Assailed in this petition for review under Rule 45 of the Rules of Court are the November 29, 2001 Decision^[1] and May 7, 2002 Resolution^[2] of the Court of Appeals (CA) in CA-G.R. SP No. 63377 reversing the September 29, 2000 Decision^[3] of the National Labor Relations Commission (NLRC) which affirmed the May 15, 2000 Decision^[4] of the Labor Arbiter. The CA found that private respondent was illegally dismissed.

On December 6, 1999, private respondent Myrthle B. Marzan (Marzan) filed before the NLRC a complaint for illegal suspension and illegal dismissal with prayer for damages against petitioners Ambee Food Services, Inc. (Ambee) and its officers, Lauro M. Amante, Mackey Dimaculangan and Lea P. Evasco.^[5] The surrounding factual circumstances of Marzan's employment with Ambee as well as her dismissal therefrom were narrated in the affidavit attached to her Position Paper^[6], thus:

1. I was employed in Ambee Foods Services, Inc. (hereafter referred to as Ambee)[,] a franchise of JOLLIBEE operating in San Pedro, Laguna, from June 5, 1995 until I was unceremoniously dismissed therefrom last October 28, 1999[.]
   
   
2. Initially, I worked at Ambee as management trainee for six months, and thereafter, as shift/counter manager until I was dismissed. My latest salary was P13,500.00 per month. Moreover, in addition to the 13^th month pay, I was also receiving mid-year bonus of P8,000.00, and a year-end bonus of P10,000.00, on the average.
   
   
3. As a counter manager, the counter crew members were under my supervision. On the other hand, those who were responsible or in control of the releasing of the food products such as rice and chicken joy were under the supervision of the Kitchen Manager and Products Comptroller.
   
   
4. On October 12, 1999, at about 8:00 p.m. to 8:30 p.m.[,] counter crew members obtained orders from customers for rice and chicken joy on a waiting condition, that is, that they had to wait for about ten minutes. It was because the counter crew members asked those in the kitchen and production [sections] the availability of rice and chicken joy, and they were assured that these food products would become available about ten minutes more. Unfortunately, ten minutes passed but the kitchen and production sections were able to prepare only the chicken joy, not the rice.
   
   
5. Consequently, the crew members, upon instruction, offered the customers bread/roll in lieu of rice. Many of them agreed, and some complained. Of those who complained, one opted for the refund.
   
   
6. Meanwhile, one customer uttered some unsavory words before accepting our offer for bread/roll in place of rice. Still another customer inquired from me in a loud voice about his order. His loud voice instantaneously instilled a feeling of fear in me, and in response, I told him in a fearful and somewhat louder voice to just wait if I could have rice served on him. Such customer turned out later to be Rodolfo "Rudy" Garon. A copy of my report about such incident is attached hereto as Annexes "A" and "A-1."
   
   
7. The following day, Mackey Dimaculangan, the Area Manager, called me by phone, and told me that there was a customer complaining against me in the name of Melba Olivares, and Ms. Dimaculangan read to me the alleged letter-complaint of the alleged Melba Olivares. I replied that there was really a customer who complained, but not the way the letter-complaint [narrated], and the complainant was a man, not a woman.
   
   
8. After a week, the Manager/Director[,] Mr. Larry Amante (hereinafter referred to as Mr. Amante)[,] talked to me, and asked me [a] question about the complaint-letter. I was asked if there was indeed a complaint, and I said yes. While I was asked the said alleged letter-complaint, I was not actually given the chance to explain my side because I was practically made to give an answer "yes" or "no" only.
   
   
9. Thereafter, Ms. Dimaculangan and Mr. Amante talked to me again, and Mr. Amante told me that they had gathered information about the incident of October 12, 1999. He told me that because I anyway admitted such incident to have transpired already from my employment.
   
   
10. I [protested], and told him that there was no complainant in the name of Melba Olivares, so why should I be terminated. They admitted that there is really Melba Olivares, but they argued that I did [not] [deal] well with the [customer] because I did not allegedly entertain personally the latter.
    
    
11. Thereafter, I was informed that I would be suspended indefinitely. The following day, or on October 29, 1999, I still reported for work and therein I received the letter suspending me indefinitely, asking me then to explain my side. Copy of the alleged incident report of alleged Melba Olivares is hereto attached as Annexes "B" and "B-1," and copy of the letter of indefinite suspension is hereto attached as Annex "B-2."
    
