G.R. No. 106231 November 16, 1994
HAWAIIAN-PHILIPPINE COMPANY, petitioner, vs. REYNALDO J. GULMATICO, Labor Arbiter, Regional Arbitration Branch No. VI, AND NATIONAL FEDERATION OF SUGAR WORKERS-FOOD AND GENERAL TRADES representing all the sugar farm workers of the HAWAIIAN PHILIPPINE MILLING DISTRICT, respondents.

FACTS

On July 4, 1989, respondent union, the National Federation of Sugar Workers-Food and General Trades (NFSW-FGT), filed a case (RAB VI Case No. 06-07-10256-89) against petitioner Hawaiian-Philippine Company for claims under Republic Act No. 809 (The Sugar Act of 1952). The union claimed that sugar farm workers within petitioner’s milling district had never received the benefits due them under Section 9 of the law, which mandates that 60% of any increase in participation granted to planters shall be distributed to their laborers. Petitioner filed a Motion to Dismiss, contending that the Labor Arbiter had no jurisdiction over the case and that the union had no cause of action against it, as there was no employer-employee relationship between the milling company and the farm workers. The Labor Arbiter denied the motion to dismiss in an Order dated June 29, 1992, prompting petitioner to file this petition for certiorari and prohibition.

ISSUE

1. Whether public respondent Labor Arbiter has jurisdiction to hear and decide the case against petitioner milling company.
2. Whether respondent union and/or the farm workers represented by it have a cause of action against petitioner.

RULING

The Supreme Court GRANTED the petition.
1. On Jurisdiction: The Court ruled that the Labor Arbiter has no jurisdiction over the case against petitioner. Under Article 217 of the Labor Code, the jurisdiction of Labor Arbiters is limited to cases arising out of or in connection with an employer-employee relationship. Citing San Miguel Corporation vs. NLRC and Federation of Free Farmers vs. Court of Appeals, the Court emphasized that no employer-employee relationship exists between a sugar central/milling company and the plantation workers of the planters milling their cane. The obligation to pay the workers’ share under R.A. No. 809 falls solely on the planters, as the employers of the workers, and is to be supervised by the Department of Labor. Since no such relationship exists between petitioner and the workers, the Labor Arbiter lacks jurisdiction over petitioner.
2. On Cause of Action: The Court ruled that respondent union and the workers have no cause of action against petitioner. The liability for the payment of the sugar workers’ benefits under R.A. No. 809 rests exclusively with the planters, not the central or milling company. The Court cited the Federation of Free Farmers case, which held that the central has no liability to the plantation laborers should their planter-employers fail to pay the legal share. The proper recourse for the workers is to claim their shares from their respective planter-employers, with the supervision of the Secretary of Labor. The Labor Arbiter’s concern about a possible conspiracy between the central and planters was based on unproven factual conclusions and did not create a cause of action against the milling company. If planters have a claim against the central for non-payment of their share, their remedy is to implead the central as a third-party defendant, not to involve it as a direct defendant in the workers’ claim.
The Court ordered public respondent Labor Arbiter to dismiss the case with respect to petitioner Hawaiian-Philippine Company and to proceed with resolving the case against the other parties.