[G.R.No.L32052.July25,1975.

]
PHILIPPINEVIRGINIATOBACCOADMINISTRATION,
petitioner,vs.COURTOFINDUSTRIALRELATIONSetal.
respondents.
Gov't.Corp.CounselLeopoldoM.Abellera,TrialAttorneysManuelM.Lazaro&
VicenteConstantino,Jr.,forpetitioner.
RenatoB.Kare&SimeonC.Satoforprivaterespondents.
SYNOPSIS
PrivaterespondentfiledwiththeCourtofIndustrialRelationsapetitiontorecover
overtimepayforservicesrenderedinexcessofeighthoursaday.SaidCourt
renderedadecisiondirectingpetitionertopayprivaterespondents'claim,minus
whathadalreadybeenpaid.Amotionforreconsiderationhavingbeendenied,
petitionerfiledthispetitionforcertiorarionthegroundthatrespondentcourtis
withoutjurisdictionsincethePhilippineVirginiaTobaccoAdministration
exercisesgovernmentalfunctionsandthatitisnotcoveredbytheEightHour
LaborLaw.
TheCourtaffirmedthedecisionrulingthatperformanceofgovernmentalfunction
doesnotmilitateagainstCourtofIndustrialRelation'sjurisdictionandthatthe
EightHourLaborLawappliesto"allpersonsemployedinanyindustryor
occupationwhetherpublicorprivate."
CasereferredtotheNationalLaborRelationsCommissionforfurtherproceedings
asprovidedbytheNewLaborCode.
SYLLABUS
1.CONSTITUTIONALLAW;STATE;REJECTIONOFLAISSEZFAIRE
DOCTRINE.AsheldinEduvs.Ericta,L32096,October24,1970:"...,to

eraseanydoubtstheConstitutionalConventionsawtoitthattheconceptoflaissez
fairewasrejected.Itentrustedtoourgovernmenttheresponsibilityofcopingwith
socialandeconomicproblemswiththecommensuratepowerofcontrolover
economicaffairs.Therebyitcouldliveuptoitscommitmenttopromotethe
generalwelfarethroughstateaction."
2.ID.;ID.;ID.;REASONS.Rejectionofthelaissezfairedoctrineisonewayby
whichthrough"theharshcontrastwhichobtainbetweenthelevelsoftherichand
thepoor"maybeminimized.ItisaresponsetothetrendnotedbyJusticeLaurelin
Calalangvs.Williams,70Phil.726,forthehumanizationoflawsandpromotion
oftheinterestofallcomponentelementsofsocietysothatman'sinnate
aspirations,inwhatwassofelicitouslytermedbytheFirstLadyas"a
compassionatesociety,"beattained.
3.ID.;ID.;ID.;PHILIPPINEVIRGINIATOBACCOADMINISTRATION
PERFORMSGOVERNMENTALFUNCTION.Fromacursoryperusalofthe
purposesandobjectivesofRANo.2265,creatingthePhilippineVirginiaTobacco
Administration,andRANo.4155,amendingthesame,itisclearthatthesaidbody
exercisesgovernmentalandnotproprietyfunction.
4.ID.;ID.;ID.;PERFORMANCEOFGOVERNMENTALFUNCTIONDOES
NOTMILITATEAGAINSTCOURTOFINDUSTRIALRELATION'S
JURISDICTIONOVERLABORDISPUTES.InPhilippineVirginiaTobacco
Administrationvs.JudgeHonoratoB.Masakayan,L29538,November29,1972,
wherethepointindisputewaswhetheritwastheCourtofIndustrialRelationsora
courtoffirstinstancethatispossessedofcompetenceinadeclaratoryreliefforthe
interpretationofacollectivebargainingagreement,onethatcouldreadilybe
thoughtofaspertainingtotheJudiciary,theanswerwasthat"unlessthelaw
speaksclearlyandunequivocally,thechoiceshouldfallontheCourtofIndustrial
Relations."Referencetoanumberofdecisionswhichrecognizedinthethen
respondentcourtthejurisdictiontodeterminelaborcontroversiesbygovernment
ownedorcontrolledcorporationslendsupporttosuchanapproach.
5.ID.;PROTECTIONTOLABOR;EIGHTHOURLABORLAW;COVERS
BODIESEXERCISINGGOVERNMENTALFUNCTION.Section2ofthe
EightHourLaborLawleavesnodoubtthat"itshallapplytoallpersonsemployed
inanyindustryoroccupation,whetherpublicorprivate..."Privaterespondents,

thereforearenotincludedamongtheemployeeswhoarebarredfromenjoyingthe
statutorybenefits.

