BENJAMIN WENCESLAO, ET AL., PLAINTIFFS AND APPELLEES, VS. CARMEN ZARAGOZA, INC., DEFENDANT AND APPELLANT.

Appellees commenced this action in the
Municipal Court of Manila to recover their respective separation pay.  Liability therefor
was denied by appellant in its answer, alleging that in March 1962 when its
film exchange business was taken
over by Times Film Corpo­ration, appellees were
deemed to have impliedly resigned from, or abandoned their employment
because they were immediately employed by the latter.

Upon trial, the lower court found for appellees
and rendered judgment accordingly.

Appellant-employer
appealed to the Court of First Instance of Manila where during the hearing
held on September 20, 1963
the parties submitted the following:

“STIPULATION OF
FACTS

The parties respectfully submit this Sti­pulation of Facts:

1.    Plaintiffs re of legal age and their
respective residences are indicated in paragraph 1 of the Complaint.

2.    Defendant is a corporation organized under
Philippine Laws with principal offices at Boie Building,
Escolta, Manila.

3.    For some years prior to February 28, 1962,
defendant operates as a distinct de­partment the ‘Times Film Exchange’ which department was holding office at Boie
Build­ing, Escolta, Manila, but was
subsequently transferred at Alcazar Building, Estero Ce­gado, Manila, while defendant’s
main offices remained at Boie
Building, for the booking of Frieder Films, Times-owned and Allied Artist motion
pictures.’

4.    Plaintiffs’ respective service and salary
during their employment in defendant’s Times Film Exchange, follows:

5.    On February 28, 1962, due to the pro­jected
closing of the film exchange business of defendant, the contract between Allied
Artists Corporation and defendant was terminated, and said Allied Artists
Corporation entered into another contract with Times Film Corporation, another
corporation organized under the laws of
the Philippines by the Rufino family, for the booking
of Allied Artists motion pictures.  Since
then defendant closed the Times Film Exchange and ceased to engage in said
business.

6.    The employees of defendant’s defunct ‘Times
Film Exchange,’ including the plaintiffs, were employed by the Times Film
Corporation effective March 1, 1962.

7.    Plaintiffs were paid by the defendant the
money value of their respective earned and unused vacation leave as of February 28, 1962.

8.    Defendant terminated the services of the plaintiffs
effective February 28, 1962
without advance notice or separation pay, of which termination plaintiffs were
notified by defendant on March 5, 1962.

9.    By virtue of a letter dated April 5, 1962,
plaintiffs requested the defendant to give them separation pay under
Republic Let No. 1787, a copy of which is hereto attached as Annex ‘A’ and made a part hereof.

10.  Earlier, defendant delivered to Teo­doro Cabrera, one
of the plaintiffs, resignation papers, a sample copy of which is hereto
attached as Annex ‘B’, for plaintiffs’ signature, which however, were not signed by them.

11.  Defendant denied the claim of the plaintiffs
as per its letter dated April 12, 1962, a copy of which is hereto attached as
Annex ‘C’.

12.  The parties reserve the right to present
additional evidence not covered by the foregoing stipulation, on facts where
they could not agree.

WHEREFORE, it is respectfully prayed that on the basis of the
foregoing stipulation of facts and evidence the parties may further adduce, the
right of the plaintiffs to separation pay under Republic Act No. 1787 be determined.

 Manila, Philippines, September 20, 1963.”

Pursuant to the right reserved in connection with the
presentation of additional evidence, appellant submitted Exhibits 1 and 2.

Upon the aforesaid
stipulation of facts and the additional evidence referred to above, the lower
court made the following findings:

“x x x   x x x That the defendant is a
corporation duly established under the laws of the Philippines with principal office at notice Bole Bldg., Escolta, Manila; that, the plaintiffs were defendant’s employees with date of employment and monthly or weekly salaries,
enumerated under par. 4 of the stipulation of facts; that
defendant terminated the services of the
plaintiffs effective February 28, 1962, without advance notice or separation
pay, but were formally notified only on March 5, 1962; that on April 5, 1962,
plaintiffs made a formal demand to the defendant for separation pay according
to the provisions of Act 1787, the letter
of demand was marked as Exhibit A;
that the defendant denied the claims of the plaintiffs on April
12, 1962, according to Exhibit C.”

