which was dismissed by the Labor Arbiter and affirmed by the NLRC on the ground that no employer-employee relationship existed.

SSC Proceedings and the Commission’s Rationale

In the SSC proceedings the Club answered that the caddies were independent in rendering services to individual players who themselves paid the caddies; the Club asserted it neither paid nor directly controlled the manner of the caddies’ work. Fifteen of the original seventeen petitioners withdrew their claims, leaving only Llamar and Jomok. The SSC dismissed the remaining petitioners for lack of merit, emphasizing that (a) caddy fees were paid by players, not by the Club; (b) caddies worked according to their own choice and were not subject to the Club’s supervision as to how they performed their tasks; (c) the Club’s rules and regulations were disciplinary and identificatory in nature (e.g., issuance of ID cards) but did not amount to the kind of direction and control characteristic of an employment relationship; and (d) the absence of the two essential elements of employment—payment of wages by the alleged employer and control or supervision by the alleged employer—supported denial of mandatory SSS coverage. The SSC relied on the established “control test” in Philippine law for determining employment.

Intermediate Appellate Court Decision and Its Basis

On appeal the Intermediate Appellate Court (IAC) reversed the SSC, declared Fermin Llamar an employee of the Club, and ordered the Club to report him for SSS coverage and pay corresponding benefits. The IAC based reversal primarily on a finding that the Club exercised sufficient control over the caddies as measured by the “control test.” The IAC enumerated several indicia of control: (a) promulgation and enforcement of approximately twenty-four detailed rules and regulations governing caddies’ conduct and deportment; (b) a group rotation system assigning turn numbers to caddies; and (c) the Club’s “suggestion” of caddy fee rates. The IAC discounted the fact that players paid the caddies directly and that caddies had no fixed hours or guaranteed income, and it relied on prior authority including Investment Planning Corporation v. SSS and an American decision (Indian Hill Club v. Industrial Commission) to support the proposition that the mode of payment or collection did not preclude an employment relationship.

Issues Presented to the Supreme Court

The Supreme Court considered (a) whether caddies performing services for members and guests on the Club’s premises were employees of the Club and thus within compulsory SSS coverage; (b) whether the SSC decision was improperly adjudicating an issue that should await resolution by the labor authorities (certificate election or labor arbiter); and (c) whether any prior administrative determinations—especially the certification ruling—operated as res judicata to bar further litigation on the employer-employee issue. The Court also addressed the propriety of the IAC’s application of the control test to the specific facts.

Analysis on Res Judicata and Certification Proceedings

The Court reiterated the essential requisites for res judicata: a final judgment or order; decision on the merits; jurisdiction over subject matter and parties; and identity of parties, subject matter, and cause of action. Implicit in these requisites is that the prior adjudication be adversarial and contested, affording the parties notice and opportunity to be heard. The Court observed that certification proceedings are investigative, non-adversarial, and fact-finding in character, and thus are not the kind of adversarial adjudication that ordinarily gives rise to res judicata on the contested issue of employer-employee status. Consequently, the Court held that the IAC did not err in disregarding the certification proceeding as a bar. The Court further noted that the compulsory arbitration proceeding, having been litigated adversarially and affirmed by the NLRC on the question that there was no employer-employee relationship, would logically be the ruling entitled to greater preclusive effect; but the record did not satisfactorily disclose all pending motions challenging the certification decision, and the Court declined to give the private respondent the benefit of any doubt given his pursuit of multiple fora.

Analysis on the Control Test and Employer-Employee Relationship

Applying the control test, the Court scrutinized whether the Club exercised control not only over the results of the caddies’ work but also over the means and methods by which they performed it. The Court found that the factual circumstances identified by the IAC did not establish the degree of control indicative of employment. Critical points in the Court’s reasoning included: (a) the caddies were paid directly by players and the Club merely collected or facilitated the process—this arrangement tended to show absence of wage payment by the Club; (b) the Club’s rules (dress, deportment, conduct) were normative and disciplinary but did not regulate the technical manner in which caddies performed their services; (c) caddies were free to come and go, had no definite working hours, could work elsewhere, and could absent themselves without compulsion or the imposition of employment-like sanctions beyond withdrawal of access to Club premises; (d) the group rotation system was a distribution mechanism aimed at fairness rather than a means of compelling service or controlling methods of work; and (e) the Club’s suggestion of customary fees indicated regulation of marketplace expectations rather than

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