San Miguel Corporation vs. Court of Appeals

The proper remedy from a decision of the Court of Appeals is a petition for review under Rule 45, not a special civil action for certiorari under Rule 65, and certiorari cannot be availed of as a substitute for a lost appeal. Additionally, Muslim holidays are regular holidays in the provinces and cities designated under Article 170 of Presidential Decree No. 1083, and both Muslim and non-Muslim employees working in those areas are entitled to holiday pay pursuant to Article 94 of the Labor Code.

San Miguel Corporation (SMC) is a corporation operating a facility in Sta. Filomena, Iligan City, which is among the areas where Muslim holidays are officially observed under Article 170 of Presidential Decree No. 1083, otherwise known as the Code of Muslim Personal Laws. The Department of Labor and Employment (DOLE) exercises visitorial and enforcement powers over labor standards provisions under Article 128 of the Labor Code, as amended by Republic Act No. 7730. The case involves the application of Articles 169 and 170 of P.D. 1083, which recognize certain Muslim holidays as legal holidays in designated provinces and cities, in conjunction with Article 94 of the Labor Code, which grants workers the right to holiday pay during regular holidays.

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, which was received by and explained to its personnel officer Elena dela Puerta.

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 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 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 the Supreme Court for relief via a petition for certiorari, which the Court referred to the Court of Appeals pursuant to St. Martin Funeral Homes vs. NLRC. The appellate court, in its decision promulgated on 08 May 2000, modified the order of Director Macaraya and the order of Undersecretary Español, Jr. with respect to the payment of Muslim holiday pay from 200% to 150% of the employee's basic salary, and remanded the case to the Regional Director for the proper computation of the said holiday pay. SMC's motion for reconsideration was denied for lack of merit, prompting SMC to file a petition for certiorari before the Supreme Court.

SMC alleged that the public respondents gravely abused their discretion in granting Muslim holiday pay to non-Muslim employees and ordering SMC to pay the same retroactively for one year, contrary to the provisions, intent, and purpose of P.D. 1083 and prevailing jurisprudence. SMC also claimed that the issuance of the compliance order was tainted with grave abuse of discretion because SMC was not accorded due process of law, and that the respondents had no jurisdiction or had lost jurisdiction over the labor standard case.

• Muslim Holiday Pay to Non-Muslims: Petitioner argued that public respondents seriously erred and committed grave abuse of discretion when they granted Muslim holiday pay to non-Muslim employees of SMC-Iligan and ordered SMC to pay the same retroactive for one 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.
• Due Process: Petitioner argued that the issuance of the compliance order was tainted with grave abuse of discretion in that SMC 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.
• Jurisdiction: Petitioner argued that the Court of Appeals committed grave abuse of discretion when it declared that Regional Director Macaraya, Undersecretary Trajano, and Undersecretary Español, 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 have lost jurisdiction over the labor standard case.

• Muslim Holiday Pay: The Solicitor General argued that the petitioner did not deny that it was not paying Muslim holiday pay to its non-Muslim employees; petitioner merely contended that its non-Muslim employees are not entitled to Muslim holiday pay, and the issue could be resolved even without documentary proofs.
• Prior NLRC Case: The Solicitor General and Undersecretary Español maintained that the prior NLRC case (Napoleon E. Fernan vs. San Miguel Corporation Beer Division and Leopoldo Zaldarriaga) has no consequence to the issues before the Court, as it "can never be a benchmark nor a guideline to the present case."

• Procedural Remedy: Whether the petition for certiorari under Rule 65 was the proper remedy from the decision of the Court of Appeals, or whether SMC should have filed an appeal under Rule 45.
• Muslim Holiday Pay to Non-Muslims: Whether non-Muslim employees of SMC in Iligan City are entitled to Muslim holiday pay under P.D. 1083 and the Labor Code.
• Jurisdiction of the Regional Director: Whether Regional Director Macaraya had jurisdiction to issue the compliance order under Article 128 of the Labor Code, as amended by Republic Act No. 7730.
• Due Process: Whether SMC was denied due process of law in the issuance of the compliance order.
• Prior Judgment: Whether 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).

