Demotion is said to exist when there is a reduction in:

salary
rank
position

Generally, demotion is allowed as a valid exercise of management prerogative,

often as a consequence of an employees failure to comply with company
productivity standards. (Leonardo vs. NLRC, G.R. No. 125303, June 16, 2000)

Due Process Requirement.

The rules on demotion are similar to termination of employees. The employer

must comply with both substantive and procedural due process.

While an employer may demote an employee for valid reasons, it must first
comply with the twin requirements of notice and hearing. This is because a
demotion affects the employment of an employee, whose right to continued
employment under the same terms and conditions, is likewise protected by law.
(Floren Hotel vs. NLRC, G.R. No. 155264, May 6, 2005). Demotion, like dismissal
or termination from employment, is in the nature of a punitive action, which an
employee should be given a chance to contest.