DECISION

FERNANDO,Jp:
Theprincipalissuethatcallsforresolutioninthisappealbycertiorarifroman
orderofrespondentCourtofIndustrialRelationsisoneofconstitutional
significance.Itisconcernedwiththeexpandedroleofgovernmentnecessitatedby
theincreasedresponsibilitytoprovideforthegeneralwelfare.Morespecifically,it
dealswiththequestionofwhetherpetitioner,thePhilippineVirginiaTobacco
Administration,dischargesgovernmentalandnotproprietaryfunctions.The
landmarkopinionofthethenJustice,nowChiefJustice,MakalintalinAgricultural
CreditandCooperativeFinancingAdministrationv.ConfederationofUnionsin
GovernmentCorporationsandoffices,pointsthewaytotherightanswer.1It
interpretedthethenfundamentallawashostiletotheviewofalimitedornegative
state.Itisantitheticaltothelaissezfaireconcept.Forasnotedinanearlier
decision,thewelfarestateconcept"isnotalientothephilosophyof[the1935]
Constitution."2ItismuchmoresounderthepresentCharter,whichisimpressed
withanevenmoreexplicitrecognitionofsocialandeconomicrights.3Thereis
manifest,torecallLaski,"adefiniteincreaseintheprofundityofthesocial
conscience,"resultingin"astatewhichseekstorealizemorefullythecommon
goodofitsmembers."4Itdoesnotnecessarilyfollow,however,justbecause
petitionerisengagedingovernmentalratherthanproprietaryfunctions,thatthe
laborcontroversywasbeyondthejurisdictionofthenowdefunctrespondent
Court.Noristheobjectionraisedthatpetitionerdoesnotcomewithinthecoverage
oftheEightHourLaborLawpersuasive.5Wecannotthengrantthereversal
sought.Weaffirm.

Thefactsareundisputed.OnDecember20,1966,claimants,nowprivate
respondents,filedwithrespondentCourtapetitionwhereintheyallegedtheir
employmentrelationship,theovertimeservicesinexcessoftheregulareighthours
adayrenderedbythem,andthefailuretopaythemovertimecompensationin

