SOCIAL SECURITY SYSTEM, PETITIONER, VS. THE HONORABLE COURT OF APPEALS, MANILA JOCKEY CLUB, INC., PHILIPPINE RACING CLUB, INC., RESPONDENTS.

A recent decision, Investment Planning Corporation v. Social
Security System,^[1] is decisive of this controversy, the
issue involved being whether or not jockeys connected with respondents Manila
Jockey Club, Inc. and Philippine Racing Club, Inc. may be considered as their
employees and, therefore, fall within the coverage of the Social Security
Act.  Respondent Court of Appeals, in its
decision of February 4, 1966, set aside a resolution of peti­tioner Social
Security System of July 3, 1963, which held that for the purposes of coverage
under the Social Security Act, there is an employer-employee relationship
between the two above-named re­spondents on the one hand and the jockeys on the
other.  The matter was elevated to the
Court of Appeals with the result aforesaid, the dispositive
portion of its decision of February 4, 1966 stating:  “Let a new resolution be entered
declaring [that] jockeys are not employees of [Manila Jockey Club, Inc.] and
[Philippine Racing Club, Inc.] * * * within the purview of the Social Security
Act.” Hence this appeal by certiorari from such Court of Appeals decision,
the Social Security System being the peti­tioner.

We have to affirm in the light of the facts as found by the Court
of Appeals under the control test set forth in authoritative Investment
Planning Corporation decision.

The facts as found by the Court of Appeals are as follows:  “1. That there are only two (2) racing
entities in the Philippines, namely, the [Manila Jockey Club, Inc.] and the
[Philippine Racing Club, Inc.], whose clubs and personnel are expressly
prohibited by the [Games and Amusements Board] Rules from owning a race horse *
*; 2. That about 10 days before a scheduled race, the clubs receive inscription
of horses, accomplished on entry forms, whereon the names of the horses and
their owners appear, duly certified by the owners * * *.  Thereafter, the handicapper prepares a list
of the entries to enable horse owners to determine whether to join the
scheduled race.  If they decide to join,
they file with the club a declaration therefor * * *
stating the name of the horse and of the jockey, together with the jockey’s
signature thereon to show his conformity thereto.  Upon receipt of said declarations, the clubs
screen the same in order that disqualified jockeys or disqualified race mounts
may not participate.  Once the screening
is completed, the program on the race is printed and released to the public,
after which no changes can be made except where the entry is incapacitated by
reason of sickness or accident; 3. That the maximum number of participants
allowed in a racing event, are 14 qualified horses mounted by the same number
of qualified jockeys; 4. That from the total bets in a single race, the law
allots 1/2% to the [Games and Amusements Board], 6-1/2% to the club, 5-1/2% as
prize money, and the remainder for dividends to bettors.  The prize money must, in turn, be shared by
the horse owner of the winning mounts with his jockey and trainers, who get 20%
and 10% each of said prize money. 
However, the jockeys and trainees of mounts who do not place first,
second or third, do not receive anything from the prize money; 5. That the
stewards are, under the law, officials of the club which pays their per diems
but licensed by the [Games and Amusements Board] – whose duty it is to
supervise the conduct of the races and enforce [its] rules as well as to
penalize mounts and jockey for infractions relative thereto; 6. That for a
person to ride as jockey, he must first secure a license from the [Games and
Amusements Board].  And upon payment to
the club of the nominal fee of P6.00, the jockey may use the race tracks for
training, may participate in racing meets held therein and/or to sit as
spectator in the grandstand A of the hippo­drome; and 7. That the clubs have
employees, such as janitors, club guards, and the like, who maintain and
operate the offices and the race tracks, which personnel are already under SSS
coverage.”^[2]

In the decision now sought to be reviewed, reference is made to
the statutory definition of the term “employee” under the Social
Security Act.^[3]
Thus:  “Employee – Any person who
performs services for an ’employer’ in which either or both mental and physical
efforts are used and who received compensation for such services, where there
is an employer-employee relationship.”^[4]

Why jockeys do not fall under the facts obtaining within such a
category was explained in the Court of Appeals decision in this wise:  “The evidence invariably shows that the
selection and employ­ment of the jockey is made by the race horse owner whose
horse the jockey will ride, not by the race club.  Upon the other hand, the jockey decides for
himself the horse he is to mount.  This
was testified to by Samuel Sharuff, a race horse
owner, corroborated by Exhibits B to B-5 consisting of declaration forms which
race horse owners file with the race club before the scheduled race meet,
stating inter alia the name of the race
horse being entered in the race and the name of the jockey chosen to ride the
mount, which declaration must bear the signature of the jockey concerned as
evidence of his conformity thereto, in accordance with the [Games and
Amusements Board] rules * * *.”^[5]
It went on to state:  “Thus, the
matter as to which jockey shall ride which horse, is mutually agreed upon by and
between the race horse owner and the jockey. 
Once such agreement is reached, the race club cannot compel the race
horse owner to accept another jockey or the jockey to ride another horse.  Nor can the race club prevent the jockey from
riding the horse, which the jockey had previously agreed with the race horse
owner to ride.”^[6]

After citing the pertinent statutory provision as well as the
rules of the Games and Amusements Board,^[7]
the Court of Appeals concluded, as noted, that there was no employer-employee
relationship, especially so in view of the undeniable fact that no control was
exercised by respondents over the jockeys. 
Such control is exercised by racing stewards who, as noted, are en­trusted
with the duty to supervise the conduct of the races and en­force the Games and
Amusements Board rules.  As noted in the
decision:  “The stewards admittedly
receive per diems from the race clubs. 
However, the acts and decisions of race stewards, when exercising their
office as such, are not under the control of the race clubs.  The powers and authority of the stewards
proceed from the law aforecited, not from the club
sponsoring the race meet.  Such powers
and authority of the race stewards are in turn defined and delimited by the
same law and by the [Games and Amusements Board] rules.  Consequently, the acts and decisions of the
stewards when acting as such, are independent of and not subject to the will of
anybody, save the [Games and Amusements Board]. 
And the jockeys, the race horse owners as well as the racing clubs must
abide by the decision of the stewards relative to the conduct of the race and
the enforcement of [such] rules.”^[8]

