SME Bank Inc. et al v. Elicerio Gaspar . 707 SCRA 35, G.R. No.

184517 October 8, 2013

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