accordancewithCommonwealthActNo.444.Theirprayerwasforthedifferential
betweentheamountactuallypaidtothemandtheamountallegedlyduethem.6
TherewasananswerfiledbypetitionerPhilippineVirginiaTobacco
Administrationdenyingtheallegationsandraisingthespecialdefensesoflackofa
causeofactionandlackofjurisdiction.7TheIssueswerethereafterjoined,and
thecasesetfortrial,withbothpartiespresentingtheirevidence.8Aftertheparties
submittedthecasefordecision,thethenPresidingJudgeArsenioT.Martinezof
respondentCourtissuedanordersustainingtheclaimsofprivaterespondentsfor
overtimeservicesfromDecember23,1963uptothedatethedecisionwas
renderedonMarch21,1970,anddirectingpetitionertopaythesame,minuswhat
ithadalreadypaid.9Therewasamotionforreconsideration,butrespondentCourt
enbancdeniedthesame.10Hencethispetitionforcertiorari.
PetitionerPhilippineVirginiaTobaccoAdministration,ashadbeennoted,would
predicateitspleaforthereversaloftheordercomplainedofonthebasic
propositionthatitisbeyondthejurisdictionofrespondentCourtasitisexercising
governmentalfunctionsandthatitisexemptfromtheoperationofCommonwealth
ActNo.444.11While,torepeat,itssubmissionastothegovernmentalcharacter
ofitsoperationistobegivencredence,itisnotanecessaryconsequencethat
respondentCourtisdevoidofjurisdiction.Norcouldthechallengedorderbeset
asideontheadditionalargumentthattheEightHourLaborLawisnotapplicable
toit.Soitwas,attheoutset,madeclear.
1.Areferencetotheenactmentscreatingpetitionercorporationsufficesto
demonstratethemeritofpetitioner'spleathatitperformsgovernmentalandnot
proprietaryfunctions.AsoriginallyestablishedbyRepublicActNo.2265,12its
purposesandobjectivesweresetforththus:"(a)Topromotetheeffective
merchandisingofVirginiatobaccointhedomesticandforeignmarketssothat
thoseengagedintheindustrywillbeplacedonabasisofeconomicsecurity;(b)
ToestablishandmaintainbalancedproductionandconsumptionofVirginia
tobaccoanditsmanufacturedproducts,andsuchmarketingconditionsaswill
insureandstabilizethepriceofalevelsufficienttocoverthecostofproduction
plusreasonableprofitbothinthelocalaswellasintheforeignmarket;(c)To
create,establish,maintain,andoperateprocessing,warehousingandmarketing
facilitiesinsuitablecentersandsupervisethesellingandbuyingofVirginia
tobaccosothatthefarmerswillenjoyreasonablepricesthatsecureafairreturnof
theirinvestments;(d)Toprescriberulesandregulationsgoverningthegrading,
classifying,andinspectingofVirginiatobacco;and(e)Toimprovethelivingand
economicconditionsofthepeopleengagedinthetobaccoindustry."13The

amendatorystatute,RepublicActNo.4155,14rendersevenmoreevidentits
natureasagovernmentalagency.Itsfirstsectiononthedeclarationofpolicy
reads:"Itisdeclaredtobethenationalpolicy,withrespecttothelocalVirginia
tobaccoindustry,toencouragetheproductionoflocalVirginiatobaccoofthe
qualitiesneededandinquantitiesmarketableinbothdomesticandforeign
markets,toestablishthisindustryonanefficientandeconomicbasis,andtocreate
aclimateconducivetolocalcigarettemanufactureofthequalitiesdesiredbythe
consumingpublic,blendingimportedandnativeVirginialeaftobaccotoimprove
thequalityoflocallymanufacturedcigarettes."15Theobjectivesaresetforththus:
"Toattainthisnationalpolicythefollowingobjectivesareherebyadopted:1.
Financing;2.Marketing;3.ThedisposalofstocksoftheAgriculturalCredit
Administration(ACA)andthePhilippineVirginiaTobaccoAdministration
(PVTA)atthebestobtainablepricesandconditionsinorderthatareinvigorated
Virginiatobaccoindustrymaybeestablishedonasoundbasis;and4.Improving
thequalityoflocallymanufacturedcigarettesthroughblendingofimportedand
nativeVirginialeaftobacco;suchimportationwithcorrespondingexportationata
ratioofonekiloofimportedtofourkilosofexportedVirginiatobacco,purchased
bytheimporterexporterfromthePhilippineVirginiaTobaccoAdministration."16
Itisthusreadilyapparentfromacursoryperusalofsuchstatutoryprovisionswhy
petitionercanrightfullyinvokethedoctrineannouncedintheleadingAgricultural
CreditandCooperativeFinancingAdministrationdecision17andwhythe
objectionofprivaterespondentswithitsovertonesofthedistinctionbetween
constituentandministrantfunctionsofgovernmentsassetforthinBacaniv.
NationalCoconutCorporation18iffutile.Theirrelevanceofsuchadistinction
consideringtheneedsofthetimeswasclearlypointedoutbythepresentChief
Justice,whotooknote,speakingofthereconstitutedAgriculturalCredit
Administration,thatfunctionsofthatsort"maynotbestrictlywhatPresident
Wilsondescribedas'constituent'(asdistinguishedfrom'ministrant'),suchasthose
relatingtothemaintenanceofpeaceandthepreventionofcrime,thoseregulating
propertyandpropertyrights,thoserelatingtotheadministrationofjusticeandthe
determinationofpoliticaldutiesofcitizens,andthoserelatingtonationaldefense
andforeignrelations.Underthistraditionalclassification,suchconstituent
functionsareexercisedbytheStateasattributesofsovereignty,andnotmerelyto
promotethewelfare,progressandprosperityofthepeopletheselatterfunctions
beingministrant,theexerciseofwhichisoptionalonthepartofthegovernment."
19Nonetheless,asheexplainedsopersuasively:"Thegrowingcomplexitiesof
modernsociety,however,haverenderedthistraditionalclassificationofthe
functionsofgovernmentquiteunrealistic,nottosayobsolete.Theareaswhich