• Procedural Remedy: No. The petition for certiorari under Rule 65 was an improper remedy because an appeal under Rule 45 was available, plain, speedy, and adequate; certiorari cannot be availed of as a substitute for a lost appeal, and the questioned decision of the Court of Appeals had become final and executory for failure to file a timely appeal.
• Muslim Holiday Pay to Non-Muslims: Yes. Muslim holidays are regular holidays in the provinces and cities designated under Article 170 of P.D. 1083, and both Muslim and non-Muslim employees working in those areas are entitled to holiday pay under Article 94 of the Labor Code; there should be no distinction between Muslims and non-Muslims as regards payment of benefits for Muslim holidays.
• Jurisdiction of the Regional Director: Yes. 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 under Article 128(b) of the Labor Code, as amended by Republic Act No. 7730.
• Due Process: No. SMC was furnished a copy of the inspection order, received by and explained to its Personnel Officer, and a series of summary hearings were conducted by DOLE; SMC could not claim that it was not given an opportunity to defend itself.
• Prior Judgment: No. The prior NLRC case was primarily for illegal dismissal, and the claim for benefits was only incidental to the main case; the decision has no consequence to the issues before the Court.

• Procedural Remedy: The Court cited National Irrigation Administration vs. Court of Appeals, which declared that since 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 reviewable by timely appeal and not by a special civil action of certiorari. The appeal from a final disposition of the Court of Appeals is a petition for review under Rule 45, regardless of the nature of the action or proceeding involved, 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. For the writ of certiorari under Rule 65 to issue, a petitioner must show that he has no plain, speedy, and adequate remedy in the ordinary course of law; in this case, appeal was not only available but also a speedy and adequate remedy. Well-settled is the rule that certiorari cannot be availed of as a substitute for a lost appeal. For failure of petitioner to file a timely appeal, the questioned decision of the Court of Appeals had already become final and executory.
• Muslim Holiday Pay to Non-Muslims: The Court held that Articles 169 and 170 of P.D. 1083 recognize certain Muslim holidays as legal holidays officially observed in designated provinces and cities, including Iligan. These provisions should be read in conjunction with Article 94 of the Labor Code, which provides that every worker shall be paid his regular daily wage during regular holidays. The Court rejected petitioner's assertion that Article 3(3) of P.D. 1083 limits the application of the Code to Muslims only, stating that 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 Español's statement that if the respondent's position were correct, then by the same token, Muslims throughout the Philippines would also not be entitled to holiday pays on Christian holidays declared by law as regular holidays, and that wages and other emoluments granted by law to the working man are determined on the basis of criteria laid down by laws, not on the basis of the worker's faith or religion. Article 3(3) of P.D. 1083 also declares that "nothing herein shall be construed to operate to the prejudice of a non-Muslim." The 1999 Handbook on Workers' Statutory Benefits, approved by then DOLE Secretary Bienvenido E. Laguesma, categorically stated that since 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.
• Jurisdiction of the Regional Director: The Court cited Article 128, Section B of the Labor Code, as amended by Republic Act No. 7730, which provides that notwithstanding the provisions of Articles 129 and 217 of the Code, 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 the Code and other labor legislation based on the findings of labor employment and enforcement officers made in the course of inspection. In this case, 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. The Court agreed with the Solicitor General that the petitioner did not deny that it was not paying Muslim holiday pay to its non-Muslim employees; petitioner merely contended 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.
• Due Process: The Court sustained the Court of Appeals in finding that SMC was furnished a copy of the inspection order, 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.
• Prior Judgment: The Court noted that the prior NLRC case (Napoleon E. Fernan vs. San Miguel Corporation Beer Division and Leopoldo Zaldarriaga) 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, that Muslim holidays are legally observed within the area of jurisdiction of the Autonomous Region for Muslim Mindanao (ARMM), particularly in the provinces of Maguindanao, Lanao del Sur, Sulu, and Tawi-Tawi, and that it is only upon Presidential Proclamation that Muslim holidays may be officially observed outside the Autonomous Region. The Court held that this decision has no consequence to the issues before it, and as aptly declared by Undersecretary Español, it "can never be a benchmark nor a guideline to the present case."

