SECOND DIVISION

G.R. No. 225125, June 06, 2018

MARLON L. ARCILLA, Petitioner, v. ZULISIBS, INC., PIANDRE SALON, AND

ROSALINDA FRANCISCO, Respondents.

RESOLUTION

CARPIO, J.:

The Case

This is a petition for review to set aside the 10 February 2016  Decision1 of the Court of
Appeals in CA-G.R. SP No. 141953 which affirmed with modifications the Resolutions
dated 30 April 20152 and 26 June 20153 of the National Labor Relations Commission
(NLRC), Third Division, in NLRC LAC No. 04-001028-15/NLRC NCR No. 10-12582-14.

The Facts

Respondent Zulisibs, Inc. (Zulisibs) is a corporation organized and existing under

Philippine laws with respondent Rosalinda Francisco (Francisco) as its President and
Chief Executive Officer. Zulisibs operates respondent Piandre Salon (Piandre), an
establishment engaged in the operation of beauty salons.

Petitioner Marlon L. Arcilla (Marlon) was hired by Piandre on 8 February 2000 and was
assigned to the Alabang, Muntinlupa City branch. Maricel Arcilla (Maricel), Marlon's wife,
was hired on 12 November 2000 and was assigned to the Salcedo Village, Makati City
branch. After several years, both Marlon and Maricel were promoted as senior hair
stylists earning a monthly salary of P11,672.00 plus commissions from customers and
sale of products.

Sometime in September 2014, Zulisibs, through its officers, received information that
Marlon was establishing a beauty salon somewhere in Daang Hari, Alabang, Muntinlupa
City, near the Piandre Salon where Marlon was working.

On 6 September 2014, Marlon received a notice from Piandre and Francisco placing
Marlon under preventive suspension from 6 to 14 September 2014 and requiring him to
appear on 12 September 2014 at Francisco's office in Sta. Ana, Manila.

During the 12 September 2014 investigative hearing, Marlon was accused of, among
other things, being involved in the opening of a salon near Piandre Alabang. Marlon
denied that he had an agreement or contract with the owner of the salon along Daang
Hari, Alabang. However, he admitted the following: (1) that he extended help to the
salon owner who happens to be his brother-in-law; (2) that he called up two former
employees of Piandre and recommended them to his brother-in-law; and (3) that he
gave P50,000.00 to the salon owner which amount was a portion of the P250,000.00
loan he borrowed from the employees' cooperative of Piandre.4
Further investigation revealed that Marlon was often absent from work and whenever
he was working, he would entertain phone calls, thus, disrupting his work. He would be
absent on days when he would be the only stylist available. Francisco and other
supervisors of Piandre verified the existence of a new salon along Daang Hari, Alabang
and alleged that "the interiors of said salon, already with equipment, mirrors and
chairs, [sic] all set to operate, with towels folded and presented the 'Piandre'
way."5 They also learned from neighboring establishments that the salon was set to
open on 8 September 2014.

On 11 September 2014, Maricel received a notice from Piandre and Francisco, asking
her to explain her alleged involvement with her husband, Marlon, in setting up a salon
along Daang Hari, Alabang and requiring her to appear on 13 September 2014 at the
Sta. Ana office. On 14 September 2014, Maricel received a notice placing her under
preventive suspension from 14 September to 13 October 2014.

Marlon received a copy of his notice of termination on 14 September 2014. Maricel

received her notice of termination on 26 September 2014. Both were found guilty of
violating Piandre's Code of Discipline 3F No. 2: Pagkawala ng tiwala dahil sa ginawang
masama.

Subsequently, Marlon and Maricel filed two separate complaints6 for illegal dismissal,
underpayment of wages, non-payment of overtime pay, service incentive leave,
13th month pay, Emergency Cost of Living Allowance, and separation pay, and illegal
suspension, with prayer for moral and exemplary damages, and attorney's fees.

The Ruling of the Labor Arbiter

On 9 March 2015, the Labor Arbiter rendered a Decision7 dismissing Marlon and

Maricel's complaints for lack of merit. The Labor Arbiter held that:

WHEREFORE, the complaint[s] for illegal dismissal and x x x money claims [are]
DISMISSED for lack of merit.8

The Ruling of the NLRC

On 30 April 2015, the NLRC denied Marlon and Maricel's appeal and affirmed the Labor
Arbiter's decision. The NLRC held that:

WHEREFORE, premises considered, Complainants-Appellants' appeal is hereby DENIED.

