Philippine Airlines, Inc. vs. NLRC

An employee's dismissal for fraud against the employer is valid even without proof of actual monetary loss, provided there is substantial evidence of the employee's participation in an act intended to defraud the company or obtain a benefit to which he is not entitled. Financial assistance or separation pay may not be awarded where the valid dismissal is for serious misconduct or an offense involving moral turpitude such as fraud.

Petitioner Philippine Airlines, Inc. (PAL) is the employer, while private respondent Marcelito Pescante served as a load controller responsible for manifesting passenger baggage and determining aircraft load balance. PAL's Code of Discipline, Section 2, defines "fraud against the Company" and prescribes dismissal as the penalty for any employee who knowingly initiates or takes part in any action intended to defraud the company or obtain a payment, benefit, or gain to which he is not entitled. As company policy, load controllers are prohibited from assisting in the checking-in of passengers to prevent collusion with check-in clerks.

On January 19, 1993, private respondent Marcelito Pescante was assigned as load controller and Edgar Vicente as check-in clerk for PAL flight PR 841 bound for Cebu. As load controller, Pescante's task was to manifest passenger baggage by weight and determine the aircraft's proper load balance. As check-in clerk, Vicente checked in passengers, tagged their luggage, and recorded baggage weights on tickets that were then passed to the load controller. Company policy prohibited load controllers from assisting in checking-in passengers to prevent collusion with check-in clerks.

That same day, a passenger named Myla Cominero arrived at the check-in counter escorted by Sgt. Jose Tompong, a police officer assigned at the domestic airport. Cominero presented her ticket to check-in clerk Alfredo Pelayo and declared seven pieces of baggage. Before Pelayo could process the check-in, Vicente arrived and said he would handle it. After weighing the baggage, Vicente told Cominero her seven pieces exceeded 100 kilograms and that she would need to pay more than P1,000. Vicente then contracted with the passenger privately. Cominero later gave Sgt. Tompong P1,000 in rolled bills to hand to Vicente, saying it was for her excess baggage and that she had saved a little. Around 5:00 p.m., Pescante retrieved the money from Tompong near a telephone booth at terminal 2. Vicente reflected a lighter baggage weight on Cominero's ticket to make it appear within the allowable level, and her excess baggage was pooled with other passengers who had lesser or no baggage weight.

When boarding time came, Cominero failed to appear, prompting preparations to off-load her baggage. A check of the passenger manifest prepared by Pescante showed Cominero was presumably travelling with three companions, as her ticket was pooled with boarding passes numbers 15 to 17. PAL ramp agent Danilo Baniqued spoke to these supposed companions, but all denied knowing Cominero. Cominero then arrived during the final boarding call and insisted she had paid P1,000 as excess baggage charges at the counter, though no receipt was issued. The duty manager instructed station control to call Cebu to intercept Cominero and collect the corresponding excess baggage fee. An investigation followed.

Upon discovery of the anomaly, Vicente hastily went to cashier Loreto Condez and paid P983.50 representing excess baggage charges, but only after the aircraft had already departed. Despite this belated payment, Cominero was still made to pay P672.95 as excess baggage fee upon arrival in Cebu. In his report dated January 23, 1993, Vicente implicated Pescante, stating that Pescante had suggested calling a friend in Cebu to intercept the passenger, and that Pescante later brought Sgt. Tompong and handed Vicente P1,000 to be issued an Excess Baggage Receipt. CSA Alfredo Pelayo, in his written explanation dated February 22, 1993, corroborated portions of this account, stating that Pescante had urged him to check-in Cominero's ticket by proxy, and when Pelayo refused, Pescante chided him and then called Vicente, who readily cooperated.

On January 29, 1993, PAL filed an administrative case against Pescante and Vicente for "fraud against the company" under its Code of Discipline. After hearings, both were found guilty and dismissed from service. Pescante's grievance appeal was denied. On May 27, 1994, Pescante filed a complaint for illegal dismissal with the labor arbiter, seeking reinstatement, backwages, damages, and attorney's fees. The labor arbiter dismissed the complaint, finding Pescante had direct involvement in the illegal pooling of baggage, but awarded P5,000 as financial assistance. The NLRC reversed, holding that the defrauding was not Pescante's handiwork and that PAL had not shown actual revenue losses, and ordered reinstatement with full backwages.