usedtobelefttoprivateenterpriseandinitiativeandwhichthegovernmentwas
calledupontoenteroptionally,andonly'becauseitwasbetterequippedto
administerforthepublicwelfarethanisanyprivateindividualorgroupof
individuals,'continuetolosetheirwelldefinedboundariesandtobeabsorbed
withinactivitiesthatthegovernmentmustundertakeinitssovereigncapacityifit
istomeettheincreasingsocialchallengesofthetimes.Hereasalmosteverywhere
elsethetendencyisundoubtedlytowardsagreatersocializationofeconomic
forces.Hereofcoursethisdevelopmentwasenvisioned,indeedadoptedasa
nationalpolicy,bytheConstitutionitselfinitsdeclarationofprincipleconcerning
thepromotionofsocialjustice."20ThuswaslaidtorestthedoctrineinBacaniv.
NationalCoconutCorporation,21basedontheWilsonianclassificationofthe
tasksincumbentongovernmentintoconstituentandministrantinaccordancewith
thelaissezfaireprinciple.Thatconcept,thendominantineconomics,wascarried
intothegovernmentalsphere,asnotedinatextbookonpoliticalscience,22the
firsteditionofwhichwaspublishedin1898,itsauthorbeingthethenProfessor,
laterAmericanPresident,WoodrowWilson.Hetookpainstoemphasizethatwhat
wascategorizedbyhimasconstituentfunctionshaditsbasisinarecognitionof
whatwasdemandedbythe"strictest[conceptof]laissezfaire,[asthey]areindeed
theverybondsofsociety."23Theotherfunctionshewouldminimizeas
ministrantoroptional.
ItisamatteroflawthatinthePhilippines,thelaissezfaireprinciplehardly
commandedtheauthoritativepositionwhichatonetimeitheldintheUnited
States.Asearlyas1919,JusticeMalcolminRubiv.ProvincialBoard,24could
affirm:"Thedoctrinesoflaissezfaireandofunrestrictedfreedomofthe
individual,asaxiomsofeconomicandpoliticaltheory,areofthepast.Themodern
periodhasshownawidespreadbeliefintheamplestpossibledemonstrationof
governmentactivity."25The1935Constitution,aswasindicatedearlier,
continuedthatapproach.AsnotedinEduv.Ericta:26"Whatismore,toeraseany
doubts,theConstitutionalConventionsawtoitthattheconceptoflaissezfaire
wasrejected.Itentrustedtoourgovernmenttheresponsibilityofcopingwith
socialandeconomicproblemswiththecommensuratepowerofcontrolover
economicaffairs.Therebyitcouldliveuptoitscommitmenttopromotethe
generalwelfarethroughstateaction."27NordidtheopinioninEdustopthere:
"Torepeat,ourConstitutionwhichtookeffectin1935erasedwhateverdoubts
theremightbeonthatscore.Itsphilosophyisarepudiationoflaissezfaire.Oneof
theleadingmembersoftheConstitutionalConvention,ManuelA.Roxas,laterthe
firstPresidentoftheRepublic,madeitclearwhenhedisposedoftheobjectionof
DelegateJoseReyesofSorsogon,whonotedthe'vastextensionsinthesphereof

governmentalfunctions'andthe'almostunlimitedpowertointerfereintheaffairs
ofindustryandagricultureaswellastocompetewithexistingbusiness'as
'reflectionsofthefascinationexertedby[thethen]currenttendencies'inother
jurisdictions.Hespokethus:'Myansweristhatthisconstitutionhasadefiniteand
welldefinedphilosophy,notonlypoliticalbutsocialandeconomic....Ifinthis
Constitutionthegentlemenwillfinddeclarationsofeconomicpolicytheyarethere
becausetheyarenecessarytosafeguardtheinterestandwelfareoftheFilipino
peoplebecausewebelievethatthedayshavecomewheninselfdefense,anation
mayprovideinitsconstitutionthosesafeguards,thepatrimony,thefreedomto
grow,thefreedomtodevelopnationalaspirationsandnationalinterests,nottobe
hamperedbytheartificialboundarieswhichaconstitutionalprovision
automaticallyimposes."28