The March 9, 2015 Decision of Labor Arbiter Gaudencio P. Demaisip, Jr. is hereby
AFFIRMED.9

On 26 June 2015, Marlon and Maricel's Motion for Reconsideration10 was denied by the
NLRC for lack of merit, holding that "The resolution of [the] Commission dated April 30,
2015 STANDS undisturbed."11
 The Ruling of the Court of Appeals

On 10 February 2016, Marlon and Maricel's petition for certiorari under Rule 65 was
partially granted. Marlon's termination was held to be valid. As to Maricel, the Court of
Appeals held that the NLRC and the Labor Arbiter erred in upholding the legality of her
dismissal. The dispositive portion of the Decision12 reads:

WHEREFORE, the petition is PARTIALLY GRANTED. The Resolutions dated April 30, 2015
and June 26, 2015 of public respondent National Labor Relations Commission, Third
Division, in NLRC LAC No. 04-001028-15/NLRC NCR No. 10-12582-14 are hereby
AFFIRMED with MODIFICATIONS, in that the private respondents are ORDERED to pay
MARICEL ARCILLA the following:

1) Backwages and all other benefits from September 26, 2014 until finality of this Decision;
2) Separation pay equivalent to one (1) month salary for every year of service;
3) Moral and exemplary damages in the amount of Php 50,000.00
4) Attorney's fees equivalent to ten percent (10%) of the total monetary award; and
5) Legal interest of six percent (6%) per annum on the total monetary awards from the finality
of this Decision until full payment thereof.

The appropriate Computation Division of the National Labor Relations Commission is

hereby ordered to COMPUTE and UPDATE the award as herein determined WITH
DISPATCH.

All other aspects of the assailed Resolutions STAND.

SO ORDERED.13

The Issues

Marlon presents the following issues:

1. Whether the Court of Appeals erred in upholding the two resolutions of the NLRC,
finding Marlon's dismissal to be valid and for just cause, and effected after due notice
and hearing; and

2. Whether the Court of Appeals gravely erred in upholding the two resolutions of the
NLRC, finding that Marlon was not entitled to his money claims.

The Ruling of this Court

We deny the petition.

Dismissals under the Labor Code have two facets: the legality of the act of dismissal,
which constitutes substantive due process; and the legality of the manner of dismissal,
which constitutes procedural due process.14

In this case, we do not dispute the findings of the Labor Arbiter, the NLRC, and the
Court of Appeals that the manner of Marlon's dismissal was legal and in accordance
with law.15 The requirement of procedural due process was met when Marlon was
served with a first written notice containing the specific causes or grounds for his
termination, when Marlon was called to attend an investigative hearing to explain his
side, and when Marlon was served with a second written notice containing the
justification for his termination.

Thus, the only issue to be resolved is the legality of the act of dismissal by re-
examining the facts and evidence on record. Given that this Court is not a trier of facts,
and the scope of its authority under Rule 45 of the Rules of Court is confined only to
errors of law and does not extend to questions of fact, which are for labor tribunals to
resolve, one of the recognized exceptions to the rule is when the factual findings and
conclusion of the labor tribunals are contradictory or inconsistent with those of the
Court of Appeals.16 In this case, however, the factual findings and conclusion of the
labor tribunals and the Court of Appeals regarding Marlon's dismissal are consistent and
one. As to Maricel, the decision in her favor was not appealed to us anymore. Thus, the
decision of the Court of Appeals insofar as Maricel is concerned is final and executory.

Respondents Zulisibs, Francisco, and Piandre alleged that Marlon committed serious
misconduct or willful disobedience of the company's lawful orders, and of fraud or willful
breach of the trust reposed in him by the company when he helped his brother-in-law
open a salon along Daang Hari, Alabang. They justified Marlon's dismissal by citing
paragraphs (a) and (c), Article 297 of the Labor Code.17 The provision reads:

Article 297. TERMINATION BY EMPLOYER.  An employer may terminate an employee for

any of the following causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of
his employer or representative in connection with his work.

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer
or duly authorized representative.

The Labor Arbiter, the NLRC, and the Court of Appeals all held that the respondents
presented substantial evidence to justify Marlon's dismissal. We affirm all the rulings.
We adopt in toto the Court of Appeals' decision with regard to Marlon's dismissal. It
held:

From the facts and circumstances obtaining with respect to petitioner Marlon Arcilla,
there exists a valid cause in terminating his employment. It was clearly stated in
paragraph 8 of the Agreement or "Kasunduan"  signed by petitioners that they are
prohibited from setting up or being involved in a business similar to that of private
respondents' during the course of their employment. Considering that the petitioners
have neither controverted nor denied the existence of the Kasunduan, they are
therefore bound by the terms and conditions thereof. Petitioners cannot likewise deny
the existence of the Code of Discipline and feign ignorance of the offense they
committed and its corresponding penalty by holding that the private respondents did
not present a copy of said Code in the proceedings below. They are deemed to have
acknowledged the existence of said Code and presumed to have understood the
provisions contained therein when they signed the Kasunduan and agreed to abide by
the Code of Discipline and the rules and regulations of the company in paragraph 2 of
their agreement. As private respondents' trusted Senior Hairstylists for quite a
number of years, it is incumbent upon them to have read and understood its
provisions and be fully aware of the prohibitions and penalties imposed upon
erring employees.