The absence of control that may be exercised on the part of
respondents over the jockeys negates the existence of an employer-employee
relationship.  That is the principle
adopted by us in the leading Investment Planning Corporation decision.  Thus: 
“The specific question of when there is ’employer-employee
relationship’ for purposes of the Social Security Act has not yet been settled
in this jurisdiction by any decision of this Court.  But in other con­nections wherein the term is
used the test that has been generally applied is the so-called control test,
that 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.”^[9]

As was noted further by Justice Makalintal,
who penned the decision:  “The logic
of the situation indeed dictates that where the element of control is absent;
where a person who works for another does so more or less at his own pleasure
and is not subject to definite hours or conditions of work, and in turn is
compensated according to the result of his efforts and not the amount thereof, we should not
find the relationship of employer and employee exists.”^[10]

Petitioner Social Security System would have us reverse the
decision of the Court of Appeals with the plea that instead of the control test
the “economic facts of the relation” test should be the criterion as
to whether or not the matter falls within the coverage of the Social Security
Act.  As set forth in its brief:  “The Supreme Court of the United States
in the case of National Labor Relations Board v. Hearst Publications Inc.,
322 U.S. 111, 88 L. Ed. 1170, considered the aforementioned ‘economic facts of
the relation’ test as more reliable, thus: 
‘In short when the particular situation of employment combines those
characteristics so that the economic facts of the relation make more
nearly one of the employment than of independent business enterprise with
respect to the ends sought to be accomplished by the legislation, those
characteristics may outweigh technical legal classification for purposes
unrelated to the statute’s objectives and bring the relation within its
position.'”^[11]

We are unable to accord acceptance to such a plea in view of the
controlling Investment Planning Corporation decision.  In fairness to petitioner Social Security
System, it must be stated that our decision was rendered on November 18, 1967 but its brief was
filed as far back as February 8 of the same year.  Our decision noted United v. Silk,^[12]
quoted with approval in a case decided the same year, Bartels v. Birmingham.^[13]
Then came this citation from Bartels: 
“‘In United States v. Silk, No. 312, 331 US 704, ante, 1957, 67 S
Ct 1463, * * *, we held that the relationship of employer-employee, which
determines the liability for employment taxes under the Social Security Act was
not to be determined solely by the idea of control which an alleged employer
may or could exercise over the details of the service rendered to his business
by the worker or workers.  Obviously
control is characteristically associated with the employer-employee relationship,
but in the application of social legislation employees are those who as a
matter of economic reality are dependent upon the business to which they render
service.'”^[14] After which the Investment Planning
Corporation opinion goes on to state: 
“However, the ‘economic-reality’ test was subsequently abandoned as
not reflective of the intention of Congress in the enactment of the original
Security Act of 1935.  The change was
accomplished by means of an amendatory Act passed in 1948, which was construed
and applied in later cases.”^[15]

Petitioner Social
Security System is not in agreement with such a view.  For it, as noted, the
“economic-reality” or the “economic facts of relation”
test, the distinction being simply a matter of terminology, calls far acceptance.  If it were a new question, perhaps, such a plea might be impressed with a greater persuasive force.

Considering, however, that such an approach was suggested and
rejected in the Investment Planning Corporation decision, we cannot yield
assent.  We adhere to the Investment
Planning Corporation doctrine.  It bears
reiteration.  Thus:  “Considering the similarity between the
definition of ’employee’ in the Federal Social Security Act (U.S.) as amended and its definitions in our
own Social Security Act, and considering further that the local statute is admittedly patterned after that of
the United States, the decisions of American courts on the matter before us may
well be accorded persuasive force.  The
logic of the situation indeed dictates that where the element of control is
absent; where a person who works for another does so more or less at his own
pleasure and is not subject to definite hours or conditions of work, and in
turn is compensated according to the result of his efforts and not the amount thereof,
we should not find that the relationship of employer and employee exists.”^[16]

The matter being thus
foreclosed, there being a reaffirmance of the
authoritative holding in the Investment Planning Corporation decision, there is
nothing that calls for a reversal of the Court of Appeals decision, now sought
to be reviewed.

WHEREFORE, the decision of the Fourth Division of the
Court of Appeals of February 4, 1966
is affirmed.  Without pronouncement as to costs.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, and
Teehankee, JJ., concur.

Barredo, J., did not take part.

^[1]
21 SCRA 924 (1967).

^[2]
Decision, pp. 2-4.

^[3]
Republic Act No. 1161 as amended by Republic Act No. 2868 (1960).

^[4]
Decision, p. 7.

^[5]
Ibid, pp. 8-9.

^[6]
Ibid, pp. 9-10.

^[7]
Republic Act No. 309 as amended by Republic Act No. 1938 (1957).

^[8]
Ibid, pp. 13–14.

^[9]
Investment Planning Corp. v. Social Security System, 21 SCRA 924,
928-929 (1967).

^[10]
Ibid, p. 932.

^[11]
Brief for Petitioner, p. 25.

^[12]
331 US 704 (1947).

^[13]
332 US 126 (1947).

^[14]
Investment Planning Corp. v. Social Security System, 21 SCRA 924,
929-930 (1967).

^[15]
Ibid, p. 930.

^[16]
Ibid, p. 932.