GR L L 32052; (July 1975) (Digest)
G.R. No. L-32052, July 25, 1975
PHILIPPINE VIRGINIA TOBACCO ADMINISTRATION, petitioner, vs. COURT OF INDUSTRIAL RELATIONS, REUEL ABRAHAM, ET AL., respondents.
FACTS
On December 20, 1966, a large group of employees, the private respondents, filed a petition with the Court of Industrial Relations (CIR) against their employer, the Philippine Virginia Tobacco Administration (PVTA). They alleged that they had rendered overtime services beyond the regular eight-hour workday but were not paid the corresponding overtime compensation as mandated by Commonwealth Act No. 444 (The Eight-Hour Labor Law). Their prayer was for the payment of the differential amounts due to them. The PVTA, in its answer, raised a jurisdictional challenge, arguing that as a government agency performing governmental functions, it was beyond the jurisdiction of the CIR. It further contended that its employees were not covered by the Eight-Hour Labor Law.
ISSUE
The principal issue is whether the CIR had jurisdiction over the labor claims of PVTA employees, which hinges on the resolution of two sub-issues: (1) whether the PVTA performs governmental or proprietary functions, and (2) whether its employees are covered by Commonwealth Act No. 444 .
RULING
The Supreme Court affirmed the CIR’s jurisdiction. The Court first addressed the nature of PVTA’s functions. Citing the landmark case of *Agricultural Credit and Cooperative Financing Administration v. Confederation of Unions in Government Corporations and Offices*, the Court rejected the rigid dichotomy between governmental and proprietary functions. It emphasized the modern concept of the welfare state under the Constitution, where the government actively engages in socio-economic activities for the common good. The PVTA, established to develop and stabilize the tobacco industry, was thus engaged in a governmental function. However, the Court clarified that performing a governmental function does not automatically exempt an entity from the jurisdiction of the CIR over employer-employee relations. Jurisprudence has consistently held that government-owned or controlled corporations, even those performing governmental functions, are subject to the CIR’s jurisdiction when the dispute arises from an employer-employee relationship.
On the second sub-issue, the Court held that the Eight-Hour Labor Law, by its explicit terms in Section 2, applies to “all persons employed in any industry or occupation, whether public or private,” with specific enumerated exceptions. PVTA employees do not fall under any of these exceptions. Therefore, they are entitled to the law’s benefits, including overtime pay. The Court found no merit in PVTA’s claim of exemption. Consequently, the CIR correctly assumed jurisdiction over the money claims of PVTA’s employees for overtime compensation.