G.R. No. 126230 September 18, 1997
Carmen Arrieta, petitioner, vs. National Labor Relations Commission, Central Negros Electric Cooperative, Inc. (CENECO) and Christopher Rios, respondents.

FACTS

Petitioner Carmen Arrieta was employed by respondent Central Negros Electric Cooperative, Inc. (CENECO). She started as Executive Secretary to the President and Board of Directors in 1988. On April 16, 1988, she was appointed as Executive Secretary to the Board of Directors under Grade 9, Rank 9-B. On August 28, 1989, she was detailed to the Engineering Department as its Secretary while retaining her status and prerequisites as Executive Secretary. On April 19, 1991, she was upgraded to Rank 9-1 with a monthly salary of P4,947.00.
On December 18, 1991, CENECO’s Board of Directors passed Resolution No. 5446 abolishing all positions in the 1987 plantilla and adopting a new plantilla as part of a reorganization to streamline operations and properly place employees based on qualifications. Under the new plantilla, the position of Executive Secretary in the Office of the Board of Directors was abolished, replaced by positions of Secretary/Stenographer and Assistant Secretary with lower grades. Petitioner’s former rank of 9-1 was made eligible only for Senior Linemen.
Pursuant to this, petitioner was permanently appointed as Secretary in the Engineering Department effective December 1, 1991, with a new grade of 6-5 but receiving the same total monthly rate of P4,947.00. She signed the appointment under protest. She demanded restoration to her former position, and upon CENECO’s refusal, filed a complaint for constructive dismissal.
The Labor Arbiter ruled in her favor, finding constructive dismissal and ordering reinstatement with back salary differentials, damages, and attorney’s fees. The National Labor Relations Commission (NLRC) reversed this decision on appeal, dismissing the complaint. Petitioner then filed the instant special civil action, reiterating her claim of constructive dismissal based on a reduction in her basic monthly salary and a demotion in rank and grade, and arguing she had acquired a vested right to her former position.

ISSUE

Whether or not the reorganization undertaken by CENECO, resulting in the abolition of petitioner’s position and her new appointment as Engineering Department Secretary, constituted constructive dismissal.

RULING

No, the reorganization did not constitute constructive dismissal. The petition was dismissed and the NLRC decision was affirmed.
The Supreme Court upheld the validity of the reorganization as a legitimate exercise of management prerogative. The power of a corporation’s board of directors to implement a reorganization, including the abolition of positions, is implied or incidental to its power to conduct business affairs. Absent any finding of bad faith or malice aimed at easing an employee out, the deletion of a position is a valid exercise of such prerogative.
The Court found no evidence that the abolition of the Executive Secretary position and petitioner’s new appointment were adopted to force her out of employment. The reorganization was comprehensive, as all positions in the old plantilla were abolished and all employees received new appointments; petitioner was not singled out. The reorganization was based on a study by a Steering Committee considering employees’ qualifications and was aimed at operational efficiency.
The Court ruled that petitioner’s claim of a reduction in basic salary was unmeritorious because she continued to receive the same total monthly rate of P4,947.00. Her claim of demotion from Rank 9-B/9-1 to 6-5 was also rejected, as the grades belonged to two different plantillas with different salary allocations; a lower numerical grade in the new plantilla did not necessarily equate to a demotion. The Court further found no evidence that her new position was servile, humiliating, or demeaning, noting her duties remained similar and required the same skills.
The subsequent upgrading of other secretarial positions two years after the 1991 reorganization could not be invoked by petitioner to show discrimination. The Court emphasized that security of tenure does not deprive an employer of its management prerogatives, and petitioner’s indefinite appointment did not give her a vested right to a position that was validly abolished. Therefore, no constructive dismissal occurred.