• Sufficiency of Evidence: Petitioner argued that the NLRC's finding that the defrauding of excess baggage revenue was not Pescante's handiwork was unsupported by the evidence on record, which included the corroborated statements of Vicente, Pelayo, Sgt. Tompong, Irene Cancio, and Condez.
• Credibility of Co-Employee Statements: Petitioner maintained that the NLRC legally erred in disregarding and giving no probative value to the statements of Vicente and Pelayo, whose declarations were replete with essential details that interlocked with other witnesses' accounts.
• Material Damage Not Required: Petitioner argued that material damage is not necessary for the validity and legality of dismissal due to loss of trust and confidence, as the attempt to defraud already constitutes fraud under the company's Code of Discipline.
• Reinstatement Unjustified: Petitioner contended that the NLRC was not justified in ordering Pescante's reinstatement with full backwages, given the substantial evidence of his participation in the fraudulent scheme.

• Sufficiency of Evidence: Whether the NLRC's finding that the defrauding of PAL's excess baggage revenue was not Pescante's handiwork is supported by evidence on record.
• Credibility of Co-Employee Statements: Whether the NLRC was legally justified in disregarding and giving no probative value to the statements of Vicente and Pelayo.
• Material Damage: Whether material damage is necessary for the validity and legality of dismissal due to loss of trust and confidence.
• Reinstatement and Backwages: Whether the NLRC was justified in ordering the reinstatement of Pescante with full backwages.

• Sufficiency of Evidence: No. The NLRC's finding was not supported by the evidence, which showed substantial evidence of Pescante's direct involvement in the illegal pooling of baggage.
• Credibility of Co-Employee Statements: No. The NLRC gravely erred in disregarding Vicente's and Pelayo's statements, as a witness's own culpability does not automatically discredit his testimony, and bias cannot be presumed absent proof of ill motive.
• Material Damage: No. Actual defraudation is not necessary; an attempt to deprive the employer of lawful revenue already constitutes fraud warranting dismissal under the company's Code of Discipline.
• Reinstatement and Backwages: No. Since the dismissal was for just and valid cause, the order of reinstatement with full backwages had no factual or legal basis, and the financial assistance award was likewise improper.

• Sufficiency of Evidence: In certiorari proceedings under Rule 65, the Court does not re-weigh evidence but determines whether the NLRC acted with grave abuse of discretion. However, where the NLRC's findings contradict those of the labor arbiter, the Court must review the records to determine which findings are more comfortable to the evidentiary facts. The evidence showed five concrete acts establishing Pescante's direct involvement: (1) he urged Pelayo to check-in Cominero by proxy and, failing, called Vicente to cooperate; (2) when the anomaly was uncovered, he approached Sgt. Tompong and asked him to return the money; (3) he handed the P1,000 to Vicente for payment of the excess baggage fee; (4) he instructed Vicente to call a fellow load controller in Mactan to intercept Cominero; and (5) he failed to report the matter to his supervisors as was standard practice. These acts, taken together, constituted substantial evidence of fraud. The NLRC's contrary finding was thus unsupported.

• Credibility of Co-Employee Statements: The NLRC erred in discrediting Vicente's statement solely because he appeared to be the real culprit. A witness's own culpability does not automatically render his testimony unworthy of belief; rather, his declaration must be weighed alongside other witnesses' testimonies. Pelayo's statement was improperly dismissed as biased, because bias cannot be presumed absent proof that the declarant was actuated by ill motive. Pescante offered only bare denials and presented no evidence that his co-workers harbored ill will against him. The testimonies of persons not shown to have any motive to depose falsely must be given due credence, particularly where no rational motive explains why the employer would single out the employee for dismissal unless he were truly guilty. The statements of Vicente and Pelayo were credible because they contained essential details that interlocked with the declarations of Sgt. Tompong, Irene Cancio, and Condez.

• Material Damage: Under Section 2 of PAL's Code of Discipline, any employee who "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" shall suffer the penalty of dismissal. The fact that PAL failed to prove actual revenue losses is immaterial. Actual defraudation is not necessary; the attempt to deprive the company of lawful revenue is itself tantamount to fraud against the company, which warrants dismissal. Pescante's participation in the illegal pooling of baggage constituted a knowing initiation of and participation in an action intended to defraud PAL.

• Reinstatement and Backwages: Because Pescante's dismissal was for just and valid cause, the NLRC's order of reinstatement with full backwages had no factual or legal basis. The labor arbiter's award of P5,000 as financial assistance on equitable consideration was likewise improper. Financial assistance or separation pay is justified only where the employee is validly dismissed for causes other than serious misconduct or those adversely affecting moral character. Where the valid dismissal is for an offense involving moral turpitude—such as theft, fraud, falsification, or illicit sexual relations—no financial assistance may be awarded. Fraud, the ground for Pescante's dismissal, falls squarely within this prohibition.