Collorarily, as briefly summed up by the public respondent, petitioners were later

discovered to be involved in setting up another salon near the private respondents'
salon in Alabang, albeit the involvement was only indirect by means of extending a
Php50,000.00 financial assistance to the owner of the new salon who happens to be the
brother-in-law of Marlon or his wife Maricel's brother. We agree with public respondent
that it is immaterial whether the new salon was under the petitioners' name or not, or
that they established a salon of their own. The important fact remains that
petitioner Marlon made an admission that he gave funds to his brother-in-law
for the new salon in Alabang which directly competes with the business of his
employer. It is not disputed that the new beauty salon is located less than a
kilometer away from Piandre Salon in Alabang.

Furthermore, Marlon's admission susbtantially proves two things: 1) that a new salon
has indeed been established; and 2) that he willfully disobeyed his contract of
employment with the private respondents. His involvement in setting up a
competing salon, which albeit indirect, constitutes serious misconduct because
of his blatant disregard [of] the terms and conditions of his
contract/agreement with the private respondents. His act of allowing himself
to be involved with his brother-in-law's business displays an act of disloyalty
to the company which is likewise sufficient to warrant his dismissal for loss of
trust and confidence. To our mind, his apology in his written letter to private
respondent Francisco [was] a mere afterthought after realizing the gravity of his
offense after he became the subject of an investigation by the private respondents.
Substantial proof, and not clear and convincing evidence or proof beyond reasonable
doubt, is a sufficient basis for the imposition of any disciplinary action upon the
employee. The standard of substantial evidence is satisfied where the employer has
reasonable ground to believe that the employee is responsible for the misconduct that
renders the latter unworthy of the trust and confidence demanded by his or her
position.18 (Emphasis supplied)

All told, there is sufficient basis to dismiss Marlon on the grounds of serious misconduct
or willful disobedience of the company's lawful orders, and of fraud or willful breach of
the trust reposed in him by the company when he helped his brother-in-law open a
salon along Daang Hari, Alabang. The Court of Appeals acted in accordance with the
evidence on record and case law when it affirmed and upheld the resolutions of the
NLRC.
WHEREFORE, the petition is DENIED for lack of merit.

SO ORDERED.
 THIRD DIVISION

G.R. No. 212003, February 28, 2018

PHILIPPINE SPAN ASIA CARRIERS CORPORATION (FORMERLY SULPICIO

LINES, INC.), Petitioner, v. HEIDI PELAYO, Respondent.

DECISION

LEONEN, J.:

"Not every inconvenience, disruption, difficulty, or disadvantage that an employee must

endure sustains a finding of constructive dismissal."1 It is an employer's right to
investigate acts of wrongdoing by employees. Employees involved in such
investigations cannot ipso facto claim that employers are out to get them. Their
involvement in investigations will naturally entail some inconvenience, stress, and
difficulty. However, even if they might be burdened - and, in some cases, rather heavily
so - it does not necessarily mean that an employer has embarked on their constructive
dismissal.

This resolves a Petition for Review on Certiorari2 under Rule 45 of the 1997 Rules of
Civil Procedure praying that the assailed Court of Appeals July 4, 2013 Decision3 and
February 12, 2014 Resolution4 in CA-G.R. SP No. 04622 be reversed and set aside.

The assailed Court of Appeals July 4, 2013 Decision found grave abuse of discretion on
the part of the National Labor Relations Commission in issuing its May 27, 2011
Decision5 and August 31, 2011 Decision6 holding that respondent Heidi Pelayo (Pelayo)
was not constructively dismissed. The assailed Court of Appeals February 12, 2014
Resolution denied the Motion for Reconsideration7 of petitioner Philippine Span Asia
Carriers Corporation, then Sulpicio Lines, Inc. (Sulpicio Lines).

Pelayo was employed by Sulpicio Lines as an accounting clerk at its Davao City branch
office. As accounting clerk, her main duties were "to receive statements and billings for
processing of payments, prepare vouchers and checks for the approval and signature of
the branch manager, and release checks for payment."8

Sulpicio Lines uncovered several anomalous transactions in its Davao City branch office.
Most notably, a check issued to a certain "J. Josol"9 had been altered from its original
amount of P20,804.58 to P820,804.58. The signatories to the check were branch
manager Tirso Tan (Tan) and cashier Fely Sobiaco (Sobiaco).10

There were also apparent double disbursements. In the first double disbursement, two
(2) checks amounting to P5,312.15 each were issued for a single P5,312.15 transaction
with Davao United Educational Supplies. This transaction was covered by official receipt
no. 16527, in the amount of P5,312.15 and dated January 12, 2008. The first check,
Philippine Trust Company (PhilTrust Bank) check no. 2043921, was issued on December
15, 2007. This was covered by voucher no. 227275. The second check, PhilTrust Bank
check no. 2044116, was issued on January 19, 2008 and was covered by voucher no.
227909.11

