G.R. No. 119205 April 15, 1998
SIME DARBY PILIPINAS, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (2ND DIVISION) and SIME DARBY SALARIED EMPLOYEES ASSOCIATION (ALU-TUCP), respondents.

FACTS

Petitioner Sime Darby Pilipinas, Inc. is engaged in manufacturing automotive tires and rubber products. Private respondent Sime Darby Salaried Employees Association (ALU-TUCP) is an association of the company’s monthly salaried employees at its Marikina factory. Prior to the controversy, all factory workers, including union members, worked from 7:45 a.m. to 3:45 p.m. with a 30-minute paid “on call” lunch break. On August 14, 1992, petitioner issued a memorandum changing the work schedule effective September 14, 1992, to 7:45 a.m. to 4:45 p.m. (Monday to Friday) and 7:45 a.m. to 11:45 a.m. (Saturday), with a one-hour unpaid lunch break from 12:00 nn to 1:00 p.m. and a ten-minute coffee break. The change applied to all factory-based employees except those in the Warehouse and Quality Assurance Department on shifts. The private respondent union filed a complaint for unfair labor practice, discrimination, and evasion of liability, citing a previous Supreme Court ruling in a related Sime Darby case. The Labor Arbiter dismissed the complaint, ruling the change was a valid management prerogative and did not diminish benefits as the workday did not exceed eight hours. The NLRC initially sustained the Labor Arbiter but, upon motion for reconsideration and with a change in commissioners, reversed itself. The NLRC held that the new schedule deprived employees of a “time-honored company practice” of a paid lunch break, constituting an unjust diminution of benefits under Article 100 of the Labor Code. Petitioner filed this petition, arguing the NLRC committed grave abuse of discretion.

ISSUE

Is the act of management in revising the work schedule of its employees and discarding their paid lunch break constitutive of unfair labor practice and an unjust diminution of benefits?

RULING

No. The Supreme Court granted the petition, set aside the NLRC Resolution, and affirmed the Labor Arbiter’s decision dismissing the complaint. The Court held that the right to fix work schedules rests principally on the employer. The change was implemented to improve business efficiency and production. The previous 30-minute paid lunch break was “on call,” meaning employees could be required to work during that period, making it effectively working time. The new schedule provided a full, undisturbed one-hour lunch break without pay, as employees were no longer required to be on call. The new work schedule complied with the eight-hour workday under the Labor Code and applied uniformly to all similarly situated factory employees, whether union members or not, thus negating any claim of discrimination or unfair labor practice. The Court distinguished the present case from the earlier Sime Darby case, which involved discrimination for granting paid lunch breaks to some employees but not others. The Court reiterated that management retains the prerogative to regulate all aspects of employment, including working hours, provided it is exercised in good faith for the advancement of the employer’s interest and not to defeat employee rights. The change was a valid exercise of management prerogative and did not constitute unfair labor practice or an unjust diminution of benefits.