• Certiorari Not a Substitute for Lost Appeal — A petition for certiorari under Rule 65 cannot be availed of as a substitute for a lost appeal. Where an appeal under Rule 45 is available, plain, speedy, and adequate, the failure to file a timely appeal renders the questioned decision final and executory, and certiorari will not lie. The Court applied this doctrine to dismiss SMC's petition, which was filed under Rule 65 instead of Rule 45.
• Muslim Holidays as Regular Holidays — Under Articles 169 and 170 of P.D. 1083, Muslim holidays are legal holidays officially observed in designated provinces and cities, including Iligan. When read in conjunction with Article 94 of the Labor Code, every worker in those areas, regardless of religious affiliation, is entitled to holiday pay during these regular holidays. The Court applied this doctrine to affirm the grant of Muslim holiday pay to non-Muslim employees of SMC in Iligan City.
• Visitorial and Enforcement Power of the Secretary of Labor — Under Article 128(b) of the Labor Code, as amended by Republic Act No. 7730, the Secretary of Labor and Employment or his duly authorized representatives have the power to issue compliance orders to give effect to labor standards provisions based on findings made in the course of inspection, notwithstanding the provisions of Articles 129 and 217. The Court applied this doctrine to uphold the jurisdiction of Regional Director Macaraya to issue the compliance order against SMC.

• "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." — This passage articulates the standard for the issuance of certiorari under Rule 65 and the Court's basis for dismissing SMC's petition for being an improper remedy.
• "However, there should be no distinction between Muslims and non-Muslims as regards payment of benefits for Muslim holidays." — This statement encapsulates the Court's ruling on the substantive issue of whether non-Muslim employees are entitled to Muslim holiday pay.
• "Assuming arguendo that the respondent's 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 worker's faith or religion." — This passage, quoted approvingly by the Court, explains the rationale for granting Muslim holiday pay to non-Muslim employees, emphasizing that labor benefits are determined by law, not by religious affiliation.
• "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." — This passage from the 1999 Handbook on Workers' Statutory Benefits, quoted by the Court, confirms that both Muslim and Christian employees in designated Muslim areas are entitled to observe Muslim holidays.

• St. Martin Funeral Homes vs. NLRC, 295 SCRA 494 (1998) — Cited as the basis for the Supreme Court's referral of SMC's petition for certiorari to the Court of Appeals.
• National Irrigation Administration vs. Court of Appeals, 318 SCRA 255 (1999) — Controlling precedent on the rule that errors committed by the Court of Appeals in the exercise of its jurisdiction are errors of judgment reviewable by timely appeal under Rule 45, not by a special civil action of certiorari under Rule 65.
• GSIS vs. Olisa, 304 SCRA 421 (1999) — Cited in support of the rule that certiorari cannot be availed of as a substitute for a lost appeal.
• Mathay, Jr. vs. Civil Service Commission, 312 SCRA 91 (1999) — Cited in support of the rule that certiorari cannot be availed of as a substitute for a lost appeal.
• Republic vs. Court of Appeals, 313 SCRA 376 (1999) — Cited in support of the rule that certiorari cannot be availed of as a substitute for a lost appeal.

• Article 169, Presidential Decree No. 1083 — Recognizes certain Muslim holidays as legal holidays, including 'Amun Jadid (New Year), Maulid-un-Nabi (Birthday of the Prophet Muhammad), Lailatul Isra Wal Mi'raj (Nocturnal Journey and Ascension of the Prophet Muhammad), 'Id-ul-Fitr (Hari Raya Puasa), and 'Id-ul-Adha (Hari Raya Haji). The Court applied this provision to determine which Muslim holidays are recognized as legal holidays.
• Article 170, Presidential Decree No. 1083 — Provides that 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. The Court applied this provision to determine that Iligan City is among the areas where Muslim holidays are officially observed.
• Article 3(3), Presidential Decree No. 1083 — Provides that the provisions of the Code shall be applicable only to Muslims, but also declares that "nothing herein shall be construed to operate to the prejudice of a non-Muslim." The Court interpreted this provision to support the grant of Muslim holiday pay to non-Muslim employees.
• Article 94, Labor Code — Provides that every worker shall be paid his regular daily wage during regular holidays, and that an employee required to work on any holiday shall be paid compensation equivalent to twice his regular rate. The Court read this provision in conjunction with Articles 169 and 170 of P.D. 1083 to grant Muslim holiday pay to both Muslim and non-Muslim employees.
• Article 128(b), Labor Code, as amended by Republic Act No. 7730 — Grants the Secretary of Labor and Employment or his duly authorized representatives the power to issue compliance orders to give effect to labor standards provisions based on findings made in the course of inspection. The Court applied this provision to uphold the jurisdiction of Regional Director Macaraya to issue the compliance order against SMC.

• Davide, Jr., C.J. (Chairman)
• Puno, J.
• Pardo, J.
• Ynares-Santiago, J.