There was another double disbursement for a single transaction. Two (2) checks for
P20,804.58 each in favor of Everstrong Enterprises were covered by official receipt no.
5129, dated January 25, 2008. The first check, PhilTrust Bank check no. 2044156, was
dated January 26, 2008 and covered by voucher no. 228034. The second check,
PhilTrust Bank check no. 2044244, was dated February 9, 2008 and covered by voucher
no. 228296.12

Another apparent anomaly was a discrepancy in the amounts reflected in what should
have been a voucher and a check corresponding to each other and covering the same
transaction with ARR Vulcanizing. Voucher no. 232550 dated October 30, 2008
indicated only P17,052.00, but the amount disbursed through check no. 2051313
amounted to P29,306.00.13

Sulpicio Lines' Cebu-based management team went to Davao to investigate from March
3 to 5, 2010. Pelayo was interviewed by members of the management team as "she
was the one who personally prepared the cash vouchers and checks for approval by Tan
and Sobiaco."14

The management team was unable to complete its investigation by March 5, 2010.
Thus, a follow-up investigation had to be conducted. On March 8, 2010, Pelayo was
asked to come to Sulpicio Lines' Cebu main office for another interview.15 Sulpicio Lines
shouldered all the expenses arising from Pelayo's trip.16

In the midst of a panel interview, Pelayo walked out.17 She later claimed that she was
being coerced to admit complicity with Tan and Sobiaco.18 Pelayo then returned to
Davao City,19 where she was admitted to a hospital "because of depression and a
nervous breakdown."20 She eventually filed for leave of absence and ultimately stopped
reporting for work.21

Following an initial phone call asking her to return to Cebu, Sulpicio Lines served on
Pelayo a memorandum dated March 15, 2010,22 requiring her to submit a written
explanation concerning "double disbursements, payments of ghost purchases and
issuances of checks with amounts bigger than what [were] stated in the
vouchers."23 Sulpicio Lines also placed Pelayo on preventive suspension for 30 days.24 It
stated:

Among your duties is to receive statements and billings for processing of payments,
prepare vouchers and checks for the signature of the approving authority. In the
preparation of the vouchers and the checks, you also are required to check and to make
sure that the supporting documents are in order. Thus, the double payments and other
payments could not have been perpetra[t]ed without your cooperation and/or neglect
of duty/gross negligence.

You are hereby required to submit within three (3) days from receipt of this letter a
written explanation why no disciplinary action [should] be imposed against you for
dishonesty and/or neglect of duty or gross negligence.25
Sulpicio Lines also sought the assistance of the National Bureau of Investigation, which
asked Pelayo to appear before it on March 19, 2010.26

Instead of responding to Sulpicio Lines' memorandum or appearing before the National

Bureau of Investigation, Pelayo filed a Complaint against Sulpicio Lines charging it with
constructive dismissal.27

Sulpicio Lines denied liability asserting that Pelayo was merely asked to come to Cebu
"to shed light on the discovered anomalies"28 and was "only asked to cooperate in
prosecuting Tan and Sobiaco."29 It also decried Pelayo's seeming attempt at
"distanc[ing] herself from the ongoing investigation of financial anomalies discovered."30

In her September 17, 2010 Decision,31 Labor Arbiter Merceditas C. Larida (Labor Arbiter
Larida) held that Sulpicio Lines constructively dismissed Pelayo. She faulted Sulpicio
Lines for harassing Pelayo when her participation in the uncovered anomalies was "far-
fetched."32 Labor Arbiter Larida relied mainly on the affidavit of Alex Te (Te),33 an
employee of Sulpicio Lines assigned at the Accounting Department of its Cebu City main
office. Te's affidavit was attached to the Secretary's Certificate,34 attesting to Sulpicio
Lines' Board Resolution authorizing Te to act in its behalf in prosecuting Tan and
Sobiaco. This affidavit detailed the duties of Tan and Sobiaco, as branch manager and
cashier, respectively, and laid out the bases for their prosecution.35 Labor Arbiter Larida
noted that the affidavit's silence on how Pelayo could have been involved demonstrated
that it was unjust to suspect her of wrongdoing.36

In its May 27, 2011 Decision,37 the National Labor Relations Commission reversed Labor
Arbiter Larida's Decision. It explained that the matter of disciplining employees was a
management prerogative and that complainant's involvement in the investigation did
not necessarily amount to harassment.38 The dispositive portion of this Decision read:

WHEREFORE, foregoing premises considered, the appeal is GRANTED and the appealed
decision is SET ASIDE and VACATED. In lieu thereof, a new judgment is rendered
DISMISSING the above-entitled case for lack of merit.

