FIRST DIVISION

[G.R. No. 122468. September 3, 1998]

SENTINEL SECURITY AGENCY, INC., petitioner, vs. NATIONAL LABOR RELATIONS

COMMISSION, ADRIANO CABANO, JR., VERONICO C. ZAMBO, HELCIAS ARROYO,
RUSTICO ANDOY, and MAXIMO ORTIZ, respondents.

[G.R. No. 122716. September 3, 1998]

PHILIPIPPINE AMERICAN LIFE INSURANCE COMPANY, petitioner, vs. NATIONAL

LABOR RELATIONS COMMISSION, VERONICO ZAMBO, HELCIAS ARROYO,
ADRIANO CABANO, MAXIMO ORTIZ, and RUSTICO ANDOY, respondents.

DECISION

PANGANIBAN, J.:

The transfer of an employee involves a lateral movement within the business or operation of the
employer, without demotion in rank, diminution of benefits or, worse, suspension of employment
even if temporary. The recall and transfer of security guards require reassignment to another post
and are not equivalent to their placement on floating status. Off-detailing security guards for a
reasonable period of six months is justified only in bona fide cases of suspension of operation,
business or undertaking.
The Case

This is the rationale used by the Court in dismissing the two consolidated petitions for certiorari
before us, seeking the reversal of the Decision dated August 25, 1995, and the Resolution date
October 24, 1995, both promulgated by the National Labor Relations Commissioni[1] in NLRC
Case No. V-0317-94 (RAB VII-01-0097-94, RAB VII-020173-94, and RAB VII-01-0133-94).

In the action for illegal dismissal and payment of salary differential, service incentive leave pay
and separation pay filed by private respondents, Labor Arbiter Dominador A. Almirante rendered
a Decision, which disposed:ii[2]

WHEREFORE, premises considered[,] judgment is hereby rendered ordering xxx Sentinel

Security Agency, Inc. jointly and severally with xxx Philamlife, Cebu Branch, to pay
complainants the total amount of [s]ixty [t]housand [o]ne [h]undred [t]welve [p]esos and 50/100
(P60,112.50) in the concept of 13th month pay and service incentive leave benefits as computed
by our Labor Arbitration Associate whose computation is hereto attached and forming part
thereof.iii[3]

On appeal, the NLRC modified the labor arbiters Decision. The dispositive portion of the NLRC
Decisioniv[4]reads:
WHEREFORE, the assailed Decision is hereby MODIFIED in so far as the award of 13th month
pay for the previous years which is hereby excluded. Further, xxx Sentinel Security Agency, Inc.
is hereby ORDERED to pay complainants separation pay at the rate of month pay for every year
of service and for both xxx Philippine American Life Insurance, Inc. and Sentinel Security
Agency, Inc. and/or Daniel Iway to pay to the [complainants] jointly and severally their
backwages from January 16, 1994 to January 15, 1995 and the corresponding 13th month pay for
the said year. The monetary awards hereby granted are broken down as follows [into separation
pay, back wages, 13th month pay and service incentive leave pay]:

xxx xxx x x x.v[5]

The challenged Resolution denied reconsideration for lack of merit.vi[6]

The Facts

The undisputed factual backdrop is narrated by Respondent Commission as follows:vii[7]

The complainants were employees of Sentinel [Security Agency, Inc. hereafter referred to as the
Agency] since March 1, 1966 in the case of Veronico Zambo; October 27, 1975 in the case of
Helcias Arroyo; September 20, 1985 in the case of Adriano Cabano; February 1, 1990 in the case
of Maximo Ortiz; and Ortiz and November 1, 1967 in the case of Rustico Andoy. They were
assigned to render guard duty at the premises of [Philippine American Life Insurance Company]
at Jones Avenue, Cebu City. On December 16, 1993 Philippine American Life Insurance
Company [the Client, for brevity], through Carlos De Pano, Jr., sent notice to all concerned that
the [Agency] was again awarded the contract of [s]ecurity [s]ervices together with a request to
replace all the security guards in the companys offices at the cities of Cebu, Bacolod, Cagayan de
Oro, Dipolog and Ilagan. In compliance therewith, [the Agency] issued on January 12, 1994, a
Relief and Transfer Order replacing the complainants as guards [of the Client] and for then to be
re-assigned [to] other clients effective January 16, 1994. As ordered, the complainants reported
but were never given new assignments but instead they were told in the vernacular, gui-ilisa mo
kay mga tigulang naman mo which when translated means, you were replace[d] because you are
already old. Precisely, the complainants lost no time but filed the subject illegal dismissal cases
on January 18, January 26 and February 4, 1994 and prayed for payment of separation pay and
other labor standard benefits.

