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 CENECO, starting as Executive Secretary to the President and Board of Directors. She was later appointed indefinitely as Executive Secretary to the Board under Grade 9, Rank 9-B. In 1991, CENECO’s Board passed a resolution abolishing all positions in the old plantilla and adopting a new one to streamline operations. The reorganization abolished the position of Executive Secretary to the Board. Consequently, Arrieta was permanently appointed as Secretary in the Engineering Department under a new grade of 6-5, though her total monthly compensation remained unchanged.
Arrieta signed the new appointment under protest, demanding restoration to her former position. She filed a complaint for constructive dismissal, alleging demotion in rank and a reduction in her basic monthly salary. The Labor Arbiter ruled in her favor, but the NLRC reversed the decision, dismissing the complaint. Arrieta then elevated the case to the Supreme Court via a special civil action.

ISSUE

Whether the reorganization undertaken by CENECO, resulting in Arrieta’s new appointment, constituted constructive dismissal.

RULING

The Supreme Court dismissed the petition and affirmed the NLRC decision, finding no constructive dismissal. The legal logic centers on the valid exercise of management prerogative. The Court upheld the power of a corporation’s board to implement a bona fide reorganization, including the abolition of positions, as incidental to conducting its business affairs. The abolition of Arrieta’s former position was deemed legitimate, undertaken for streamlining purposes, with no evidence of bad faith aimed at easing her out.
The Court clarified that Arrieta received a new appointment due to the reorganization, not a mere transfer. Her claim of salary reduction was unfounded, as her total monthly pay remained precisely the same; the alleged decrease pertained only to a component of her salary which was offset by a differential. The change in grade from 9-B to 6-5 was not a demotion in substance but a change in nomenclature between two different plantilla systems. A lower numerical grade in the new scheme did not inherently signify a demotion. The Court also noted the impossibility of granting her demand for restoration to a position that no longer existed. Absent any showing of illegality or malice in the reorganization, the employer’s management prerogative was sustained.