SO ORDERED.39

In its assailed July 4, 2013 Decision, the Court of Appeals found grave abuse of
discretion on the part of the National Labor Relations Commission in reversing Labor
Arbiter Larida's Decision.40

Following the denial of its Motion for Reconsideration,41 Sulpicio Lines filed the present
Petition.

For resolution is the issue of whether or not the Court of Appeals erred in finding grave
abuse of discretion on the part of the National Labor Relations Commission in ruling
that respondent Heidi Pelayo's involvement in the investigation conducted by petitioner
did not amount to constructive dismissal.

The Court of Appeals must be reversed.

An employer who conducts investigations following the discovery of misdeeds by its
employees is not being abusive when it seeks information from an employee involved in
the workflow which occasioned the misdeed. Basic diligence impels an employer to
cover all bases and inquire from employees who, by their inclusion in that workflow,
may have participated in the misdeed or may have information that can lead to the
perpetrator's identification and the employer's adoption of appropriate responsive
measures. An employee's involvement in such an investigation will naturally entail
difficulty. This difficulty does not mean that the employer is creating an inhospitable
employment atmosphere so as to ease out the employee involved in the investigation.

While adopted with a view "to give maximum aid and protection to labor,"42 labor laws
are not to be applied in a manner that undermines valid exercise of management
prerogative.

Indeed, basic is the recognition that even as our laws on labor and social justice impel a
"preferential view in favor of labor,"

[e]xcept as limited by special laws, an employer is free to regulate, according to his

own discretion and judgment, all aspects of employment, including hiring, work
assignments, working methods, time, place and manner of work, tools to be used,
processes to be followed, supervision of workers, working regulations, transfer of
employees, work supervision, lay-off of workers and the  discipline, dismissal and recall
of work.43 (Emphasis supplied).

The validity of management prerogative in the discipline of employees was sustained by

this Court in Philippine Airlines v. National Labor Relations Commission,44 "In general,
management has the prerogative to discipline its employees and to impose appropriate
penalties on erring workers pursuant to company rules and regulations."45

The rationale for this was explained in Rural Bank of Cantilan, Inc. v. Julve:46

While the law imposes many obligations upon the employer, nonetheless, it also
protects the employer's right to expect from its employees not only good performance,
adequate work, and diligence, but also good conduct and loyalty. In fact, the Labor
Code does not excuse employees from complying with valid company policies and
reasonable regulations for their governance and guidance.47

Accordingly, in San Miguel Corporation v. National Labor Relations Commission:48

An employer has the prerogative to prescribe reasonable rules and regulations

necessary for the proper conduct of its business, to provide certain disciplinary
measures in order to implement said rules and to assure that the same would be
complied with. An employer enjoys a wide latitude of discretion in the promulgation of
policies, rules and regulations on work-related activities of the employees.

It is axiomatic that appropriate disciplinary sanction is within the purview of

management imposition. Thus, in the implementation of its rules and policies, the
employer has the choice to do so strictly or not, since this is inherent in its right to
control and manage its business effectively.49

II

Disciplining employees does not only entail the demarcation of permissible and
impermissible conduct through company rules and regulations, and the imposition of
appropriate sanctions. It also involves intervening mechanisms "to assure that
[employers' rules] would be complied with."50 These mechanisms include the conduct of
investigations to address employee wrongdoing.

While due process, both substantive and procedural, is imperative in the discipline of
employees, our laws do not go so far as to mandate the minutiae of how employers
must actually investigate employees' wrongdoings. Employers are free to adopt
different mechanisms such as interviews, written statements, or probes by specially
designated panels of officers.

In the case of termination of employment for offenses and misdeeds by employees, i.e.,
for just causes under Article 282 of the Labor Code,51 employers are required to adhere
to the so-called "two-notice rule."52King of Kings Transport v. Mamac53 outlined what
"should be considered in terminating the services of employees"54 :

(1) The first written notice to be served on the employees should contain the specific causes or
grounds for termination against them, and a directive that the employees are given the
opportunity to submit their written explanation within a reasonable period. "Reasonable
opportunity" under the Omnibus Rules means every kind of assistance that management
must accord to the employees to enable them to prepare adequately for their defense. This
should be construed as a period of at least five (5) calendar days from receipt of the notice
to give the employees an opportunity to study the accusation against them, consult a union
official or lawyer, gather data and evidence, and decide on the defenses they will raise
against the complaint. Moreover, in order to enable the employees to intelligently prepare
their explanation and defenses, the notice should contain a detailed narration of the facts
and circumstances that will serve as basis for the charge against the employees. A general
description of the charge will not suffice. Lastly, the notice should specifically mention
which company rules, if any, are violated and/or which among the grounds under Art. 282
is being charged against the employees.