• Grave Abuse of Discretion in Certiorari Proceedings — In certiorari proceedings under Rule 65, the Court does not assess the sufficiency of evidence but determines whether the lower tribunal acted without or in excess of jurisdiction or with grave abuse of discretion. However, where the NLRC's findings contradict those of the labor arbiter, the Court must review the records to determine which findings are more consistent with the evidentiary facts.

• Credibility of a Culpable Witness — A witness's own apparent culpability does not automatically discredit his testimony. His declaration must be weighed alongside the testimonies of other witnesses regarding the incident. The testimony of a witness not shown to harbor ill motive to depose falsely must be given due credence.

• Presumption Against Bias — A co-employee's statement should not be considered biased in the absence of proof showing that the declarant was actuated by ill motive. Bare denials by the accused employee, without more, do not suffice to impeach co-workers' testimonies.

• Fraud Without Actual Loss — Actual defraudation or proof of monetary loss is not necessary to sustain a dismissal for fraud against the employer. An attempt to deprive the employer of lawful revenue is already tantamount to fraud, warranting dismissal under company rules prohibiting such conduct.

• Financial Assistance in Cases of Valid Dismissal — Financial assistance or separation pay is justified only where the employee is validly dismissed for causes other than serious misconduct or those adversely affecting moral character. Where the dismissal is for an offense involving moral turpitude—such as theft, fraud, falsification, or illicit sexual relations—no financial assistance may be awarded, regardless of length of service.

• "It is erroneous to discredit the statement of Vicente just because he appears guilty too. Rather, Vicente's declaration must be weighed side by side the testimonies of other witnesses regarding the incident." — This passage articulates the rule that a witness's own culpability does not automatically destroy his credibility, a principle frequently invoked in labor cases where co-employees involved in the same irregularity testify against each other.

• "Actual defraudation is not necessary in order that an employee may be held liable under the aforequoted rule. That private respondent attempted to deprive petitioner of its lawful revenue is already tantamount to fraud against the company, which warrants dismissal from the service." — This states the ratio decidendi on the material-damage issue: the attempt to defraud, not the consummation of loss, is the operative act that justifies dismissal.

• "[S]uch monetary award is justified only in those instances where the employee is validly dismissed for causes other than serious misconduct or those adversely affecting his moral character. Thus, if the reason for the valid dismissal is, for example, habitual intoxication or an offense involving moral turpitude, like theft, fraud, falsification or illicit sexual relations with a fellow worker, separation pay or financial assistance, or by whatever other name it is called, may not be allowed." — This is the canonical formulation of the doctrine prohibiting financial assistance when dismissal is for causes involving moral turpitude, consistently applied in subsequent jurisprudence.

• Industrial Timber Corporation vs. NLRC, 273 SCRA 200 (1997) — Cited for the rule that in certiorari proceedings under Rule 65, the Court does not assess the sufficiency of evidence but determines whether the lower tribunal acted with grave abuse of discretion.
• Arboleda vs. NLRC, 303 SCRA 38 (1999) — Cited for the proposition that when the NLRC's findings contradict those of the labor arbiter, the Court must review the records to determine which findings are more consistent with the evidentiary facts.
• Dyne-Sem Electronics Corporation vs. NLRC, 226 SCRA 824 (1993) — Cited for the rule that testimonies of persons not shown to harbor ill motive to depose falsely must be given due credence, particularly where no rational motive explains why the employer would single out an employee for dismissal unless truly guilty.
• Santos, Jr. vs. NLRC, 287 SCRA 117 (1998) — Cited among the line of cases holding that financial assistance is not allowed where dismissal is for causes involving moral turpitude such as fraud.
• Philippine Airlines Inc. vs. NLRC, 282 SCRA 536 (1997) — Cited as prior authority for the same doctrine on financial assistance in cases of valid dismissal for fraud.

• Section 2, PAL Code of Discipline (Fraud against the Company) — Defines fraud as any employee who makes a false or fraudulent claim, or knowingly initiates or takes part in any action intended to defraud the company or obtain a payment, benefit, or gain to which he is not entitled, or knowingly honors a forged signature, or gives due course to a false document, and prescribes dismissal as the penalty. The Court applied this provision to Pescante's conduct, finding that his participation in the illegal pooling of baggage constituted a knowing initiation of an action intended to defraud PAL of its excess baggage revenue.
• Rule 65, Rules of Court — Governs the petition for certiorari. The Court applied it to confine its review to whether the NLRC committed grave abuse of discretion, while invoking its equity jurisdiction to review the records due to the conflicting findings between the labor arbiter and the NLRC.

Bellosillo, Mendoza, Buena, and De Leon, Jr., JJ., concurred.