    
12. Accordingly, through my lawyer, I explained my side, copy of such written explanation submitted to Ambee is hereto attached as Annex "C."
    
    
13. On October 31, 1999, I learned from one of the crew members that one of them in the name of Jenny was spreading words that I should be terminated because, allegedly, I became discourteous to the customers. I confronted her, and told her that she could not hear what was happening in the counter. But as of the moment, I told her that the case at hand was mine, and should she want, I would include her in my case.
    
    
14. On November 10, 1999, I was summoned to the office, and was confronted by Mr. Amante, Ms. Dimaculangan and Lea Evasco, Assistant Manager. They showed and read to me the report of Lea Evasco on the incident of October 12, 1999 regarding the alleged complaint of Rodolfo "Rudy" Garon, copy of such report of Lea Evasco is hereto attached as Annexes "D" and "D-1." After that, I was informed that the penalty on me should have been suspension, but because I allegedly intimidated Jenny on October 31, 1999, my penalty then is termination.
    
    
15. Mr. Amante told me thereafter to go out of the room, and told me to go to Mr. Rodolfo Garon and [give] an apology; he told me to go to Shierra Armada, [accountant] of the Corporation, to get from her the address of Mr. Rodolfo Garon. He clarified to me, however, that he was not making any promise that my dismissal would be recalled. He told me that I would anyway be summoned again on the following day.
    
    
16. Accordingly, I went to Mr. Rodolfo Garon and after explaining my side, he made a letter addressed to the Managing Director of Ambee refuting the allegations of Lea Evasco, and explaining the latter's visit [to] him, copy of which is hereto attached as Annexes "E" and "E-1."
    
    
17. On November 12, 1999, after securing Mr. Amante's consent, I faxed to his residence the letter-complaint of Mr. Garon (Annex "E" hereto). Since then to date, no word came from Mr. Amante [and] neither from any of his top officers. I made follow-ups with Ms. Shierra Armada about the management's final decision after the explanation of Mr. Garon, but Ms. Shierra Armada's consistent reply was that the management had no decision yet on my case.
    
    
18. It appears from the facts above narrated, and the [evidence] hereto attached, particularly from the letter of Mr. Rodolfo Garon, that my termination was effected in bad faith. It was evident from such letter of Mr. Garon that the management of Ambee was really bent on securing all [evidence] it could muster in its attempt to find a justification against me, even to the extent of bribing Mr. Garon to side with it. The accusation against me that there was complaint in the name Melba Olivares, is not true, for such person is fictitious[.] The Brgy. Captain where the alleged Melba Olivares allegedly resides certifies to that effect. Copy of such certification is hereto attached as Annex "F".^[7]

As expected, petitioners presented a contrasting account of facts, averring that:

1. Complainant started working with the respondent food store on June 5, 1995 as Shift Manager;
   
   
2. In the course [of] her said employment, she was not in good terms with her co-employees specially her subordinates who have various complaints, comments and unsavory remarks about her attitude in dealing with them, to wit:

ANNEX "1" -	Complaint, comment, remarks of crew member Mc-Dowell Cartaño saying that Ms. Marzan often shouted at him even for no valid reason in front of customers. He said she is unreasonable.
ANNEX "2" -	Complaint, comment, remarks of Jennie Vieve Odono saying that Ms. Marzan was always shouting at them at the counter in front of customers, cursing them even if no valid reasons. She described her as "sobrang higpit".
ANNEX "3" -	Complaint, comment, remarks of Jasmin B. Patricio saying that Ms. Marzan was rude. One time she was asking [for] a ketchup from Ms. Marzan[,] who[,] in turn[,] [threw] it [to] her - "Pahagis ang bigay niya kaya nagtalsikan at tinamaan po ako sa mukha at balikat" - in front of the customers. She described Ms. Marzan as always hot headed [and] ready to explode any moment even without cause.
ANNEX "4" -	Complaint, comment, remarks of Marivic Anonuevo saying that Ms. Marzan would always shout and curse them even in front of customers and threatened [them] that for such violation they could be terminated. With that, they were often put to shame when she could have talked to them in private. And because Ms. Marzan was too strict all other employees were afraid of her
ANNEX "5" -	Complaint, comment, remarks of Aileen describing Ms. Marzan as too strict and all of them were afraid of her because [on] every little things done she would curse and shout at them[;]

