Montinola vs. PAL

G.R. No. 198656, 8 September 2014

Facts of the case:

Montinola was employed as a flight attendant of PAL since 1996. On January 29, 2008, Montinola and other flight crew members were subjected to custom searches in Honolulu, Hawaii, USA, where items from the airline were recovered from the flight crew by customs officials. Because of this, the Honolulu customs official sent an email to PAL regarding the search and another email enumerating the list of items taken from the crew members.

PAL conducted an investigation and Montinola was among those implicated. PAL’s Cabin Services Sub-Department required Montinola to comment on the incident. She gave a handwritten explanation three days after, stating that she did not take anything from the aircraft. She also committed to give her full cooperation should there be any further inquiries on the matter. She was furnished with emails from the Honolulu customs official followed by a notice of administrative charge. During the clarificatory hearing, Montinola, through her counsel objected PAL’s failure to specify her participation in the alleged pilferage. Atty. Pascual, counsel of PAL, threatened Montinola that a request for clarification would result in a waiver of the clarificatory hearing. Despite her counsel’s objections, Montinola allowed the clarificatory hearings to proceed because she wanted to extend her full cooperation in the investigations.

During the hearing, Montinola admitted US customs personnel conducted a search of her person. At that time, she had in her possession only the following food items: cooked camote, 3-in-1 coffee packs, and Cadbury hot chocolate. PAL, however, found Montinola guilty of 11 Violations of the company’s Code of Discipline and Government Regulation. She was meted with suspension for 1 year without pay.

The Labor Arbiter found her suspension illegal finding that PAL never presented evidence that showed Montinola as the one responsible for any of the illegally taken airline items. In addition to reinstatement with backwages, inclusive of allowances and benefits amounting to ₱378,630.00.29, the LA awarded moral damages in the amount of ₱100,000.00 and exemplary damages amounting to ₱100,000.00. Attorney’s fees were also awarded. The NLRC affirmed the decision of LA. The NLRC pointed out that the affidavit sent by the US custom official categorically admitted that she did not know which items were attributable to each of the seven crew members whom she identified and there were no individual inventories. The CA likewise affirmed the decision of NLRC however, it deleted the award of moral and exemplary damages and attorney’s fees to private respondent.

Issue:

1. Whether or not petitioner was illegally suspended.

2. Whether or not petitioner is entitled to a) moral damages; b) exemplary damages; and c) attorney’s fees.

Ruling of the Court:

1. The Court finds the suspension illegal. Here, although PAL complied with procedural due process as laid out in Article 277, paragraph (b) of the Labor Code, like issued a written notice of administrative charge, conducted a clarificatory hearing, and rendered a written decision suspending Montinola, the written notice of administrative charge, however, did not serve the purpose required under due process. PAL threaten her that if she insists on a specific notice of administrative charge, that will be construed as a waiver of the clarificatory hearing. With Montinola unable to clarify the contents of the notice of administrative charge, there were irregularities in the procedural due process accorded to her.

PAL denied Montinola substantial due process. Just cause has to be supported by substantial evidence. Substantial evidence, or "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion," is the quantum of evidence required in administrative bodies such as the NLRC. It is reasonable to expect the employer to consider substantial evidence in disciplinary proceedings against its employees.

The employer has the burden of proof in showing that disciplinary action was made for lawful cause. The employer must consider and show facts adequate to support the conclusion that an employee deserves to be disciplined for his or her acts or omissions. PAL, however, merely relied on pieces of information that are not sufficient to show the participation of any of the flight crew members, least of all Montinola. None of the evidence presented show that the customs officials confiscated any of these items from her. Thus, the evidence by themselves do not show that Montinola pilfered airline items.

Together with the manner in which the investigation proceeded, i.e., that Montinola was prevented from asking for clarification of the charges against her, the absence of substantial evidence is so apparent that disciplining an employee only on these bases constitutes bad faith.

2. a) Montinola is entitled to moral damages because of bad faith of PAL in suspending her. 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.

