In Philippine Airlines, Inc. v. National Labor Relations Commission, the Supreme Court upheld an employer’s right to dismiss employees for engaging in fraudulent activities and falsifying company documents. The Court emphasized that while labor laws protect employees, they do not shield criminal acts perpetrated for personal gain. This decision reinforces the principle that companies have the right to safeguard their interests and maintain integrity within their workforce, even when it involves union members.

When Union Activity Doesn’t Excuse Fraud: The Case of the Dubious Ticket Sales

Philippine Airlines, Inc. (PAL) conducted an audit of its Davao Station and discovered irregularities in the ticketing office. Employees were manipulating the payment methods for tickets, charging payments to their or their co-employees’ credit cards while pocketing the cash from passengers. This was done by creating discrepancies between the audit coupon and the flight coupon of the tickets. Avelino Micabalo and Prospero Enriquez, both union officials, were implicated in these fraudulent activities and subsequently charged with violating the company’s Code of Discipline.

Micabalo faced charges for using his credit card to pay for tickets despite receiving cash payments from passengers. The audit revealed instances where the audit coupon indicated “Cash/Charge” while the flight coupon showed “Cash” or no entry at all. Enriquez was investigated for similar ticket anomalies, including soliciting cash payments from customers and charging the tickets to his credit card instead. PAL dismissed Micabalo and Enriquez, along with other employees involved. The Labor Arbiter initially ruled in favor of the employees, citing that the investigation was partial and that the dismissal was motivated by anti-union sentiments. This decision was affirmed by the National Labor Relations Commission (NLRC), leading PAL to appeal to the Supreme Court.

The Supreme Court reversed the NLRC’s decision, emphasizing that administrative findings of fact are not infallible and can be set aside when they fail the test of arbitrariness. The Court found that the NLRC had misappreciated the evidence and that the dismissal was for just cause, not for union activities. It stated that,

Factual findings of administrative agencies are not infallible and will be set aside when they fail the test of arbitrariness.

The Court noted that the discrepancies in the ticket coupons clearly demonstrated falsifications committed by the employees. While Micabalo and Enriquez claimed their actions were unintentional or done in good faith, the Court found these explanations unconvincing.

The Court rejected the argument that the charges against Micabalo and Enriquez were due to their union activities. The claim was based on Micabalo’s opposition to certain promotions and their participation in a strike. However, the Court found that these circumstances did not constitute substantial evidence to support a conclusion of illegal dismissal due to union activities. Substantial evidence is defined as,

that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.

It pointed out that the strike had been declared illegal and that the evidence of the grievance cases was insufficient to prove malicious action by PAL. The court contrasted the employees’ claims of union-busting with PAL’s presentation of concrete evidence showing repeated instances of wrongdoing by the private respondents. The evidence showed a clear pattern of falsification and diversion of cash payments for personal gain.

The Court also refuted the NLRC’s finding that PAL only filed charges against employees who had filed grievance suits. PAL presented evidence that it conducted company-wide audits and charged all employees found to have committed infractions, not just those who were at odds with the company. The Court highlighted that other employees, such as Bernardo Fernandez, Jr., Carlos Coruña, Eustaquio Gallardo, Eliseo Villarino, Jr., and Jose Blones, Jr., were also investigated and charged with similar ticketing anomalies. Furthermore, the Court addressed the NLRC’s contention that PAL failed to prove the damage it sustained. The Court clarified that the use of credit cards when passengers were willing to pay in cash deprived the company of the immediate use of those cash payments, and the company also incurred service fees for credit card transactions, resulting in financial loss.

Ultimately, the Supreme Court held that the NLRC acted with grave abuse of discretion in affirming the Labor Arbiter’s decision. The Court emphasized that employees cannot hide behind unionism to shield criminal acts committed for personal gain. The Court then turned to the appropriateness of the dismissal penalty imposed by PAL. The company’s Code of Discipline explicitly states that employees who make false claims, defraud the company, falsify documents, or enter false information are subject to dismissal. The Court affirmed that these offenses are serious and that the private respondents were aware of the consequences of their actions. The Court underscored the importance of trust and integrity in the employer-employee relationship, stating that an employer cannot be compelled to continue employing someone who has breached that trust.

The decision underscores the importance of upholding ethical standards in the workplace. While labor laws are designed to protect employees, they do not provide immunity for fraudulent or dishonest behavior. Employers have the right to enforce their codes of conduct and discipline employees who violate these standards. This case serves as a reminder that employees must act with integrity and honesty in their dealings with their employers, and that breaches of trust can have serious consequences, including dismissal. The Court’s ruling emphasizes the importance of balancing the protection of employees’ rights with the employer’s right to maintain a fair and honest work environment.

FAQs

What was the key issue in this case?	The central issue was whether Philippine Airlines (PAL) illegally dismissed employees Avelino Micabalo and Prospero Enriquez due to union activities or for just cause based on fraudulent activities and falsification of company documents.
What did the audit reveal about the employees’ actions?	The audit uncovered that Micabalo and Enriquez were manipulating ticket payment methods by charging payments to credit cards while pocketing cash from passengers, creating discrepancies between audit and flight coupons.
What was the company’s Code of Discipline regarding fraud and falsification?	The company’s Code of Discipline explicitly states that employees who make false claims, defraud the company, falsify documents, or enter false information are subject to dismissal.
How did the Labor Arbiter and NLRC initially rule?	The Labor Arbiter and NLRC initially ruled in favor of the employees, citing that the investigation was partial and that the dismissal was motivated by anti-union sentiments.
What was the Supreme Court’s decision?	The Supreme Court reversed the NLRC’s decision, holding that the dismissal was for just cause due to the employees’ fraudulent activities and falsification of company documents, and not for union activities.
What evidence did PAL present to support its case?	PAL presented concrete evidence of repeated wrongdoings by Micabalo and Enriquez, including discrepancies in ticket coupons and diversion of cash payments for personal gain.
Did the Court find any evidence of anti-union discrimination?	No, the Court found no substantial evidence that the charges against Micabalo and Enriquez were due to their union activities or that PAL selectively prosecuted them.
What was the impact of the employees’ actions on the company?	The employees’ actions deprived PAL of immediate use of cash payments and incurred service fees for credit card transactions, resulting in financial loss for the company.
Can employees use unionism as a shield for criminal acts?	No, the Supreme Court emphasized that employees cannot hide behind unionism to shield criminal acts committed for personal gain.
What is the key takeaway from this case?	The case underscores the importance of upholding ethical standards in the workplace and that employees must act with integrity and honesty in their dealings with employers; breaches of trust can result in dismissal.

The Philippine Airlines v. NLRC case reaffirms the principle that employers have the right to protect their interests and maintain integrity within their workforce. This ruling highlights the delicate balance between protecting employees’ rights and ensuring accountability for fraudulent actions. It sends a clear message that employees who engage in dishonest behavior cannot expect to be shielded by their union membership.

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. 117038, September 25, 1997