[The Client and the Agency] maintained there was no dismissal on the part of the complainants,
constructive or otherwise, as they were protected by the contract of security services which
allows the recall of security guards from their assigned posts at the will of either party. It also
advanced that the complainants prematurely filed the subject cases without giving the [Agency] a
chance to give them some assignments.

On the part of [the Client], it averred further that there [was] no employer-employee relationship
between it and the complainants as the latter were merely assigned to its Cebu Branch under a
job contract; that [the Agency] ha[d] its own separate corporate personality apart from that of
[the Client]. Besides, it pointed out that the functions of the complainants in providing security
services to [the Clients] property [were] not necessary and desirable to the usual business or
trade of [the Client], as it could still operate and engage in its life insurance business without the
security guards. In fine, [the Client] maintains that the complainants have no cause of action
against it.
Ruling of Respondent Commission

Respondent Commission ruled that the complainants were constructively dismissed, as the recall
of the complainants from their long time post[s] at [the premises of the Client] without any good
reason is a scheme to justify or camouflage illegal dismissal.

It ruled Superstar Security Agency, Inc. vs. National Labor Relations Commissionviii[8] and A
Prime Security Services, Inc. vs. national Labor Relations Commissionix[9] were not applicable
to the case at bar. In the former, the security guard was placed on temporary off-detail due to his
poor performance and lack of elementary courtesy and tact, and to the cost-cutting program of
the agency. In the latter, the relief of the security guard was due to his sleeping while on duty and
his repeated refusal to resume work despite notice.

In the present case, the complainants case, the complainants were told by the Agency that they
lost their assignment at the Clients premises because they were already old, and not because they
had committed any infraction or irregularity. The NLRC applied RA 7641,x[10] which gives
retirement benefits of one-half month pay per year of service to retirable employees, viz.:

xxx As stated earlier xxx, the complainants were in the service of [the Client] for nearly twenty
(20) years in the cases of Helcias Arroyo and for more than twenty (20) years in the cases of
Veronico Zambo and Rustico Andoy, which long years of service [appear] on record to be
unblemished. The complainants were then confronted with an impending sudden loss of earning
for while the order of [the Agency] to immediately report for reassignment momentarily gave
them hope, there was in fact no immediate reinstatement. While it could have been prudent for
the complainants to wait, they were set unstable and were actually threatened by the statement of
the personnel in charge of [the Agency] that they were already old, that was why they were
replaced.

Against these glaring facts is the new Retirement Law, R.A. 7641 which took effect on January
7, 1993 giving retirement benefits of month pay per year of service to an employee upon
reaching retirement age to be paid by the employer, in this case at quiet a sizeable amount and in
not so long due time as some of the complainants were described as already old.

As complainants were illegally dismissed, the NLRC ruled that they were entitled to the twin
remedies of back wages for one (1) year from the time of their dismissal on January 15, 1994,
payable by both the Client and the Agency, and separation pay one-half month pay for every
year of service payable only by the Agency. Reinstatement was not granted due to the resulting
antipathy and resentment among the complainants, the Agency and the Client.

Hence, this petition.xi[11]

The Issues
In their memoranda, the Agency poses this question:xii[12]

xxx [W]hether xxx Sentinel is guilty of illegal dismissal[,]

On the other hand, the Client raises the following issues:xiii[13]

Whether xxx [the complainants] were illegally dismissed by their employer, Sentinel Security
Agency, Inc., and in holding petitioner to be equally liable therefor.

Whether xxx petitioner is jointly and severally liable with Sentinel Security Agency, Inc., in the
latters payment of backwages, 13th month pay and service incentive leave pay to its employees
xxx.

In sum, the resolution of these consolidated petitions hinges on (1) whether the complainants
were illegally dismissed, and (2) whether the Client is jointly and severally liable for their
thirteenth-month and service incentive leave pays.
The Courts Ruling

The petition is partly meritorious.