(2) After serving the first notice, the employers should schedule and conduct a hearing or
conference wherein the employees will be given the opportunity to: (1) explain and clarify
their defenses to the charge against them; (2) present evidence in support of their defenses;
and (3) rebut the evidence presented against them by the management. During the hearing
or conference, the employees are given the chance to defend themselves personally, with
the assistance of a representative or counsel of their choice. Moreover, this conference or
hearing could be used by the parties as an opportunity to come to an amicable settlement.
(3) After determining that termination of employment is justified, the employers shall serve
the employees a written notice of termination indicating that: (1) all circumstances
involving the charge against the employees have been considered; and (2) grounds have
 been established to justify the severance of their employment.55 (Citation omitted)

The two-notice rule applies at that stage when an employer has previously determined
that there are probable grounds for dismissing a specific employee. The first notice
implies that the employer already has a cause for termination. The employee then
responds to the cause against him or her. The two-notice rule does not apply to
anterior, preparatory investigations precipitated by the initial discovery of wrongdoing.
At this stage, an employer has yet to identify a specific employee as a suspect. These
preparatory investigations logically lead to disciplinary proceedings against the specific
employee suspected of wrongdoing, but are not yet part of the actual disciplinary
proceedings against that erring employee. While the Labor Code specifically prescribes
the two-notice rule as the manner by which an employer must proceed against an
employee specifically charged with wrongdoing, it leaves to the employer's discretion
the manner by which it shall proceed in initially investigating offenses that have been
uncovered, and whose probable perpetrators have yet to be pinpointed.

Thus, subject to the limits of ethical and lawful conduct, an employer is free to adopt
any means for conducting these investigations. They can, for example, obtain
information from the entire roster of employees involved in a given workflow. They can
also enlist the aid of public and private investigators and law enforcers, especially when
the uncovered iniquity amounts to a criminal offense just as much as it violates
company policies.

When employee wrongdoing has been uncovered, employers are equally free to adopt
contingency measures; lest they, their clients, and other employees suffer from
exigencies otherwise left unaddressed. These measures may be enforced as soon as an
employee's wrongdoing is uncovered, may extend until such time that disciplinary
proceedings are commenced and terminated, and in certain instances, even made
permanent. Employers can rework processes, reshuffle assignments, enforce stopgap
measures, and put in place safety checks like additional approvals from superiors.
In Mandapat v. Add Force Personnel Services, Inc.,56 this Court upheld the temporary
withholding of facilities and privileges as an incident to an ongoing investigation. Thus,
this Court found no fault in the disconnection of an employee's computer and the
suspension of her internet access privilege.57 Employers can also place employees under
preventive suspension, not as a penalty in itself, but as an intervening means to enable
unhampered investigation and to foreclose "a serious and imminent threat to the life or
property of the employer or of the employee's co-workers."58 As Artificio v. National
Labor Relations Commission59 illustrated:

In this case, Artificio's preventive suspension was justified since he was employed as a
security guard tasked precisely to safeguard respondents' client. His continued
presence in respondents' or its client's premises poses a serious threat to respondents,
its employees and client in light of the serious allegation of conduct unbecoming a
security guard such as abandonment of post during night shift duty, light threats and
irregularities in the observance of proper relieving time.

Besides, as the employer, respondent has the right to regulate, according to its
discretion and best judgment, all aspects of employment, including work assignment,
working methods, processes to be followed, working regulations, transfer of employees,
work supervision, lay-off of workers and the discipline, dismissal and recall of workers.
Management has the prerogative to discipline its employees and to impose appropriate
penalties on erring workers pursuant to company rules and regulations.

This Court has upheld a company's management prerogatives so long as they are
exercised in good faith for the advancement of the employer's interest and not for the
purpose of defeating or circumventing the rights of the employees under special laws or
under valid agreements.60

III

The standards for ascertaining constructive dismissal are settled:

There is constructive dismissal when an employer's act of clear discrimination,

insensibility or disdain becomes so unbearable on the part of the employee so as to
foreclose any choice on his part except to resign from such employment. It exists
where there is involuntary resignation because of the harsh, hostile and unfavorable
conditions set by the employer. We have held that the standard for constructive
dismissal is "whether a reasonable person in the employee's position would have felt
compelled to give up his employment under the circumstances."61

This Court has, however, been careful to qualify that "[n]ot every inconvenience,
disruption, difficulty, or disadvantage that an employee must endure sustains a finding
of constructive dismissal."62 In a case where the employee decried her employers' harsh
words as supposedly making for a work environment so inhospitable that she was
compelled to resign, this Court explained:

The unreasonably harsh conditions that compel resignation on the part of an employee
must be way beyond the occasional discomforts brought about by the
misunderstandings between the employer and employee. Strong words may sometimes
be exchanged as the employer describes her expectations or as the employee narrates
the conditions of her work environment and the obstacles she encounters as she
accomplishes her assigned tasks. As in every human relationship, there are bound to be
disagreements.