3. On October 12, 1999 at about 7:30 [P.M.], a customer by the name of Mr. Rudy Garon, together with his wife, went to respondent food store and ordered "Chicken Joy with Rice" and they were told to wait for 15 minutes because the rice was still being cooked. However, said period [elapsed] and still there was no rice The customer got angry and was complaining at the counter. Ms. Marzan refused to talk to him and she was hiding in the kitchen. When the customer came to know that Ms. Marzan was the manager at that time, the customer [called] her outside to talk to him but Ms. Marzan refused to come out and face him. The more the customer got angry. This incident was witnessed by many employees and some of them are as follows:

ANNEX "6" -	Report of Lea Evasco, the Manager, narrating the following:
	"... at first the chicken joy was served after 10 minutes without rice, so he (the customer) went to the counter area to ask for it, and he was told that no rice was available so he was offered a roll (bread) and he agreed because he and his wife were already hungry. After 20 minutes of waiting for the roll he again went to the counter and asked for the manager on duty (Ms. Marzan). But the Manager did not want to go out, instead she [answered] the customer from the kitchen area. Their verbal exchange was loud because they were far from each other. As the customer got angry and [ashamed] because all [others] were looking at him, he asked for the refund...."
ANNEX "7" -	Statement of Maureen Mangubos saying that the customer wanted to talk to Ms. Marzan but she refused to talk to him. The customer was angry why he was earlier offered a roll instead of a rice but still no roll came despite [the long wait]. The incident ended when [the money was refunded to the customer] despite the objection of Ms. Marzan.
ANNEX "8" -	Statement of Michael A. Roque (Mikee) who said that the customer got angry at first when, after payment for one piece chicken joy with rice and after being told to wait for the rice for 30 minutes[,] no rice came[,] and [that] the more he became angry when, after being told that he [would] be given [a] roll instead, he [waited] for another 30 minutes and yet no roll came. The more the customer got angry when the manager, Ms. Marzan, refused to come out [of] the kitchen and talk to him as he demanded.
ANNEX "9" -	Statement of Teresita Curioso who said that the angry customer was shouting at Ms. Marzan to come out [of] the kitchen and talk to him but Ms. Marzan did not come out and refused to talk to him[;]

4. Because of what happened, the (sic) Ms. Marzan herself as manager issued an Incident Report, a copy of which is hereto attached as ANNEX "10," wherein she openly admitted the following:

-	that her action was definitely unbecoming for a Jollibee Manager;
-	she got rattled as there were so many complaints. Complainant Rudy Garon was the third person who complained about the lack of rice that time;
-	she also got rattled because she overlooked the rice availability[;]

5. Due to all the foregoing, she was issued a memorandum dated October 28, 1999 suspending her and requiring her to submit a written explanation about the incident, copy attached as ANNEX "11";
   
   
6. On October 31, 1999, complainant Ms. Marzan submitted a letter of protestation, ANNEX "12";
   
   
7. In a clarificatory meeting on November 10, 1999, complainant was present and she gave a statement, copy attached as ANNEX "13" wherein she said, among others:
   
   "I admit that [I] had a loud voice when I said,
   
   `Sandali lang po titingnan ko lang kung may rice[;]'"
   
   
8. Complainant was not terminated. Then on several occasions attempts by phone [calls] to talk to her about the case were refused, thus, settlement could not be effected. On one occasion that our accountant was able to talk [to] her she emphatically said that "I'll just see you in court[;]"
   
   
9. Finally, [the] management had to write her on February 20, 2000 requesting her to report for work[;]
   
   
10. That up to the present, and even by way of this pleading, respondents are telling complainant to go back to work to (sic) as they are willing to accept her back under the same terms and conditions. If she [would] not heed this manifestation, respondents [would] take it to mean that complainant is no longer interested in her employment and her name [would] be totally removed from the list of employees.^[8]

In her Reply,^[9] Marzan admitted that on March 3, 2000 she received a letter dated February 29, 2000 asking her to return to work. While sensing that such letter was merely a ploy of petitioners, she still gave it the benefit of the doubt when she reported for work on March 5, 2000. That time, she caused her name to be written in the logbook, punched her time card and had it signed by the manager, Marge Austria. It turned out, however, that Amante, the Managing Director who signed the letter, was nowhere to be found and that not even the managers knew that she would report back. Thus, she left the store.

Moreover, Marzan noted that during the initial stage of the case before the labor arbiter petitioners made no offer whatsoever to settle the controversy, hence, the filing of the parties' position papers was set. It was only when she moved for an extension of time to file the same that petitioners, through counsel, offered a separation pay (computed at one month pay for every year of service) without reinstatement. Also, prior to the rescheduled date set for the filing of the parties' position papers (on March 7, 2000), Marzan received the February 29, 2000 letter asking her to report back to work.