First Issue: Illegal Dismissal

The private respondents transfer, according to Respondent Commission, was affected to

circumvent the mandate of Republic Act 7641 (New Retirement Law), which by then had
already taken effect, in view of the fact that the complainants had worked for both the Client and
the Agency for 10 to 20 years and were nearing retirement age. With this premise, the NLRC
concluded that the guards were illegally dismissed. The complainants add that the findings of the
Commission match the remarks of the personnel manager of the Agency, Feliciano Marticion;
that is, that they were being replaced because they were already old. They insist that their service
records are unblemished; hence, they could not have been dismissed by reason of any just cause.

We agree that the security guards were illegally dismissed, but not for the reasons given by the
public respondent. The aforecited contentions of the NLRC are speculative and unsupported by
the evidence on record. As the solicitor general said in his Manifestation in Lieu of Comment,
the relief and transfer order was akin to placing private respondents on temporary off-detail.

Being sidelined temporarily is a standard stipulation in employment contracts, as the availability

of assignment for security guards is primarily dependent on the contracts entered into by the
agency with third parties. Most contracts for security services, as in this case, stipulate that the
client may request the replacement of the guards assigned to it. In security agency parlance,
being placed off detail or on floating status means waiting to be posted.xiv[14] This
circumstance is not equivalent to dismissal, so long as such status does not continue beyond
reasonable time.xv[15]
In the case at bar, the relief and transfer order per se did not sever the employment relationship
between the complainants and the Agency. Thus, despite the fact that complainants were no
longer assigned to the Client, Article 287 of the Labor Code, as amended by RA 7641, still binds
the Agency to provide them upon their reaching the retirement age of sixty to sixty-five years
retirement pay or whatever else was established in the collective bargaining agreement or in any
other applicable employment contract. On the other hand, the Client is not liable to the
complainants for their retirement pay because of the absence of an employer-employee
relationship between them.

However, the Agency claims that the complainants, after being placed off-detail, abandoned their
employ. The solicitor general, siding with the Agency and the labor arbiter, contends that while
abandonment of employment is inconsistent with the filing of a complaint for illegal dismissal,
such rule is not applicable where [the complainant] expressly rejects this relief and asks for
separation pay instead.

The Court disagrees. Abandonment, as a just and valid cause for termination, requires a
deliberate and unjustified refusal of an employee to resume his work, coupled with a clear
absence of any intention of returning to his or her work.xvi[16] That complainants did not pray
for reinstatement is not sufficient proof of abandonment. A strong indication of the intention of
complainants to resume work is their allegation that on several dates they reported to the Agency
for reassignment, but were not given any. In fact, the contention of complainant is that the
Agency constructively dismissed them. Abandonment has recently been ruled to be incompatible
with constructive dismissal. We, thus, rule that complainants did not abandon their jobs.xvii[17]
We will now demonstrate why we believe complainants were illegally dismissed.

In several cases, the Court has recognized the prerogative of management to transfer an
employee from one office to another within the same business establishment, as the exigency of
the business may require, provided that the said transfer does not result in a demotion in rank or
a diminution in salary, benefits and other privileges of the employee;xviii[18] or is not
unreasonable, inconvenient or prejudicial to the latter;xix[19] or is not used as a subterfuge by
the employer to rid himself of an undesirable worker.xx[20]

A transfer means a movement (1) from one position to another of equivalent rank, level or salary,
without a break in the service;xxi[21] and (2) from one office to another within the same
business establishment.xxii[22] It is distinguished from a promotion in the sense that it involves
a lateral change as opposed to a scalar ascent.xxiii[23]

In this case, transfer of the complainants implied more than a relief from duty to give them time
to rest a mere changing of the guards. Rather, their transfer connoted a reshuffling or exchange
of their posts, or their reassignment to other posts, such that no security guard would be without
an assignment.

However, this legally recognized concept of transfer was not implemented. The agency hired
new security guards to replace the complainants, resulting in a lack of posts to which the
complainants could have been reassigned. Thus, it refused to reassign Complainant Andoy when
he reported for duty on February 2, 4 and 7, 1994; and merely told the other complainants on
various dates from January 25 to 27, 1994 that they were already too old to be posted anywhere.

The Agency now explains that since, under the law, the Agency is given a period of not more
than six months to retain the complainants on floating status, the complaint for illegal dismissal
is premature. This contention is incorrect.

