“Under the Labor Code, Labor Arbiters are authorized by law to award moral and exemplary damages:
Art. 217. Jurisdiction of Labor Arbiters and the Commission. – (a) Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural:
. . . .
4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations[.]
The nature of moral damages is defined under our Civil Code. Article 2220 states that “[w]illful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith.” In Primero v. Intermediate Appellate Court, this court stated that damages, as defined in the Civil Code, is recoverable in labor cases. Thus, moral damages:
. . . cannot be justified solely upon the premise (otherwise sufficient for redress under the Labor Code) that the employer fired his employee without just cause or due process. Additional facts must be pleaded and proven to warrant the grant of moral damages under the Civil Code, these being, to repeat, that the act of dismissal was attended by bad faith or fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy; and, of course, that social humiliation, wounded feelings, grave anxiety, etc., resulted therefrom.
The employee is entitled to moral damages when the employer acted a) in bad faith or fraud; b) in a manner oppressive to labor; or c) in a manner contrary to morals, good customs, or public policy.1
Bad faith “implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity.” Cathay Pacific Airways v. Spouses Vazquez[ established that bad faith must be proven through clear and convincing evidence. This is because “[b]ad faith and fraud . . . are serious accusations that can be so conveniently and casually invoked, and that is why they are never presumed. They amount to mere slogans or mudslinging unless convincingly substantiated by whoever is alleging them.”Here, there was clear and convincing evidence of bad faith adduced in the lower tribunals.
PAL’s actions in implicating Montinola and penalizing her for no clear reason show bad faith. PAL’s denial of her request to clarify the charges against her shows its intent to do a wrongful act for moral obliquity. If it were acting in good faith, it would have gathered more evidence from its contact in Honolulu or from other employees before it started pointing fingers. PAL should not have haphazardly implicated Montinola and denied her livelihood even for a moment.
PAL apparently granted Montinola procedural due process by giving her a notice of administrative charge and conducting a hearing. However, this was more apparent than real. The notice of administrative charge did not specify the acts committed by Montinola and how these acts violated PAL’s Code of Discipline. The notice did not state which among the items confiscated by the US customs officials were originally found in Montinola’s possession. Worse, the panel of PAL officers led by Atty. Pascual did not entertain any query to clarify the charges against her.
There is denial of an opportunity to be heard if the employee is not clearly apprised of the acts she committed that constituted the cause for disciplinary action. The Omnibus Rules Implementing the Labor Code requires that “a written notice [be] served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity within which to explain his side.” Reasonable opportunity has been described as “every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense.”
When the alleged participation of the employee in the illicit act which serves as a basis for the disciplinary action is not clear from the notice, the opportunity to be heard will not be reasonable. The notice fails to meet reasonable standards. It does not have enough information to enable the employee to adequately prepare a defense.”
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“Montinola was found by PAL to be guilty of all the charges against her. According to PAL, “[t]hese offenses call for the imposition of the penalty of Termination, however, we are imposing upon you the reduced penalty of One (01) year Suspension.” It is not clear how she could violate all the prestations in the long list of rules she allegedly violated. There is also no clear explanation why termination would be the proper penalty to impose. That the penalty was downgraded, without legal explanation, to suspension appears as a further badge of intimidation and bad faith on the part of the employer.
Nothing in PAL’s action supports the finding that Montinola committed specific acts constituting violations of PAL’s Code of Discipline.
This act of PAL is contrary to morals, good customs, and public policy. PAL was willing to deprive Montinola of the wages she would have earned during her year of suspension even if there was no substantial evidence that she was involved in the pilferage.
Moral damages are, thus, appropriate. In Almira v. B.F. Goodrich Philippines, this court noted that unemployment “brings untold hardships and sorrows on those dependent on the wage-earner.” This is also true for the case of suspension. Suspension is temporary unemployment. During the year of her suspension, Montinola and her family had to survive without her usual salary. The deprivation of economic compensation caused mental anguish, fright, serious anxiety, besmirched reputation, and wounded feelings. All these are grounds for an award of moral damages under the Civil Code.”
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“Montinola is also entitled to exemplary damages.
Under Article 2229 of the Civil Code, “[e]xemplary or corrective damages are imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages.” As this court has stated in the past: “Exemplary damages are designed by our civil law to permit the courts to reshape behaviour that is socially deleterious in its consequence by creating negative incentives or deterrents against such behaviour.”
If the case involves a contract, Article 2332 of the Civil Code provides that “the court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner.” Thus, in Garcia v. NLRC, this court ruled that in labor cases, the court may award exemplary damages “if the dismissal was effected in a wanton, oppressive or malevolent manner.”
It is socially deleterious for PAL to suspend Montinola without just cause in the manner suffered by her. Hence, exemplary damages are necessary to deter future employers from committing the same acts.”
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G.R. No. 198656, September 08, 2014, NANCY S. MONTINOLA, PETITIONER, VS. PHILIPPINE AIRLINES, RESPONDENT.