INDEPENDENT SAGAY-ESCALANTE PLANTERS, INC., PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, FOURTH DIVISION, CEBU CITY AND ALFREDO SUMIDO, JULIO PANER, MELQUIADES BACAN AND…

The private respondents in this case are sugarcane plantation
workers of Hacienda Tinago, situated at Fabrica, Negros Occidental. In 1983, they instituted a class suit on
behalf of all sugar plantation workers of the Lopez Mill District, directed
against all sugar planters therein and the Lopez Sugar Corporation — which
operated the sugar central or mill and refinery serving the Lopez Mill District
— before Regional Arbitration Branch No. 6 of the Department of Labor and
Employment, Bacolod City.^[1]

Private respondents sought to recover the sixty per cent (60%)
share of the laborers in the increased deliveries enjoyed by their
employer-planters of unrefined sugar and other derivative products of sugar
cane produced by the refinery. Such benefit was accorded the laborers or
employees of sugar planters by Sections 1 and 9 of R.A. No. 809.^[2]

Private respondent workers alleged in their complaint that
beginning with the 1972-73 crop year, such increases in the planters’
participation in the output of the refinery had been concealed in their milling
contracts, either by being omitted deliberately, or by being characterized or
disguised as other items therein. Thus,
the alleged 4.5% increase enjoyed by planters beginning with the 1972-73 crop
year was made to appear as trucking allowances to be remitted annually to the planters
until the 1986-87 crop year; an additional one percent (1%) increase of the
planters’ share given during this same period was diverted by the latter to the
laborers’ hospital being operated by the Lopez District Farmers’ Foundation
Inc.; and a further two percent (2%) increase was given the planters beginning
with the 1978-79 crop year when the refinery’s production reached 1.4 million
piculs annually. According to the
private respondents, these increases in participation have continued to be received
from the refinery by the planters to the present time.^[3]

The planters, represented by petitioner Independent
Sagay-Escalante Planters, Inc., sought dismissal of the complaint, offering in
evidence the affidavits of its members declaring that they had not received
increases in their share of the products of the refinery as claimed by private
respondents.^[4]

On the basis of the parties’ position papers and annexes, the
Labor Arbiter rendered a decision dated 15 August 1984 dismissing the complaint
of the planters’ laborers on the grounds that it was not a proper class suit
and that R.A. No. 809 did not apply to the Lopez Mill District since a majority
of the planters therein had executed milling contracts with the refinery.^[5]

Private respondents appealed to the National Labor Relations
Commission (“NLRC”) in Manila. Initially, the NLRC dismissed the appeal in a resolution dated 26 April
1988 for being late.^[6] On
reconsideration, however, the NLRC gave due course to the appeal in a
resolution dated 8 June 1990, after ascertaining that only payment of the
appeal fee had been effected by private respondents beyond the reglementary
period.

On the merits of the case, the NLRC found that it needed to
ascertain additional facts before it could resolve the substantive issues
raised. It remanded the case back to
the Labor Arbiter for reception of evidence relating to: 1) the sharing agreements between the sugar
central or refinery and the planters; 2) the gross production of the sugar
central; and 3) the value of the planters’ participations turned over by the
sugar central, for each fiscal year, beginning from 1972 onwards. The NLRC further directed the Labor Arbiter
to complete such inquiry into
the relevant facts within sixty (60) days from notice of its resolution and to
forward the evidence received, with the latter’s evaluation and report, to the
Commission.^[7]

In this Petition for Certiorari with prayer for
preliminary injunction, petitioner planters assail the reinstatement of private
respondents’ appeal as a grave abuse of discretion on the part of the
NLRC. Petitioner’s contention is that
the NLRC should not be permitted to reopen a case where the decision of the
Labor Arbiter had become final, so to enable private respondent workers to
introduce evidence to establish their claim before the Labor Arbiter that the
planters had received increases in their participations in the products of the
refinery. Petitioner contends that the
private respondents had waived their opportunity to prove their allegations
when they chose to submit the case before the Labor Arbiter on the basis of
their position paper.

The Court is not persuaded. We note that the workers had failed to establish their claim before the
Labor Arbiter because access to the evidence needed for that purpose was under
the absolute control of the sugar central and of petitioner’s members. Private respondent workers had tried several
times to obtain a subpoena from the Labor Arbiter to require the sugar
central to produce its records. The
Labor Arbiter failed to act on these motions for reasons which do not appear on
the record. Thus, the private
respondents had no effective and fair opportunity to be heard before the Labor
Arbiter; accordingly, the NLRC considered that it should not resolve the appeal
on the basis alone of position papers of the parties and affidavits of
petitioner’s member planters. We
consider that the NLRC had ample authority, under Article 218 (c) of the Labor
Code, to disregard the circumstance that the appeal fee had been tardily paid
by private respondents^[8] and
to order the parties to present evidence before the Labor Arbiter in support of
their claims.

