ISSUES:

1. Whether or not the employees can demand separation pay from previous employer
on the ground of change in management?
2. Whether or not
3. Whether or not the separation pay prescribes?
4. Whether or not the number of years prior to the transfer of management be included
in the computation of separation pay if the employee opts not to claim separation
pay from the previous employer?

LAW:

ART. 283. Closure of establishment and reduction of personnel.

The employer may also terminate the employment of any employee due to the
installation of labor-saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the
Department of Labor and Employment at least one (1) month before the
intended date thereof.

In case of termination due to the installation of labor-saving devices or

redundancy, the worker affected thereby shall be entitled to a separation pay
equivalent to at least his one (1) month pay or to at least one (1) month pay
for every year of service, whichever is higher. In case of retrenchment to
prevent losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or financial
reverses, the separation pay shall be equivalent to one (1) month pay or at least
one-half (1/2) month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1) whole year.

ART. 291. Money claims.

All money claims arising from employer-employee relations accruing during

the effectivity of this Code shall be filed within three (3) years from the time
the cause of action accrued; otherwise they shall be forever barred.
HELD:

On the first of Whether or not the employees can demand separation pay from previous
employer on the ground of change in management?

G.R. 184517 [OCTOBER 8, 2013] EN BANC

There are two types of corporate acquisitions: asset sales and stock sales. In asset sales, the
corporate entity sells all or substantially all of its assets to another entity. In stock sales, the
individual or corporate shareholders sell a controlling block of stock to new or existing
shareholders.

In asset sales, the rule is that the seller in good faith is authorized to dismiss the affected
employees, but is liable for the payment of separation pay under the law. The buyer in good
faith, on the other hand, is not obliged to absorb the employees affected by the sale, nor is it
liable for the payment of their claims. The most that it may do, for reasons of public policy and
social justice, is to give preference to the qualified separated personnel of the selling firm.

In contrast with asset sales, in which the assets of the selling corporation are transferred to
another entity, the transaction in stock sales takes place at the shareholder level. Because the
corporation possesses a personality separate and distinct from that of its shareholders, a shift in
the composition of its shareholders will not affect its existence and continuity. Thus,
notwithstanding the stock sale, the corporation continues to be the employer of its people
and continues to be liable for the payment of their just claims. Furthermore, the corporation
or its new majority share holders are not entitled to lawfully dismiss corporate employees absent
a just or authorized cause.

Thus, applicable to those cases were the rules in asset sales: the employees may be separated
from their employment, but the seller is liable for the payment of separation pay; on the
other hand, the buyer in good faith is not required to retain the affected employees in its
service, nor is it liable for the payment of their claims.

On the Issue on Prescription:

G.R. 163924 [JUNE 18, 2009]

Under Article 291 of the Labor Code, all money claims arising from employer-employee relations
shall be filed within three (3) years from the time the cause of action accrued; otherwise, they
shall forever be barred. It is settled jurisprudence that a cause of action has three elements, to
wit, (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is
created; (2) an obligation on the part of the named defendant to respect or not to violate such
right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff
or constituting a breach of the obligation of the defendant to the plaintiff.
GR 182622 [SEPTEMBER 9, 2010]
The Labor Code has no specific provision on when a claim for illegal dismissal or a monetary
claim accrues. Thus, the general law on prescription applies. Article 1150 of the Civil Code
states:

Article 1150. The time for prescription for all kinds of actions, when there is
no special provision which ordains otherwise, shall be counted from the day
they may be brought. (Emphasis supplied)

Like other causes of action, the prescriptive period for money claims is subject to
interruption, and in the absence of an equivalent Labor Code provision for determining whether
the said period may be interrupted, Article 1155 of the Civil Code may be applied, to wit:

ART. 1155. The prescription of actions is interrupted when they are filed
before the Court, when there is a written extrajudicial demand by the creditors,
and when there is any written acknowledgment of the debt by the debtor.

Thus, the prescription of an action is interrupted by (a) the filing of an action, (b) a
written extrajudicial demand by the creditor, and (c) a written acknowledgment of the debt
by the debtor.