However, when these strong words from the employer happen without palpable reason
or are expressed only for the purpose of degrading the dignity of the employee, then a
hostile work environment will be created. In a sense, the doctrine of constructive
dismissal has been a consistent vehicle by this Court to assert the dignity of labor.63

Resolving allegations of constructive dismissal is not a one-sided affair impelled by

romanticized sentiment for a preconceived underdog. Rather, it is a question of justice
that "hinges on whether, given the circumstances, the employer acted fairly in
exercising a prerogative."64 It involves the weighing of evidence and a consideration of
the "totality of circumstances."65

IV
This Court fails to see how the petitioner's investigation amounted to respondent's
constructive dismissal.

The assailed Court of Appeals July 4, 2013 Decision devoted all of three (3)
paragraphs66 in explaining why respondent was constructively dismissed. It anchored its
conclusion on how "petitioner was made to admit the commission of the crime,"67 and
on how "[respondent] was compelled to give up her employment due to [petitioner's]
unfounded, unreasonable and improper accusations, which made her employment
unbearable."68

The Court of Appeals was in serious error.

The most basic flaw in the Court of Appeals' reasoning is its naive credulity. It did not
segregate verified facts from impressions and bare allegations. It was quick to lend
credence to respondent's version of events and her bare claim that she "was made to
admit the commission of the crime."69

As it stands, all that have been ascertained are that: first, petitioner discovered
anomalies in its Davao branch; second, members of its management team went to
Davao to investigate ; third, the investigation involved respondent considering that, as
accounting clerk, her main duties were "to receive statements and billings for
processing of payments, prepare vouchers and checks for the approval and signature of
the Branch Manager, and release the checks for cash payment";70 fourth, the
investigation in Davao could not be completed for lack of time; fifth, respondent was
made to come to petitioner's Cebu main office - all expense paid - for the continuation
of the investigation; sixth, in Cebu, respondent was again interviewed; seventh,
respondent walked out in the midst of this interview.

There is no objective proof demonstrating how the interview in Cebu actually

proceeded. Other than respondent's bare allegation, there is nothing to support the
claim that her interviewers were hostile, distrusting, and censorious, or that the
interview was a mere pretext to pin her down. Respondent's recollection is riddled with
impressions, unsupported by independently verifiable facts. These impressions are
subjective products of nuanced perception, personal interpretation, and ingrained belief
that cannot be appreciated as evidencing "the truth respecting a matter of fact."71

Respondent's subsequent hospitalization does not prove harassment or coercion to

make an admission either. The mere fact of its occurrence is not an attestation that
respondent's interview proceeded in the manner that she claimed it did. While it proves
that she was stressed, it does not prove that she was stressed specifically because she
was cornered into admitting wrongdoing.

Human nature dictates that involvement in investigations for wrongdoing, even if one is
not the identified suspect, will entail discomfort and difficulty. Indeed, stress is merely
the "response to physical or psychological demands on a person."72 Even positive
stimuli can become stressors.73 Stress, challenge, and adversity are the natural state of
things when a problematic incident is revealed and begs to be addressed. They do not
mean that an employer is bent on inflicting suffering on an employee.
Different individuals react to stress differently "and some people react to stress by
getting sick."74 Stress is as much a matter of psychological perception as it is of
physiological reaction. Respondent's confinement at a hospital proves that, indeed, she
was stressed at such a degree that it manifested physically. It may also be correlated
with the stressors that respondent previously encountered. Among these stressors was
her interview. One can then reasonably say that respondent's interview may have been
difficult for her. However, any analysis of causation and correlation can only go as far
as this. The evidence does not lead to an inescapable conclusion that respondent's
confinement was solely and exclusively because of how respondent claims her
interviewers incriminated her.

The discomfort of having to come to the investigation's venue, the strain of recalling
and testifying on matters that transpired months prior, the frustration that she was
being dragged into the wrongdoing of other employees—if indeed she was completely
innocent—or the trepidation that a reckoning was forthcoming—if indeed she was guilty
—and many other worries doubtlessly weighed on respondent. Yet, these are normal
burdens cast upon her plainly on account of having to cooperate in the investigation.
They themselves do not translate to petitioner's malice. Respondent's physical response
may have been acute, but this, by itself, can only speak of her temperament and
physiology. It would be fallacious to view this physical response as proof of what her
interviewers actually told her or did to her.

Indeed, it was possible that respondent was harassed. But possibility is not proof.
Judicial and quasi-judicial proceedings demand proof. Respondent's narrative is rich
with melodramatic undertones of how she suffered a nervous breakdown, but is short of
prudent, verifiable proof. In the absence of proof, it would be a miscarriage of justice to
sustain a party-litigant's allegation.

What is certain is that there were several anomalies in petitioner's Davao branch. It
made sense for petitioner to investigate these anomalies. It also made sense for
respondent to be involved in the investigation.