The Labor Arbiter’s award was vitiated by other, equally serious,
flaws. The Labor Arbiter held that the
private respondent workers had no standing to bring their complaint on behalf
of all the laborers in their district for lack of a sufficiently common interest in the subject matter of the
litigation, that is, that they were not entitled to bring a class suit:

“x x x. In the present
case, the five complainants themselves working under respondent Teodoro Lopez
are not similarly situated with respect to their status and conditions of
employment, dates of employment and hours of work. Moreover, it cannot be denied that whatever rights each of the
five complainants may have is exclusively personal to them individually and
will be based on their respective actual work done during the crop year in
which their planter?employer may have received an increase in his participation under the Act. From the foregoing, we find that
complainants cannot properly represent their co-workers under respondent
Teodoro Lopez and more especially the other plantation workers numbering tens
of thousands employed by different and numerous planters within the Lopez Mill
District. We therefore rule that the
present case cannot be treated as a class suit.“^[9] (Underscoring supplied)

Worse, the Labor Arbiter also held that the private respondents
themselves had no cause of action against the planters because R.A. No. 809 had
provided that its benefits would be available only in milling districts where a
majority of the planters did not execute milling contracts with the sugar
central, a situation which did not exist in the Lopez Mill District. The Labor Arbiter said:^[10]

“Moreover, Sections 1 and 9 of Republic Act 809, which we have
earlier quoted, are clear and unambiguous as to leave no room for
interpretation. Since the share of
labor under Section 9, in any increase in participation which his
planter-employer may receive under the Act, is made dependent upon the
application of said Act in a milling district, and since said Act applies only
when there is an ‘absence of written milling agreements between the
majority of the planters and miller’, and since in this case the complainants themselves admitted that all the
planters within the Lopez Mill District have such written milling agreements
with respondent Central, then the sharing between the planters and respondent
Central provided under Section 1 of said Act becomes inoperative and Republic
Act 809 will not apply in the present case. Therefore, this particular claim of the complainants has no basis in law
whatsoever.”^[11]

These two (2) rulings of the Labor Arbiter collided frontally
with prior rulings of this Court interpreting the provisions of R.A. No.
809. In Federation of Free Farmers
v. Court of Appeals,^[12] the
Court held that the class suit had been properly brought by the laborers or
their federation to secure their rights and interests under R.A. No. 809:

“Also, considering the number of laborers involved herein, We
hold that it cannot be seriously argued that the trial court erred in holding
that the laborers and/or the FEDERATION had properly initiated their action
as a class suit, it being a matter of common knowledge that the subject
matter of the controversy (herein) is one of common or general interest to
persons – (so) numerous that it is impracticable to bring them all before the
court, ‘and after all, it appears that the ‘parties actually before (the
trial court were) sufficiently numerous and representative, so that all
interests concerned (were) sufficiently protected.”^[13]
(Underscoring supplied)

In Asociacion de Agricultores de Talisay-Silay, Inc. v.
Talisay-Silay Milling Company, Inc.,^[14] the
Supreme Court expressly rejected the second position taken by the Labor Arbiter
in his award. The Court there held that
the benefits of Section 9 of R.A. No. 809, allocating sixty percent (60%) of
the increased participations granted the planters “under this Act [R.A.
No. 809]” covered “any increase [a sugar] central should concede to
the planters by contract executed after the passage of [R.A. No. 809].” In
that case, the operator of a sugar refinery attempted to impugn the
constitutionality of R.A. No. 809 on the ground, among others, that it violated
the equal protection clause of the Constitution. In rejecting this contention, the Court emphasized that the
overriding social justice purpose of the statute called for an interpretation
which would avoid that constitutional objection:

“It is clear to Us that all that Section 1 implies is that the
proportions of sharing therein specified would no longer hold in the event a
majority of the planters in the district should have written milling contracts
with the centrals. In that sense, it
cannot be said that the Act impairs the freedom of contract to which the
CENTRAL and the planters are entitled. The language of said section does not however appear to Us to
necessarily envisage inseparability of its applicability from the
enforceability of the rest of the Act. On the contrary, it is implicit in the separability clause contained in
Section 10 of the Act itself that to avoid that the unconstitutionality of any
provision of the Act which may result from its application in relation to
another provision thereof, such provisions should be accordingly applied
independently of each other, specially if by so doing, as in this instance, the
objective of the statute can be achieved.