In other words, 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.

Moreover, the list of provisions in PAL’s Code of Discipline allegedly violated was long and exhaustive. PAL’s notice of administrative charge stated that it had probable cause to administratively charge Montinola of 11 violation of the PAL’s Code of Discipline.

To constitute proper notice, the facts constitutive of the violations of these rules — and not just the rules of conduct — must be clearly stated. Proper notice also requires that the alleged participation of the employee be clearly specified. Without these, the most fundamental requirement of a fair hearing cannot be met.

Montinola was found by PAL to be guilty of all the charges against her. According to PAL, "these 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 therefore, 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.

b) Montinola is entitled to exemplary damages. 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.

c) Montinola is entitled to attorney’s fees. Considering that exemplary damages has been awarded, in this case, attorney’s fees can likewise be awarded. Further, PAL’s acts and omissions compelled Montinola to incur expenses to protect her rights with the NLRC and the judicial system. She went through four tribunals, and she was assisted by counsel. These expenses would have been unnecessary if PAL had sufficient basis for its decision to discipline Montinola. Finally, the action included recovery for wages. To bring justice to the illegal suspension of Montinola, she asked for backwages for her year of suspension.

Good notes in this case

- Illegally suspended employees, similar to illegally dismissed employees, are entitled to moral damages when their suspension was attended by bad faith or fraud, oppressive to labor, or done in a manner contrary to morals, good customs, or public policy.

Security of tenure, a constitutionally guaranteed right

- Security of tenure of workers is not only statutorily protected, it is also a constitutionally guaranteed right. Thus, any deprivation of this right must be attended by due process of law. This means that any disciplinary action which affects employment must pass due process scrutiny in both its substantive and procedural aspects.

Labor/work, a vested right

- The constitutional protection for workers elevates their work to the status of a vested right. It is a vested right protected not only against state action but against the arbitrary acts of the employers as well. This court in Philippine Movie Pictures Workers’ Association v. Premier Productions, Inc. categorically stated that "the right of a person to his labor is deemed to be property within the meaning of constitutional guarantees." Moreover, it is of that species of vested constitutional right that also affects an employee’s liberty and quality of life. Work not only contributes to defining the individual, it also assists in determining one’s purpose. Work provides for the material basis of human dignity.

Suspension of work is a deprivation of vested right

- Suspension from work is prima facie a deprivation of this right. Thus, termination and suspension from work must be reasonable to meet the constitutional requirement of due process of law. It will be reasonable if it is based on just or authorized causes enumerated in the Labor Code.

Procedural due process

- On the other hand, articulation of procedural due process in labor cases is found in Article 277(b) of the Labor Code.

The procedure can be summarized in this manner. First, the employer must furnish the employee with a written notice containing the cause for termination. Second, the employer must give the employee an opportunity to be heard. This could be done either through a position paper or through a clarificatory hearing. The employee may also be assisted by a representative or counsel. Finally, the employer must give another written notice apprising the employee of its findings and the penalty to be imposed against the employee, if any. In labor cases, these requisites meet the constitutional requirement of procedural due process, which "contemplates notice and opportunity to be heard before judgment is rendered, affecting one’s person or property."

Nature of moral damages

- The nature of moral damages is defined under our Civil Code. Article 2220 states that "willful 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.

When is an employee be entitled to moral damages?

- 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.

Bad faith

- 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 "bad 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."

Denial of an opportunity to be heard

- 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."

Exemplary damages

- Under Article 2229 of the Civil Code, "exemplary 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."

How to conduct administrative investigations

- We acknowledge the right of PAL to be constantly vigilant to prevent and deter pilferage. After all, that is equally its property which is also protected by the Constitution. However, PAL cannot assume liability on the employee. It has to endeavor to move through its administrative investigations more humanely and more in consonance with the law. Its employees may only have their work. It is their work, no matter what the classification and how significant they may be in the eyes of their employer, that should give them their dignity.