A floating status requires the dire exigency of the employers bona fide suspension of operation,
business or undertaking. In security services, this happens when the clients that do not renew
their contracts with a security agency are more than those that do and the new ones that the
agency gets. However, in the case at bar, the Agency was awarded a new contract by the Client.
There was no surplus of security guards over available assignments. If there were, it was because
the Agency hired new security guards. Thus, there was no suspension of operation, business or
undertaking, bona fide or not, that would have justified placing the complainants off-detail and
making them wait for a period of six months. If indeed they were merely transferred, there would
have been no need to make them wait for six months.

The only logical conclusion from the foregoing discussion is that the Agency illegally dismissed
the complainants. Hence, as a necessary consequence, the complainants are entitled to
reinstatement and back wages.xxiv[24] However, reinstatement is no longer feasible in this case.
The Agency cannot reassign them to the Client, as the former has recruited new security guards;
the complainants, on the other hand, refuse to accept other assignments. Verily, complainants do
not pray for reinstatement; in fact, they refused to be reinstated. Such refusal is indicative of
strained relations.xxv[25] Thus, separation pay is awarded in lieu of reinstatement.xxvi[26]
Second Issue:
Clients Liability

The Client did not, as it could not, illegally dismiss the complainants. Thus, it should not be held
liable for separation pay and back wages. But even if the Client is not responsible for the illegal
dismissal of the complainants, it is jointly and severally liable with the Agency for the
complainants service incentive leave pay. In Rosewood Processing, Inc. vs. National Labor
Relations Commission,xxvii[27] the Court explained that, notwithstanding the service contract
between the client and the security agency, the two are solidarily liable for the proper wages
prescribed by the Labor Code, pursuant to Article 106, 107 and 109 thereof, which we quote
hereunder:

ART. 106. Contractor or subcontractor.Whenever an employer enters into a contract with

another person for the performance of the former[s] work, the employees of the contractor and of
the latter[s] subcontractor, if any, shall be paid in accordance with the provisions of this Code.

In the event that the contractor or subcontractor fails to pay the wages of his employees in
accordance with this Code, the employer shall be jointly and severally liable with his contractor
or subcontractor to such employees to the extent of the work performed under the contract, in the
same manner and extent that he is liable to employees directly employed by him.
The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of
labor to protect the rights of workers established under this Code. In so prohibiting or restricting,
he may make appropriate distinctions between labor-only contracting and job contracting as well
as differentiations within these types of contracting and determine who among the parties
involved shall be considered the employer for purposes of this Code, to prevent any violation or
circumvention of any provision of this Code.

xxx In such cases [labor-only contracting], the person or intermediary shall be considered merely
as an agent of the employer who shall be responsible to the workers in the same manner and
extent as if the latter were directly employed by him.

ART. 107. Indirect employer.The provisions of the immediately preceding Article shall
likewise apply to any person, partnership, association or corporation which, not being an
employer, contracts with an independent contractor for the performance of any work, task, job or
project.

ART. 109. Solidary liability.The provisions of existing laws to the contrary notwithstanding,
every employer or indirect employer shall be held responsible with his contractor or
subcontractor for any violation of any provision of this Code. For purpose of determining the
extent of their civil liability under this Chapter, they shall be considered as direct employers.

Under these provisions, the indirect employer, who is the Client in the case at bar, is jointly and
severally liable with the contractor for the workers wages, in the same manner and extent that it
is liable to its direct employees. This liability of the Client covers the payment of the service
incentive leave pay of the complainants during the time they were posted at the Cebu branch of
the Client. As service had been rendered, the liability accrued, even if the complainants were
eventually transferred or reassigned.

The service incentive leave is expressly granted by these pertinent provisions of the Labor Code:

ART. 95. Right to service incentive leave.(a) Every employee who has rendered at least
one year of service shall be entitled to a yearly service incentive leave of five days with pay.

(b) This provision shall not apply to those who are already enjoying the benefit herein
provided, those enjoying vacation leave with pay of at least five days and those employed in
establishments regularly employing less than ten employees or in establishments exempted from
granting this benefit by the Secretary of Labor after considering the viability or financial
condition of such establishment.

(c) The grant of benefit in excess of that provided herein shall not be made a subject of
arbitration or any court [or] admnistrative action.

Under the Implementing Rules and Regulations of the Labor Code, an unused service incentive
leave is commutable to its money equivalent, viz.:
Sec. 5. Treatment of Banefit. - The service incentive leave shall be commutable to its money
equivalent if not used or exhausted at the end of the year.

