G.R. No. 147756 - Ariola vs. Philex Mining Corp.

The case involves a petition for review of the Court of Appeals' Decision and Resolution regarding the retrenchment of petitioners, former supervisors of Philex Mining Corporation.
The Court of Appeals denied the petitioners' claims, leading to their appeal to the Supreme Court.
The petitioners argued that their dismissal was illegal, while the respondents contended that the petitioners voluntarily retired.

Philex Mining Corporation faced financial losses in 1992 and implemented cost-saving measures, including retrenchment.
A workforce audit identified 310 excess positions, leading to a Memorandum of Agreement (MOA) with both rank-and-file and supervisory unions outlining retrenchment criteria.
On June 1, 1993, the petitioners received termination notices effective June 30, 1993, and were paid separation pay, signing Deeds of Release and Quitclaim.
The rank-and-file employees contested their dismissal, leading to a favorable ruling from Arbitrator Valdez, while the supervisors' case was assigned to Arbitrator Advincula.

Arbitrator Advincula initially ordered reinstatement but later found sufficient grounds for Philex's retrenchment.
The ruling emphasized that the petitioners had voluntarily retired and executed valid quitclaims, thus barring them from contesting their separation.
Advincula cited the employer's prerogative to retrench under Article 283 of the Labor Code, affirming Philex's claims of financial distress.

The Court of Appeals upheld Arbitrator Advincula's ruling, affirming that the petitioners voluntarily retired and could not contest their separation due to the signed waivers.
The appellate court treated its previous decision regarding the rank-and-file employees as the law of the case, focusing on the nature of the petitioners' separation.

The Supreme Court found merit in the petition, indicating that the conclusion of retirement was untenable based on the evidence.
The Court noted that the payments labeled as "retirement gratuity" were actually separation pay due to retrenchment, as confirmed by Philex's communications.
The Court emphasized that the intent to retire must be clearly established; otherwise, the separation is treated as a discharge.

Article 283 of the Labor Code outlines the requirements for lawful retrenchment, including substantial financial losses, proper notice, and payment of separation pay.
The Court highlighted that while Philex met some requirements, it failed to implement the retrenchment program fairly and reasonably, particularly regarding the criteria used for selection.

The Court identified a substantive defect in the retrenchment process due to inconsistencies between the supervisors' MOA and the Collective Bargaining Agreement (CBA).
The failure to apply fair criteria in the retrenchment process invalidated the dismissals, as the criteria used were not ratified by the supervisors' union.

The Court ruled that the petitioners were not estopped from questioning their dismissal, acknowledg...continue reading