[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.
DECISION
BELLOSILLO, J.:
Is the act of management in revising the work schedule of its employees and discarding their paid lunch
break constitutive of unfair labor practice?
Sime Darby Pilipinas, Inc., petitioner, is engaged in the manufacture of automotive tires, tubes and other
rubber products. Sime Darby Salaried Employees Association (ALU-TUCP), private respondent, is an
association of monthly salaried employees of petitioner at its Marikina factory. Prior to the present
controversy, all company factory workers in Marikina including members of private respondent union
worked from 7:45 a.m. to 3:45 p.m. with a 30 minute paid on call lunch break.
On 14 August 1992 petitioner issued a memorandum to all factory-based employees advising all its
monthly salaried employees in its Marikina Tire Plant, except those in the Warehouse and Quality
Assurance Department working on shifts, a change in work schedule effective 14 September 1992 thus
TO: ALL FACTORY-BASED EMPLOYEES
RE: NEW WORK SCHEDULE
Effective Monday, September 14, 1992, the new work schedule factory office will be as follows:
7:45 A.M. 4:45 P.M. (Monday to Friday)
7:45 A.M. 11:45 P.M. (Saturday).
Coffee break time will be ten minutes only anytime between:
9:30 A.M. 10:30 A.M. and
2:30 P.M. 3:30 P.M.
Lunch break will be between:
12:00 NN 1:00 P.M. (Monday to Friday).

Excluded from the above schedule are the Warehouse and QA employees who are on shifting.
Their work and break time schedules will be maintained as it is now. i[1]
Since private respondent felt affected adversely by the change in the work schedule and discontinuance
of the 30-minute paid on call lunch break, it filed on behalf of its members a complaint with the Labor
Arbiter for unfair labor practice, discrimination and evasion of liability pursuant to the resolution of this
Court in Sime Darby International Tire Co., Inc. v. NLRC. ii[2] However, the Labor Arbiter dismissed the
complaint on the ground that the change in the work schedule and the elimination of the 30-minute paid
lunch break of the factory workers constituted a valid exercise of management prerogative and that the
new work schedule, break time and one-hour lunch break did not have the effect of diminishing the
benefits granted to factory workers as the working time did not exceed eight (8) hours.
The Labor Arbiter further held that the factory workers would be justly enriched if they continued to be
paid during their lunch break even if they were no longer on call or required to work during the break. He
also ruled that the decision in the earlier Sime Darby caseiii[3] was not applicable to the instant case
because the former involved discrimination of certain employees who were not paid for their 30-minute
lunch break while the rest of the factory workers were paid; hence, this Court ordered that the
discriminated employees be similarly paid the additional compensation for their lunch break.
Private respondent appealed to respondent National Labor Relations Commission (NLRC) which
sustained the Labor Arbiter and dismissed the appeal. iv[4] However, upon motion for reconsideration by
private respondent, the NLRC, this time with two (2) new commissioners replacing those who earlier
retired, reversed its arlier decision of 20 April 1994 as well as the decision of the Labor Arbiter. v[5] The
NLRC considered the decision of this Court in the Sime Darby case of 1990 as the law of the case wherein
petitioner was ordered to pay the money value of these covered employees deprived of lunch and/or
working time breaks. The public respondent declared that the new work schedule deprived the employees
of the benefits of time-honored company practice of providing its employees a 30-minute paid lunch
break resulting in an unjust diminution of company privileges prohibited by Art. 100 of the Labor Code, as
amended. Hence, this petition alleging that public respondent committed grave abuse of discretion
amounting to lack or excess of jurisdiction: (a) in ruling that petitioner committed unfair labor practice in
the implementation of the change in the work schedule of its employees from 7:45 a.m. 3:45 p.m. to 7:45
a.m. 4:45 p.m. with one-hour lunch break from 12:00 nn to 1:00 p.m.; (b) in holding that there was
diminution of benefits when the 30-minute paid lunch break was eliminated; (c) in failing to consider that
in the earlier Sime Darby case affirming the decision of the NLRC, petitioner was authorized to
discontinue the practice of having a 30-minute paid lunch break should it decide to do so; and (d) in
ignoring petitioners inherent management prerogative of determining and fixing the work schedule of its
employees which is expressly recognized in the collective bargaining agreement between petitioner and
private respondent.
The Office of the Solicitor General filed in lieu of comment a manifestation and motion recommending that
the petition be granted, alleging that the 14 August 1992 memorandum which contained the new work
schedule was not discriminatory of the union members nor did it constitute unfair labor practice on the
part of petitioner.