The award of the thirteenth-month pay is deleted in view of the evidence presented by the
Agency that such claim has already been paid to the complainants. Obviously then, the award of
such benefit in the dispositive portion of the assailed Decision is merely an oversight,
considering that Respondent Commission itself deleted it from the main body of the said
Decision.

WHEREFORE, the petition is DISMISSED and the assailed Decision and Resolution are
hereby AFFIRMED, but the award of the thirteenth-month pay is DELETED. Costs against
petitioners.

SO ORDERED.
FIRST DIVISION

[G.R. No. 146775. January 30, 2002]

SAN MIGUEL CORPORATION, petitioner, vs. THE HONORABLE COURT OF APPEALS-

FORMER THIRTEENTH DIVISION, HON. UNDERSECRETARY JOSE M. ESPAOL, JR.,
Hon. CRESENCIANO B. TRAJANO, and HON. REGIONAL DIRECTOR ALLAN M.
MACARAYA, respondents.

DECISION

KAPUNAN, J.:

Assailed in the petition before us are the decision, promulgated on 08 May 2000, and the
resolution, promulgated on 18 October 2000, of the Court of Appeals in CA G.R. SP-53269.

The facts of the case are as follows:

On 17 October 1992, the Department of Labor and Employment (DOLE), Iligan District Office,
conducted a routine inspection in the premises of San Miguel Corporation (SMC) in Sta.
Filomena, Iligan City. In the course of the inspection, it was discovered that there was
underpayment by SMC of regular Muslim holiday pay to its employees. DOLE sent a copy of
the inspection result to SMC and it was received by and explained to its personnel officer Elena
dela Puerta.i[1] SMC contested the findings and DOLE conducted summary hearings on 19
November 1992, 28 May 1993 and 4 and 5 October 1993. Still, SMC failed to submit proof that
it was paying regular Muslim holiday pay to its employees. Hence, Alan M. Macaraya, Director
IV of DOLE Iligan District Office issued a compliance order, dated 17 December 1993, directing
SMC to consider Muslim holidays as regular holidays and to pay both its Muslim and non-
Muslim employees holiday pay within thirty (30) days from the receipt of the order.

SMC appealed to the DOLE main office in Manila but its appeal was dismissed for having been
filed late. The dismissal of the appeal for late filing was later on reconsidered in the order of 17
July 1998 after it was found that the appeal was filed within the reglementary period. However,
the appeal was still dismissed for lack of merit and the order of Director Macaraya was affirmed.

SMC went to this Court for relief via a petition for certiorari, which this Court referred to the
Court of Appeals pursuant to St. Martin Funeral Homes vs. NLRC.i[2]

The appellate court, in the now questioned decision, promulgated on 08 May 2000, ruled, as
follows:

WHEREFORE, the Order dated December 17, 1993 of Director Macaraya and Order dated July
17, 1998 of Undersecretary Espaol, Jr. is hereby MODIFIED with regards the payment of
Muslim holiday pay from 200% to 150% of the employee's basic salary. Let this case be
remanded to the Regional Director for the proper computation of the said holiday pay.
SO ORDERED.i[3]

Its motion for reconsideration having been denied for lack of merit, SMC filed a petition for
certiorari before this Court, alleging that:

PUBLIC RESPONDENTS SERIOUSLY ERRED AND COMMITTED GRAVE ABUSE OF

DISCRETION WHEN THEY GRANTED MUSLIM HOLIDAY PAY TO NON-MUSLIM
EMPLOYEES OF SMC-ILICOCO AND ORDERING SMC TO PAY THE SAME
RETROACTIVE FOR ONE (1) YEAR FROM THE DATE OF THE PROMULGATION OF
THE COMPLIANCE ORDER ISSUED ON DECEMBER 17, 1993, IT BEING CONTRARY
TO THE PROVISIONS, INTENT AND PURPOSE OF P.D. 1083 AND PREVAILING
JURISPRUDENCE.

THE ISSUANCE OF THE COMPLIANCE ORDER WAS TAINTED WITH GRAVE ABUSE
OF DISCRETION IN THAT SAN MIGUEL CORPORATION WAS NOT ACCORDED DUE
PROCESS OF LAW; HENCE, THE ASSAILED COMPLIANCE ORDER AND ALL
SUBSEQUENT ORDERS, DECISION AND RESOLUTION OF PUBLIC RESPONDENTS
WERE ALL ISSUED WITH GRAVE ABUSE OF DISCRETION AND ARE VOID AB
INITIO.

