In Philippine Airlines Inc. v. National Labor Relations Commission, the Supreme Court affirmed the right of an employer to dismiss an employee for attempting to defraud the company, even if no actual loss was proven. The case underscores the importance of trust and fidelity in the employer-employee relationship, particularly in positions where employees handle company revenues. This decision clarifies that an attempt to commit fraud against a company is sufficient grounds for dismissal, reinforcing the principle that employers have the right to protect their financial interests and maintain integrity within their workforce.

When a Discount Turns into Deceit: Can Attempted Fraud Justify Dismissal?

The case revolves around Marcelito Pescante, a load controller for Philippine Airlines (PAL), and an incident involving a passenger named Myla Cominero. Cominero, escorted by Sgt. Jose Tompong, attempted to check in seven pieces of baggage, exceeding the allowable weight limit. Another PAL employee, Edgar Vicente, intervened and offered Cominero a deal to avoid paying the full excess baggage fee. Sgt. Tompong’s testimony revealed that Cominero later gave him money to pass on to Vicente, presumably as payment for the discounted rate. This sparked an internal investigation that implicated both Vicente and Pescante in a scheme to defraud PAL of excess baggage revenues.

Following the investigation, PAL filed an administrative case against Pescante and Vicente, leading to their dismissal. Pescante then filed a complaint for illegal dismissal, which the Labor Arbiter initially dismissed but the National Labor Relations Commission (NLRC) reversed, ordering his reinstatement. PAL then elevated the case to the Supreme Court, arguing that the NLRC had erred in disregarding evidence of Pescante’s involvement in the fraudulent scheme. The central legal question was whether Pescante’s actions constituted just cause for dismissal, even if the company did not prove actual financial loss.

The Supreme Court, in resolving the issue, emphasized the importance of according probative value to the statements of witnesses like Vicente and Pelayo, unless there is clear evidence of ill motive. The Court noted that their testimonies were consistent with other evidence presented, including Sgt. Tompong’s account and the actions taken by other PAL employees after the incident. Building on this principle, the Court highlighted specific instances demonstrating Pescante’s involvement, such as urging another employee to check in Cominero’s baggage by proxy and retrieving money from Sgt. Tompong.

Furthermore, the Supreme Court pointed out that Pescante failed to report the irregularity to his supervisors, a standard practice in such situations. This failure, coupled with his other actions, indicated a clear intent to participate in the fraudulent scheme. The Court then cited PAL’s Code of Discipline, which explicitly prohibits employees from engaging in actions intended to defraud the company or obtain unauthorized benefits. According to the code, such violations warrant dismissal, regardless of whether the company suffers actual financial loss.

The Court reasoned that Pescante’s actions, even if they did not result in actual loss for PAL, constituted an attempt to deprive the company of its lawful revenue. This attempt was a sufficient basis for dismissal under the company’s code of conduct.

“Any employee who makes a false or fraudulent claim against the company, or knowingly initiates or takes part in any action intended to defraud the Company or to obtain a payment, benefit or gain from the Company to which he is not entitled, or knowingly honors a forged signature for his own benefit or that of another person; or gives due course or approval to a document knowing it to be false erroneous shall suffer the penalty of dismissal.”

This ruling underscores the principle that employers have the right to expect honesty and integrity from their employees, especially those in positions of trust.

Moreover, the Supreme Court addressed the issue of financial assistance, which the Labor Arbiter had awarded to Pescante based on equitable considerations. Citing previous cases, the Court clarified that financial assistance is not appropriate in cases where the employee is dismissed for serious misconduct or offenses affecting moral character. Since Pescante’s dismissal was based on an attempt to defraud the company, an act involving moral turpitude, the Court deemed the award of financial assistance unwarranted. This aspect of the decision reinforces the idea that employees who engage in dishonest behavior should not be rewarded with financial benefits upon termination.

In conclusion, the Supreme Court’s decision in Philippine Airlines Inc. v. National Labor Relations Commission reaffirms the employer’s right to dismiss employees for attempting to defraud the company. The ruling clarifies that actual financial loss is not a prerequisite for dismissal in such cases, and that attempts to defraud are sufficient grounds for termination. The decision also clarifies the circumstances under which financial assistance may be awarded to dismissed employees, emphasizing that such assistance is not appropriate in cases involving serious misconduct or offenses affecting moral character.

FAQs

What was the key issue in this case?	The key issue was whether Philippine Airlines (PAL) had just cause to dismiss Marcelito Pescante for his involvement in a scheme to defraud the company of excess baggage revenues. The Supreme Court had to determine if Pescante’s actions warranted dismissal, even without proof of actual financial loss to PAL.
What did Marcelito Pescante do?	Marcelito Pescante, a load controller for PAL, was implicated in a scheme where a passenger was offered a discounted rate on excess baggage fees. He was found to have facilitated the transaction and failed to report the irregularity, leading to his dismissal.
Did PAL suffer any actual financial loss?	The Supreme Court noted that actual financial loss was not necessary to justify Pescante’s dismissal. The attempt to defraud the company was sufficient grounds for termination under PAL’s Code of Discipline.
What did the NLRC decide?	The National Labor Relations Commission (NLRC) initially reversed the Labor Arbiter’s decision and ordered Pescante’s reinstatement with backwages. The Supreme Court later overturned the NLRC’s decision, upholding Pescante’s dismissal.
What was the basis for the Supreme Court’s decision?	The Supreme Court based its decision on substantial evidence showing Pescante’s direct involvement in the illegal pooling of baggage and his attempt to deprive PAL of its lawful revenue. The Court also relied on PAL’s Code of Discipline, which prohibits employees from engaging in fraudulent activities.
Was Pescante entitled to financial assistance?	No, the Supreme Court ruled that Pescante was not entitled to financial assistance. The Court reasoned that financial assistance is not appropriate in cases involving serious misconduct or offenses affecting moral character, such as attempting to defraud the company.
What is the significance of this ruling for employers?	This ruling reinforces the employer’s right to dismiss employees for attempting to defraud the company, even without proof of actual financial loss. It underscores the importance of trust and fidelity in the employer-employee relationship.
What is the significance of this ruling for employees?	This ruling emphasizes the importance of honesty and integrity in the workplace. Employees who engage in fraudulent activities, or attempt to do so, risk dismissal and may not be entitled to financial assistance upon termination.

The Philippine Airlines Inc. v. National Labor Relations Commission case serves as a reminder of the importance of ethical conduct in the workplace and the legal consequences of engaging in fraudulent activities. It also underscores the need for companies to have clear codes of conduct and disciplinary procedures to address such issues effectively.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Philippine Airlines Inc. v. National Labor Relations Commission, G.R. No. 126805, March 16, 2000