More specifically with reference to the contention that Section
9 pegs or predicates the right of labor to partake in the increase of the
shares of the planters to the increase resulting from the absence of a majority of contract planters
provided for in Section 1, We hold
that it is entirely within the purview of the legislative
pro-labor-and-social-justice intent of the Act that any increase the central
should concede to the planters by contract executed after the passage thereof
is an increase ‘under the Act’,
thereby resulting in the application of its Section 9, for there can be no doubt that the centrals
would only grant such increase for the ultimate purpose of avoiding the
application of Section 1, which is to say that the centrals’ act of entering
into written contracts would plainly be nothing less than an ineludible
consequence of the compulsive effect of the Act intended by the
legislature. That this construction may
not give the laborers exactly what the Act contemplates, since the contracts to
be entered into might actually provide for proportions less favorable to the
planters than that stipulated in Section 1 is no argument to render it
untenable. What would happen in such a
case is only a lesser evil that the totally anti-social disaster of labor
getting absolutely nothing while the planters would be getting an increase
which could be as much as that provided for them (planters) in said
section. To reiterate, the
percentage for labor specified in Section 9 may be safely construed to be
demandable whatever be the percentage of increase for the planters that their
contracts with their centrals might provide. And inasmuch as this constitu­tional approach just indicated is the only one consistent
with the manifest objective of the Act, We are duly bound to adopt the same in
the case at bar. The spirit rather than the latently ambiguous
letter of the Act must be enforced.”^[15] (Under­scoring supplied)

The above rulings of this Court in Federation of Free Farmers
and in Asociacion de Agricultores de Talisay-Silay have not been
reversed by this Court and
remain good law. The Labor Arbiter’s
award disregarded applicable case law, and we hold that such disregard, in the
circumstances of this case, constituted grave abuse of discretion on the part
of the Labor Arbiter correctible on appeal to the NLRC.^[16]
It is clear to the Court that when the NLRC remanded the case for determination
of whether the planters had in fact received increases in their participations
in the products of the sugar central under their milling contracts, the NLRC
was in effect applying the relevant case law of this Court to the relations of
the petitioner and private respondents.

Finally, petitioner contends that the NLRC had no jurisdiction to
take cognizance of private respondents’ appeal from the Labor Arbiter’s award,
upon the ground that the money claim of private respondents was not lawfully
asserted before the Labor Arbiter in the first place, since such money claim
was not based upon an employer-employee relationship. The theory of petitioner here is that since the benefit claimed
by private respondents would be due to a laborer only if his planter-employer
received an increased participation in the products of the sugar central, the
entitlement of the laborer was due, not to the employer-employee relationship
which was “incidental,” but rather to the simple fact of receipt by
the planter of increased participations. Petitioner adds that there is no law vesting the task of implementing
R.A. No. 809 upon the NLRC.

The Court, once more, is not persuaded. We consider that the claims asserted by private respondent
laborers are inextricably linked to their employment status, that the benefits
extended to them by R.A. No. 809 constituted in effect additional
compensation intended to improve their economic condition as laborers in
sugar cane plantations. It follows that
those were properly cognizable by the Labor Arbiter as a claim “arising
from employer-employee relations”^[17] and,
upon appeal, by the NLRC.

Finally, Section 9 of R.A. No. 809 decreed that “the
distribution of the share corresponding to the laborers shall be made under the
supervision of the Department of Labor.” Thus, the law charged the
Secretary of Labor and Employment with the duty of ensuring that the planters,
after receiving their increased participation from the sugar refinery, actually
distribute the proportionate share of their laborers therein.^[18]
The Court would note that refusal by sugar planters to carry out this
distribution would also activate the exercise of the visitorial and enforcement
powers of the Secretary under Article 128 (b) of the Labor Code, in a
proceeding summary in nature, provided that the individual laborers’ individual
claims for each crop year did not exceed P5,000.00.^[19]

WHEREFORE, the Petition for Certiorari must be
DISMISSED for lack of merit. The
Resolutions of public respondent NLRC dated 8 June 1990 and 13 June 1991 are
hereby AFFIRMED in toto. Costs against petitioner.

This case began nine (9) years ago and essential facts have still
to be ascertained. The Court enjoins
the Labor Arbiter to determine the facts and the NLRC to dispense substantial
justice, with all deliberate speed. This Decision is immediately executory.

SO ORDERED.

Gutierrez, Jr.,
(Chairman), Bidin, Davide, Jr., and
Romero, JJ., concur.

