Villaruel v. Yeo

G.R. No. 169191 (June 1, 2011)

Romeo Villaruel's claim for separation pay was denied; court ruled he voluntarily resigned.

Facts:

On February 15, 1999, Romeo Villaruel (petitioner) filed a complaint for separation pay against Yuhans Enterprises, owned by Yeo Han Guan (respondent), with the National Labor Relations Commission (NLRC) in Quezon City. Villaruel claimed he had been employed as a machine operator since June 1963, despite the company changing its name multiple times, with the last being Yuhans Enterprises from 1993 until the filing of the complaint. He alleged that after falling ill and being hospitalized on October 5, 1998, he was not allowed to return to work upon reporting on December 12, 1998. Villaruel requested to be assigned lighter work due to his health but was denied and instead offered P15,000.00 as separation pay, which he argued was insufficient as it only covered his employment from 1993 to 1999. He sought separation pay calculated from his first day of employment, along with service incentive leave for three years and attorney's fees.

In response, Yeo Han Guan contended that Villaruel was employed from March 1, 1993, until he stopped working in February 1999 due to illness. Guan claimed that he never terminated Villaruel's employment and had even invited him to return to work, which Villaruel declined, indicating he was no longer interested in returning.

The Labor Arbiter ruled in favor of Villaruel on November 27, 2000, awarding him separation pay based on his length of service from June 1963 to October 1998, amounting to P91,445.00, and service incentive leave of P3,015.00. Guan appealed to the NLRC, which affirmed the Labor Arbiter's decision on March 31, 2003. Guan's motion for reconsideration was denied, leading him to file a petition for certiorari with the Court of Appeals (CA).

On February 16, 2005, the CA partially granted Guan's petition, deleting the award of separation pay but upholding the service incentive leave payment. Villaruel's motion for reconsideration was denied on August 2, 2005, prompting him to file a petition with the Supreme Court.

Legal Issues:

  1. Whether Villaruel was entitled to separation pay under Article 284 of the Labor Code.
  2. Whether the CA erred in its interpretation of the circumstances surrounding Villaruel's employment termination.
  3. The burden of proof regarding the termination of employment due to illness.

Arguments:

  • Petitioner (Villaruel): Argued that he was entitled to separation pay based on his long service and the circumstances of his termination due to illness. He contended that the CA failed to appreciate the admission of his termination and the legal basis for his claim under Article 284 of the Labor Code.

  • Respondent (Guan): Claimed that Villaruel voluntarily resigned and was not terminated. He argued that there was no illegal dismissal and that Villaruel had not expressed a desire to return to work after his illness, thus he was not entitled to separation pay.

Court's Decision and Legal Reasoning:

The Supreme Court found the petition without merit, affirming the CA's decision with modifications. The Court emphasized that Article 284 of the Labor Code allows for separation pay only when an employer terminates an employee due to illness. The Court noted that both the Labor Arbiter and the NLRC failed to adequately address whether Villaruel was indeed terminated or if he had voluntarily resigned.

The Court highlighted that Villaruel's actions indicated he did not intend to return to work, as he did not seek reinstatement and rejected Guan's offer to return. The Court concluded that Villaruel's situation amounted to resignation rather than termination, thus disqualifying him from receiving separation pay under the Labor Code.

However, the Court recognized the principle of "social and compassionate justice" and awarded Villaruel P50,000.00 as financial assistance, considering his long service and the circumstances of his employment severance.

Significant Legal Principles Established:

  1. Separation Pay Entitlement: Under Article 284 of the Labor Code, separation pay is only warranted when an employer terminates an employee due to illness, not when an employee resigns voluntarily.
  2. Burden of Proof: The burden of proof lies with the employer to demonstrate that an employee's termination was justified under the law.
  3. Social Justice Considerations: The Court may grant financial assistance as a measure of social justice in cases where an employee has served long and is in need, even if not entitled to separation pay under the law.