AGAPITA PAJARILLO, ET AL., PETITIONERS AND APPELLANTS, VS. SOCIAL SECURITY SYSTEM, RESPONDENT AND APPELLEE.

This is an appeal by Agapita Pajarillo, et al., from the resolution
of the Social Security Commission, denying their petition to be
exempted from coverage of the Social Security System.

There is no controversy as to the facts of this case. Appellants are
owners of fishing boats being used for fishing at sea, namely:

Owner	Name of Vessel
Agapita Pajarillo	Bagong Kalayaan
Basilio Medina	Stella Maris
Rosario Relloso	Villa Florida
Teofila Campana	Salenian
Melicia Totanes	Nazareno
Melicia Totanes	San Pedro
Ireneo Racelis	Ricardo
Salvador Boral	Villa Rosario
Cesar King	Felipa
Ramon King	Tacia
Jaime King	Aday
Amelia Reyes	Queen Mary
Amelia Reyes	Nancy
Teofilo Nasis	Teresita
Rosario Reyes	Charing Uno
Rosario Reyes	Charing Dos
Aurora Sales	Aurora

As such property-owners, they enter into agreements ^[1]
with the so-called patrons or pilots, whereby the latter take charge of
appellants’ fishing vessels, equipment, and gear used for fishing. Once
entrusted with the equipment, the pilot “hires” the crew to man the
boat and secures their provisions. This is usually financed from loans
obtained in the form of advances from fish dealers, and payable in kind
when the boat returns with catch from the fishing trip. (pp. 23-24,
t.s.n.).

These fishing trips are not regular. The fishermen go out to the sea
only when there is no moon or it is not yet very bright. For this
reason, even in months of fine weather, the most that a boat can make
are 18 fishing days every month. These men have no regular income. If
the trip yields a catch, the proceeds thereof are divided into three
parts: one part goes to the owner of the boat and equipment; one part
is set aside to cover expenses like crude oil and for maintenance of
the boat, and the other one-third is divided among the men, with the
pilot getting 3 times the share of a crew-member, and the “machinist”,
who tends or operates the engine of the motorized boat, receiving twice
the share of a crew-member. (pp.9, 23, t.s.n.).

The men (usually 12 for every vessel, including the pilot) are under
no obligation to stay in one outfit. Sometimes, they join as members of
the crew for one night only; sometimes two, or three days. Then, they
leave and join other outfits. (pp. 18-19, t.s.n.). Even the pilot
himself is not bound to retain his charge for any definite duration. He
can return the boat to its owner anytime, if he does not want to manage
it anymore. (p. 11, t.s.n.). The vessel-owners, appellants in the
present case, required to register as employers with the Social
Security System, filed a joint petition with the Social Security
Commission, claiming that there exists no employer-employee
relationship between them and the crew of their fishing vessels, and
praying that they be exempted from the compulsory coverage of the law.
After hearing, their petition was denied, the Commission holding that
while the services of the crew-members are engaged by the pilots, the
latter are mere employees or agents of the boat-owners. Thus, it is
contended, a boat-owner can abolish the employment of the crew-members
by withdrawing from the pilot the authority to take charge of the
vessel. Appellants, consequently, were directed to report their
coverage and that of their respective pilots and crew-members to the
Commission and to pay the prescribed premiums pursuant to Sections 18,
19, and 20 of the Republic Act 1161, as amended. The boat-owners filed
the present appeal.

The only issue raised before the Commission and presented in this
appeal is, as stated by the Commission itself, “whether under the facts
set forth above, there exists an employer-employee relationship between
the petitioners and the crew-members of their respective fishing boats
within the meaning of Republic Act 1161, as amended.”

Under the law, an employer is a “person, natural or
juridical, domestic or foreign, who carries on in the Philippines any
trade, business, industry, undertaking, or activity of any kind and
uses the services of another person who is under his orders as regards
the employment.”^[2] In the
case at bar, the pilots are not under the orders of the boat-owners as
regards their employment. They go out to sea not upon direction of the
boat-owners, but upon their own volition as to when, how long and where
to go fishing. Much less do the boat-owners in any way control the
crew-members with whom the former have no relation whatsoever. These
crew-members simply join every trip for which the pilots allow them,
without any reference to the owners of the vessel.

On the other hand, an employee is defined as a “person who performs services for an ’employer’ in which either or both mental and physical efforts are used and who receives compensation for such services, where there is an employer–employee relationship.”^[3]
In the present case, neither the pilots nor the crew-members receive
compensation from the boat-owners. They only share in their own catch
produced by their own efforts. There is no showing that outside of
their one-third share, the boat-owners have anything to do with the
distribution of the rest of the catch among the pilots and the
crew-members. The latter perform no service for the boat-owners, but
mainly for their own benefit.

In the undertaking in question, the boat-owners obviously are not
responsible for the wage, salary, or fee of the pilot and crew-members.
Their sole participation in the venture is the furnishing or delivery
of the equipment used for fishing, after which, they merely wait for
the boat’s return and receive their share in the catch, if there is
any. For his part, a person who joins the outfit is entitled to a share
or participation in the fruit of the fishing trip. If it gives no
return, the men get nothing. It appears to us, therefore, that the
undertaking is in the nature of a joint venture, with the boat-owner
supplying the boat and its equipments, and the pilot and crew-members
contributing the necessary labor, and the parties getting specific
shares for their respective contributions.

But, even assuming arguendo that the pilot and crew-members
may be treated as employees of the boat-owner, they cannot also be made
subject to compulsory coverage under the Social Security Act. As
previously stated, the men are under no obligation to remain in the
outfit for any definite period. Thus, one can be the crew-member of an
outfit for one day and be the member of the crew of another vessel the
next day. Also, a fishing boat has no regular schedule of fishing
trips. It all depends on the weather and other natural conditions, and
the volition of the pilots and crew-men themselves. And, even when a
fishing trip is completed, it is no assurance of income for the
fishermen and the boat-owner as well. Clearly, the services rendered by
the fishermen are no different from the agricultural labor performed by
a share or leasehold tenant or worker, which is specifically excluded
from the definition of “employment”, ^[4] and exempted from the coverage of the Social Security Act.

Add to this the extreme difficulty, if not impossibility, of determining the monthly wage or earning of these fishermen for the purpose of fixing the amount of their and the supposed employer’s contributions,^[5]
and there is every reason to exempt the parties to this kind of
undertaking from compulsory registration with the Social Security
System.

In view of the foregoing considerations, the resolution of the
Social Security Commission appealed from is hereby set aside, and
petitioners-appellants are declared exempted from compulsory coverage
of the Social Security law. No costs.

SO ORDERED.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, and Ruiz Castro, JJ., concur.
Regala, J., on leave, no part.

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^[1] All agreements entered into in connection with this occupation are not in writing.

^[2] Sec. 8(c), Rep. Act 1161.

^[3] Sec. 8(d), Ibid., as amended by Rep. Act 2658.

^[4] “SEC. 8. Terms defined.— * * *.”

* * * * * *

“(j) Employment. – Any service performed by an employee for his employer except —

“(1) Agricultural labor when performed by a share or leasehold
tenant or worker who is not paid any regular daily wage or base pay and
who does not work for an uninterrupted period of at least six months in
a year; * * *.” (Rep. Act 1161, as amended by Rep. Act 2658).

^[5] See Secs. 18 and 19, Ibid.