We agree, hence, we sustain petitioner. The right to fix the work schedules of the employees rests
principally on their employer. In the instant case petitioner, as the employer, cites as reason for the
adjustment the efficient conduct of its business operations and its improved production. vi[6] It
rationalizes that while the old work schedule included a 30-minute paid lunch break, the employees could
be called upon to do jobs during that period as they were on call. Even if denominated as lunch break,
this period could very well be considered as working time because the factory employees were required
to work if necessary and were paid accordingly for working. With the new work schedule, the employees
are now given a one-hour lunch break without any interruption from their employer. For a full one-hour
undisturbed lunch break, the employees can freely and effectively use this hour not only for eating but
also for their rest and comfort which are conducive to more efficiency and better performance in their
work. Since the employees are no longer required to work during this one-hour lunch break, there is no
more need for them to be compensated for this period. We agree with the Labor Arbiter that the new work
schedule fully complies with the daily work period of eight (8) hours without violating the Labor Code. vii[7]
Besides, the new schedule applies to all employees in the factory similarly situated whether they are
union members or not.viii[8]
Consequently, it was grave abuse of discretion for public respondent to equate the earlier Sime Darby
caseix[9] with the facts obtaining in this case. That ruling in the former case is not applicable here. The
issue in that case involved the matter of granting lunch breaks to certain employees while depriving the
other employees of such breaks. This Court affirmed in that case the NLRCs finding that such act of
management was discriminatory and constituted unfair labor practice.
The case before us does not pertain to any controversy involving discrimination of employees but only
the issue of whether the change of work schedule, which management deems necessary to increase
production, constitutes unfair labor practice. As shown by the records, the change effected by
management with regard to working time is made to apply to all factory employees engaged in the same
line of work whether or not they are members of private respondent union. Hence, it cannot be said that
the new scheme adopted by management prejudices the right of private respondent to self-organization.
Every business enterprise endeavors to increase its profits. In the process, it may devise means to attain
that goal. Even as the law is solicitous of the welfare of the employees, it must also protect the right of an
employer to exercise what are clearly management prerogatives. x[10] Thus, management is free to
regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work
assignments, working methods, time, place and manner of work, processes to be followed, supervision of
workers, working regulations, transfer of employees, work supervision, lay off of workers and discipline,
dismissal and recall of workers.xi[11] Further, management retains the prerogative, whenever exigencies
of the service so require, to change the working hours of its employees. So long as such prerogative is
exercised in good faith for the advancement of the employers interest and not for the purpose of
defeating or circumventing the rights of the employees under special laws or under valid agreements, this
Court will uphold such exercise.xii[12]
While the Constitution is committed to the policy of social justice and the protection of the working class,
it should not be supposed that every dispute will be automatically decided in favor of labor. Management
also has right which, as such, are entitled to respect and enforcement in the interest of simple fair play.
Although this Court has inclined more often than not toward the worker and has upheld his cause in his
conflicts with the employer, such as favoritism has not blinded the Court to the rule that justice is in every

case for the deserving, to be dispensed in the light of the established facts and the applicable law and
doctrine.xiii[13]
WHEREFORE, the Petition is GRANTED. The Resolution of the National Labor Relations Commission
dated 29 November 1994 is SET ASIDE and the decision of the Labor Arbiter dated 26 November 1993
dismissing the complaint against petitioner for unfair labor practice is AFFIRMED.
SO ORDERED.
CASE DIGEST:
Sime Darby Employees vs. NLRC
G.R. No. 148021, December 6, 2006
(Labor Law, NLRC Procedure, Illegal Dismissal)
FACTS
Sime Darby Pilipinas (the Company) declared and implemented a lockout against all the hourly
employees of its tire factory on the ground of sabotage and work slowdown. This after failed
negotiations with Sime Darby Employees Association (the Union) for the remaining two years of
their CBA. The Union contested the lockout before the DOLE-NLRC. Subsequently the company
decided to sell its tire manufacturing assets and close the business. As a result, all employees
were terminated, including the petitioners. The company later found a buyer of its assets and
business in Goodyear Philippines, Inc..
Petitioners filed a complaint for Illegal Dismissal before the DOLE and later a complaint for
Unfair Labor Practice (ULP), both cases eventually consolidated. The labor arbiter ordered the
parties to submit their respective memorandum but instead of doing this, the Union filed an
Appeal Memorandum with a petition for injunction and/or a TRO before the NLRC. The labor
arbiter later dismissed the case for lack of merit. It found the lockout valid and legal, and
justified by the incidents of continued work slowdown, mass absences, and consistent low
production output, high rate of waste and scrap tires and machine breakdown. It also
considered the mass termination of all the employees valid as an authorized termination of
employment due to closure of the establishment, the company having complied with due
process.
Petitioners appealed the labor arbiters Decision to the NLRC which was also dismissed for lack
of merit. It also ruled that that the labor arbiter could not have lost jurisdiction over the case
when petitioners appealed the formers order since the order was interlocutory in nature and
cannot be appealed separately. In the Court of Appeals, the petition was similarly denied.
Petitioners reiterate that they were denied due process when they were dismissed right on the
day they were handed down their termination letters, without the benefit of the thirty (30)-day
notice as required by law, and invoke the Courts ruling in Serrano v. NLRC; that the labor arbiter
had lost jurisdiction over the issue when have already perfected their appeal to the NLRC; and
that labor arbiter deprived petitioners of the chance to present their evidence during the formal
trial.