Petitioners countered in their Reply^[10] that while Marzan reported for work on March 5, 2000, she punched in her time card at 11:27 A.M. and punched out at 1:01 P.M. Also, she did not come in on her usual working hours, was not in company uniform and did not do her assigned job. Since then, Marzan never went back to work. The affidavit of Evasco, the Assistant Store Manager, was shown to attest these allegations.^[11]

On May 15, 2000, the complaint was dismissed for lack of merit. The labor arbiter ruled that the penalty of preventive suspension imposed on Marzan was not tantamount to, or considered as, illegal dismissal. It was held:

In the case at bar, it has been amply shown that in the incident that happened on October 12, 1999, at the [Jollibee] outlet in San Pedro, Laguna, complainant has miserably failed to attend to the customers' need with utmost dispatch, courteousness, and respect, the prime and standard requirements to employees working in a fast food chain.

Verily, complainant's [rude] character towards customer Rudy Garon, when, in a loud voice, she told him to wait for his rice for 30 minutes, and when no rice came and the customer complained, complainant offered a bread/roll and, still, notwithstanding another 30 minutes of waiting, no bread/roll has been offered, and when customer Rudy Garon wanted to talk to her, she refused, and instead hid herself in the kitchen, show a clear case of culpable incapacity on complainant's part to appropriately handle and/or control the situation highly expected to a Manager, especially so, or during the time, when there are many customers queuing for their orders.

Significantly, the Memorandum dated October 28, 1999, suspending complainant after a proper investigation, and upon submitting her answer[,] is but a consequential action expected [of] the management. On this point, we find herein complainant to be not illegally dismissed but merely suspended because there was no illegal dismissal to speak of in the instant case[,] whether orally or in writing.

The records indubitably show that there were several attempts to reach her by phone, to talk to her about the case, but she refused. There was even one occasion when [respondent Ambee's] accountant was able to talk to her but she emphatically said, "I'll just see you in court."

Parenthetically, up to the present, and even by way of respondents' pleadings, [respondents] were telling complainant to report back to work under the same terms and conditions yet complainant maintained her hard headedness.

Taking this into mind, we are convinced that complainant was indeed preventively suspended and not dismissed contrary to complainant's claim.

Surely, herein complainant's right to security of tenure does not give her the vested right as would deprive [respondent Ambee's] of its prerogative to conduct investigation and to impose the corresponding penalty and sanction reasonable under the obtaining circumstances. For so long as the same has been conducted in the exercise of management's prerogative to protect its business and does not involve a demotion in rank or diminution of salary and other privileges, herein complainant cannot allege that the act of the management constitutes illegal dismissal. Needless to stress, the employer is free to regulate all aspects of employment, including investigation and sanctions.

Additionally, the institution or filing of a case by herein complainant against the respondents did not operate to make the management's conduct, orders, instructions or judgments illegal or unenforceable to excuse continued non-compliance therewith, otherwise an absurd situation will result wherein an indolent employee would simply refuse to follow an order or instruction from the management through the more [expedient means] of instituting an action. To disregard or disobey the order of the respondents for a return to work on the pleaded theory that the sanction imposed is unreasonable [or] illegal would be disastrous to the discipline of an employee and disadvantageous to the interest of the employer in preserving a convenient working relationship with its employee since without it no meaningful progress is possible. Significantly, the deliberate disregard, disobedience, or utter defiance by complainant over the respondents' call for her report to work cannot be countenanced. This is not to say that complainant has no remedy against the rules or orders of the respondents which complainant may regard as unjust or illegal because she can object thereto or negotiate thereon. But until and unless the rules, orders, directive or instructions of [the] respondents are declared to be illegal or improper by competent authority, herein complainant cannot just ignore or disobey such order.

In fact, respondents' desire for complainant's return to work is such a noble act because notwithstanding the seriousness of complainant's offense aggravated by various complaints, comments, and unsavory remarks from her co-employees and subordinates about her attitude, she is still being accepted by the herein respondents with open hands.

Ironically, while it appears from the records that complainant has reported on March 5, 2000, and punched her time card at exactly 11:27 a.m., she [had] also punched out her time card at 1:01 p.m.; also, it appears from the records that she did not report on her usual working hours, not in proper uniform, and did not perform her assigned task. These incidents had been witnessed and testified to by Lea Evasco, the Asst. Store Manager, in her affidavit executed on March 8, 2000, hereto marked as Annex ["B."] Suffice it to state therefore that it was petulance for herein complainant to report for a while and thereafter to leave immediately as it can be viewed to be a sign of disrespect and wanton desire to cause insult and injury to herein respondents.