ItwouldbethentorejectwhatwassoemphaticallystressedintheAgricultural
CreditAdministrationdecisionaboutwhichtheobservationwasearliermadethat
itreflectedthephilosophyofthe1935Constitutionandisevenmorein
consonancewiththeexpandedroleofgovernmentaccordedrecognitioninthe
presentCharterifthepleaofpetitionerthatitdischargesgovernmentalfunction
werenotheeded.ThatpaththisCourtisnotpreparedtotake.Thatwouldbetogo
backward,toretreatratherthantoadvance.Nothingcanthusbeclearerthanthat
thereisnoconstitutionalobstacletoagovernmentpursuinglinesofendeavor,
formerlyreservedforprivateenterprise.Thisisoneway,inthelanguageofLaski,
bywhichthroughsuchactivities,"theharshcontractwhich[does]obtainbetween
thelevelsoftherichandthepoor"maybeminimized.29Itisaresponsetoatrend
notedbyJusticeLaurelinCalalangv.Williams30forthehumanizationoflaws
andthepromotionoftheinterestofallcomponentelementsofsocietysothat
man'sinnateaspirations,inwhatwassofelicitouslytermedbytheFirstLadyas"a
compassionatesociety"beattained.31
2.Thesuccessthatattendedtheeffortsofpetitionertobeadjudgedasperforming
governmentalratherthanproprietaryfunctionscannotmilitateagainstrespondent
Courtassumingjurisdictionoverthislabordispute.Soitwasmentionedearlier.As
farbackasTaborav.Montelibano,32thisCourt,speakingthroughJusticePadilla,
declared:"TheNARICwasestablishedbytheGovernmenttoprotectthepeople
againstexcessiveorunreasonableriseinthepriceofcerealsbyunscrupulous
dealers.Withthatmainobjectivethereisnoreasonwhyitsfunctionshouldnotbe
deemedgovernmental.TheGovernmentowesitsveryexistencetothataimand

