GR L 22577; (July, 1968) (Digest)
G.R. No. L-22577 July 31, 1968
BENJAMIN WENCESLAO, ET AL., plaintiffs-appellees, vs. CARMEN ZARAGOZA, INC., defendant-appellant.
FACTS
The plaintiffs-appellees were employees of the defendant-appellant Carmen Zaragoza, Inc., working in its “Times Film Exchange” department. On February 28, 1962, the defendant closed its Times Film Exchange business after its contract with Allied Artists Corporation was terminated and the latter entered into a new contract with Times Film Corporation. The defendant terminated the services of the plaintiffs effective February 28, 1962, without advance notice or separation pay, and formally notified them on March 5, 1962. The plaintiffs were immediately employed by Times Film Corporation effective March 1, 1962. The defendant paid the plaintiffs the money value of their earned and unused vacation leave but denied their claim for separation pay under Republic Act No. 1787 , contending that the plaintiffs, by accepting employment with Times Film Corporation, had impliedly resigned from or abandoned their employment, and that the termination was due to the just cause of closing its enterprise.
ISSUE
Whether the plaintiffs-appellees are entitled to separation pay under Republic Act No. 1787 despite the closure of the defendant-appellant’s film exchange department and their immediate re-employment by a different corporation.
RULING
Yes. The Supreme Court affirmed the lower court’s decision, ordering the defendant-appellant to pay separation pay to the plaintiffs-appellees. The Court held that: (1) The just cause for termination without notice under the law is the closing or cessation of operation of the establishment or enterprise of the employer, not merely the closing of a particular division or department. The closure of the Times Film Exchange department did not constitute such a just cause. (2) The plaintiffs did not abandon their employment; they did not apply for employment with Times Film Corporation but were placed there by the defendant’s arrangements. Their acceptance of the new employment was not a voluntary choice but a necessity to avoid unemployment, especially since their new employer refused to credit their prior years of service, which was prejudicial to their rights. Therefore, the termination was without just cause and without the required notice, entitling them to separation pay.