Anent the issue of reinstatement, certainly, we cannot grant the same, because there was no illegal dismissal at all. More so, the claim for backwages cannot prosper because her suspension cannot be construed as illegal dismissal.

Lastly, the claim for damages has no leg to stand on because her suspension has not been shown to be illegal much less attended by bad faith or fraud or can be constituted as an act oppressive to labor.^[12]

On September 29, 2000, the NLRC resolved to affirm in toto the above ruling, finding the decision to be "in complete accord with the evidence on record and applicable law on the matter."^[13] It denied Marzan's subsequent motion for reconsideration.^[14]

The CA, however, differed in its view. On November 29, 2001, it primarily held that although Marzan's actuation is improper it cannot be considered as grave enough to constitute serious misconduct to warrant the ultimate penalty of dismissal, and that her indefinite suspension pending investigation is tantamount to illegal dismissal. Hence, the CA annulled and set aside the NLRC Decision and ordered Marzan's reinstatement, with payment of full backwages from the time her compensation was withheld up to the time of her actual reinstatement.^[15] Both Marzan and petitioners separately moved for reconsideration of the Decision, with the former praying for its modification so as to include awards of moral and exemplary damages as well as attorney's fees. Nevertheless, both motions were denied.^[16]

Petitioners ask this Court to resolve whether the CA committed grave abuse of discretion when it reversed, set aside and declared null and void the Decision of the labor arbiter and the NLRC, and found that private respondent was illegally dismissed and entitled to reinstatement and full backwages even if it was found that her actuation was a misconduct and, therefore, should be punished with a penalty corresponding to the offense committed.^[17]

Petitioners argue that, consistent with Ignacio v. Coca-Cola Bottlers Phils., Inc.,^[18] decisions of the labor arbiters as affirmed by the NLRC are entitled to respect if not finality and are considered binding on the appellate court. In this case, as the rulings of the labor arbiter and NLRC are strictly in accordance with the evidence presented and the applicable law, this Court should therefore sustain the same. They insist that Marzan was not terminated from employment but was merely suspended pending her administrative investigation as, in fact, there is no written or verbal communication to prove the alleged dismissal and that, up to now, petitioner Ambee is still awaiting Marzan's decision to report back to work under the same terms and conditions. Even so, petitioners maintain that the actuations of Marzan on October 12, 1999 evince a gross and serious misconduct constituting a valid cause for her dismissal. Granting that severance from employment is too severe a punishment, they submit that the penalty of reinstatement without backwages should instead be imposed.

Petitioners are correct. The record shows that private respondent was suspended pending investigation of the incident in question but was never dismissed. Rather, it was private respondent who refused to return to work when petitioners asked her to do so. The appropriate resolution of the situation should therefore be to allow private respondent to return to work under the same terms and conditions but without backwages since her suspension was valid and thereafter she refused to return to work.

WHEREFORE, the Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 63377 dated November 29, 2001 and May 7, 2002 are REVERSED and SET ASIDE and the Decision of the National Labor Relations Commission dated September 29, 2000 is REINSTATED and private respondent is allowed to return to work under the same terms and conditions but without backwages.

No costs.

SO ORDERED.

Puno, C.J., (Chairperson), Carpio, Corona, and Leonardo-De Castro, JJ., concur.

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^[1] Penned by Associate Justice Josefina Guevara-Salonga, with Associate Justices Godardo A. Jacinto and Eloy R. Bello, Jr. concurring.

^[2] Rollo, p. 26.

^[3] Penned by Commissioner Ireneo B. Bernardo, with Commissioners Lourdes C. Javier and Tito F. Genilo concurring.

^[4] Penned by Acting Executive Labor Arbiter Pedro C. Ramos.

^[5] NLRC records, p. 1.

^[6] Id. at 39-47.

^[7] Id. at 48-50.

^[8] Id. at 11-14.

^[9] Id. at 65-70.

^[10] Id. at 73-75.

^[11] Id. at 77-78.

^[12] Id. at 94-97.

^[13] Id. at 128-133.

^[14] Id. at 159-160.

^[15] CA rollo, pp. 210-226.

^[16] Id. at 254.

^[17] Rollo, p. 193.

^[18] 417 Phil. 747 (2001).