In connection with the
main defenses interposed below by
appellant, the trial court said the following:

“This case was filed by the plaintiffs, as has been previously
stated in order to demand from the defendant, separation pay.  On April
12, 1962, the defendant wrote the plaintiffs a letter Exhibit C, stating the
reasons why they were
separated.  The im­portant reason was the fact that the plain­tiffs after the defunct Times Film
Exchange” was taken over by the Luzon
Theaters, Inc. starting March 1, 1962, ‘accepted employment with Luzon Theaters’, x x x ‘hence, we con­sidered
you to have resigned as of that date from TIMES FILM EXCHANGE.

x                   x               x                     
x                     x

“Besides, when Times Film Exchange totally ceased operation of
its business, separation from employment of its employees – granting arguendo that there was positive act of dismissal – would
be with just cause, to wit:  closing of
an enterprise x x x.

“The plaintiffs denied
having accepted a new employment. 
They were merely
continuing their work as such employees during the transition period of
changing the management.  It was not
practically a change of ownership.  It
was merely to change the hands of administration and consequently, the
employees are en­titled to the protection of Republic Act 1052, as amended by
Republic Act No. 1787.  It was not also a mere closing of an enterprise,
either.  Even if there was change of
ownership, and the contract of transfer of sale of the enterprise from the
first owner to the buyer did not mention about the fate of the employees affected,
the employees are protected or got to be pro­tected by law – any doubt should be interpreted in their favor.”

Finding for the appellees, the trial court, therefore, rendered judgment as
follows:

“WHEREFORE, judgment is hereby rendered for the plaintiffs and
against the defendant, ordering the latter to pay plaintiff Benjamin Wenceslao,
Five Hundred Thirty (P530.00) Pesos, Manuel Eulano, One Thousand Three Hundred
Six Pesos (P1,306.00); Juanita Barcelon, Six hundred Eighty Three Pesos &
Thirty Three Centavos (P683.33); Manuel Echevarria,
Five hundred Fourteen Pesos and Fifty Eight Centavos (P514.58); Teodoro Cabrera, Four Hundred Seventy Pesos (P470.00);
Vicente Gomez, Five Hundred Thirteen Pesos and Thirty Three Centavos (P513.33);
Valeriano Leano, Four
Hundred Ten (P410.00) Pesos; Maximo Cavinta, Two Hundred Eighty (P280.00) Pesos; representing
the latters‘ separation pay as evidenced by Annex A,
or a total of Four Thousand Seven Hundred Seven Pesos and Twenty Four Centavos
(P4,707.24) with interest thereon at the legal rate from the date of the filing
of this complaint, until fully paid; plus the amount of P1,000.00 as attorney‘s fees and the costs of this
suit.”

It is appellant’s contention in this instance that appellees should be deemed to have been dismissed for
cause, namely, the closing or cessation of its business, there being no showing
that the closing was for the purpose of defeating the intention of the law;
that, at any rate, having been immediately employed by Times Film Corporation, appellees should be deemed to have abandoned their
employment with appellant, or, at least, to be no longer entitled to one
month’s notice prior to the
termination of their services.

We find both contentions
to be without merit.

True, appellant’s film exchange business where appellees worked was closed as of February 28, 1962, but
what the law considers as just cause for terminating an employment without a definite period is the closing or cessation of
operation of the establishment or enterprise of the
employer, and not merely the closing or cessation of operation of any
particular division or department of the employer’s business.  To sustain appellant’s con­tention in this
regard would amount to reading this into the
law – something which we are not ready to do, con­sidering its adverse effects
upon the rights of the employees.  If it
must be so, let the law say it clearly.

Regarding the alleged
abandonment by appellees of their employment with
appellant, suffice it to say that they did not apply for employment with the
Times Film Corporation.  What happened was that appellant, probably
inspired by a desire to give them immediate employment elsewhere, or by some other
reason, worked things out so that, immediately after the closure of its own
film exchange business, appellees would find work elsewhere. 
This, while laudable, does not seem to be in full satis­faction
of the purpose of the law requiring
advance notice to be served upon
employees whose services are to
be terminated, which is to give them sufficient time to look for another perhaps
better place of employment.  In
the present case, in the predicament, they found them­selves when appellant
notified then of the termination of their
services, appellees had no reasonable alternative but
to accept the new employment which appellant had found for them; the other
alternative was the street.  In this
connection it must be further observed that while their employment was not
interrupted, their new employer re­fused to tack in their years of
service under appellant.  This
meant that as far as the new employer was concerned, they were starting from
scratch.  This, of course, was
prejudicial to appellees because it would in due time affect their right
to bigger separation pay and other privileges.

WHEREFORE, finding the appealed decision to be in
accordance with law and the evidence, the same is hereby affirmed, with costs.

Concepcion, C.J., Reyes, J.B.L., Makalintal, Zaldivar, Sanchez,
Angeles, and Fernando, JJ., concur.

Ruiz Castro, J., did not take
part.