Contrary to Labor Arbiter Larida's conclusion, respondent's connection with the

uncovered anomalies was not "far-fetched."75 The anomalies related to discrepancies
between vouchers and checks, multiple releases of checks backed by as many vouchers
(even if there had only been one transaction), and a check altered to indicate a larger
amount, thereby enabling a larger disbursement. Certainly, it made sense to involve in
the investigation the accounting clerk whose main duty was to "prepare vouchers and
checks for the approval and signature of the Branch Manager, and release the checks
for cash payment."76

Labor Arbiter Larida's reliance on Te's affidavit is misplaced. That affidavit was prepared
to facilitate the criminal prosecution of Tan, the branch manager, and Sobiaco, the
cashier.77 It naturally emphasized Tan's and Sobiaco's functions, and related these to
the uncovered anomalies. It would have been absurd to make respondent a focal point
as she was extraneous to the criminal suit against Tan and Sobiaco. The affidavit was
reticent about respondent because it did not have to discuss her.
If at all, Te's affidavit even militates against respondent's claim that petitioner was out
to get her. For if petitioner was indeed bent on pinning her down, it was foolhardy for it
to concentrate its attempts at criminal prosecution on Tan and Sobiaco.

Respondent cannot point to petitioner's referral to the National Bureau of Investigation

as proof of petitioner's malevolence. In the first place, petitioner was free to refer the
commission of crimes to the National Bureau of Investigation. Republic Act No.
157,78 which was in effect until the National Bureau of Investigation's functions were
calibrated in 2016 by Republic Act No. 10867,79 enabled the National Bureau of
Investigation "[t]o render assistance, whenever properly requested in the investigation
or detection of crimes and other offenses."80 Moreover, petitioner's efforts show that it
opted to avail of legitimate, official channels for conducting investigations. Petitioner's
actions demonstrate that rather than insisting on its own position and proceeding with
undue haste, it was submitting to the wisdom of an independent, official investigator
and was willing to await the outcome of an official process. While this could have also
led to criminal prosecution, it still negates malicious fixation. Indeed, if petitioner's
focus was to subvert respondent, it could have just lumped her with Tan and Sobiaco.
This would have even been to petitioner's advantage as joining all defendants in a
single case would have been more efficient and economical.

In any case, for the very reason of her main functions as accounting clerk, it made
sense to view respondent with a degree of suspicion. It was only logical for petitioner to
inquire into how multiple vouchers and checks could have passed the scrutiny of the
officer tasked to prepare them. It was not capricious for petitioner to ponder if its
accounting clerk acted negligently or had allowed herself to be used, if not acted with
deliberate intent to defraud.

Even if petitioner were to completely distance itself from judicious misgivings against
respondent, elect to not treat her as a suspect, and restrict itself to Tan's and Sobiaco's
complicity, it was still reasonable for it to involve respondent in its investigation. Given
her direct interactions with Tan and Sobiaco and her role in the workflow for payments
and disbursements, it was wise, if not imperative, to invoke respondent as a witness.

In prior jurisprudence, this Court has been so frank as to view an employee's

preemption of investigation as a badge of guilt. In Mandapat v. Add Force Personnel
Services, Inc.,81 this Court quoted with approval the following findings of the Court of
Appeals:

Unfortunately, however, before the investigation could proceed to the second step of
the termination process into a hearing or conference, Mandapat chose to resign from
her job. Mandapat's bare allegation that she was coerced into resigning can hardly be
given credence in the absence of clear evidence proving the same. No doubt, Mandapat
read the writing on the wall, knew that she would be fired for her transgressions, and
beat the company to it by resigning. Indeed, by the disrespectful tenor of her
memorandum, Mandapat practically indicated that she was no longer interested in
continuing cordial relations, much less gainful employment with Add Force.82 (Citation
omitted)

This Court will not be so intrepid in this case as to surmise that respondent was truly
complicit in the uncovered anomalies and that termination of employment for just cause
was a foregone conclusion which she was merely trying to evade by ceasing to report to
work. Still, fairness dictates that this Court decline to condone her acts in preempting
and refusing to cooperate in a legitimate investigation, only to cry constructive
dismissal. To do so would be to render inutile legitimate measures to address employee
iniquity. It would be to send a chilling effect against bona fide investigations, for to
investigate - riddled as it is with the strain on employees it naturally entails - would be
to court liability for constructive dismissal. Employees cannot tie employers' hands,
incapacitating them, and preemptively defeating investigations with laments of how the
travails of their involvement in such investigations translates to their employers'
fabrication of an inhospitable employment atmosphere so that an employee is left with
no recourse but to resign.

WHEREFORE, the Petition for Review on Certiorari is GRANTED. The assailed July 4,
2013 Decision and February 12, 2014 Resolution of the Court of Appeals in CA-G.R. SP
No. 04622 are REVERSED and SET ASIDE. The National Labor Relations Commission
May 27, 2011 and August 31, 2011 Decisions in NLRC No. MAC-01-011835-2011 (RAB-
XI-03-00352-2010) are REINSTATED.

SO ORDERED.