G.R. No. 226369 - Isabela-I Electric Coop., Inc. vs. Del Rosario, Jr.

On January 29, 1996, Isabela-I Electric Cooperative, Inc. (petitioner) hired Vicente B. Del Rosario, Jr. as a Financial Assistant.
Rapid career advancement occurred as follows:

April 26, 1996: He was promoted to Acting Management Internal Auditor.
October 26, 1996: He was confirmed as Management Internal Auditor, earning a basic monthly salary of P30,979.00 (exclusive of representation allowance and other benefits).

No concerns were raised by petitioner regarding his performance or managerial capabilities.

In January 2011, petitioner approved a reorganization plan declaring all positions vacant within the company.
Despite opposition from respondent (who, along with other employees, signed a manifesto against the reorganization), petitioner proceeded with its implementation in June 2011.
All employees were informed in writing of their "hold-over capacity" and were required to fill out an application form indicating position preferences; respondent listed his current position ("Internal Auditor Manager A") as first preference and "Finance Services Department Manager A" as second.

While on vacation in October 2012, respondent received two letters from petitioner:

The first letter notified him of his appointment as probationary Area Operations Manager.
The second letter comprised four office memoranda directing:

His new area of assignment.
The cessation of his role as Management Internal Auditor.
The turnover of his current post and pertinent documents to his successor.
The appointment of his subordinate, Arlene B. Boy, as officer-in-charge of the Auditing Department.

Respondent, despite expressing concerns (notably that his successor was not a Certified Public Accountant like himself), accepted the new appointment.
In January 2013, he formally requested reinstatement to his former position in a letter, arguing that the new assignment was a demotion; however, no remedial action was taken by petitioner.

On January 30, 2013, respondent filed a complaint alleging illegal dismissal and damages on the grounds of:

Assignment to a new position with a lower salary grade (Salary Rank 19 at P30,963.95 vs. former Salary Rank 20 at P33,038.05).
A diminution in job responsibilities since his new role (limited to the South Sector vs. nationwide responsibility in his former role).
Appointment of a colleague with lesser qualifications in his former position despite his superior credentials as the only CPA and holder of a Master’s Degree in Business Administration.

The reorganization was lawful and carried out in accordance with Republic Act No. 9136 (EPIRA) and the NEA’s approved model organizational structure.
The transfer was a fresh appointment arising from a company-wide reorganization, with no loss in salary, rank, or benefits.

The Labor Arbiter dismissed the complaint on August 29, 2013.
The NLRC reversed the Arbiter's decision on appeal (Decision dated November 20, 2013) and ruled respondent was constructively dismissed due to an unjustified demotion.
The Court of Appeals, in its Decision dated December 21, 2015, affirmed the NLRC ruling with the modification of deleting the award for salary differential, and later denied petitioner’s motion for reconsideration on July 7, 2016.

Petitioner sought review via a petition for review on certiorari before the Supreme Court, challenging the decisions rendered by the lower tribunals.
In his comment, respondent repleaded his submissions, emphasizing that he was demoted despite retaining the title “manager” and that the demotion resulted in a loss of responsibilities, status, and proper compensation.

The central issue is whether respondent was constructively dismissed when he was transferred to a new position—Area Operations Management Department Manager—that entailed:

A demotion with a lowering of responsibilities.
A reduction in both salary grade (from Salary Rank 20 to Salary Rank 19) and compensatory benefits, despite the retention of the managerial title.

Whether the reorganization implemented by petitioner and the subsequent transfer of respondent amounted to an arbitrary, prejudicial movement amounting to constructive dismissal.