^[1]
Rollo, pp. 52 and 54.

^[2]
Sections 1 and 9 of Republic Act No. 809 (effective 22 June 1952), provide as
follows:

“SECTION 1. In the absence of
written milling agreements between the majority of the planters and the millers
of sugar-cane in any milling district in the Philippines, the unrefined sugar
produced in that district from the milling by any sugar central of the
sugar-cane of any sugar-cane planter or
plantation owner, as well
as all by-products and derivatives thereof, shall be divided between them as
follows:

Sixty per centum for the planter,
and forty per centum for the central in any milling district the maximum actual
production of which is not more than four hundred thousand piculs; Provided,
That the provisions of this section shall not apply to sugar centrals with an actual
production of less than one hundred fifty thousand piculs.

Sixty-two and one-half per centum
for the planter, and thirty-seven and one-half per centum for the central in
any milling district the actual production of which exceeds four hundred thousand
piculs but does not exceed six hundred thousand piculs;

Sixty-five per centum for the
planter, and thirty-five per centum for the central in any milling district the
maximum actual production of which exceeds six hundred thousand piculs but does
not exceed nine hundred thousand piculs;

Sixty-seven and one-half per centum
for the planter, and thirty-two and one-half per centum for the central in any
milling district the maximum actual production of which exceeds nine hundred
thousand piculs but does not exceed one
million two hundred thousand piculs;

Seventy per centum for the planter,
and thirty per centum for the central in any milling district the maximum
actual production of which exceeds one million two hundred thousand piculs.

By actual production is meant the
total production of the mill for the crop year immediately preceeding.

x x x                             x x x                             x x x

SEC. 9. In addition to the benefits
granted by the Minimum Wage Law, the proceeds of any increase in the
participation granted the planters under this Act and above their present
share shall be divided between the planter and his laborers in the
plantation in the following proportion:

Sixty per centum of the
increased participa­tion for the laborers and forty per centum for the
planters. This distribution of the
share corres­ponding to the laborers shall made under the supervision of the
Department of Labor.

The benefits granted to laborers in
sugar plantations under this Act and in the Minimum Wage Law shall not in any
way be diminished by such labor contracts known as ‘by the piece,’ ‘by the
volume,’ ‘by the area,’ or by any other system of ‘pakyaw,’ the Secretary of
Labor being hereby authorized to issue the necessary orders for the enforcement
of this provision.” (Underscoring supplied)

^[3]
Rollo, pp. 53-54 and 93.

^[4]
Id., pp. 7-8.

^[5]
Rollo, pp. 97 and 99.

^[6]
Id., pp. 100 and 133.

^[7]
Id., pp. 21-23.

^[8]
“Art. 218. Powers of the Commission. — The Commission shall have
the power and authority:

x x x                             x x x                             x
x x

(c) To conduct investigation for
the determination of a question matter or controversy within its
jurisdiction, proceed to hear and determine the disputes in the absence of
any party thereto who has been summoned or served with notice to appear,
conduct its proceedings or any part thereof in public or in private, adjourn
its hearings to any time and place, refer technical matters or accounts to an
expert and to accept his report as evidence after hearing of the parties upon
due notice, direct parties to be joined in or excluded from the proceedings,
correct, amend, or waive any error defect or irregularity whether in
substance or in form, give all such directions as it may deem necessary or
expedient in the determination of the dispute before it, and dismiss any matter
or refrain from further hearing or from determining the dispute or part
thereof, where it is trivial or where further proceedings by the Commission are
not necessary or desirable; x x x.” (Underscoring supplied)

^[9]
Rollo, p. 97.

^[10]
Id., pp. 97 and 99.

^[11]
Id., p. 99.

^[12]
107 SCRA 352 (1981).

^[13]
107 SCRA at 391. The Court here merely reiterated its earlier ruling in Acar
v. Rosal (19 SCRA 625 [1967]), where it recognized the propriety of
the laborers instituting a class
suit for the purpose of recovering the benefits accorded to them under Section
9 of R.A. No. 809.

^[14]
88 SCRA 294 (1979).

^[15]
88 SCRA at 358-359.

^[16]
See Article 223, Labor Code.

^[17]
Article 217 (a)(6) and (b), Labor Code.

^[18]
Ernesto v. Court of Appeals, 116 SCRA 755, 766 (1982); reiterated in
Central Azucarera de Bais v. Court of Appeals, 188 SCRA 328, 338 (1990).

^[19]
Servando’s Inc. v. Secretary of Labor and Employ­ment, 198 SCRA 156, 161
(1991).