Arrieta v. National Labor Relations Commission
REITERATIONFacts
1. The Antecedents: Petitioner Carmen Arrieta was employed by Central Negros Cooperative, Inc. (CENECO) and held the position of Executive Secretary to the Board of Directors. In 1991, CENECO underwent a reorganization, which resulted in the abolition of her position under the old plantilla. Consequently, she was appointed as Secretary in the Engineering Department under a new plantilla, a position she accepted under protest due to perceived demotion in rank and grade. 2. Procedural History: Arrieta filed a complaint against CENECO and its General Manager, Christopher Rios, alleging constructive dismissal. The Labor Arbiter ruled in her favor, finding CENECO guilty of constructive dismissal and ordering reinstatement with back pay and damages. However, upon appeal, the National Labor Relations Commission (NLRC) reversed the Labor Arbiter's decision, dismissing the complaint on the grounds that no constructive discharge occurred. 3. The Petition: Arrieta filed a special civil action before the Supreme Court, reiterating her claim of constructive dismissal. She argued that the reorganization resulted in a reduction of her basic monthly salary and a demotion in rank and grade, making her employment impossible, unreasonable, or unlikely. She contended that her new position was a demotion from a position of dignity to a menial one and that the reorganization was a ploy to remove her. She sought to be restored to her former position with her original rank, grade, and salary.
Issue(s)
Whether the petitioner was constructively dismissed due to reorganization. Whether the petitioner suffered a demotion in rank and a reduction in salary. Whether the abolition of the Executive Secretary position and petitioner's subsequent appointment constituted an exercise of valid management prerogative.
Ruling
The petition is dismissed, and the assailed judgment of the National Labor Relations Commission is affirmed.
Ratio Decidendi
On the issue of constructive dismissal due to reorganization: The Supreme Court held that the petitioner was not constructively dismissed. The Court emphasized that the abolition of the petitioner's former position as Executive Secretary was a result of a legitimate reorganization aimed at streamlining operations. This reorganization involved the abolition of all positions under the old plantilla and the creation of new ones based on qualifications. The Court reiterated the principle of management prerogative, stating that employers are at liberty to abolish positions deemed unnecessary, absent any malice or bad faith. The Court found no indication that the abolition of the position or the petitioner's subsequent appointment was a ploy to force her out of employment. The reorganization affected all employees, and petitioner was not singled out. Therefore, the changes in position, rank, and grade were accepted as a valid exercise of management prerogative. On the issue of demotion in rank and reduction in salary: The Court found no demotion in rank or reduction in salary. Regarding salary, the Court noted that petitioner's last basic salary rate of P4,947.00 prior to the reorganization was maintained in her new monthly salary. Furthermore, any difference in the basic pay was adequately compensated by a monthly differential pay of P441.20, which exceeded the P81.20 difference she claimed. The Court clarified that her basic salary of P3,685.00 before the reorganization was maintained through the new basic pay plus the differential. As for rank, the Court stated that comparing the old rank of 9-B (actually 9-1) with the new rank of 6-5 was unmeritorious because they belonged to different plantillas with different salary allocations. A lower grade or rank number in the new plantilla did not necessarily mean a demotion. The Court also dismissed the claim that the new position was servile or menial, noting that no evidence supported this and that other department secretaries did not complain. On the issue of management prerogative: The Court affirmed the validity and legitimacy of the management prerogative exercised by CENECO. The abolition of the Executive Secretary position was a consequence of a valid reorganization, not a mere transfer of work assignment. The Court cited Aurelio vs. National Labor Relations Commission to uphold the power of a board of directors to implement a reorganization, including the abolition of positions, as incidental to its power to conduct business. The Court stressed that security of tenure cannot be used to deprive an employer of its prerogative to reorganize, provided there is no bad faith. The Court found no arbitrary or oppressive act by CENECO and concluded that the reorganization was fair to the petitioner and other employees, as all positions in the old plantilla were abolished and new appointments were given.
Main Doctrine
A reorganization undertaken in good faith, which results in the abolition of positions and the subsequent reassignment of employees to new positions, does not constitute constructive dismissal, even if there are changes in rank or grade, provided that the employee's salary is maintained or adequately compensated for any difference, and the new position is not unreasonable, humiliating, or demeaning.