ISSUES
1. Whether or not the labor arbiter has lost jurisdiction over the Unions petition due to the
appeal on the labor arbiters order that the Union filed before the NLRC?
2. Whether or not petitioners were deprived by the labor arbiter of the right to a presentation of
evidence in a formal trial?
3. Whether or not petitioners were illegally dismissed due to lack of due process and also as a
consequence of an illegal lockout?
HELD
Petition DENIED. Decision affirmed as the labor arbiter never lost its jurisdiction to decide on
the case and has decided the case without grave abuse of discretion. The Court gives due
credence to the factual findings of the labor arbiter and NLRC.
The order by the labor arbiter to the parties to submit their respective memorandum is in the
nature of an interlocutory order. An interlocutory order is not appealable until after the rendition
of the judgment on the merits for a contrary rule would delay the administration of justice and
unduly burden the courts. Nor could the Court finds any grave abuse of discretion on the labor
arbiters part. For one, the holding of an adversarial trial is discretionary on the labor arbiter and
the parties cannot demand it as a matter of right. The New Rules of Procedure of the NLRC
grants the labor arbiter wide latitude to determine, after the submission by the parties of their
position papers/memoranda, if there is need for a formal trial or hearing.
Petitioners argument that had the labor arbiter allowed respondents to present their evidence
during the formal trial, the Decision would have been different, cannot be sustained. As
previously stated, the labor arbiter enjoys wide discretion in determining whether there is a need
for a formal hearing in a given case, and he or she may use all reasonable means to ascertain
the facts of each case without regard to technicalities. When the parties submitted their position
papers and other pertinent pleadings to the labor arbiter, it is understood / given /deemed that
they have included therein all the pieces of evidence needed to establish their respective cases.
A formal hearing is not compulsory in consonance with the need for speedy disposition of labor
cases. If it were necessary, the parties may then willfully withhold their evidence and disclose
the same only during the formal hearing, thus creating surprises which could merely complicate
the issues and prolong the trial. There is a dire need to lessen technicalities in the process of
settling labor disputes.
Well-settled is the rule that hearings and resolutions of labor disputes are not governed by the
strict and technical rules of evidence and procedure observed in the regular courts of law.
Technical rules of procedure are not applicable in labor cases, but may apply only by analogy or
in a suppletory character, for instance, when there is a need to attain substantial justice and an
expeditious, practical and convenient solution to a labor problem.
Petitioners claim that the alleged failure of the company to notify them of their termination
renders their dismissal illegal, and thus they should be reinstated and paid with full backwages
or given separation pay, following the Courts ruling in Serrano v. Court of Appeals. The
argument does not hold. The ruling in Serrano has already been superseded by the case of
Agabon v. National Labor Relation Commission. The Agabon enunciates the new doctrine that if
the dismissal is for just cause but statutory due process was not observed, the dismissal should

be upheld. While the procedural infirmity cannot be cured, it should not invalidate the dismissal.
However, the employer should be held liable for non-compliance with the procedural
requirements of due process.
But in any case, the issue of illegal dismissal had already been resolved by the NLRC and the
Court of Appeals, which both found that the company had an authorized cause and had
complied with the requirements of due process when it dismissed petitioners.

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