THE HON. COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION WHEN

IT DECLARED THAT REGIONAL DIRECTOR MACARAYA, UNDERSECRETARY
TRAJANO AND UNDERSECRETARY ESPAOL, JR., WHO ALL LIKEWISE ACTED WITH
GRAVE ABUSE OF DISCRETION AND WITHOUT OR IN EXCESS OF THEIR
JURISDICTION, HAVE JURISDICTION IN ISSUING THE ASSAILED COMPLIANCE
ORDER AND SUBSEQUENT ORDERS, WHEN IN FACT THEY HAVE NO
JURISDICTION OR HAS LOST JURISDICTION OVER THE HEREIN LABOR STANDARD
CASE.i[4]

At the outset, petitioner came to this Court via a petition for certiorari under Rule 65 instead of
an appeal under Rule 45 of the 1997 Rules of Civil Procedure. In National Irrigation
Administration vs. Court of Appeals,i[5] the Court declared:

x x x (S)ince the Court of Appeals had jurisdiction over the petition under Rule 65, any alleged
errors committed by it in the exercise of its jurisdiction would be errors of judgment which are
reviewable by timely appeal and not by a special civil action of certiorari. If the aggrieved party
fails to do so within the reglementary period, and the decision accordingly becomes final and
executory, he cannot avail himself of the writ of certiorari, his predicament being the effect of
his deliberate inaction.

The appeal from a final disposition of the Court of Appeals is a petition for review under Rule 45
and not a special civil action under Rule 65 of the Rules of Court, now Rule 45 and Rule 65,
respectively, of the 1997 Rules of Civil Procedure. Rule 45 is clear that decisions, final orders or
resolutions of the Court of Appeals in any case, i.e., regardless of the nature of the action or
proceeding involved, may be appealed to this Court by filing a petition for review, which would
be but a continuation of the appellate process over the original case. Under Rule 45 the
reglementary period to appeal is fifteen (15) days from notice of judgment or denial of motion
for reconsideration.

xxx

For the writ of certiorari under Rule 65 of the Rules of Court to issue, a petitioner must show
that he has no plain, speedy and adequate remedy in the ordinary course of law against its
perceived grievance. A remedy is considered "plain, speedy and adequate" if it will promptly
relieve the petitioner from the injurious effects of the judgment and the acts of the lower court or
agency. In this case, appeal was not only available but also a speedy and adequate remedy. i[6]

Well-settled is the rule that certiorari cannot be availed of as a substitute for a lost appeal.i[7] For
failure of petitioner to file a timely appeal, the questioned decision of the Court of Appeals had
already become final and executory.

In any event, the Court finds no reason to reverse the decision of the Court of Appeals.

Muslim holidays are provided under Articles 169 and 170, Title I, Book V, of Presidential
Decree No. 1083,i[8] otherwise known as the Code of Muslim Personal Laws, which states:

Art. 169. Official Muslim holidays. - The following are hereby recognized as legal Muslim
holidays:

(a) Amun Jadd (New Year), which falls on the first day of the first lunar month of Muharram;

(b) Maulid-un-Nab (Birthday of the Prophet Muhammad), which falls on the twelfth day of the
third lunar month of Rabi-ul-Awwal;

(c) Lailatul Isr Wal Mirj (Nocturnal Journey and Ascension of the Prophet Muhammad),
which falls on the twenty-seventh day of the seventh lunar month of Rajab;

(d) d-ul-Fitr (Hari Raya Puasa), which falls on the first day of the tenth lunar month of
Shawwal, commemorating the end of the fasting season; and

(e) d-l-Adh (Hari Raya Haji),which falls on the tenth day of the twelfth lunar month of Dhl-
Hijja.

Art. 170. Provinces and cities where officially observed. - (1) Muslim holidays shall be officially
observed in the Provinces of Basilan, Lanao del Norte, Lanao del Sur, Maguindanao, North
Cotabato, Iligan, Marawi, Pagadian, and Zamboanga and in such other Muslim provinces and
cities as may hereafter be created;

(2) Upon proclamation by the President of the Philippines, Muslim holidays may also be
officially observed in other provinces and cities.
The foregoing provisions should be read in conjunction with Article 94 of the Labor Code, which
provides:

Art. 94. Right to holiday pay. -

(a) Every worker shall be paid his regular daily wage during regular holidays,
except in retail and service establishments regularly employing less than
ten (10) workers;

(b) The employer may require an employee to work on any holiday but such
employee shall be paid a compensation equivalent to twice his regular
rate; x x x.