purposetoprotectthepeople."33Inasubsequentcase,NaricWorker'sUnion
v.Hon.Alvendia,34decidedfouryearslater,thisCourt,relyingonPhilippine
AssociationofFreeLaborUnionsv.Tan,35whichspecifiedthecaseswithinthe
exclusivejurisdictionoftheCourtofIndustrialRelations,includedamongwhichis
onethatinvolveshoursofemploymentundertheEightHourLaborLaw,ruled
thatitispreciselyrespondentCourtandnotordinarycourtsthatshouldpassupon
thatparticularlaborcontroversy.ForJusticeJ.B.L.Reyes,theponente,thefact
thattherewerejudicialaswellasadministrativeandexecutivepronouncementsto
theeffectthattheNaricwasperforminggovernmentalfunctionsdidnotsufficeto
confercompetenceonthethenrespondentJudgetoissueapreliminaryinjunction
andtoentertainacomplaintfordamages,whichaspointedoutbythelaborunion,
wasconnectedwithanunfairlaborpractice.Thisisemphasizedbythedispositive
portionofthedecision:"Wherefore,therestrainingorderscomplainedof,dated
May19,1958andMay27,1958,aresetaside,andthecomplaintisordered
dismissed,withoutprejudicetotheNationalRiceandCornCorporation'sseeking
whateverremedyitisentitledtointheCourtofIndustrialRelations."36Then,too,
inacaseinvolvingpetitioneritself,PhilippineVirginiaTobaccoAdministration,
37wherethepointindisputewaswhetheritwasrespondentCourtoracourtof
firstinstancethatispossessedofcompetenceinadeclaratoryreliefpetitionforthe
interpretationofacollectivebargainingagreement,onethatcouldreadilybe
thoughtofaspertainingtothejudiciary,theanswerwasthat"unlessthelaw
speaksclearlyandunequivocally,thechoiceshouldfallontheCourtofIndustrial
Relations."38Referencetoanumberofdecisionswhichrecognizedinthethen
respondentCourtthejurisdictiontodeterminelaborcontroversiesbygovernment
ownedorcontrolledcorporationslendstosupporttosuchanapproach.39Nor
coulditbeexplainedonlyontheassumptionthatproprietaryratherthan
governmentalfunctionsdidcallforsuchaconclusion.Itistobeadmittedthatsuch
aviewwasnotpreviouslybereftofplausibility.WiththeaforecitedAgricultural
CreditandCooperativeFinancingAdministrationdecisionrenderingobsoletethe
Bacanidoctrine,ithas,touseaWilsonianphrase,nowlapsedinto"innocuous
desuetude."40RespondentCourtclearlywasvestedwithjurisdiction.
3.ThecontentionofpetitionerthattheEightHourLaborLaw41doesnotapplyto
ithardlydeservesanyextendedconsideration.Thereisanairofcasualnessinthe
waysuchanargumentwasadvancedinitspetitionforreviewaswellasinits
brief.Inbothpleadings,itdevotedlessthanafullpagetoitsdiscussion.Thereis
muchtobesaidforbrevity,butnotinthiscase.Suchaterseandsummary
treatmentappearstobeareflectionmoreoftheinherentweaknessoftheplea
ratherthanthepossessionofanadvocate'senviabletalentforconcision.Itdidcite

Section2oftheAct,butitsverylanguageleavesnodoubtthat"itshallapplytoall
personsemployedinanyindustryoroccupation,whetherpublicorprivate..."42
Norareprivaterespondentsincludedamongtheemployeeswhoaretherebybarred
fromenjoyingthestatutorybenefits.ItcitedMarcelov.PhilippineNationalRed
Cross43andBoyScoutsofthePhilippinesv.Araos.44Certainly,theactivitiesto
whichthetwoabovepubliccorporationsdevotethemselvescaneasilybe
distinguishedfromthatengagedinbypetitioner.Areferencetothepertinent
sectionsofbothRepublicActs2265and2155onwhichitreliestoobtainaruling
astoitsgovernmentalcharactershouldrenderclearthedifferentiationthatexists.
Ifasaresultoftheappealedorder,financialburdenwouldhavetobeborneby
petitioner,ithasonlyitselftoblame.Itneednothaverequiredprivaterespondents
torenderovertimeservice.Itcanhardlybesurmisedthatoneofitschiefproblems
ispaucityofpersonnel.Thatwouldindeedbeacauseforastonishment.Itwould
appear,therefore,thatsuchanobjectionbasedonthisgroundcertainlycannot
sufficeforareversal.Torepeat,respondentCourtmustbesustained.
WHEREFORE,theappealedOrderofMarch21,1970andtheResolutionof
respondentCourtenbancofMay8,1970denyingamotionforreconsiderationare

herebyaffirmed.ThelastsentenceoftheOrderofMarch21,1970readsas
follows:"Tofindhowmucheachofthem[privaterespondents]isentitledunder
thisjudgment,theChiefoftheExaminingDivision,oranyofhisauthorized
representative,isherebydirectedtomakeareexaminationofrecords,papersand
documentsinthepossessionofrespondentPVTApertinentandproperunderthe
premisesandtosubmithisreportofhisfindingstotheCourtforfurther
dispositionthereof."Accordingly,asprovidedbytheNewLaborCode,thiscaseis
referredtotheNationalLaborRelationsCommissionforfurtherproceedings
conformablytolaw.Nocosts.
Makalintal,C.J.,Castro,Barredo,Antonio,Esguerra,Aquino,Concepcion,Jr.and
Martin,JJ.,concur.
MuozPalmaandMakasiar,JJ.,tooknopart.
TeehankeeJ.,isonofficialleave.