Petitioner asserts that Article 3(3) of Presidential Decree No. 1083 provides that (t)he provisions
of this Code shall be applicable only to Muslims x x x. However, there should be no distinction
between Muslims and non-Muslims as regards payment of benefits for Muslim holidays. The
Court of Appeals did not err in sustaining Undersecretary Espaol who stated:

Assuming arguendo that the respondents position is correct, then by the same token, Muslims
throughout the Philippines are also not entitled to holiday pays on Christian holidays declared by
law as regular holidays. We must remind the respondent-appellant that wages and other
emoluments granted by law to the working man are determined on the basis of the criteria laid
down by laws and certainly not on the basis of the workers faith or religion.

At any rate, Article 3(3) of Presidential Decree No. 1083 also declares that x x x nothing herein
shall be construed to operate to the prejudice of a non-Muslim.

In addition, the 1999 Handbook on Workers Statutory Benefits, approved by then DOLE
Secretary Bienvenido E. Laguesma on 14 December 1999 categorically stated:

Considering that all private corporations, offices, agencies, and entities or establishments
operating within the designated Muslim provinces and cities are required to observe Muslim
holidays, both Muslim and Christians working within the Muslim areas may not report for
work on the days designated by law as Muslim holidays.i[9]

On the question regarding the jurisdiction of the Regional Director Allan M. Macaraya, Article
128, Section B of the Labor Code, as amended by Republic Act No. 7730, provides:

Article 128. Visitorial and enforcement power. -

xxx

(b) Notwithstanding the provisions of Article 129 and 217 of this Code to the contrary, and in
cases where the relationship of employer-employee still exists, the Secretary of Labor and
Employment or his duly authorized representatives shall have the power to issue compliance
orders to give effect to the labor standards provisions of this Code and other labor legislation
based on the findings of labor employment and enforcement officers or industrial safety
engineers made in the course of the inspection. The Secretary or his duly authorized
representative shall issue writs of execution to the appropriate authority for the enforcement of
their orders, except in cases where the employer contests the findings of the labor employment
and enforcement officer and raises issues supported by documentary proofs which were not
considered in the course of inspection.

xxx

In the case before us, Regional Director Macaraya acted as the duly authorized representative of
the Secretary of Labor and Employment and it was within his power to issue the compliance
order to SMC. In addition, the Court agrees with the Solicitor General that the petitioner did not
deny that it was not paying Muslim holiday pay to its non-Muslim employees. Indeed, petitioner
merely contends that its non-Muslim employees are not entitled to Muslim holiday pay. Hence,
the issue could be resolved even without documentary proofs. In any case, there was no
indication that Regional Director Macaraya failed to consider any documentary proof presented
by SMC in the course of the inspection.

Anent the allegation that petitioner was not accorded due process, we sustain the Court of
Appeals in finding that SMC was furnished a copy of the inspection order and it was received by
and explained to its Personnel Officer. Further, a series of summary hearings were conducted by
DOLE on 19 November 1992, 28 May 1993 and 4 and 5 October 1993. Thus, SMC could not
claim that it was not given an opportunity to defend itself.

Finally, as regards the allegation that the issue on Muslim holiday pay was already resolved in
NLRC CA No. M-000915-92 (Napoleon E. Fernan vs. San Miguel Corporation Beer Division
and Leopoldo Zaldarriaga),i[10] the Court notes that the case was primarily for illegal dismissal
and the claim for benefits was only incidental to the main case. In that case, the NLRC Cagayan
de Oro City declared, in passing:

We also deny the claims for Muslim holiday pay for lack of factual and legal basis. Muslim
holidays are legally observed within the area of jurisdiction of the present Autonomous Region
for Muslim Mindanao (ARMM), particularly in the provinces of Maguindanao, Lanao del Sur,
Sulu and Tawi-Tawi. It is only upon Presidential Proclamation that Muslim holidays may be
officially observed outside the Autonomous Region and generally extends to Muslims to enable
them the observe said holidays.i[11]

The decision has no consequence to issues before us, and as aptly declared by Undersecretary
Espaol, it can never be a benchmark nor a guideline to the present case x x x.i[12]

WHEREFORE, in view of the foregoing, the petition is DISMISSED.

SO ORDERED.